Property Tutorial 1 PDF

Preview

Summary

WHAT IS A PROPERTY RIGHT?...

Description

TUTORIAL 1. WHAT IS A PROPERTY RIGHT?

3 October 2019

Recommended reading MHN, paras 1.14-1.27, 1.56-1.79, 3.1-3.34, and 3.69-3.86 Cooke, pp 2-5 King v David Allen & Sons Billposting Ltd [1916] 2 AC 54 National Provincial Bank v Ainsworth [1965] AC 1175 (esp. 1241-3, 1247 8) Manchester Airport plc v Dutton [1999] EWCA Civ 844, [2000] QB 133 Suggested reading Keppell v Bailey (1834) 39 ER 1042 Hill v Tupper (1863) 159 ER 51 WJ Swadling, ‘Opening the Numerus Clausus’ (2000) 116 LQR 354 Questions: 1. In King v David Allen & Sons Billposting Ltd, [1916] 2 AC 54, what right did David Allen & Sons have? Why was Mr King being sued and not the company? Do you think the case is rightly decided? [successors in title: important to note in land law] -

Licence= personal obligation (just a k btwn people who have agreed to be bound) Property right= a right/ claim to property Judge in King v David Allen & Sons Billposting Ltd: there may be other claims against company, but none are property claims Property right is important to B, as B wants to have posters displayed on the wall (specific performance) instead of receiving damages Based on case, does licence matter? Lord Chancellor does not judge a case based on what the item is labelled Lord Denning: damages does not satisfy claimants most of the time

A contractual licence is not a legal/ equitable property right in land, and so cannot bind C, a 3P later acquiring a right in A’s land King v David Allen: King (A) owned land and entered into k with David (B), giving B a right to display posters on the wall of cinema to be built on A’s land. C then acquired a lease of the land, including the cinema and C refused to allow B to display posters. B sued A for breach of k. A argued B suffered no loss as right to display posters was binding on C HL: rejected A’s argument, finding k btwn A and B created nothing but a personal obligation and so could not itself bind C 2. In National Provincial Bank v Ainsworth [1965] AC 1175, what right did Mrs Ainsworth have? Why, according to the House of Lords, did this right fail to qualify as a property right? Do you think the case is rightly decided? National Provincial Bank v Ainsworth: whether Mrs A had any property right she could assert against the bank. CA: successful, Lord Denning: deserted wife equity, Mrs A has right to remain in the matrimonial home and the bank was aware of her occupation when it acquired its charge, no defence

HL: Mrs A’s right was only a personal right against husband, not capable of binding the bank, defences irrelevant - HL: deserted wife equity= compel ex-husband to provide wife with an accommodation, but not that specific property - Lord Wilberforce’s definition* of what is a property right – right not definable (could be against other houses instead of the specific house), permanence (husband could stop the right and pay wife’s damages instead) o Definition used in current settings (carbon emission, cryptocurrencies and crypto assets) 3. Is the decision in Manchester Airport plc v Dutton [1999] EWCA Civ 844 consistent with the earlier case of King v David Allen & Sons Billposting Ltd, [1916] UKHL 1? Do you think Manchester Airport plc v Dutton [1999] EWCA Civ 844 is rightly decided? When considering bare licence, if B is in exclusive possession of A’s land, the fact that possession gives B a legal property right capable of binding X (a stranger who later interferes with A’s land). B’s protection in such case depends on the legal freehold that B acquires through possession and not on any licence that B may have from A In a recent case, the courts have extended the protection available to B against a stranger, X, even if B has not yet taken exclusive possession of A’s land. If B has a right against A to take such possession, that right alone can give B a claim against X King v David Allen: A contractual licence is not a legal/ equitable property right in land, and so cannot bind C, a 3P later acquiring a right in A’s land Manchester Airport v Dutton: National Trust (A) owned some land neighbouring Manchester Airport (B). A gave B contractual licence to cut down trees to prepare for building of a new runway. Before B could enter land, environmental protestors (X) occupied it with intention of protecting trees. B applied for an order for possession, requiring the protestors to leave the land. CA: granted B possession order (in a powerful dissent, Chadwick LJ noted the decision overlooked the previously crucial distinction btwn cases where B in fact has gone onto land and taken exclusive possession of it, and cases where B simply has a contractual right against A to take such possession) - The decision in Manchester Airport is supported by Lord Neuberger in Mayor of London v Hall, on the basis that law should protect B against X if B is ‘entitled to use and control, effectively amounting to possession of the land in question…’ The DIFFICULTY here is as to the word ‘entitled’ where B has a personal right against A under a licence, it is possible for B to be entitled to some benefit (eg: possession of the land) as against A, without that, meaning that B thereby has an abstract entitlement, good against the rest of the world 4. Jane and Elizabeth were sisters who lived together in a house belonging to Elizabeth, called Pemberley. Elizabeth granted Jane a contractual licence, promising her that she would always be allowed to live at Pemberley as long as she continued to pay £50 a week for her expenses. In the light of the cases you have read this week, how do you think the courts would react to the following scenarios?

Elizabeth is the owner of Pemberley, known as A. Jane, (B), has a contractual licence with A to live at Pemberley as long as she continued to pay her rents. According to King v David Allen, a contractual licence is not a legal/ equitable property right in land, and so cannot bind C, a 3P later acquiring a right in A’s land. 5. (a) Elizabeth changes her mind after a quarrel and asks Jane to leave. Jane insists that she is entitled to stay as long as she continues to pay the weekly £50. According to King v David Allen, a contractual licence is not a legal/ equitable property right in land, and so cannot bind C, a 3P later acquiring a right in A’s land. That being said, it is a personal right which B has against A and A cannot breach the duty owed to B. If breached, B can bring a claim against A for breaking the contractual promise. A can terminate k when A provides notice to B (b) Elizabeth dies, and Pemberley is inherited by her other sister, Lydia. Lydia asks Jane to leave. According to King v David Allen, a contractual licence is not a legal/ equitable property right in land, and so cannot bind C, a 3P later acquiring a right in A’s land. However, whether B was allowed to stay depends on whether B has acquired a new, direct right against Lydia (C). This depends on the will of A, if it included the fact that C has to honour A’s contractual promise with B. If yes, then B would have acquired a new, direct right according to Binions v Evans. - If licence, A dies, licence goes away, C is free to do whatever she wants - Lease requirements: fix duration, exclusive possession, rent (c) Elizabeth mortgages Pemberley to the Collins Bank Ltd in exchange for a loan of £10,000. When she is unable to pay, the bank asks the court to evict both Jane and Elizabeth so that it can sell the land. Bank can evict B Following Ainsworth’s case, court has to determine if B has contributed towards the purchase of the freehold of the house (cf Boland) If yes, then B’s right would then be linked to A’s freehold and would be prima facie binding on a party. The acquisition question had to be satisfied by showing that trust had indeed arisen (through the financial contribution to the purchase price of freehold). Hence, acquired a share of the benefit of the freehold. Defences will then be considered: Lack of registration defence is where C will be able to rely on this defence unless B was in ‘actual occupation’ of the land at the relevant time. However, it is important to note if the loan was given to both A and B or only A. Because according to Flegg’s case, if loan was given to both A and B, C could raise an overreaching defence. Williams & Glyn’s Bank v Boland: Mrs B contributed some of the money used to purchase the freehold. (a) Mrs B had an equitable property right in relation to the land as Mr Boland held his freehold on trust for both himself and for her. If trust could be established, Mrs B’s right would then be linked to her husband’s freehold and would be prima facie binding on a party. (b) Mrs B also had to satisfy the acquisition question, by showing that trust had indeed arisen. She was able to do this bc she had made a financial contribution to the purchase

price of the freehold held by husband. Hence, acquired a share of the benefit of the freehold. - Once the content and acquisition tests are satisfied, defences questions had to be considered: could bank establish a defence to Mrs B’s pre-existing equitable property right? - Lack of registration defence: C will be able to rely on this defence unless B was in ‘actual occupation’ of the land at the relevant time. Held: At first instance, when bank acquired its charge, Mrs B was not in actual occupation (she had then been living in the home with her husband, and such occupation would not alert bank to the risk that she might have her own independent property right in the land – rejected by both CA and HL: Mrs B was in fact occupying the land when the bank acquired its charge, defence not available o This does not mean that Mrs B can stay in the property for as long as she wishes – bank as a holder of the charge has a legitimate interest in selling the home so that it can have access to the share of the proceeds of sale available to its debtor, Mr B. Today, under the Trusts of Land and Appointment of Trustees Act 1996, the bank can apply to court for an order that the property be sold. Mrs B will only be entitled to a share of the proceeds of sale, with the size of that share depending on the size of her beneficial interest under the trust City of London Building Society v Flegg: Mr and Mrs Flegg lived with Mr and Mrs M. F sold own home to purchase Bleak House, but M were registered as joint holders of the freehold of Bleak House. M gave legal property right (charge) over the land to C. When loan not repaid, C sought possession. - HL: F satisfied the content and acquisition questions and had equitable interest under a trust of the freehold held by M. F were in actual occupation of the land and C cannot establish the lack of registration defence – Problem: C could rely on overreaching defence by section 2 of the Law of Property Act 1925, gives C a way to avoid being bound by an interest arising under a trust of land. Can be used by C (party acquiring a later property right) to take priority over B (party with pre-existing property right)  Peculiarity of Overreaching Defence: where C acquires its right in the land in return for paying money, C van establish the defence only if the money is paid to at least 2 trustees of the land (/ to a trust corporation), therefore in Boland, where A holds freehold on trust for B, and so C pays money only to A, C cannot make out the statutory overreaching defence) * Overriding interest is a property right in land that cannot be defeated by the ‘lack of registration’ defence – One does not have overriding interest unless there is actual occupation of land and legal/ equitable property right (d) While Jane and Elizabeth are on holiday in Cyprus, a trespasser called Wickham breaks into Pemberley and starts to live there. Elizabeth decides to settle permanently in Cyprus and Jane returns alone to find Wickham in occupation of the house and refusing to leave. She wants the court to evict Wickham.

Jane has licence, can evict Wickham based on Manchester Airport v Dutton (bare licence) Question: Can Manchester Airport be extended to cases like this? When considering bare licence, if B is in exclusive possession of A’s land, the fact that possession gives B a legal property right capable of binding X (a stranger who later interferes with A’s land). B’s protection in such case depends on the legal freehold that B acquires through possession and not on any licence that B may have from A. Hence, the court has to consider the timeline when Jane (B) and trespasser (X) possesses the land. However, after the decision in Manchester Airport v Dutton, the court seems to have extended the protection available to B against X, even if B has not yet taken exclusive possession of A’s land. B’s right against A to take such possession, that right alone can give B a claim against X Manchester Airport v Dutton: National Trust (A) owned some land neighbouring Manchester Airport (B). A gave B contractual licence to cut down trees to prepare for building of a new runway. Before B could enter land, environmental protestors (X) occupied it with intention of protecting trees. B applied for an order for possession, requiring the protestors to leave the land. CA: granted B possession order (in a powerful dissent, Chadwick LJ noted the decision overlooked the previously crucial distinction btwn cases where B in fact has gone onto land and taken exclusive possession of it, and cases where B simply has a contractual right against A to take such possession) - The decision in Manchester Airport is supported by Lord Neuberger in Mayor of London v Hall, on the basis that law should protect B against X if B is ‘entitled to use and control, effectively amounting to possession of the land in question…’

Notes: 1. Property right is a right that relates to something independent of a specific person, instead linked to something such as a piece of land, and is binding to third parties. - Example 1: A and B make a k under which A will, for £20 mow B’s lawn - Example 2: A sells A’s lawnmower to B for £200. o If X carelessly damages the lawnmower, B has no claim against X as the loss is purely economic loss (Cattle v Stockton Waterworks Co) o If careless damage occurs after A has sold the lawnmower to B and B has ownership of the mower, B does have a claim in tort against X as X has breached a duty owed to B not to carelessly damage the mower (not economic loss, as B has a property right in the mower and so loss flows from an interference with B’s property) 2. Personal right is a right that can only be asserted against a specific person’ 3. Structure (in examining if B can assert a property right against 3P): - (a) Defences - (b) Impact of equity – equitable property right - (c) Impact of statutes – Law of Property Act 1925, Land Registration Act 2002 - National Provincial Bank v Ainsworth : whether Mrs A had any property right she could assert against the bank. CA: successful, Lord Denning: deserted wife equity, Mrs A has right to remain in the matrimonial home and the bank was aware of her occupation when it acquired its charge, no defence

-

-

o HL: Mrs A’s right was only a personal right against husband, not capable of binding the bank, defences irrelevant Williams & Glyn’s Bank v Boland: Mrs B contributed some of the money used to purchase the freehold. (a) Mrs B had an equitable property right in relation to the land as Mr Boland held his freehold on trust for both himself and for her. If trust could be established, Mrs B’s right would then be linked to her husband’s freehold and would be prima facie binding on a party. (b) Mrs B also had to satisfy the acquisition question, by showing that trust had indeed arisen. She was able to do this bc she had made a financial contribution to the purchase price of the freehold held by husband. Hence, acquired a share of the benefit of the freehold. o Once the content and acquisition tests are satisfied, defences questions had to be considered: could bank establish a defence to Mrs B’s pre-existing equitable property right?  Lack of registration defence: C will be able to rely on this defence unless B was in ‘actual occupation’ of the land at the relevant time. Held: At first instance, when bank acquired its charge, Mrs B was not in actual occupation (she had then been living in the home with her husband, and such occupation would not alert bank to the risk that she might have her own independent property right in the land – rejected by both CA and HL: Mrs B was in fact occupying the land when the bank acquired its charge, defence not available o This does not mean that Mrs B can stay in the property for as long as she wishes – bank as a holder of the charge has a legitimate interest in selling the home so that it can have access to the share of the proceeds of sale available to its debtor, Mr B. Today, under the Trusts of Land and Appointment of Trustees Act 1996, the bank can apply to court for an order that the property be sold. Mrs B will only be entitled to a share of the proceeds of sale, with the size of that share depending on the size of her beneficial interest under the trust City of London Building Society v Flegg : Mr and Mrs Flegg lived with Mr and Mrs M. F sold own home to purchase Bleak House, but M were registered as joint holders of the freehold of Bleak House. M gave legal property right (charge) over the land to C. When loan not repaid, C sought possession. o HL: F satisfied the content and acquisition questions and had equitable interest under a trust of the freehold held by M. F were in actual occupation of the land and C cannot establish the lack of registration defence – Problem: C could rely on overreaching defence by section 2 of the Law of Property Act 1925, gives C a way to avoid being bound by an interest arising under a trust of land. Can be used by C (party acquiring a later property right) to take priority over B (party with pre-existing property right)  Peculiarity of Overreaching Defence: where C acquires its right in the land in return for paying money, C van establish the defence only if the money is paid to at least 2 trustees of the

land (/ to a trust corporation), therefore in Boland, where A holds freehold on trust for B, and so C pays money only to A, C cannot make out the statutory overreaching defence) * Overriding interest is a property right in land that cannot be defeated by the ‘lack of registration’ defence – One does not have overriding interest unless there is actual occupation of land and legal/ equitable property right 4. Distinction between personal rights and property rights: - Hill v Tupper: Canal company (A) owners of the canal gave H (B) an ‘exclusive’ permission to hire boats out on the canal. T (X) who ran a pub on a bank of the canal also started to hire out boats on the canal. Question: whether B could prevent X from doing so and obtain damages from X for the loss caused to B’s business o Held: B’s k with A only gave him a personal right against A and not a property right in the land (canal), no claim against X (the content of the particular right claimed by B did not meet the content requirements for an easement) o B could sue A and A could sue X. If A refused to sue X, B could sue A for a breach of the contract to give B an ‘exclusive’ licence - Star Energy v Bocardo: B had a freehold (recognised legal property right in the land) and by drilling and extracting oil from beneath the surface of the land without B’s permission, Star Energy (X) committed the tort of trespass against B 5. The Basic Distinctions: Warning - (1) Whilst it is true that a personal right cannot in itself bind a third party, this does not mean that B will necessarily lose against C/ X where B initially has only a personal right against A – it may be possible for B to assert a different right directly against C/X (eg: when X procures the breach of contract btwn A and B) o HOWEVER, difficult for B to show that he has acquired such a new direct right eg: no such right arises from the mere fact that C buys land knowing that B has a personal right against A in relation to the land and intending to stop B exercising that right (Midland Bank Trust Co v Green) - (2) The mere fact that B has a property right in land does not mean that B will win against a 3P, even if B had that property right before the 3P’s involvement (3P may h...