Hunt v Luck [1902] 1 Ch. 428

UNREGISTERED CONVEYANCING – LEASES – CONSTRUCTIVE NOTICE – RECEIPT OF RENTS

Facts

H owned a number of properties which were let out, the rents for which were collected by an agent. These properties were subsequently conveyed to G, who proceeded to take out a series of mortgages. Following the death of H, his personal representatives (C) brought an action challenging the validity of the conveyance to G. When the court at first instance upheld the validity of the deed of conveyance, C brought an appeal, arguing that the defendant mortgagee (D) had constructive notice of the tenancies, and through that, constructive notice of the interest of C as receiver of the rents.

Issues

The Court of Appeal were called upon to consider the nature of constructive notice in the context of unregistered conveyancing. Specifically, the question arose as to whether a purchaser or mortgagee would have constructive notice of a receiver’s interest where the interest of a tenant in occupation would have been discoverable on a reasonably careful inspection.

Decision/Outcome

The Court of Appeal found in favour of D: A purchaser will have constructive notice of any rights reasonably discoverable by inspection of the property, and, in particular, from enquiry of any occupier as to his interests. This does not, however, extend to the rights of a landlord, there being no obligation to enquire as to the existence of interests beyond those of the tenant in occupation. If D had actual knowledge of C’s right to receive the rents, however, would have sufficed to fix D with notice of that right.