LORD JUSTICE MORRITT: This is an appeal of Lloyds Bank PLC, to which I shall refer as the Bank, from the order of Mr Recorder Holmes made in the Cambridge County Court on 5th July 1994. By that order he dismissed the Bank's claim as mortgagee for possession of leasehold property known as 7 Derby Way, Newmarket, Suffolk and made a declaration that the mortgagor, the first defendant Mr Carrick, held the lease of that property in trust for the second defendant, Mrs Carrick, so that her interests in and rights over that property were not subject to the Bank's charge dated 25th November 1986.
The facts are simple and may be shortly stated. No 7 Derby Way, Newmarket is a maisonette the title to which is unregistered. By a lease dated 4th August 1971 it was demised for a term of 99 years from 25th March 1971 in consideration of a premium and a relatively nominal rent. There were no restrictions on the lessee's ability to assign the term, which, on 2nd February 1982, was assigned to the first defendant Mr Carrick who then lived in the Maisonette.
Mr Jeffrey Carrick was the brother of Mr Carrick and the husband of the second defendant. Mr Jeffrey Carrick and Mrs Carrick, together with their two small boys, lived in Edinburgh Road, Newmarket. Mr Jeffrey Carrick died in March 1982. After his death but before November 1982 there were discussions between Mr Carrick and Mrs Carrick as to where she should live. Those discussions and their aftermath were described by the Recorder in the following terms
"the first defendant says that he told Mrs Carrick that, effectively, "If you like, you can come and live in this property [i.e. 7 Derby Way, Newmarket]". She was concerned whether she could afford to do so and whether she could sell her house and what would happen. Suffice it to say that Mr. Michael Carrick, the first defendant, said to his sister-in-law "Put the property on the market and what you get from the net proceeds of sale you can pay to this property, which will become yours".
Effectively, that is what happened. Mrs. Carrick, the second defendant put her property on the market. She realised a figure, which after deductions of repayment of mortgage (no doubt estate agent's commission and legal expenses and the usual outgoings that one incurs on a sale), amounted to around £19,000. As a result of completing that the £19,000 was paid over to the first defendant. The first defendant, being a building contractor, had a number of other properties at the material time and, in fact, went to live at another property, taking his then wife and child with him, leaving Mrs Carrick to come and live in the property."
Mrs Carrick and her two children moved into the Maisonette in about November 1982.
In the course of his judgment the Recorder referred to the existence of a charge over the Maisonette in favour of the Bank existing at that time but that seems to be an error for the original document is dated 10th November 1983. At all events Mrs Carrick became aware of it and raised the matter with Mr Carrick on a number of occasions when he told her not to worry as he would sort it out. In the event it was redeemed on 11th November 1986 some two weeks before the execution of the charge with which this appeal is concerned. At some time before it was redeemed works were carried out in the Maisonette consisting of a kitchen extension, central heating and damp proofing. They were effected by Mr Carrick at a cost of about £5,000 but paid for by Mrs Carrick's father.
The legal charge on which the Bank relies is dated 25th November 1986 and was made between Mr Carrick and the Bank to secure all monies due on any account by the former to the latter. Mr Carrick as beneficial owner charged the lease of the Maisonette as security for those monies. The charge was preceded by a questionnaire signed by Mr Carrick to the effect that, to the best of his knowledge, there were no persons other than the mortgagor who would then or thereafter occupy the Maisonette.
On 16th January 1991 and again on 9th August 1991 the Bank demanded from Mr Carrick the substantial sums then due from him to the Bank. They were not paid and the Bank commenced these proceedings in the Cambridge County Court by a summons issued on 27th February 1992 seeking against Mr Carrick a judgment for £89,010-95 and interest thereon accruing at the rate of £53-18 per day and an order for possession of the Maisonette.
By his answer dated 8th March 1992 Mr Carrick admitted the money claim but, in respect of the possession claim, he alleged that he was and had been since a time before the execution of the legal charge relied on by the Bank a bare trustee of the Maisonette for his sister in law. Accordingly Mrs Carrick was joined as the second defendant and ordered to serve a defence. By her defence and counterclaim served on 27th April 1992 Mrs Carrick claimed that Mr Carrick had been a bare trustee for her of the long leasehold interest in the Maisonette. The material paragraphs are paragraphs 5, 6, 9, 10 and 11 which are in the following terms
"5. Pursuant to a suggestion made by the First Defendant to the Second Defendant, the Second Defendant in or about October 1982 sold her former matrimonial home and took up occupation at 7 Derby Way, Newmarket which she has occupied at all material times since that date.
6. On the direction of the Second Defendant the Solicitors who acted on the sale of the said matrimonial home paid the resulting proceeds of around £19,000 to the order of the First Defendant. The said sum was for the acquisition of 7 Derby Way, Newmarket by the Second Defendant."
9. After the said acquisition of 7 Derby Way Newmarket the second defendant was responsible for and paid all outgoings relating to 7 Derby Way.
10. The second defendant in or about 1983 had an extension built to 7 Derby Way at a cost of about £5,000 which the second defendant paid.
11. It was the common intention of both the first and second defendants that 7 Derby Way, Newmarket should become the property of the second defendant free of all incumbrances."
The Bank replied to the effect that the interest of Mrs Carrick was registrable as a land charge of class C(iv), namely an estate contract, and was void against the Bank for want of registration. The Bank sought particulars of the defence so as to require Mrs Carrick to spell out the origin of the interest she claimed. The particulars served by Mrs Carrick on 17th September 1993 contended
"1. that no contract of sale was concluded between the First and Second Defendant in respect of the First Defendant's interest in 7 Derby Way;
2. that upon the Second Defendant entering into occupation of 7 Derby Way and paying to the First Defendant the sum of about £19,000 as pleaded in paragraph 6 of the Defence and Counterclaim, the First Defendant held his interest in 7 Derby Way upon bare trust for the Second Defendant;
3. that further and alternatively, the Second Defendant paid the said sum and entered into occupation of 7 Derby Way and acted as pleaded in paragraphs 9 and 10 of the Defence and Counterclaim, with the intention, which was a common intention of the First and Second Defendants, that 7 Derby Way was to be the Second Defendant's permanent home and that she was to be absolutely entitled to the beneficial interest in it;"
Yet further particulars were sought from Mrs Carrick and given by her on 20th December 1993. These included the following passage
"It was agreed that the Second Defendant would buy 7 Derby Way for whatever she received upon the sale of 93 Edinburgh Road (in the event about £19,000). The First Defendant told the Second Defendant not to worry about the matter further and that he would sort things out. The Second Defendant thereafter left it up to the First Defendant to sort out the legal formalities of the sale. The Second Defendant moved in to 7 Derby Way on 19th November 1982. She paid the First Defendant the proceeds of sale from 93 Edinburgh Road on about that date. Since then the Second Defendant has lived at 7 Derby Way and paid all the outgoings on it. The agreement between the Defendants is not recorded in writing."
The action was heard by the Recorder on 4th July 1994. He heard evidence from two Bank officials and from Mr Carrick and Mrs Carrick. He gave judgment on 5th July 1994. The Recorder set out the history of the case, the state of the pleadings and the documents of title relating to the Maisonette. He expressed the view, at page 12 of the transcript of his judgment, that the case turned on the law so far as it relates to registrable interests and later, at page 13 of the transcript, whether there was a contract between Mr Carrick and Mrs Carrick. In respect of these issues his conclusions set out on page 15 of the transcript were
"In my view there was a contract that upon payment of the £19,000 by the second defendant there arose, in my view, a bare trust. In other words, there was nothing left vested in Mr. Carrick (the first defendant) other than the legal title. Mr. Carrick had no right to the property. He simply held the legal title upon trust. Mrs. Carrick could have called for the legal title to be conveyed to her by the first defendant as bare trustee. If, as I do, I follow that through the interest behind the bare trust is not registrable."
On the basis that there was no registrable interest the Recorder then went on to consider whether the Bank had notice of the interest of Mrs Carrick so that the legal charge took effect subject to it. He concluded on all the evidence that the Bank was not entitled to rely simply on the answer to the questionnaire for one or more of its officers knew that Mrs Carrick was resident in the Maisonette and had constructive notice of her beneficial interest for any enquiry of her would have revealed it. The Recorder declined to deal with a submission based on proprietary estoppel as, in his view, it had not been pleaded and did not arise.
The Bank appeals with the leave of Neill LJ and Cazalet J granted on 31st March 1995. It contends that the Recorder should have found that the only interest of Mrs Carrick in the Maisonette was an estate contract within Land Charges Act 1972 and accordingly was void for want of registration as against the Bank as the purchaser of a legal estate for valuable consideration.
By a respondent's notice served on 1st May 1995 Mrs Carrick contends that the decision of the Recorder should be upheld on the additional ground that her expenditure on the improvements to the Maisonette prior to the legal charge was incurred in the belief encouraged by Mr Carrick that she was the owner of the property and thus gave rise to an equity in her favour. She submits that the Bank had notice of it and that such equity should be satisfied by the affirmation of the Recorder's order. It was accepted by counsel on her behalf that she could not go outside the facts pleaded in her defence of which I have quoted the relevant paragraphs. The other points referred to in the Respondent's notice were abandoned at the hearing.
It is convenient to consider first the relevant statutory provisions. Land Charges Act 1972 replaced Land Charges Act 1925. So far as relevant it provides
2 The register of land charges
(1) If a charge on or obligation affecting land falls into one of the classes described in this section, it may be registered in the register of land charges as a land charge of that class.
....
(4) A Class C land charge is any of the following [(not being a local land charge)], namely-
....
(iv) an estate contract;
and for this purpose-
....
(iv) an estate contract is a contract by an estate owner or by a person entitled at the date of the contract to have a legal estate conveyed to him to convey or create a legal estate, including a contract conferring either expressly or by statutory implication a valid option to purchase, a right of pre-emption or to any other like right.
4. ....
(6) An estate contract and a land charge of Class D created or entered into on or after 1st January 1926 shall be void as against a purchaser for money or money's worth [(or, in the case of an Inland Revenue charge, a purchaser within the meaning of [the Capital Transfer Tax Act 1984])] of a legal estate in the land charged with it, unless the land charge is registered in the appropriate register before the completion of the purchase.
Section 17 incorporates the definitions contained in the Law of Property Act 1925 of legal estate and purchaser, which, it is common ground, include a charge by way of legal mortgage and a mortgagee such as the Bank.
So far as relevant Law of Property Act 1925 provides
199 Restrictions on constructive notice
(1) A purchaser shall not be prejudicially affected by notice of-
(i) any instrument or matter capable of registration under the provisions of the Land Charges Act 1925, or any enactment which it replaces, which is void or not enforceable as against him under that Act or enactment, by reason of the non-registration thereof;
In the light of these provisions and, no doubt, the consideration by each party of the written argument of the other the issues between them were narrowed considerably. First, it is accepted by Mrs Carrick that if her only interest in the Maisonette was derived from the contract which she accepts is void as against the Bank as an unregistered estate contract then the appeal succeeds. Second, Mrs Carrick accepts that the original contract between her and Mr Carrick, as found by the Recorder, was a valid open contract for the purchase of the Maisonette; that it became enforcible by her when she partly performed it by entering into possession and paying the whole of the purchase price but that it remained executory, that is to say uncompleted, at the time of the legal charge to the Bank granted in November 1986. Third, the Bank accepts that if Mrs Carrick had an interest in the Maisonette not arising but separate and distinct from the unregistered contract it was and is binding on the Bank for, as found by the Recorder, the Bank had notice of it.
Thus the issue argued on this appeal was whether Mrs Carrick had an interest in the Maisonette separate and distinct from that which arose under the unregistered estate contract which was capable of binding the Bank as successor in title to Mr Carrick. For Mrs Carrick it was submitted that she did. It was contended that she was entitled to such an interest under a bare trust, a constructive trust and by virtue of a proprietory estoppel.
I shall consider each of these points in due course. But before doing so it is necessary to consider the position of Mr Carrick and Mrs Carrick before the charge to the Bank was executed. At the time it was made the contract was valid but, as provided by s.40 Law of Property Act 1925, unenforcible for want of a memorandum in writing or part performance. It became enforcible when in or about November 1982 Mrs Carrick paid the purchase price to Mr Carrick and went into possession. One consequence of the contract becoming enforcible was that it was specifically enforcible at the suit of Mrs Carrick. Accordingly Mr Carrick became a trustee of the Maisonette for Mrs Carrick. Normally such trusteeship is of a peculiar kind because the vendor himself has a beneficial interest in the property as explained in Megarry & Wade on The Law of Real Property 5th Edition page 602. But in this case as Mrs Carrick had paid the whole of the purchase price at the time the contract became enforcible Mr Carrick as the vendor had no beneficial interest. Thus he may properly be described as a bare trustee. cf Bridges v Mees (1957) Ch.475 at page 485. It follows that at all times after November 1982 Mrs Carrick was the absolute beneficial owner of the Maisonette and Mr Carrick was a trustee of it without any beneficial interest in it.
The argument for Mrs Carrick relied on the relative position at law and in equity as I have described it to found the argument that such an absolute equitable interest was not itself registrable but bound the Bank as they had constructive notice of it. Counsel for Mrs Carrick accepted that such interest came or started from the contract but, he contended, it matured into an interest separate and distinct from the contract as soon as the purchase price was paid in full.
For my part I am unable to accept this analysis. The payment of £19,000 by Mrs Carrick to Mr Carrick did not as such and without more give her any interest in the Maisonette. Nor, prior to the conclusion of the contract, were the circumstances such that Mrs Carrick could assert that her brother-in-law held the Maisonette on any trust for her benefit. The source and origin of the trust was the contract; the payment of the price by Mrs Carrick served only to make it a bare trust by removing any beneficial interest of Mr Carrick. S.4(6) Land Charges Act 1972 avoids that contract as against the Bank. The result, in my judgment, must be that Mrs Carrick is unable to establish the bare trust as against the Bank for it has no existence except as the equitable consequence of the contract. Accordingly I reject the contention founded on the bare trust.
The second contention for Mrs Carrick was to the effect that she was entitled to the whole beneficial interest in the Maisonette arising under a constructive trust and that that interest was not registrable so that the Bank having had constructive notice of it took subject to it. For this proposition her Counsel relied on the speech of Lord Bridge of Harwich in Lloyds Bank PLC v Rosset (1991) AC 107. That case was concerned with the question of what must be established to entitle a wife to an equitable interest in registered land the title to which is registered in the sole name of her husband. At page 132 Lord Bridge of Harwich said
"The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel."
Counsel recognised that in this case the contract between Mr Carrick and Mrs Carrick was entered into after Mr Carrick had taken an assignment of the lease into his own name. But he submitted that the same principle applied and for that purpose relied on the statement of Lord Oliver of Aylmerton in giving the opinion of the Privy Council in Austin v Keele (1987) 61 A.L.J.R. 605 at 609 where he said
"Although Lord Diplock [Gissing v Gissing (1971) AC 886 at p.905] referred to the formation of a common intention "at the time of acquisition", the Court of Appeal expressed the view, with which their Lordships agree, that although it may be more difficult to prove, the requisite intention in relation to property already held beneficially by the trustee, there is no reason in principle why the doctrine should be limited to an intention formed at the time of the first acquisition of the property - an opinion echoed by Mustill L.J. in Grant v. Edwards [1986] Ch 638 at 651. In essence the doctrine is an application of proprietary estoppel and there is no reason in principle why it should be confined to the single event of acquisition of the property by the owner of the legal estate."
Counsel for Mrs Carrick submitted that if there had been no contract then on the proper application of these principles there would have been a constructive trust in favour of Mrs Carrick. From this he argued that Mrs Carrick should not be in any worse position just because there was a contract.
In this case there was a trust of the Maisonette for the benefit of Mrs Carrick precisely because there had been an agreement between her and Mr Carrick which, for her part, she had substantially if not wholly performed. As between her and Mr Carrick such trust subsisted at all times after November 1982. I agree with Counsel for the Bank that there is no room in those circumstances for the implication or imposition of any further trust of the Maisonette for the benefit of Mrs Carrick In Lloyds Bank PLC v Rosset there was no contract which conferred any interest in the house on the wife. As with all such statements of principle the speech of Lord Bridge of Harwich must be read by reference to the facts of the case. So read there is nothing in it to suggest that where there is a specifically enforcible contract the court is entitled to superimpose a further constructive trust on the vendor in favour of the purchaser over that which already exists in consequence of the contractual relationship.
It is true that on this footing the ultimate position of Mrs Carrick with the benefit of a specifically enforcible contract may be worse than it would have been if there had been no contract. But that is because she failed to do that which Parliament has ordained must be done if her interest is to prevail over that of the Bank, namely register the Estate Contract. Her failure in that respect cannot, in my view, justify the implication or imposition of a trust after the execution of the charge when the dealings between Mr Carrick and Mrs Carrick before such execution did not. For these reasons I would reject the second point on which Mrs Carrick relied.
The third contention was that Mrs Carrick is entitled to the benefit of a proprietary estoppel. Counsel on her behalf submitted by reference to the principles set out in Snell's Equity 29th Ed. pp 574 to 576 that such an estoppel arose in her favour by virtue of the facts pleaded in her defence. He submitted that Mrs Carrick had paid the purchase price and carried out the improvements to the Maisonette in the belief common to both her and Mr Carrick and to that extent encouraged by him that she either did or would own it. Reliance was placed on the decisions of this court in Inwards v Baker (1965) 2 QB 29 and Ives v High (1967) 2 QB 379 as establishing that such an estoppel gives rise to an interest in land capable of binding a successor in title with notice.
This was disputed by Counsel for the Bank. She submitted that such principles could not be applied to cases in which there was no belief or expectation of having or acquiring an interest in someone else's land. In this context she relied on Western Fish Products Ltd v Penwith DC (1981) 2 All ER 204. Further she submitted that the facts did not warrant such an estoppel as they did not cover all the elements referred to as "probanda" in Wilmott v Barber (1880) 15 Ch.D.96. and were otherwise insufficient. In addition she submitted that such an estoppel cannot give rise to an interest in land capable of binding successors in title with notice.
I would observe at the outset that it is a matter of some doubt whether the principles of proprietary estoppel differ from those of that species of constructive trust which was referred to by Lord Bridge of Harwich in Lloyds Bank v Rosset. In the passage from his speech which I have already quoted he treated the two labels as interchangeable. To the like effect is the passage in the advice of the Privy Council in Austin v Keele given by Lord Oliver of Aylmerton which I have also quoted. However that may be the case under this head was put somewhat differently and should be considered on its own merits.
With regard to the second submission of Counsel for the Bank I think that it is now clear that to constitute the requisite estoppel it is not necessary to establish all of the five elements or "probanda" referred to by Fry J in Willmott v Barber (1880) 15 Ch D 96 at pp 105/6. In his judgment in Taylor Fashions Ltd v Liverpool Trustees Co. (1982) 1 QB 133 Oliver J traced through the subsequent cases in which this question had been considered. I do not propose to repeat the process but would respectfully agree with the conclusion of Oliver J that proof of all those elements or "probanda" is not necessary to found an estoppel. For my part I agree with the proposition stated by Oliver J at page 151/2 that
"the more recent cases indicate in my judgment, that the application of the Ramsden v. Dyson, L.R. 1 H.L. 129 principle - whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial - requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour. So regarded, knowledge of the true position by the party alleged to be estopped, becomes merely one of the relevant factors - it may even be a determining factor in certain cases - in the overall inquiry."
In Western Fish Products Ltd v Penwith DC (1981) 2 All ER 204 the plaintiff carried out works on its own land in reliance on statements made by an officer of the local planning authority that permission would be granted for its development. Planning permission was in due course refused and enforcement notices were served. The Plaintiff then instituted proceedings for a declaration that it was entitled to the permissions the officer had represented that it would obtain in reliance on which the Plaintiff had carried out the works on its own land. The claim failed on a number of grounds. In relation to the claim to a proprietory estoppel Megaw LJ giving the judgment of the court said at page 218 h
"We know of no case, and none has been cited to us, in which the principle set out in Ramsden v Dyson and Crabb v Arun District Council has been applied otherwise than to rights and interests created in and over land. It may extend to other forms of property: see per Lord Denning MR in Moorgate Mercantile Co Ltd v Twichings [1975] 3 All ER 314 at 323-324, [1976] QB 225 at 242. In our judgment there is no good reason for extending the principle further. As Harman LJ pointed out in Campbell Discount Co Ltd v Bridge [1961] 2 All ER 97 at 103, [1961] 1 QB 445 at 459, the system of equity has become a very precise one. The creation of new rights and remedies is a matter for Parliament, not the judges. In his reply counsel for the plaintiffs seemed to recognise that the reported cases did put limits to the application of the so-called concept of proprietary estoppel. He submitted that the plaintiffs' case was within that concept because what the defendant council, by their officers, had represented had, to their knowledge, caused the plaintiffs to spend money on or in connection with their own land which they would not have otherwise spent. On their own case they have spent money in order to take advantage of existing rights over their own land which the defendant council by their officers had confirmed they possessed. There was no question of their acquiring any rights in relation to any other person's land, which is what proprietary estoppel is concerned with."
In my judgment the claim of Mrs Carrick fails on a number of grounds. First, as in the case of the constructive trust, I do not see how there is any room for the application of the principles of proprietary estoppel when at the time of the relevant expenditure there was already a bare trust arising in consequence of an enforcible contract to the same effect as the interest sought pursuant to the proprietary estoppel. As the evidence showed Mrs Carrick knew of the need for a conveyance and was content that it should be deferred. Thus at the time that she paid the price and committed herself to the expenditure on the subsequent improvements she believed, rightly, that she was spending the money in respect of her own property albeit under an uncompleted contract. In this respect I see no relevant distinction between this case and that of Western Fish Products Ltd v Penwith DC.
Second, this is not a case in which the expectations of Mrs Carrick have been defeated by Mr Carrick seeking to resile from the position he had encouraged her to expect. As far as he is concerned he has always accepted that she had contracted to buy the Maisonette and had paid the price in full. As against him the contract is still binding and enforcible although as he is unable to redeem the mortgage he is in breach of contract for having charged the Maisonette and in breach of trust for failing to account to Mrs Carrick for the money raised on the security of the Maisonette. Mrs Carrick's expectations have been defeated because the contract was not registered at any time before the charge was granted and Parliament has decreed that in those circumstances the contract is void against the Bank.
Third, it was common ground that the right arising from a proprietary estoppel cannot exceed that which the party sought to be estopped encouraged the other to believe that she had or would acquire. The party sought to be estopped is Mr Carrick. In so far as he encouraged Mrs Carrick to believe that she was or would become the beneficial owner of the Maisonette there is no further right to be obtained for she was, and, subject to the charge, still is. But counsel for Mrs Carrick submits that Mr Carrick went further and encouraged her in the belief that she was or would become the legal owner of the Maisonette. Apart from the facts that this was never alleged in the defence of Mrs Carrick nor explored in evidence at the trial I do not think that it could avail Mrs Carrick. S.4(6) Land Charges Act 1972 invalidates, as against the Bank, any unregistered contract by the estate owner for the conveyance of the legal estate. It cannot be unconscionable for the Bank to rely on the non-registration of the contract. I do not see how it could be right to confer on Mrs Carrick indirectly and by means of a proprietary estoppel binding on the Bank that which Parliament prevented her from obtaining directly by the contract it has declared to be void. To avoid any future misunderstanding I would emphasise that there was and is a valid and enforcible contract as against the vendor. Accordingly this case is quite unlike those which may become more prevalent where there is no contract at all not because there was no agreement but because the agreement was not in writing as now required by s.2 Law of Property (Miscellaneous Provisions) Act 1989.
In my judgment the claim based on proprietary estoppel fails. In the circumstances it is unnecessary to consider further the submission of Counsel for the Bank to the effect that a proprietary estoppel cannot give rise to an interest in land capable of binding successors in title. This interesting argument will have to await another day, though it is hard to see how in this court it can surmount the hurdle constituted by the decision of this court in Ives v High (1967) 2 QB 379.
For all these reasons I consider that the Recorder was wrong to have held that Mrs Carrick had any interest valid against the Bank sufficient to constitute a defence to the claim against her for possession of the Maisonette. I would allow this appeal.
This result seems to me to be inevitable in the light of the provisions of the Land Charges Act 1972 and of the Law of Property Act 1925 I quoted earlier. However it should be noted that the result would have been different if the title to the Maisonette had been registered. In such a case the interest of Mrs Carrick, who was in possession of the Maisonette and of whom no enquiry had been made, would have been an overriding interest under s.70(1)(g) Land Registration Act 1925. As such it would have been binding on the Bank.
As the authors of Megarry & Wade on The Law of Real Property 5th Ed. point out at page 186/7 the same position would have been achieved under the Law of Property Act 1922 for what is now s.14 Law of Property Act 1925 was then in a part which also contained the legislation which subsequently became Land Charges Act 1925.
In my view it is beyond doubt that s.14 Law of Property Act 1925 does not achieve for unregistered land that which s.70(1)(g) Land Registration Act 1925 achieves for registered land but whether that was originally intended or is a quirk of the process of breaking up the Law of Property Act 1922 into, amongst others, the Law of Property Act 1925 and Land Charges Act 1925 is unclear. What is certain is that it must be for others to consider and for Parliament to decide whether this distinction between registered and unregistered land should continue, particularly as the system for the registration of incumbrances in the case of unregistered land is by no means complete as shown by Inwards v Baker (1965) 2 QB 29; Ives v High (1967) 2 QB 379 and Shiloh Spinners v Harding (1973) AC 691.
SIR RALPH GIBSON: I agree.
LORD JUSTICE BELDAM: For the reasons given by Morritt L.J., I agree that this appeal should be allowed.
The order which we shall make is that the appellant bank have possession of the property; the order of the Recorder be set aside and the counterclaim of the respondent and declarations made are dismissed. In so far as the Recorder made an order for costs in favour of the respondent that order is set aside; the appellants may have their costs before the Recorder in the County Court, such order for costs not to be enforced without the leave of the court. So far as the costs of the appeal are concerned the appellants are entitled to their costs of and occasioned by the appeal, although we would hope very much that before any such order was enforced against Mrs Carrick consideration would be given to it at the highest level in the bank; and we make an order for possession on 28th May 1996. Leave to to appeal is refused.
LORD JUSTICE MORRITT: This is an appeal of Lloyds Bank PLC, to which I shall refer as the Bank, from the order of Mr Recorder Holmes made in the Cambridge County Court on 5th July 1994. By that order he dismissed the Bank's claim as mortgagee for possession of leasehold property known as 7 Derby Way, Newmarket, Suffolk and made a declaration that the mortgagor, the first defendant Mr Carrick, held the lease of that property in trust for the second defendant, Mrs Carrick, so that her interests in and rights over that property were not subject to the Bank's charge dated 25th November 1986.
The facts are simple and may be shortly stated. No 7 Derby Way, Newmarket is a maisonette the title to which is unregistered. By a lease dated 4th August 1971 it was demised for a term of 99 years from 25th March 1971 in consideration of a premium and a relatively nominal rent. There were no restrictions on the lessee's ability to assign the term, which, on 2nd February 1982, was assigned to the first defendant Mr Carrick who then lived in the Maisonette.
Mr Jeffrey Carrick was the brother of Mr Carrick and the husband of the second defendant. Mr Jeffrey Carrick and Mrs Carrick, together with their two small boys, lived in Edinburgh Road, Newmarket. Mr Jeffrey Carrick died in March 1982. After his death but before November 1982 there were discussions between Mr Carrick and Mrs Carrick as to where she should live. Those discussions and their aftermath were described by the Recorder in the following terms
"the first defendant says that he told Mrs Carrick that, effectively, "If you like, you can come and live in this property [i.e. 7 Derby Way, Newmarket]". She was concerned whether she could afford to do so and whether she could sell her house and what would happen. Suffice it to say that Mr. Michael Carrick, the first defendant, said to his sister-in-law "Put the property on the market and what you get from the net proceeds of sale you can pay to this property, which will become yours".
Effectively, that is what happened. Mrs. Carrick, the second defendant put her property on the market. She realised a figure, which after deductions of repayment of mortgage (no doubt estate agent's commission and legal expenses and the usual outgoings that one incurs on a sale), amounted to around £19,000. As a result of completing that the £19,000 was paid over to the first defendant. The first defendant, being a building contractor, had a number of other properties at the material time and, in fact, went to live at another property, taking his then wife and child with him, leaving Mrs Carrick to come and live in the property."
Mrs Carrick and her two children moved into the Maisonette in about November 1982.
In the course of his judgment the Recorder referred to the existence of a charge over the Maisonette in favour of the Bank existing at that time but that seems to be an error for the original document is dated 10th November 1983. At all events Mrs Carrick became aware of it and raised the matter with Mr Carrick on a number of occasions when he told her not to worry as he would sort it out. In the event it was redeemed on 11th November 1986 some two weeks before the execution of the charge with which this appeal is concerned. At some time before it was redeemed works were carried out in the Maisonette consisting of a kitchen extension, central heating and damp proofing. They were effected by Mr Carrick at a cost of about £5,000 but paid for by Mrs Carrick's father.
The legal charge on which the Bank relies is dated 25th November 1986 and was made between Mr Carrick and the Bank to secure all monies due on any account by the former to the latter. Mr Carrick as beneficial owner charged the lease of the Maisonette as security for those monies. The charge was preceded by a questionnaire signed by Mr Carrick to the effect that, to the best of his knowledge, there were no persons other than the mortgagor who would then or thereafter occupy the Maisonette.
On 16th January 1991 and again on 9th August 1991 the Bank demanded from Mr Carrick the substantial sums then due from him to the Bank. They were not paid and the Bank commenced these proceedings in the Cambridge County Court by a summons issued on 27th February 1992 seeking against Mr Carrick a judgment for £89,010-95 and interest thereon accruing at the rate of £53-18 per day and an order for possession of the Maisonette.
By his answer dated 8th March 1992 Mr Carrick admitted the money claim but, in respect of the possession claim, he alleged that he was and had been since a time before the execution of the legal charge relied on by the Bank a bare trustee of the Maisonette for his sister in law. Accordingly Mrs Carrick was joined as the second defendant and ordered to serve a defence. By her defence and counterclaim served on 27th April 1992 Mrs Carrick claimed that Mr Carrick had been a bare trustee for her of the long leasehold interest in the Maisonette. The material paragraphs are paragraphs 5, 6, 9, 10 and 11 which are in the following terms
"5. Pursuant to a suggestion made by the First Defendant to the Second Defendant, the Second Defendant in or about October 1982 sold her former matrimonial home and took up occupation at 7 Derby Way, Newmarket which she has occupied at all material times since that date.
6. On the direction of the Second Defendant the Solicitors who acted on the sale of the said matrimonial home paid the resulting proceeds of around £19,000 to the order of the First Defendant. The said sum was for the acquisition of 7 Derby Way, Newmarket by the Second Defendant."
9. After the said acquisition of 7 Derby Way Newmarket the second defendant was responsible for and paid all outgoings relating to 7 Derby Way.
10. The second defendant in or about 1983 had an extension built to 7 Derby Way at a cost of about £5,000 which the second defendant paid.
11. It was the common intention of both the first and second defendants that 7 Derby Way, Newmarket should become the property of the second defendant free of all incumbrances."
The Bank replied to the effect that the interest of Mrs Carrick was registrable as a land charge of class C(iv), namely an estate contract, and was void against the Bank for want of registration. The Bank sought particulars of the defence so as to require Mrs Carrick to spell out the origin of the interest she claimed. The particulars served by Mrs Carrick on 17th September 1993 contended
"1. that no contract of sale was concluded between the First and Second Defendant in respect of the First Defendant's interest in 7 Derby Way;
2. that upon the Second Defendant entering into occupation of 7 Derby Way and paying to the First Defendant the sum of about £19,000 as pleaded in paragraph 6 of the Defence and Counterclaim, the First Defendant held his interest in 7 Derby Way upon bare trust for the Second Defendant;
3. that further and alternatively, the Second Defendant paid the said sum and entered into occupation of 7 Derby Way and acted as pleaded in paragraphs 9 and 10 of the Defence and Counterclaim, with the intention, which was a common intention of the First and Second Defendants, that 7 Derby Way was to be the Second Defendant's permanent home and that she was to be absolutely entitled to the beneficial interest in it;"
Yet further particulars were sought from Mrs Carrick and given by her on 20th December 1993. These included the following passage
"It was agreed that the Second Defendant would buy 7 Derby Way for whatever she received upon the sale of 93 Edinburgh Road (in the event about £19,000). The First Defendant told the Second Defendant not to worry about the matter further and that he would sort things out. The Second Defendant thereafter left it up to the First Defendant to sort out the legal formalities of the sale. The Second Defendant moved in to 7 Derby Way on 19th November 1982. She paid the First Defendant the proceeds of sale from 93 Edinburgh Road on about that date. Since then the Second Defendant has lived at 7 Derby Way and paid all the outgoings on it. The agreement between the Defendants is not recorded in writing."
The action was heard by the Recorder on 4th July 1994. He heard evidence from two Bank officials and from Mr Carrick and Mrs Carrick. He gave judgment on 5th July 1994. The Recorder set out the history of the case, the state of the pleadings and the documents of title relating to the Maisonette. He expressed the view, at page 12 of the transcript of his judgment, that the case turned on the law so far as it relates to registrable interests and later, at page 13 of the transcript, whether there was a contract between Mr Carrick and Mrs Carrick. In respect of these issues his conclusions set out on page 15 of the transcript were
"In my view there was a contract that upon payment of the £19,000 by the second defendant there arose, in my view, a bare trust. In other words, there was nothing left vested in Mr. Carrick (the first defendant) other than the legal title. Mr. Carrick had no right to the property. He simply held the legal title upon trust. Mrs. Carrick could have called for the legal title to be conveyed to her by the first defendant as bare trustee. If, as I do, I follow that through the interest behind the bare trust is not registrable."
On the basis that there was no registrable interest the Recorder then went on to consider whether the Bank had notice of the interest of Mrs Carrick so that the legal charge took effect subject to it. He concluded on all the evidence that the Bank was not entitled to rely simply on the answer to the questionnaire for one or more of its officers knew that Mrs Carrick was resident in the Maisonette and had constructive notice of her beneficial interest for any enquiry of her would have revealed it. The Recorder declined to deal with a submission based on proprietary estoppel as, in his view, it had not been pleaded and did not arise.
The Bank appeals with the leave of Neill LJ and Cazalet J granted on 31st March 1995. It contends that the Recorder should have found that the only interest of Mrs Carrick in the Maisonette was an estate contract within Land Charges Act 1972 and accordingly was void for want of registration as against the Bank as the purchaser of a legal estate for valuable consideration.
By a respondent's notice served on 1st May 1995 Mrs Carrick contends that the decision of the Recorder should be upheld on the additional ground that her expenditure on the improvements to the Maisonette prior to the legal charge was incurred in the belief encouraged by Mr Carrick that she was the owner of the property and thus gave rise to an equity in her favour. She submits that the Bank had notice of it and that such equity should be satisfied by the affirmation of the Recorder's order. It was accepted by counsel on her behalf that she could not go outside the facts pleaded in her defence of which I have quoted the relevant paragraphs. The other points referred to in the Respondent's notice were abandoned at the hearing.
It is convenient to consider first the relevant statutory provisions. Land Charges Act 1972 replaced Land Charges Act 1925. So far as relevant it provides
2 The register of land charges
(1) If a charge on or obligation affecting land falls into one of the classes described in this section, it may be registered in the register of land charges as a land charge of that class.
....
(4) A Class C land charge is any of the following [(not being a local land charge)], namely-
....
(iv) an estate contract;
and for this purpose-
....
(iv) an estate contract is a contract by an estate owner or by a person entitled at the date of the contract to have a legal estate conveyed to him to convey or create a legal estate, including a contract conferring either expressly or by statutory implication a valid option to purchase, a right of pre-emption or to any other like right.
4. ....
(6) An estate contract and a land charge of Class D created or entered into on or after 1st January 1926 shall be void as against a purchaser for money or money's worth [(or, in the case of an Inland Revenue charge, a purchaser within the meaning of [the Capital Transfer Tax Act 1984])] of a legal estate in the land charged with it, unless the land charge is registered in the appropriate register before the completion of the purchase.
Section 17 incorporates the definitions contained in the Law of Property Act 1925 of legal estate and purchaser, which, it is common ground, include a charge by way of legal mortgage and a mortgagee such as the Bank.
So far as relevant Law of Property Act 1925 provides
199 Restrictions on constructive notice
(1) A purchaser shall not be prejudicially affected by notice of-
(i) any instrument or matter capable of registration under the provisions of the Land Charges Act 1925, or any enactment which it replaces, which is void or not enforceable as against him under that Act or enactment, by reason of the non-registration thereof;
In the light of these provisions and, no doubt, the consideration by each party of the written argument of the other the issues between them were narrowed considerably. First, it is accepted by Mrs Carrick that if her only interest in the Maisonette was derived from the contract which she accepts is void as against the Bank as an unregistered estate contract then the appeal succeeds. Second, Mrs Carrick accepts that the original contract between her and Mr Carrick, as found by the Recorder, was a valid open contract for the purchase of the Maisonette; that it became enforcible by her when she partly performed it by entering into possession and paying the whole of the purchase price but that it remained executory, that is to say uncompleted, at the time of the legal charge to the Bank granted in November 1986. Third, the Bank accepts that if Mrs Carrick had an interest in the Maisonette not arising but separate and distinct from the unregistered contract it was and is binding on the Bank for, as found by the Recorder, the Bank had notice of it.
Thus the issue argued on this appeal was whether Mrs Carrick had an interest in the Maisonette separate and distinct from that which arose under the unregistered estate contract which was capable of binding the Bank as successor in title to Mr Carrick. For Mrs Carrick it was submitted that she did. It was contended that she was entitled to such an interest under a bare trust, a constructive trust and by virtue of a proprietory estoppel.
I shall consider each of these points in due course. But before doing so it is necessary to consider the position of Mr Carrick and Mrs Carrick before the charge to the Bank was executed. At the time it was made the contract was valid but, as provided by s.40 Law of Property Act 1925, unenforcible for want of a memorandum in writing or part performance. It became enforcible when in or about November 1982 Mrs Carrick paid the purchase price to Mr Carrick and went into possession. One consequence of the contract becoming enforcible was that it was specifically enforcible at the suit of Mrs Carrick. Accordingly Mr Carrick became a trustee of the Maisonette for Mrs Carrick. Normally such trusteeship is of a peculiar kind because the vendor himself has a beneficial interest in the property as explained in Megarry & Wade on The Law of Real Property 5th Edition page 602. But in this case as Mrs Carrick had paid the whole of the purchase price at the time the contract became enforcible Mr Carrick as the vendor had no beneficial interest. Thus he may properly be described as a bare trustee. cf Bridges v Mees (1957) Ch.475 at page 485. It follows that at all times after November 1982 Mrs Carrick was the absolute beneficial owner of the Maisonette and Mr Carrick was a trustee of it without any beneficial interest in it.
The argument for Mrs Carrick relied on the relative position at law and in equity as I have described it to found the argument that such an absolute equitable interest was not itself registrable but bound the Bank as they had constructive notice of it. Counsel for Mrs Carrick accepted that such interest came or started from the contract but, he contended, it matured into an interest separate and distinct from the contract as soon as the purchase price was paid in full.
For my part I am unable to accept this analysis. The payment of £19,000 by Mrs Carrick to Mr Carrick did not as such and without more give her any interest in the Maisonette. Nor, prior to the conclusion of the contract, were the circumstances such that Mrs Carrick could assert that her brother-in-law held the Maisonette on any trust for her benefit. The source and origin of the trust was the contract; the payment of the price by Mrs Carrick served only to make it a bare trust by removing any beneficial interest of Mr Carrick. S.4(6) Land Charges Act 1972 avoids that contract as against the Bank. The result, in my judgment, must be that Mrs Carrick is unable to establish the bare trust as against the Bank for it has no existence except as the equitable consequence of the contract. Accordingly I reject the contention founded on the bare trust.
The second contention for Mrs Carrick was to the effect that she was entitled to the whole beneficial interest in the Maisonette arising under a constructive trust and that that interest was not registrable so that the Bank having had constructive notice of it took subject to it. For this proposition her Counsel relied on the speech of Lord Bridge of Harwich in Lloyds Bank PLC v Rosset (1991) AC 107. That case was concerned with the question of what must be established to entitle a wife to an equitable interest in registered land the title to which is registered in the sole name of her husband. At page 132 Lord Bridge of Harwich said
"The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel."
Counsel recognised that in this case the contract between Mr Carrick and Mrs Carrick was entered into after Mr Carrick had taken an assignment of the lease into his own name. But he submitted that the same principle applied and for that purpose relied on the statement of Lord Oliver of Aylmerton in giving the opinion of the Privy Council in Austin v Keele (1987) 61 A.L.J.R. 605 at 609 where he said
"Although Lord Diplock [Gissing v Gissing (1971) AC 886 at p.905] referred to the formation of a common intention "at the time of acquisition", the Court of Appeal expressed the view, with which their Lordships agree, that although it may be more difficult to prove, the requisite intention in relation to property already held beneficially by the trustee, there is no reason in principle why the doctrine should be limited to an intention formed at the time of the first acquisition of the property - an opinion echoed by Mustill L.J. in Grant v. Edwards [1986] Ch 638 at 651. In essence the doctrine is an application of proprietary estoppel and there is no reason in principle why it should be confined to the single event of acquisition of the property by the owner of the legal estate."
Counsel for Mrs Carrick submitted that if there had been no contract then on the proper application of these principles there would have been a constructive trust in favour of Mrs Carrick. From this he argued that Mrs Carrick should not be in any worse position just because there was a contract.
In this case there was a trust of the Maisonette for the benefit of Mrs Carrick precisely because there had been an agreement between her and Mr Carrick which, for her part, she had substantially if not wholly performed. As between her and Mr Carrick such trust subsisted at all times after November 1982. I agree with Counsel for the Bank that there is no room in those circumstances for the implication or imposition of any further trust of the Maisonette for the benefit of Mrs Carrick In Lloyds Bank PLC v Rosset there was no contract which conferred any interest in the house on the wife. As with all such statements of principle the speech of Lord Bridge of Harwich must be read by reference to the facts of the case. So read there is nothing in it to suggest that where there is a specifically enforcible contract the court is entitled to superimpose a further constructive trust on the vendor in favour of the purchaser over that which already exists in consequence of the contractual relationship.
It is true that on this footing the ultimate position of Mrs Carrick with the benefit of a specifically enforcible contract may be worse than it would have been if there had been no contract. But that is because she failed to do that which Parliament has ordained must be done if her interest is to prevail over that of the Bank, namely register the Estate Contract. Her failure in that respect cannot, in my view, justify the implication or imposition of a trust after the execution of the charge when the dealings between Mr Carrick and Mrs Carrick before such execution did not. For these reasons I would reject the second point on which Mrs Carrick relied.
The third contention was that Mrs Carrick is entitled to the benefit of a proprietary estoppel. Counsel on her behalf submitted by reference to the principles set out in Snell's Equity 29th Ed. pp 574 to 576 that such an estoppel arose in her favour by virtue of the facts pleaded in her defence. He submitted that Mrs Carrick had paid the purchase price and carried out the improvements to the Maisonette in the belief common to both her and Mr Carrick and to that extent encouraged by him that she either did or would own it. Reliance was placed on the decisions of this court in Inwards v Baker (1965) 2 QB 29 and Ives v High (1967) 2 QB 379 as establishing that such an estoppel gives rise to an interest in land capable of binding a successor in title with notice.
This was disputed by Counsel for the Bank. She submitted that such principles could not be applied to cases in which there was no belief or expectation of having or acquiring an interest in someone else's land. In this context she relied on Western Fish Products Ltd v Penwith DC (1981) 2 All ER 204. Further she submitted that the facts did not warrant such an estoppel as they did not cover all the elements referred to as "probanda" in Wilmott v Barber (1880) 15 Ch.D.96. and were otherwise insufficient. In addition she submitted that such an estoppel cannot give rise to an interest in land capable of binding successors in title with notice.
I would observe at the outset that it is a matter of some doubt whether the principles of proprietary estoppel differ from those of that species of constructive trust which was referred to by Lord Bridge of Harwich in Lloyds Bank v Rosset. In the passage from his speech which I have already quoted he treated the two labels as interchangeable. To the like effect is the passage in the advice of the Privy Council in Austin v Keele given by Lord Oliver of Aylmerton which I have also quoted. However that may be the case under this head was put somewhat differently and should be considered on its own merits.
With regard to the second submission of Counsel for the Bank I think that it is now clear that to constitute the requisite estoppel it is not necessary to establish all of the five elements or "probanda" referred to by Fry J in Willmott v Barber (1880) 15 Ch D 96 at pp 105/6. In his judgment in Taylor Fashions Ltd v Liverpool Trustees Co. (1982) 1 QB 133 Oliver J traced through the subsequent cases in which this question had been considered. I do not propose to repeat the process but would respectfully agree with the conclusion of Oliver J that proof of all those elements or "probanda" is not necessary to found an estoppel. For my part I agree with the proposition stated by Oliver J at page 151/2 that
"the more recent cases indicate in my judgment, that the application of the Ramsden v. Dyson, L.R. 1 H.L. 129 principle - whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial - requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour. So regarded, knowledge of the true position by the party alleged to be estopped, becomes merely one of the relevant factors - it may even be a determining factor in certain cases - in the overall inquiry."
In Western Fish Products Ltd v Penwith DC (1981) 2 All ER 204 the plaintiff carried out works on its own land in reliance on statements made by an officer of the local planning authority that permission would be granted for its development. Planning permission was in due course refused and enforcement notices were served. The Plaintiff then instituted proceedings for a declaration that it was entitled to the permissions the officer had represented that it would obtain in reliance on which the Plaintiff had carried out the works on its own land. The claim failed on a number of grounds. In relation to the claim to a proprietory estoppel Megaw LJ giving the judgment of the court said at page 218 h
"We know of no case, and none has been cited to us, in which the principle set out in Ramsden v Dyson and Crabb v Arun District Council has been applied otherwise than to rights and interests created in and over land. It may extend to other forms of property: see per Lord Denning MR in Moorgate Mercantile Co Ltd v Twichings [1975] 3 All ER 314 at 323-324, [1976] QB 225 at 242. In our judgment there is no good reason for extending the principle further. As Harman LJ pointed out in Campbell Discount Co Ltd v Bridge [1961] 2 All ER 97 at 103, [1961] 1 QB 445 at 459, the system of equity has become a very precise one. The creation of new rights and remedies is a matter for Parliament, not the judges. In his reply counsel for the plaintiffs seemed to recognise that the reported cases did put limits to the application of the so-called concept of proprietary estoppel. He submitted that the plaintiffs' case was within that concept because what the defendant council, by their officers, had represented had, to their knowledge, caused the plaintiffs to spend money on or in connection with their own land which they would not have otherwise spent. On their own case they have spent money in order to take advantage of existing rights over their own land which the defendant council by their officers had confirmed they possessed. There was no question of their acquiring any rights in relation to any other person's land, which is what proprietary estoppel is concerned with."
In my judgment the claim of Mrs Carrick fails on a number of grounds. First, as in the case of the constructive trust, I do not see how there is any room for the application of the principles of proprietary estoppel when at the time of the relevant expenditure there was already a bare trust arising in consequence of an enforcible contract to the same effect as the interest sought pursuant to the proprietary estoppel. As the evidence showed Mrs Carrick knew of the need for a conveyance and was content that it should be deferred. Thus at the time that she paid the price and committed herself to the expenditure on the subsequent improvements she believed, rightly, that she was spending the money in respect of her own property albeit under an uncompleted contract. In this respect I see no relevant distinction between this case and that of Western Fish Products Ltd v Penwith DC.
Second, this is not a case in which the expectations of Mrs Carrick have been defeated by Mr Carrick seeking to resile from the position he had encouraged her to expect. As far as he is concerned he has always accepted that she had contracted to buy the Maisonette and had paid the price in full. As against him the contract is still binding and enforcible although as he is unable to redeem the mortgage he is in breach of contract for having charged the Maisonette and in breach of trust for failing to account to Mrs Carrick for the money raised on the security of the Maisonette. Mrs Carrick's expectations have been defeated because the contract was not registered at any time before the charge was granted and Parliament has decreed that in those circumstances the contract is void against the Bank.
Third, it was common ground that the right arising from a proprietary estoppel cannot exceed that which the party sought to be estopped encouraged the other to believe that she had or would acquire. The party sought to be estopped is Mr Carrick. In so far as he encouraged Mrs Carrick to believe that she was or would become the beneficial owner of the Maisonette there is no further right to be obtained for she was, and, subject to the charge, still is. But counsel for Mrs Carrick submits that Mr Carrick went further and encouraged her in the belief that she was or would become the legal owner of the Maisonette. Apart from the facts that this was never alleged in the defence of Mrs Carrick nor explored in evidence at the trial I do not think that it could avail Mrs Carrick. S.4(6) Land Charges Act 1972 invalidates, as against the Bank, any unregistered contract by the estate owner for the conveyance of the legal estate. It cannot be unconscionable for the Bank to rely on the non-registration of the contract. I do not see how it could be right to confer on Mrs Carrick indirectly and by means of a proprietary estoppel binding on the Bank that which Parliament prevented her from obtaining directly by the contract it has declared to be void. To avoid any future misunderstanding I would emphasise that there was and is a valid and enforcible contract as against the vendor. Accordingly this case is quite unlike those which may become more prevalent where there is no contract at all not because there was no agreement but because the agreement was not in writing as now required by s.2 Law of Property (Miscellaneous Provisions) Act 1989.
In my judgment the claim based on proprietary estoppel fails. In the circumstances it is unnecessary to consider further the submission of Counsel for the Bank to the effect that a proprietary estoppel cannot give rise to an interest in land capable of binding successors in title. This interesting argument will have to await another day, though it is hard to see how in this court it can surmount the hurdle constituted by the decision of this court in Ives v High (1967) 2 QB 379.
For all these reasons I consider that the Recorder was wrong to have held that Mrs Carrick had any interest valid against the Bank sufficient to constitute a defence to the claim against her for possession of the Maisonette. I would allow this appeal.
This result seems to me to be inevitable in the light of the provisions of the Land Charges Act 1972 and of the Law of Property Act 1925 I quoted earlier. However it should be noted that the result would have been different if the title to the Maisonette had been registered. In such a case the interest of Mrs Carrick, who was in possession of the Maisonette and of whom no enquiry had been made, would have been an overriding interest under s.70(1)(g) Land Registration Act 1925. As such it would have been binding on the Bank.
As the authors of Megarry & Wade on The Law of Real Property 5th Ed. point out at page 186/7 the same position would have been achieved under the Law of Property Act 1922 for what is now s.14 Law of Property Act 1925 was then in a part which also contained the legislation which subsequently became Land Charges Act 1925.
In my view it is beyond doubt that s.14 Law of Property Act 1925 does not achieve for unregistered land that which s.70(1)(g) Land Registration Act 1925 achieves for registered land but whether that was originally intended or is a quirk of the process of breaking up the Law of Property Act 1922 into, amongst others, the Law of Property Act 1925 and Land Charges Act 1925 is unclear. What is certain is that it must be for others to consider and for Parliament to decide whether this distinction between registered and unregistered land should continue, particularly as the system for the registration of incumbrances in the case of unregistered land is by no means complete as shown by Inwards v Baker (1965) 2 QB 29; Ives v High (1967) 2 QB 379 and Shiloh Spinners v Harding (1973) AC 691.
SIR RALPH GIBSON: I agree.
LORD JUSTICE BELDAM: For the reasons given by Morritt L.J., I agree that this appeal should be allowed.
The order which we shall make is that the appellant bank have possession of the property; the order of the Recorder be set aside and the counterclaim of the respondent and declarations made are dismissed. In so far as the Recorder made an order for costs in favour of the respondent that order is set aside; the appellants may have their costs before the Recorder in the County Court, such order for costs not to be enforced without the leave of the court. So far as the costs of the appeal are concerned the appellants are entitled to their costs of and occasioned by the appeal, although we would hope very much that before any such order was enforced against Mrs Carrick consideration would be given to it at the highest level in the bank; and we make an order for possession on 28th May 1996. Leave to to appeal is refused.
© Crown Copyright
