Lecture 3- Equity, Estates and Unregistered Title PDF

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Lecture 3: Equity, Estates and Unregistered Title Equity introduction • Imperative to an understanding of Land Law is the contribution that Equity (as a major source of law has made over the years). • Where does it fall in the scheme of things? • For the potted story see David Hayton, ‘The Development of Equity and the “good person philosophy in Common Law systems’ [2012] Conv 263 Law of property act o shows the relationship people have with land either a free hold or lease hold, this is regarded using time o Relationship with land is guided by time e.g. lease of 5 years o Freehold is absolute possession- will not come to an end o There are only 5 statutory legal rights o Rights of entry in part of section 12 of the property act SECTION 1(3) All other estates, interests, and charges in or over land take effect as equitable interests. o Shows the power these rights have o shows whether they can or cannot be registered o what rights do they have if they do buy the property? o Section 1 part 3 is about equity o Other proprietary rights in land therefore are said to be equitable only under s1(3) of the 1925 Act. These include o The rights or a beneficiary under a trust of land o An interest under a contract to create a legal estate or interest in land. The purchaser is treated as owning an equitable estate from the date the contract is exchanged. The legal estate continues to vest in the owner. o Restrictive covenants o Interests that become equitable as a result of statutory reform. o Interests that have not conformed with the requisite formalities in their creation, e.g. A deed to convey an interest in land which must be signed witnessed, contain all the terms and be delivered. If these are not complied with then the interest conveyed will be equitable only. This lit would include leases, easements, profits a prendre and also mortgage charges. (They are all capable of existing at law) o Contractual agreements are regarded as being equitable o right of first refusal will be under contract of a legal interest o Can get a right of first refusal or options which come under a heading of legal interest o property owned by old lady which can be exploited can get her to a right of first refusal so they offer her a large amount of money so they can purchase the property o If you own property and your neighbour does you can get a covenant (agreement between neighbours which is a written agreement) o Difficult to enforce governance

o equitable interest-The personal that wants to create a legal interest e.g. mortgage hasn’t met the requirements of the proper requirement of that right o A document formality (a deed) is needed to forms legal interest- shows what is needed for this deed o Deed needs to be signed, sealed and delivered, needs to have the terms of the deed which needs to have a witness as well- this is a tool of evidence, commitment on a permanent which a court can use o People can create an arrangement with people which can be put on paper, need to have the terms which needs to be signed- they will have an equitable lease, this is not the same as a legal lease o mortgage as to hasn’t met the evidential factor, however the court can step in to look at if there is a right Development of the Common Law Courts o At Norman Conquest, system of local courts existed – rules applied varied in different areas. Communication was low, literacy levels were low, very little legal practice, didn’t have such burdening professions, only had local courts, only had the kings court o King held a court for tenants in chief (the Curia Regis) o In comparison with local courts, the royal court offered various advantages – ordinary litigants wanted to bring their cases there. o Over a period of time, 3 courts developed from the Curia Regis (King’s Bench, Common Pleas, Exchequer o Introduced the printing press- wide stream distribution of case reports and statutes o Common law as well as states is interpreted o Law applied the same to everyone o Common law courts were difficult because of the way they operated, was in Latin, they had strict procedures and limited remedies (only one is damages)- this is less that optimal, lack in enforcing court orders o The courts operated on a rich based system o There was a power struggle between the landed class and they had an interest in supressing the majority during the Norman conquest o The rit system- inherent interest between arrestotcy because they had the power over the rit system to suppress the number of claims- some issues didn’t go to court to be litigated o The rit system had many different types of claims and people couldn’t get claims in so people petitioned the king o some people objected to not being able to have their claim being heard in court due to the rit system o The system wanted to exhaust you so you don’t bring a claim o Equity

o Royal courts applied same rules to all litigants irrespective of where they came from – “common law” and the three royal courts became known as the “common law courts” o King referred petitions to his ‘secretary’ – the Chancellor – who gave relief in individual cases – guided by principles of fairness/ justice/ equity

o E.g o He would order Y to keep his promise to X and to hold the estate for the benefit of X’s family o And would compel Y to do this – not merely require him to compensate X’s family by paying money o And, would enforce his orders by imprisoning Y if he failed to obey. Development of the Court of Chancery • Number of petitions increased during the 14th Century – were made directly to the Chancellor. • A new law court developed and expanded during the 15th and 16th centuries known as the Court of Chancery o Court developed a new body of law known as ‘Equity’ o Members were given part of the court in allegiance with their king but had to support the king when defending him or defending the country e.g. fighting for the king, land at the time was oriented to the man. This is a problem because if he died in war then the wife and children will not get the land and the land will go back to the king, there was no method or inheriting. In the past men found a friend and told them that if they come back, they want the land and if they did not come back then they want the friend to give the land to their son when he’s older. The friend may give the land or not. When not given the matters were often taken to court but it was difficult because in the eyes of the law the friend is the owner and there was no trust relationship in the past. o This is how trust developed- property is held for someone o In the past common law did not deal with disputes hence it was passed on to the Chancellor o Chancellor developed equity Advantages of petitioning the Chancellor • (1) Recognition of new rights (not recognised by Common Law Courts – Eg rights of beneficiaries (X’s family) under a use – In later law, the use came to be called a ‘trust’ – Y, the trustee, owns the property but is required to hold it for the benefit of X’s family, the beneficiaries. o Chancellor recognised trust which was not recognised by common law o Wealth management o Gave a high rise to remedies (now got injunctions, specific performance as well as remedies) o Ability to compel people to go to court o There were sanctions for not attending court

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2) give new remedies – gives ‘specific relief’ rather than money compensation i.e compels party to perform obligations instead of merely compensating other party for failure to do so. Note also two important equitable remedies – Injunction – an order to act or refrain from acting

– Specific performance – remedy for breach of contract – orders party to perform contract Compels vendor (seller) of an estate in land to sell the estate to the buyer – rather than merely paying compensation for failure to do so. • •

(3) Improved procedure Chancellor had power to compel parties to attend court and to obey orders – with sanction of imprisonment.

Conflict between law and equity • Two sets of courts and two bodies of law could produce results on the same facts – eg: – In the case of the use / trust created by X: – Y is the legal owner of the estate, and at Common law can use it for his own benefit; but in Equity he is a trustee, and must hold the property for the benefit of X’s family How were these reconciled.................? o There were tensions between common law courts and equity o Earl of oxfox case- equity reigns supreme- this was to do with power struggles during the period leading tot the reign of Charles Administration of Law and Equity fused in 19th Century • Court structure reformed by the Judicature Acts 1873/5 – separate courts of law and equity abolished – replaced by the Supreme court of Judicature (High court and Court of Appeal) • Law and Equity applied as appropriate in all courts • NB statutory provision that in any conflict between rules of common law and equity ‘the rules of equity shall prevail’ – • Judicature Act 1873 s. 25(11) –provision now contained in Supreme Court Act 1981 s.49 o Going to separate courts which lead to forum shopping which is what led to judicial acts o Equity is a separate source of law is not one that has a competing set of rules o Equity pops up when needed Maximums o o o o o o o o

Equity will not suffer a wrong to without a remedy Equity follows the law He who seeks equity must do Equity He who comes to Equity must come with clean hands Equity is Equality Where the equities are equal the first in time prevails Equity imputes and intention to fulfill an obligation Equity regards as done that which ought to be done

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Equity looks to intent (substance) rather than form Delay defeats Equity Equity acts in personam Equity will not allow a statute to be used as an instrument of fraud Equity will not perfect an imperfect gift Equity will not assist a volunteer

Equitable interest in Land • The Court of Chancery developed third-party rights in land (equitable interests) • (A) Janet may hold the freehold estate in The Oaks as a trustee – – Under an express trust – eg for her children – Under an implied trust – eg for herself and her husband or partner – because: • Husband / partner contributed to the cost of buying The Oaks (resulting trust) • Husband/ partner was led to believe by Janet that would receive a share in the property and court considers that she acted unconscionably in denying this (Constructive Trust) • (B) Janet may have contracted to sell The Oaks to Percy – who will have rights to the property under an Estate Contract – – If Janet refused to perform contract, Percy could seek equitable remedy of specific performance ie compel Janet to transfer freehold estate to Percy. – Equity ‘regards as done that which ought to be done’ i.e it regards parties to specifically enforceable contracts as being in position they would be in if contract was performed– So percy is regarded by Equity as owning freehold estate from date of contract. • (c) A previous owner of The Oaks may have covenanted with a neighbour that he would not use the property for business purposes – the neighbour may have the right to enforce this restrictive covenant against Janet. • (d) Janet may have encouraged her elderly mother to come and live with her in The Oaks, promising that she will have a home for life there. If Janet’s mother ‘relied on this representation to her detriment’ she may have ‘an equity arising from estoppel’ and may be entitled to stay in the property. Unregistered land Unregistered title- exercise in understanding a system which was once integral in transfer and The whole country is not registered o registering property- there is no title ownership of a computer o This country has moved to a system of registration which speeds up the transaction or efficiency and giving security of holding property o Holding land is arbitrary o In this country the registration project stated in 1830, first registraration took place in 1862, wasn’t until 1925 that the modern registration was created, only since 2002 there has been a real political agender as well as a policy agender to push the registration system as far as possible o 15% of land mass is still not registered due to areas that were not subject to be local

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15 % (by land mass) is not registered Culprits / why No transfer within parameters of trigger (LRA 2002) and predecessors. Agricultural land Landed family holdings Network rail Church- own a lot of property Universities etc. Mostly oxford and Cambridge Involves surveying- when registering land

Relativity of title • Within the Common Law Tradition ‘title’ to an ‘estate’ is founded upon the earthy reality of behavioural fact; and the potentially variable nature of behavioural fact ensures that all land titles are ultimately relative. • Unregistered land – title remains both relative and essentially defeasible. title is a relevant concept o Ownership- will have a receipt to show possession, similar to land, if someone possesses land, they have a document containing a deed to show ownership o Need to evaluate the strongest claim With Registration •

The philosophical base of English land law has finally shifted from empirically defined fact to officially defined entitlement, from property as a reflection of social actuality to property as a product of state-ordered or political fact. See NEXT WEEK.

o Indefeasibility- ownership comes from the fact that an individual name is on the register, title by registration, moves away from the risk of unregistered land How does Unregistered Title Work? • In respect of Unregistered title – there exists NO Public record of Ownership. (Estates) • NOR • With the isolated exception of the Land Charges Act 1972 (post 1926) - do any proprietary rights exercisable over such estates appear on any general or centralised register. (Interests) o no record of rights that you have over someone property of the rights people have over your property o people would want to know if this is a leasehold or a freehold o or if there’s an existing mortgage o want to know the rights of the neighbours as well as your rights •

It is therefore NOTORIOUSLY difficult to discover the proprietorship of certain unregistered estates. most of the time there will be some records associated to that property

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An ancient & valuable clue to large tracts of dynastically owned unregistered land : ‘The New Domesday Book’ Kevin Cahill, Who Owns Britain (Canongate, Edinburgh 2001)

Evidence of title to an Unregistered Estate • Evidence of title usually exists only in the form of a chain of documentary record (or ‘title deeds’) which detail successive transactions with that land over the course of time. Show the conveyance of the property. Shows the transfer from one person to another, there could be a deal of easement, mortgage arrangements • These historic documents or ‘deed bundles’ are privately controlled, being normally retained by the “owner” These provide the essential ‘indicia of title’ •

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Indicia of title when coupled with the fact of undisturbed possession – GENERALLY identifies the person who currently has the ‘BEST’ ‘title’ to any relevant estate in the land “Relativity of Title” Title can also be claimed by one who holds no supporting documentary evidence but relies instead upon the sheer fact of his own possession

In the latter circumstance – the possessors undocumented claim might exist concurrently with, and in direct competition against, some other person’s paper title • In these circumstances extrinsic evidence of the possessor’s title to common law freehold may be provided by statutory declarations or ‘statements of trust’ which attest to the sustained possession alleged by the claimant. Declarations of this kind, sworn under the Statutory Declarations Act 1835, generally provide a proof of estate ownership sufficient to satisfy a purchaser of land. o There may be competing claims •

Transacting with Unregistered Estates • Unregistered conveyancing is based on the pragmatic assumption that the historic documents of title – together with an inspection of the land – will, usually, disclose most of the pertinent details relating to the estate • Generally, this proves to be correct. Pre conveyance • Vendor’s deeds bundle must be produced in order for purchaser to verify title • By investigating title (papers, deeds and other documents back at least 15 years (s23 LPA 1969) - the purchaser is usually/ normally able to discover most of the proprietary estates, interests and charges impinging on the vendor’s land • If the purchaser is able to find a “good root of title” - they can safely complete the transaction However • Unregistered conveyancing “arguably” does not compare with the more favourable registered conveyancing process.

The process had to be repeated upon every conveyance (irrespective of the length of time) • Each successive purchaser has to make a judgment about the quality of the relevant title. need to see if the seller is reliable o Unregistered conveyances there are problems •

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The process of unregistered conveyancing is thereby rendered repetitive , protracted and costly. Even today – where dealings with unregistered estates will more than likely TRIGGER a requirement of substantive registration of title – pre- registration rights and liabilities attaching to the land fall to be determined by reference to the principles which regulate unregistered estates and which require to be recorded on a first registration.

Estates • Before 1926 – 3 Freehold estates • After 1925 LPA 1925 s.1(1): The only estates in land which are capable of subsisting or of being conveyed created at law are: (a) An estate in fee simple absolute possession (Freehold) (b) A term of years absolute (Leasehold)

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Interests • Other people in addition to the estate owner may have rights over the property i.e. ‘interests’ in the land (also called : ‘third party rights’, ‘encumbrances’ etc.). • Examples of Third-Party Interests • (a) Janet’s neighbour may have a right to drive over her land to reach his garage – a right of way – a type of easement. • (b) another neighbour may have a right to graze a goat in Janet’s paddock – a profit a prendre. • Would want to know who owns the property and legal interests, need to know these because this is what binds you to the property • Whether the legal interests are binding depends on notice •

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(c ) A bank or building society may have lent money to enable Janet to buy The Oaks – loan by a mortgage – (mortgagor) : estate owner who mortgages his property to secure a loan (the borrower. – (mortgagee): the lender, to whom the mortgage is granted to secure the load. (d) A third party may have a right to collect a periodical payment from Janet – eg to maintain shared facilities, such as a communal garden – a rentcharge. (e) A neighbour may be cultivating part of Janet’s garden without her knowledge – perhaps because of uncertainty about the boundary line – he will have the right of an ‘adverse possessor’ or ‘squatter’

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Historically, all the rights described above (and others) were recognised and developed by the Common Law Courts – and could exist as legal interests over Janet’s property

Legal Estates under the Law of Property Act 1925 Under s1(1) of the LPA 1925 the only legal estates that could exist in land were reduced to two: 1. The term of years absolute and 2. The fee simple absolute. 1. However, apart from the two legal estates, there were lesser rights which could be created and were enforceable at law: (Legal Interests under the LPA Under section 1(2) of the Law of Property Act 1925 the following interests could exist at law: a) An easement, right or privilege in or over land for an interest equivalent to an estate in the fee simple absolute in possession or a term of years absolute (s1(2) (a)) b) A rentcharge in possession issuing out of or charged on land being either perpetual or for a term of years absolute (s 1(2) (b) ) c) A charge by way of a legal mort...