Legal Case Summary
Peffer v Rigg [1976] EWHC Ch 1; [1977] 1 WLR 285; [1978] 3 All ER 745
Whether notice of an unprotected interest binds a purchaser.
Facts
The plaintiff, Peffer, and his brother-in-law, Rigg, purchased a property that was registered in Rigg’s sole name but was actually held on trust for them both. Their agreement, later recorded in a trust deed, provided for equal beneficial shares and equal contributions to mortgage payments and other outgoings. 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
Mrs Rigg argued that the transfer defeated Peffer’s interest. She relied on s.20(1) Land Registration Act 1925 which provided 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. Although the transfer stated a consideration of £1, Mrs Rigg argued that it formed part of the wider divorce settlement, including obligations she undertook, and was therefore for valuable consideration. On that basis she claimed priority over Peffer’s unprotected minor interest.
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Decision / Outcome
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 interests, 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. Graham J treated the stated £1 as nominal rather than valuable consideration. In the alternative, he read sections 20 and 59 together as requiring a protected purchaser to act in good faith. Mrs Rigg knew of the plaintiff’s equitable interest when she took the transfer. 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. The judge treated this as a new constructive trust, independent of the original express trust, so that it supplied a further ground for protecting Peffer’s interest. The court declared that Mrs Rigg held half the property for Peffer, ordered rectification of the register and ordered sale of the property.
