The Claimant’s case is that his wife held property on trust for him absolutely. She was a sole trustee of the property in question. The wife sold the property to a third party. The Claimant’s interest was not protected by a Form A restriction, nor was he in actual occupation. It was, however, argued for the Claimant that sections 2 and 27(2) of the Law of Property Act 1925 (“LPA 1925”) prevent overreaching of the beneficial interest where the proceeds of sale were paid to a sole trustee. It was argued that the rules in the LPA 1925 applied irrespective of the effect of sections 28 and 29 of the Land Registration 2002 (“LRA 2002”), and that the third party purchaser therefore did not take the property free of the Claimant’s interest.
The third party argued that an unregistered equitable interest in land, if not protected by entry of a restriction on the register, is postponed to the registered estate acquired for valuable consideration by virtue of section 29(1) of the LRA 2002. Counsel for the third party relied on Williams & Glyn’s Bank Ltd v Boland  AC 487, and submitted that the analysis in Boland applied with equal force to the legislative scheme of the LRA 2002 as it did to the Land Registration Act 1925.
Both counsel noted that there was no case law directly on point.
Mr Justice Henderson held (see paragraph 44) that although LRA 2002 made substantial changes from the previous law (i.e. the Land Registration Act 1925) there was no reason to doubt that the fundamental policy objective in the area remains the same as before, and a purchaser takes free from unregistered beneficial interests unless they are protected by actual occupation. It followed that section 29 of the LRA 2002 applied, irrespective of section 27(2) of the LPA 1925.
A copy of the judgement is available here.
Louisa Nye appeared on behalf of the Claimant.