Lloyds Bank v Carrick [1996] 4 All ER 630

• Defendant 1 told Defendant 2 he would provide her with a house if she gave him money to pay for it, which she did. However the house remained in Defendant 1’s name and did not register her interest.

• Defendant 1 then mortgaged the house to Plaintiff and when he failed to meet the payments, P sued for possession of the house.

• CA found for Plaintiff, saying that there was an enforceable contract between Defendant 1 and Defendant 2 and therefore it could not imply a constructive trust between them.

  • Also Defendant 2 had failed to register her interest and therefore could not protect it.

  • Proprietary estoppel also could not be applied since Defendant 2 had spent money under her enforceable contract with Defendant 1. 

Morritt LJ

• Where Defendant has an interest that doesn’t have to be registered and TP (e.g. with subsequent mortgage over property) knew or ought to have known of the interest, Defendant’s interest takes priority and constructive trust/proprietary estoppel can be invoked to protect that interest.

• However here the interest was an estate contract (i.e. ownership) which DOES have to be registered and therefore constructive trusts/proprietary estoppel cannot be invoked to protect it.