Lyus v Prowsa [1982] 1 WLR 1044

X had mortgaged land to Y before giving a right over it to Plaintiff. The right was not registered and not overriding. Nevertheless, Y, after repossession, decided to sell to Defendant subject to an understanding that the sale was subject to Plaintiff’s right.

Defendant then claimed that his interest was not subject to Plaintiff’s right, since Plaintiff’s right had not been registered and was not an overriding interest.

The court found for Plaintiff, stating that in accepting the contract with Y, Defendant had agreed to hold the right for Plaintiff on constructive trust and to allow him to deny the right’s validity would be to allow the LRA 1925 to facilitate fraud - Dillon J