Melbury Road Properties 1995 Ltd v Kreidi

Melbury Road Properties 1995 Ltd v Kreidi [1999] 3 E.G.LR. 108

LAND LAW – REGISTRATION – CONSTRUCTIVE TRUST

Facts

The defendant sought to extend his lease pursuant to a statutory framework. He served the notice of claim required, and was later informed that the reversion of the lease had been assigned to another sometime after he served the notice. No entry was made in the Land Register pertaining to the notice, but the conveyance of the reversion was stated to be ‘subject to and with the benefit of’ the notice.

Issues

Registration of land confers a guarantee that the land is not encumbered by any interest or claim not contained within the register. There are only a few exceptions to this principle of indefeasibility, which includes constructive trusts.

The issue in this case was whether the notice of claim was binding on the successor-in-title to the lease’s reversion. The claimant argued that it was binding on several grounds, including constructive trust.

Decision/Outcome

The County Court held that the notice was not binding.

The Court restated the principle that a constructive trust will only arise if the court is satisfied that the conscience of the claimant is sufficiently affected that it would be unconscionable to allow him to rely on his strict legal rights. They held that mere notice/knowledge of the interest is not sufficient to ground unconscionability, given the need to ensure certainty in registered dispositions.

In this case, there was insufficient evidence of any facts making it unconscionable for the successor-in-title to insist on his strict legal rights. The clause in the transfer referring to the notice did not impose a new obligation on the parties: it was merely a description of something which was already expected to occur. The defendant was still free to serve a new notice.