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Peffer v Rigg [1977] 1 WLR 285

Whether notice of an unprotected interest binds a purchaser.

Facts:

The plaintiff, Peffer, and his brother, Rigg, purchased a property that was registered in Rigg’s sole name but was actually held on trust for them both. They both contributed to the purchase price in equal shares. No restriction was placed on the register regarding Peffer’s equitable interest. Later, Rigg transferred the entire legal estate to his wife, the defendant, for a nominal consideration of £1. 

Issues:

The defendants argued that they had not acted in breach of trust. They relied on s.20(1) Land Registration Act 1925 which says that a disposition of registered land for valuable consideration confers upon the transferee an estate subject to any incumbrances appearing on the register and any overriding interests affecting the estate which are not on the register. As Mrs Rigg had purchased the property for £1, this was valuable consideration and she should not be bound by Peffer’s unprotected minor interest.

Held:

Mrs Rigg held the property on constructive trust for herself and Peffer. Graham J stated that while a purchaser for valuable consideration takes the land free of any incumbrances other than those registered or overriding interest, if the purchaser did not provide valuable consideration s.20(4) of the 1925 Act stated that any disposition would be subject to any minor interests, subject to which the transferor or grantor held the land even if not registered. In any case Mrs Rigg knew of the plaintiff’s equitable interest when she bought the property. According to equitable principles, this meant she was bound by that interest as a constructive trustee, even though it was not protected by an entry on the register.


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