P owned a property and had rented rooms out to P made his co-owner, X, trustee of his right to half the house and rental income, before X sold his part ownership of the house to D for a nominal amount. P’s interests were not registered and were not “overriding interests”. P sued D when she re-let part of the house without his permission. The court held that (1) D knew the property was on trust for P and subject to his interest. Adherence to the strict requirements of registration or overriding interest was inequitable and therefore on equitable principles it was right to find a constructive trust. He also said that the court had a general jurisdiction to impose a Constructive Trust on a purchaser who acts in bad faith. (2) Graham J also denied D’s interest since, under LRA 1925 someone had to be a “purchaser in good faith” and to take free from unregistered minor interests. D had not purchased in good faith since she knew of the unregistered interest. High standard of good faith demanded if mere “knowledge” is enough
