• In the case of Chattey v Farndale [1998] 75 P&CR 298, the Court of Appeal extended the circumstances in which a purchaser’s lien would arise.
  • This case concerned purchasers, liens and planning permission.

Facts of the Case

  • C agreed to the creation of subunderleases. In this appeal they requested to reclaim their deposit fees after the company PWA became insolvent and D took the superior titles instead.

Issues

  • Were the purchasers entitled to lien on property?
  • Did the purchasers’ rights extend to rights arising under contracts?
  • What was the extent to which the interest subsisted was subject to the lien?

Held by Court of Appeal

  • Appeal allowed – Mr Chattey is entitled to a lien over the property.

Morritt LJ

Equitable interest

  • The judge relied on Rose v Watson [1864] 33 LJ Ch 385 where it was established that “the purchaser’s beneficial or equitable ownership of the property arising in consequence of a contract to purchase land which is from the outset specifically enforceable is sufficient for the creation of the purchaser’s lien.”
  • “The purchaser has an equitable interest or estate in the land if he has a right to call for the legal estate, albeit future and conditional, which the vendor has no right to refuse. In this case the vendor was contractually bound to use his best endeavours to obtain a satisfactory planning consent on the grant of which the contract became unconditional. The equitable interest or estate of the purchaser was one which entitled him to seek specific relief in the form of injunctions so as to protect that right notwithstanding that a claim for specific performance might have been premature.”

The purchaser’s lien

  • “In my judgment, the circumstances in which a purchaser’s lien will arise are not limited to those in which the contract is or has been specifically enforceable but include those in which there is or has been a right to call for the legal estate whether presently, in the future or conditionally so as to give rise to the equitable interest or estate to which Sir George Jessel referred.”
  • “Once it is established that the existence of the lien is not restricted to cases where the purchaser has been entitled to specific performance the concept on which the objection is based disappears too. What is important is that the purchaser shall have had the right, whether present, future or conditional, to call for the legal estate. It would be absurd if the lien should be denied merely because that legal estate did not exist but another out of which the vendor would grant it did.”
  • D was not subject to obligations like constructive trusts.

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