Lyus v Prowsa [1982] 1 WLR 1044

Chancery Division

Basic Facts: C contracted to buy land from V, but V went insolvent before completion. B, holding a legal charge over V’s estate, sold the land to D1, who then sold it to D2.

Issue for the Court: When can a constructive trust be imposed? Does the LRA (Land Registration Act) make a difference?

Held: The court held that purchasers acquiring land subject to a prior unregistered interest could hold the land on constructive trust.

• Dillon J held that knowledge of a contract creates a constructive trust, even if the buyer is not in actual occupation. The LRA does not affect the imposition of a constructive trust if the interest was agreed upon and the purchaser had notice.