EquitySeminar1

Q3:DoctrineofNotice

EquitySeminar1
Q3:DoctrineofNotice
CharlotteFernandez

WongJooYee
LimYuJia
CheongLiXin
TeongXiaoYin
TanXueQi
CharlotteFernandez
WongJooYee
LimYuJia
CheongLiXin
TeongXiaoYin
TanXueQi
TableofContents
Question
2
Introduction 2
TypesofNotice
2
RequirementsfortheDoctrineofNotice
3
EffectofOperationofDoctrineofNoticetotheEnforcementofEquitableProprietaryRights
4
ModernNotice
5
Conclusion 5
BIBLIOGRAPHY
6
Books 6
ElectronicResources 6
TableofStatutes
7
TableofCases7
Methodology 8


Question
Explain, with reference to appropriate authorities, the operation of the doctrine of notice
and how it effects the enforcement of equitable proprietary rights.
Introduction
Equity in English law refers to a set of law which consists of rights and remedies that common
law does not provide. This body of law has developed through the Courts of Chancery.
Generally, common law and equity are two different sets of principles which uphold their own
rights and remedies. Due to the harshness and rigidness of common law, equity steps in to fill in
the gaps to ensure justice is done and is standard to everyone. Whenever there is conflict between
them, equity will prevail.
The idea of doctrine of notice is that a bona fide purchaser of the legal interest can acquire the
equitable interest in property if he is not aware of the pre-existing interest at the time of
acquisition. This person is termed as equitys darling and he will take free of any equitable
interest if he can demonstrate that he is the bona fide purchaser for value without notice. The
requirements regarding the operation of doctrine of notice will be discussed below.
TypesofNotice
There are three strands to the doctrine of notice: actual notice, constructive notice and imputed
notice. The first, actual notice, also known as express notice arises when the purchaser has actual
knowledge or is aware of the existence and nature of the equitable interest at the time of
purchase or any time before the notice is completed. It does not matter how the purchaser
acquired the information if it came from a reputable and reliable source. It is important that a
vague rumour would not amount to actual notice.
Constructive notice arises when the purchaser has sufficient knowledge to put him in position to
carry out a reasonable inquiry as to the possible existence of interests or rights of another person
that might be binding on him following the purchase. The purchaser is expected to inspect the
deed title back to at least 15 years, to a good root of title. Other than that, the rule in Hunt v Luck
also requires the purchaser to inspect the land and make reasonable inquires of the person in
possession of the land. Equity has developed this doctrine to prevent purchasers deliberately
turning a blind eye or decline to make investigation on any possible equitable interests. This
rule is preserved in modern law by Law of Property Act 1925. Thus, the purchaser is deemed to
have notice even if there is no actual notice. Failure to make such inspections will result in the
purchaser being bound by constructive notice.
The last category, imputed notice arises when the purchaser will be deemed to have notice if his
agent knew or ought to have known the existence of equitable interest. As Kingsnorth Finance v
Tizard demonstrates, it is crucial that purchasers, and the third person acting on their behalf carry
out all enquiries which a reasonable person would make. In this case, Kingsnorth has imputed
notice of equitable interests as a consequence of the surveyors inspection.
RequirementsfortheDoctrineofNotice
Equitys darling refers to the person who is a bona fide purchaser of the legal ownership of the
property for value without any notice. In this circumstance, such a person will take free of any
equitable interest in the property acquired, provided he or she has met the requirements of the
test. There are four requirements of the equitable doctrine of notice and each element must be
satisfied.
First and foremost, the doctrine only operates with regards to the bona fide purchaser, which
means a person who acts in good faith. Secondly, he or she has purchased for a value in which

there was a pre-existing equitable interest. In equity, a nominal consideration would be sufficient
to establish an enforceable contractual obligation. Thirdly, the purchaser must be the legal owner
of the property which means the purchaser must be of a legal estate or interest.
Last but not least, the purchaser who applies for the equitable doctrine must not have any type of
notice before purchasing the property. The courts in Tizard held that the inspection was
inadequate since it was a pre-arranged time, i.e. Mr Tizard planned the inspection to take place
on Sunday since he knew that his wife and children would not be at home. Thus, Kingsnorth
Finance took the property subject to the wifes interest.
EffectofOperationofDoctrineofNoticetotheEnforcementofEquitableProprietaryRights
It is crucial to first understand the term equitable proprietary rights before scrutinising on the
effect of doctrine of notice to it. Proprietary rights described as equitable are those which were
historically recognised and enforced by the Courts of Chancery, or that have been developed by
process of extension of such rights. Similar to legal proprietary rights, both interests are capable
of binding third parties. However, as noted above, doctrine of notice operates to destroy
equitable proprietary interest by way of Equitys Darling. This can be seen in the case of Pilcher
v Rawlins where James LJ in the Court of Appeal held that the purchasers who had no notice of
the trust or the fraud took the property free from beneficiaries interest. The beneficial owners
failed the case on the basis that they were bona fide purchasers for value without notice of a legal
estate. The case further states that in a complex settlement deal, good faith, as part of the doctrine
of notice, is a separate requirement to the other requirement of the doctrine (legal estate, valuable
consideration, lack of notice).
A lack of good faith provides the court with the discretion to prevent the operation of the
doctrine. This is to be contrasted with another case, Kingsnorth Trust v Tizard where the lenders
mortgage took property subject to the wifes interest. In this case, Mr Tizard was the sole
registered proprietor of the matrimonial home. When their marriage broke down, Mrs Tizard
moved out but returned each day to look after their twin children and would stay the night if her
husband was away. On Mr Tizards application for the loan, he stated that he was single and
arranged for the inspection to take place on Sunday afternoon knowing that his wife would not
be present. Judge John Finlay, QC concluded that the inspection had been inadequate and the
discrepancy between what Mr Tizard had stated on his application form and what the agent
found when he inspected the property put the lenders on notice. Thus, a purchaser with notice,
whether actual or constructive, will be required to yield priority to a beneficiary of a pre-existing
trust.
As discussed, a purchaser is also deemed to have notice of an equitable interest if his agent has
either actual or constructive notice of it. In Jared v Clements, the purchaser hold the property
subject to the equitable charge as her solicitor had an actual notice of an equitable charge created
by deposit of title deeds. It must be borne in mind that after all discussions, doctrine of notice has
its roots from equity, which operates on concepts of good conscience. Thus, a person cannot
acquire a property free from a pre-existing interest if he was aware of such interest.
ModernNotice
However, the use of the doctrine of notice has been restricted starting in 1925. The doctrine has
been mostly displaced by the statutory reform, Land Registration Act 2002 in deciding if the
purchaser obtains his legal title without being bound by any equitable interests. Moreover, Law
of Property Act 1925 introduced the principal of overreaching. Overreaching occurs when the
purchaser of land will be free from pre-existing interests provided that he pays the purchase
money to two or more trustees. This was the situation in City of London Building Society v

Flegg where the House of Lords held that the parents rights have been overreached as the
mortgage company paid the purchase money to two trustees.
Conclusion
The fundamental aim of equity which is to provide fairness and justice is still preserved despite
the restriction in the use of doctrine of notice. Arguably, the case of Flegg may be seen as an
exception. Nevertheless, the doctrine of notice continues to carry out its primary duty. It also
mitigates against the harshness of Common Law which enables the equity system respond to
social needs more readily.
68Majorityofmainlegalissuesidentifiedandgoodengagementwiththequestionthroughout.
Neverreferenceacasethroughawebsitegivetheactualcasereference.Additionally,make
sureyousubmitintherequiredway.Ifthiswasasummativeitwouldnothavebeenmarked.

BIBLIOGRAPHY
Books
Pearce, R, Stevens, J, and Barr, W, The Law of Trust and Equitable Obligations (5 th Ed, OUP,
2010)
ElectronicResources
Equitys Darling
https://hklandlaw.wordpress.com/category/equitable-interests/ accessed on 20 October 2015
Pilcher v Rawlings
https://webstroke.co.uk/law/cases/pilcher-v-rawlings-1865 accessed on 20 October 2015
Kingsnorth Finance v Tizard
http://e-lawresources.co.uk/Land/Kingsnorth-Finance-v-Tizard.php accessed on 20 October 2015

TableofStatutes
Judicature Act 1875 (38 & 39 Vict c. 77)
Law of Property Act 1925 c. 20
Land Registration Act 2002 c. 9
TableofCases
Bamhart v Greenshields (1853) 9 Moo PC 18
City of London Building Society v Flegg [1988] AC 54
Hunt v Luck [1902] 1 Ch. 428
Jared v Clements [1903] 1 Ch. 428
Kingsnorth Finance v Tizard [1986] 1 WLR 783
Kingsnorth Finance v Tizard [1986] 2 All ER 54
Lloyd v Banks (1868) 3 Ch. App 488
Lloyds Bank v Carrick [1996] 1 WLR 783
Pilcher v Rawlins (1872) LR 7 Ch. App 259

Methodology
We started off by creating a Whatsapp group to keep in contact with each other, and for some
basic discussion. We then set up a meeting time and met at the Sydney Jones Library to further
discuss the question. There, we discussed in detail the requirements of the question and
proceeded to split the question into a few subheadings and divided it amongst the group. After
we have finished our individual parts, we emailed all our work to a single person to compile and
look through. Before submission, a copy of the completed work was sent to all group members
for a final check. After all of the members are satisfied, we submitted our work.