Property Law - Licences PDF

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Notes for property law on the topic of Licences...

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Property Law – Topic 2 Licences and Rights of Residence

1. Licences A licence is a permission to possess the land of another and does not bring with it any freehold or leasehold rights. It is not generally regarded as constituting a proprietary interest. In every licence the person who enjoys the permission is known as the licensee and the person who had granted the permission is known as the licensor. The licensee can be said to hold the benefit of the license and the licensor can be said to suffer the burden of it.

1.1.

Bare Licences

A bare licence is a mere permission, unsupported by any contract or estoppel or other circumstances protecting the licence. In Thomas v Sorrell, it was stated “properly passed no interest, nor alters or transfers property in anything, but only makes an action lawful, which without it had been unlawful”. At common law such a bare license is revocable at any time by the licensor and thereupon the licensee becomes a trespasser, provided he is given reasonable notice to leave. The permission need not be express; it can also be implied. Bare licences are a residual category of licences in that a licence does not belong to the category if there is anything in the circumstances to confer protection upon the licensee beyond the minimum protection which the law affords to all licences. CIN Properties Ltd v Rawlins the owner of a shopping center excluded a group of unemployed black teenagers alleging that they constituted a nuisance. Criminal prosecution failed. The youth then sued for an injunction to prevent the owner excluding them which was granted at first instance. The COA held that it was private property and that the owner had absolute right to withdraw the implied licence to the public without giving reason. In Appleby v UK the applicants had set up stalls at the entrance to a town shopping center owned by a private company and were told to remove them by the company. The ECtHR held that they could be excluded but did not comment that the member state may have to modify property law where the bar on access to land has the effect of preventing any effective exercise of freedoms of expression, assembly and association. In Browne v Dundalk Urban District Council, Barr J granted the injunction but did not address the broader constitutional issue. It is an area that may have to be considered in the future in both Ireland and England, particularly in the context of the European Convention of Human Rights.

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1.2.

Licences Coupled with an Interest

Where someone has a proprietary interest over the land of another, such as a profit a render, that would not be exercisable without an accompanying permission to use the land a licence will be said to exist and to be attached to the interest held in the land. The licence is attached to the interest and therefore it is transferred with the interest and will continue in force until such time as the interest involved has been discharged

1.3.

Contractual Licences

Contractual licences are licences that are supported by a contract either as the main subject matter of the contract or ancillary to a contract.

2. Revocation of Contractual Licences At common law contractual licences could be revoked at will, even in contravention of the terms of the licence itself. In general terms now contractual licences can be validly revoked in compliance with the terms of the contract itself. In the contract does not include provisions relating to revocation of licence, the licence van be validly revoked by providing the licensee with a “reasonable” period of notice. If the licensor removes the licensee in contravention of the contract or without providing reasonable notice the licensee can sue for breach of contract, seek an injunction to prevent removal, and – if appropriate – sue for assault.

3. Transferability of Contractual licences If a licence is intended to be purely personal, then neither the benefit nor the burden can be transferred; however, if the licence is not purely personal the benefit can be transferred to a third party. In relation to whether the burden of a contractual licence can be transferred (i.e. whether the successor-in-title of the licensor is bound by the contractual licence), the law has experienced three different stages of development which de Londras labels: -

The original position The licence-as-equity position The modern position 3.1. The original position Originally the law refused to recognise any situation in which the burden of a contractual licence could be binding on a successor-in-title of the licensor eve if that successor was actually aware of the licence at the time they acquired the property. In Clore v Theatrical Properties Ltd (1936) in which a company that had the exclusive licence to serve refreshments in the theatre could not enforce this licence against the new theatre owners for the lack of a “contractual nexus” between the parties.

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3.2.

The Licence as Equity position

Lord Denning introduced the “licence as equity” position in Errington v Errington (1952). Father bought house for son and daughter-in-law. F paid deposit told daughter they were to pay mortgage installments. House is fathers name. Father died. State trying to kick them out. The COA held that a contractual licence would be binding on someone who acquires property through a will, without Lord Denning holding that such a contractual licence created an equitable interest in the property that would be binding on all successors-in-title of the original licensor apart from the bona fide purchaser of the property for value without notice of the contract licence. The reasoning in Errington is faulty and was greatly criticised in subsequent cases for several reasons. First there was little authority to support the view that a contractual licence could create by itself an interest in land. Secondly, much of the reasoning in the case was focused around the “deserted wife’s equity” which was later rejected by the HOL in National Provincial Bank v Ainsworth.

3.3.

The Modern Position

In Binions v Evans [1972] an employer had granted an employee’s widow a right to live in a cottage for the rest of her life. They sold the cottage ‘subject to’ the agreement with the widow. The purchasers, Mr and Mrs Binions, then tried to evict the widow. In the COA, Lord Denning held that the agreement between the parties was a contractual licence resulting in an equitable interest in her favour (following Errington). Because the agreement allowed Mrs Evans to reside in the property for her lifetime, this interest was one that she enjoyed for life. To protect this interest, the court held that the purchasers were bound by a constructive trust in favour of Mrs Evans for life. This constructive trust approach to contractual licences was further developed in Ashbur Anstalt v Arnold (1989) which concerned a sale of a leasehold interest in a shop that included a clause allowing the vendor (the defendant in this case) to remain in the pro pert until the purchaser required him to leave on provision of at least four months’ notice. The HOL found that this was not in fact a licence, and was actually a lease, but went on to opine on the effect of the agreement if it had been a contractual licence. According to the Law Lords, contractual licences to occupy land do not bind purchaser per se when where they have notice of them but there will be cases where the circumstances require a constructive trust to be impose. This would happen where the court is satisfied that it would be unconscionable and inequitable for the successor-in-title to be relieved from obligations under the licence. There has been no sign of the Irish courts following the Errington reasoning and, instead, as in England much more weight has been put on doctrine like the doctrine of estoppel to which we now turn.

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4. Estoppel Licences Where a licensee acts to his detriment on the basis of a representation or belief induced by the licensor, equity may attach to the licence in order to protect the licensee. Before a court will award a remedy on the basis of a proprietary estoppel a number of things must be proved: -

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The landowner must have led a third party to believe that they will acquire an interest over property or must acquiesce in a third party’s mistake belief that they have proprietary interest in property that they are developing in some way The third party must act in reliance on this representation or induce belief. In general, this causal connection must be proved, although the UK courts have shown a tendency towards presuming the detriment in some cases. In Re JR (A ward of Court), the Irish Courts also showed a willingness to presume a detriment had arisen by the plaintiff leaving her permanent home on the promise of another, even though there was no evidence that this was the reason for the plaintiff’s decision to leave her own property. The landowner must attempt to renege on his representation or induce belief. The landowner’s reneging must be such as to result in a detriment to the position to the third party. Detriment can be taken to mean “that which would flow from the change of assumption were deserted that led to it”.

5. Bolstering Licences Through Estoppel If a licensor leads a licensee to believe that they will acquire an interest in the property and the licensee acts on the basis of this to his detriment, the licence already enjoyed may be bolstered by the attachment of an equitable element that can make the licence a more permanent and, in some cases, a proprietary right. This began in Irish law in the case of Cullen v Cullen (1962). The Court held that Martin Cullen had lived in his parents’ house by means of a licence which was revoked by the solicitor’s letter, but that the law of equity restricted the revocability of the licence on the basis of the representations made. According to Kenny J, Martin Cullen knew that he was placing the mobile home on his father's land and was never under any illusion that the property was to be transferred to him. John Cullen was, however, estopped from asserting his title to the land where the mobile home was erected because he had led his son to believe that he could place the mobile home there and reside in it for as long as he wished as a result of which the son had expended considerable time and money that he otherwise would not have spent. Thus an equity accrued to Martin Cullen (that appears to have taken the form of a licence) and he had an irrevocable permission to reside there and, Kenny K held, could claim title after 12 years as a result of adverse possession. This conclusion is clearly problematic. De Londras considered it thus: “Kenny J.'s subsequent decision to allow Martin Cullen to acquire title through twelve-years 'adverse' possession is remarkable; Martin Cullen is present on the land by means of a licence, i.e. by means of permission. His possession cannot, therefore, be adverse - it is inherently permissive (even if the court has now deemed that permission irrevocable). It is therefore difficult to understand the doctrinal basis for Kenny 4|Page

J.'s decision relating to adverse possession in this case unless one accepts that the licence under which Martin Cullen resided in the property had been successfully revoked by his father by means of the solicitor's letter. This position carries with it its own difficulties how could the father be estopped from enforcing his title against Martin Cullen but not be estopped from revoking his licence to his son in the first place?” A similar decision was reached in the later and very contentious case of McMahon v Kerry County Council (1981). McMahon bought land in 1965 in order to build a school but abandoned this idea a couple of years later. He did not mark or fence off this land and in 1968 he discovered workers planning to build on the land for the defendant. He complained and the work stopped. However, in 1972 the defendant County Council built 2 houses on the site for local authority tenants. The plaintiff attempted to claim possession of the properties and the defendant claimed entitlement by estoppel, they argued that by not fencing off the land the defendant was led to believe he had entitlement pursuant to Ramsden v Dyson. Finlay P found that the underlying principle in Ramsden is the requirement on the part of the landowner to act equitably and in good conscience. While Finlay P found that the circumstances did not failed neatly into the Ramsden paradigm he held that the “underlying principle” of that case was a requirement on the part of a landowner to act equitably and in good conscience and the requirement of a court of conscience to take into consideration: “not only conduct on the part of the plaintiff with particular regard to whether it is wrong or wilful but also conduct on the part of the defendant and furthermore the consequences and the justice of the consequences both from the point of view of the plaintiff and of the defendant” Taking into account the circumstances of the case, the court refused McMahon permission to retake possession of the land. McMahon was to be given the market value of the property and a sum in compensation, and citing Cullen v Cullen, Kerry County Council were said to be able to acquire title over the property by means of adverse possession on the expiration of 12 years. Where an estoppel has been successfully made out, the remedy to be awarded by the court will be entirely at the discretion of equity, as all equitable remedies are discretionary. In general, the courts will assess the most appropriate manner to remedy the inequity that has arisen. However, appropriateness is likely to depend on whether the court considers the inequity to result from the unsatisfied expectation of benefit or from the reliance of the actor.

6. Transferability of Estoppel Licences In Re Sharpe (A Bankrupt) 1980, the benefit of an estoppel licence is not transferable. On the other hand, the burden of an estoppel licence can be enforced against a successor-in-tile of the licensor; as the equity binds the conscience of the licensor it ought to also bind the conscience of all those who acquire the property though the licensor apart from the bona fide purchaser for value without notice of the licence.

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7. Rights of Residence A right of residence is a right peculiar to Irish land law and consists of a personal right to occupy a house or a room or rooms in a house and often includes also the right of support or maintenance out of the profits of the land, by provision of food, fuel or other products. Kennedy C.J. in the SC in National Bank v Keegan described the right as follows: “The residential rights, which are so commonly given in farm holdings in this country, especially by way of testamentary provision for testators widows, also frequently by the reservations to parents of rights in settlements made on the marriage of sons, are of two types, namely, the type which is a general right of residence charged on the holding usually coupled with a charge of maintenance; and the type which is a particular right of residence created by reserving or giving the right to the exclusive use during life of a specified room or rooms in the dwelling house on the holding. The general right of residence charged on a holding is a right capable of being valued in moneys numbered at an annual sum, and of being represented by an annuity or money charge. The Judge went on to hold that the instrument in the present case created the special type of interest and further that it amounted to a life estate, apparently in the specified part of the land. If this distinction between a general and a specific right of residence is correct then the two forms are really quite different. The special right would then not be a distinct interest in land at all, but merely a method of granting a life estate. The consequences of holding that life estate is created in such cases was extremely serious because the grantee of the right of residence. Section 40 of the Statute of Limitation clearly distinguishes between the general and special right of residence and provides that: An action in respect of a right in the nature of a lien for money's worth in or over land for a limited period not exceeding life, such as a right of support or a right of residence, not being an exclusive right of residence in or on a specified part of the land, shall not be brought after the expiration of twelve years from the date on which the right of action accrued. The next legislative step was taken in respect of registered land. Section 81 of the Registration of Title Act 1964 state: A right of residence in or on registered land, whether a general right of residence on the land or an exclusive right of residence in or on part of the land, shall be deemed to be personal to the person beneficially entitled thereto and to be a right in the nature of a lien for money's worth in or over the land and shall not operate to create any equitable estate in the land. Such a right is now registrable as a burden on the land under section 69(1)q).

8. Exclusive and General Rights of Residence Over Registered Land Section 81 of the Registration of Title Act 1964 provides: A right of residence in or on registered land, whether a general right of residence on tle land or an exclusive right of residence in or on part of the land, shall be deemed to be personal to the person beneficially entitled thereto and to be a right in the nature of a lien for money's worth in or over the land and shall not operate to create any equitable estate in the land. Rights of residence are expressly said to be section 69 (i.e. registrable) burdens over registered land.

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