Lyus an exceptional case

In Chaudhay v Yavuz ([2011] EWCA Civ 1314, CA (Eng)) V and C were neighbours. An alley divided their properties. V granted an informal easement to C that was binding on the basis of proprietary estoppel. The agreement allowed C to construct a metal staircase on V’s alley leading to doors at the first floor level of C’s property. The arrangement was not recorded in any deed. It could have been protected under England’s Land Registration Act 2002 by registration of a notice. It was not. V sold the property to Y. Neither the contract nor the transfer referred expressly to the agreement. Nor was it disclosed in pre-contract enquiries. The existence of the staircase was, however, obvious and easily apparent on inspection of the property. One question was whether the easement was binding on Y on the basis of a constructive trust. C invoked Lyus v Prowsa.  The standard form of contract used in the contract of sale to Y stated that the property was sold subject to incumbrances ‘discoverable by inspection of the property before the contract.’ C argued that this brought the case within the same category as Lyus v Prowsa and that Y’s conscience was affected so that he took subject to the easement.

The argument failed. Lyus was an exceptional case. It relied on the buyer to agree to be subject to the earlier obligation. The facts relied on here (the standard condition referring to encumbrances in general terms and the ease of discovery) were nowhere near enough to bring the case within Lyus. It would be very difficult to rely on Lyus in the absence of a specific term in the contract and where the encumbrance (the easement) could have been registered and has not been (paras. 61 – 62 and 68).

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