Co-ownership arises whenever two or more people enjoy the rights of ownership of land (whether that be freehold or leasehold land) at the same time.
Previously, co-ownership used to take place behind a ‘trust of sale’ by virtue of Sec. 34 & 36 Law of Property Act 1925. Now, co-ownership can only take place behind a ‘trust of land’ – (Sch. 2 Para. 3 & 4 Trusts of Land and Appointment of Trustees Act 1996).
A common feature of all co-owned property is that – each co-owner is simultaneously entitled to possession of the whole land. No co-owner is entitled to exclusive possession of any specific part. If any co-occupier can exclude another from part of the property, then there is no co-ownership, rather there are two separate ownerships.
Nowadays, only two kinds of co-ownership are relevant – joint tenancy and tenancy in common. Where a land is held under a joint tenancy, all co-owners are entitled to the entire property, none has any share. Whereas under a tenancy in common, each co-owner has an identifiable undivided share.
A joint tenancy cannot exist unless ‘four unities’ are present –
- Unity of possession: Each co-owner must be entitled to possess the whole land. No co-owner can be excluded from any part of the land.
- Unity of interest: The interest of each co-owner must be the same in extent, nature (e.g. freehold/leasehold) and duration (e.g. fee simple/life interest).
- Unity of title: All co-owners must acquire the title under the same document or act (incase of adverse possession).
- Unity of time: The interest of each co-owner must be acquired at the same time.
Of four unities, only the unity of possession is required for a tenancy in common, although others may be present.
Right of survivorship: Right of survivorship operates to a joint tenancy but does not operate to a tenancy in common. This means when one tenant dies his/her interest automatically and immediately passes to the surviving joint tenant(s).
The interest does not pass under his/her will or by the rules of intestacy. This is because, the right of survivorship operates immediately on death, whereas a will is operative only after death; so the survivorship takes effect first. However, on death of a tenant in common, the deceased’s share will pass under his will or by the rules of intestacy, since right of survivorship does not operate to a tenancy in common.
DETERMINING WHETHER A JOINT TENANY OR A TENANCY IN COMMON EXISTS:
- At law: A tenancy in common of the legal title to the land cannot exist – ( 1(6) LPA 1925). Thus, legal title must now always be held as joint tenants, irrespective of the words used when the land is transferred to the co-owners, and irrespective of their intentions.
Absence of the right of survivorship in tenancy in common meant, there could be expansion of legal title holders since the interest could be passed under will or the rules of intestacy. This had the potential to cause conveyancing problems. This is the reason, why tenancy in common at law has been abolished. Accordingly it follows – there could be no severance of a legal joint tenancy so as to create a tenancy in common – (Sec. 36(2) LPA 1925).
To further simplify the conveyancing process, Sec. 34(2) LPA 1925 established – the maximum number of legal owners (trustees) can be four. Further it established, where there are more than four grantees named in the conveyance, the first four named will be the legal owners (trustees).
- In equity: In equity co-owners may be joint tenants or tenants in common. The followings are offered as guidelines to determine whether a beneficial joint tenancy or a beneficial tenancy in common exists –
Four unities (unity of possession, interest, title, time)
- a) If four unities are present, there can be joint tenancy. It does not mean there can be no tenancy in common while all the four unities are present.
- b) If any of the latter three is missing, there can be no joint tenancy. But, there can be tenancy in common.
- a) If there is any express declaration between the parties as to how the beneficial interest will be held, that will be decisive – (Goodman v Gallant).
- b) If there is not any such declaration –
Words of severance:
- a) If there are words of severance (such as, in equal shares – Payne v Webb; share and share alike – Heathe v Heathe; to be divided between – Fisher v Wigg; Equally – Re Kilvert) present in the grant, there is tenancy in common.
- b) If there is not any such words –
If there is no express declaration and no words of severance, the general presumption is – there is joint tenancy, since equity follows the law.
This presumption can be rebutted, where the purchase money is provided in unequal shares. In such a case, the purchasers are presumed to take as tenants in common in proportion to their respective contributions – (Bull v Bull). In Stack v Dowden, the HL appeared to infer that, in the context of domestic properties the presumption of tenancy in common arising from unequal purchase contributions, will not apply unless one of the parties can provide evidence to the contrary.
SEVERANCE: Severance is the process by which a joint tenancy in equity can be converted into a tenancy in common, thus destroying survivorship in equity.
If there are more than two co-owners in equity, severance will operate to give a tenancy in common only to the severing party; the others will remain joint tenants.
In the absence of agreement between the co-owners, the shares which arise from severance are always equal in size, irrespective of the proportions in which the joint tenants may have contributed initially towards the purchase price of the co-owned property – (Goodman v Gallant).
There are various ways in which joint tenancy may be severed –
- Statutory severance: A joint tenancy can be severed by providing written notice to all the other joint tenants stating the unequivocal and irrevocable intention to sever immediately – ( 36 (2) LPA 1925).
For immediacy, contrast Re Draper’s conveyance with Harris v Goddard: In Re Draper’s conveyance an application was made to the court for an order directing the sale of the matrimonial home with the proceeds to be distributed between the parties – this was held sufficiently immediate. In Harris v Goddard an application was made to the court praying ‘such order may be made by way of transfer of property and/or settlement of property and/or variation of settlement in respect of the former matrimonial home….. as may be just’ – this was held not to be sufficiently immediate.
It is also clear from Re Draper’s conveyance that, the notice may take many forms: a summons claiming sale of the co-owned property was held to constitute written notice of severance under Sec. 36(2).
Once the notice has been served, it does not have to be received by the other joint tenant(s) to be effective to sever – (Re 88 Berkeley Road, Kinch v Bullard).
A notice will be deemed to be served if it is left at the last known place of abode, or business of the person upon whom it is to be served – (Sec. 196(3) LPA 1925).
There is one possible limitation to statutory severance and this emerges from the words of Sec. 36(2) itself. The section allows severance by written notice where ‘legal estate is vested in joint tenants beneficially’. This seems to include only those situations where the legal and equitable joint tenants are the same people. Fortunately, this limited interpretation has not been adopted, and statutory severance is presumed to be available, for all joint tenants, whether they are also legal owners or not – (Burgess v Rawnsley).
- Page Wood V-C in Williams v Hensman recognised three more ways in which joint tenancy can be severed –
- By an act operating on one’s own share: Typical examples are where the equitable owner sells their share to a third party; mortgages it in favour of a bank; or becomes bankrupt (though it seems odd) – (Re Dennis).
Likewise, attempting to deal with the legal title by forging the consent of the legal owners also has the effect of severing the joint tenancy; as in Ahmed v Kendrick (forged to sale) & First National Security v Hegarty (forged to mortgage). However, leaving one’s share in a subsisting joint tenancy by will, will not be of such effect – (Gould v Kemp).
- By mutual agreement: Severance can be effected by the agreement of all the joint tenants. Where the agreement is doubted in light of later negotiations, it is unlikely that severance will occur. Take this example, Cato and John – who lived together for 12 years – decides to sever the joint tenancy after quarrel. John orally (it wont be a problem in the light of Burgess v Rawnsley; see below) agrees to buy Cato’s share. But, later he tries to persuade Cato to stay and not to sell her share to him. In this situation it is doubtful, whether severance will occur under this head.
The agreement may of course be express; but can also be inferred from the surrounding circumstances. In Burgess v Rawnsley, an oral agreement by one joint tenant to purchase the share of the other – was held sufficient to imply severance; because the parties were thinking in terms of ‘shares’.
Severance can occur even though the agreement which causes the severance is unenforceable in its own right due to lack of formality – (Burgess v Rawnsley).
- By course of dealings: Severance may be effected ‘by any course of dealing sufficient to indicate that the interests of all were mutually treated as constituting a tenancy in common’ – (Page Wood V-C in Williams v Hensman). Whether there is sufficient course of dealings to sever, is a matter for the court to decide.
Lord Denning in Burgess v Rawnsley seems to suggest – ‘negotiations which, although not otherwise resulting in any agreement, indicate a common intention that the joint tenancy should be regarded as severed’. But this view was not supported by the other judges in that case. According to Sir John Pennycuick, whether such inference can be drawn, depends upon the particular facts of the case. ‘One could not ascribe to joint tenants an intention to sever merely because one offers to buy out the others share for £X and the other makes a counter offer of £Y’ – Sir Pennycuick in Burgess.
RIGHT OF BENEFICIARIES:
Beneficiaries of a trust of land have the right to occupy trust land, though this right may be restricted or excluded; in which case compensation might be payable by the occupying beneficiary (this had been the position under the old trust for sale as seen in Re Pavlou)– (Sec. 12&13 TOLATA 1996).
DISPUTES AS TO SALE: Sec. 14 of TOLATA 1996 provides that any trustee of land, or any person having an interest in land subject to such a trust may apply for an order concerning the property. Among other thing such an order may be for sale of the property.
Sec. 15 sets out the matters to be considered by the court in hearing such an application:
- The intentions of the persons who established the trust
- The purposes for which the property is held
- The welfare of any minor who occupies the land as his home
- The interests of any secured creditor
Although this list, as a matter of law, is not exclusive (consequently other matters may be considered; as done in Bell), in most cases it will not be necessary for a court to go beyond Sec. 15 in order to reach an appropriate conclusion.
Courts approach to Sec. 15 factors:
- Mortgage Corp. v Shire (2000): court ordered sale suspending it for a short period, on an application made by a secured creditor, despite there was minors in the house. Particularly, because Mrs. Shire had 75% interest in the property; which meant proceeds of the sale would be enough to buy another house for those minors. Consequently there was no reason to defeat the secured creditor’s interest. Note, the decision might have been different if Mrs. Shire’s interest in the land had been insignificant.
- Bank of Ireland v Bell (2001): trial judge refused to order sale on an application by the secured creditor, taking into consideration the fact that the property was purchased as a family home and was currently occupied by Mrs. Bell and her son who was minor. He also took into account the fact Mrs. Bell was in poor health condition.
However, CA reversed the decision and ordered sale. The reasoning’s were –
- The acquisition of the property as a family home and its continued occupation by the wife had ceased to be relevant consideration under Sec. 15(1)(a) & 15(1)(b) both, with the departure of the husband on the breakdown of the marriage.
- The occupation by the son might be relevant consideration under Sec. 15(1)(c), but at the time of the trial he was not far from the age of majority. Thus, his welfare should only have been a very slight consideration.
- CA agreed that the judge could properly have regard to the wife’s poor health, but considered that this would be a reason for postponing sale rather than refusing it.
- By contrast, the trial judge had not mentioned which the CA regarded as most significant: that the debt had now grown to more than £300,000; more than the value of the house and was increasing daily.
Remember, a mortgagee can ‘short-circuit’ a wife’s protection under Sec. 15 by bankrupting the debtor husband first and then going to court to force sale – (Alliance v Slayford).
A person may establish a share of ownership in land, legal title to which is held by someone else – by the rules of resulting trust, constructive trust and proprietary estoppel (this will be discussed in another chapter).
- RESULTING TRUST: A person may claim an equitable interest in another’s property by contributing to the purchase price of the property, unless it can be established that the money was given to the legal owner by way of a gift or loan (as seen in Bradbury v Hoolin).
This is the resulting trust. It is said to arise from the ‘common intention’ of the legal owner and the claimant that the latter should have an interest in the property, as manifested by their contribution to the acquisition of the property through part provision of the purchase price. Thus, an interest will not arise if it can be shown no common intention in fact existed – (First National Bank v Wadhwani, Lightfoot v Lightfoot-Brown – although these cases were argued on the basis of constructive trust).
It is not clear whether an equitable interest may arise, if the financial contribution is made to the purchase price over a period of time. Classic theory dictates that, a resulting trust can only arise if payments are made at the time of the acquisition of the property, and clearly post-acquisition mortgage payments are not of this character. Thus, in Curley v Parkes, the CA denied Mr. Curley an interest.
This is clearly a narrow approach and it is not clear why repayment of a mortgage which was used to purchase the property cannot be regarded as making a contribution to its acquisition. It takes only a little imagination to regard the mortgagee as the agent of the purchasers, paying at the time of purchase, with the mortgagee being repaid as agent with interest by the contributors. Indeed cases before Curley – like Carlton v Goodman & McKenzie v McKenzie – have assumed that payments of mortgage installments would suffice.
More recently, in Laskar v Laskar the CA accepted that contribution to mortgage payments would suffice. It is then now possible to argue that Curley v Parkes is wrong, in so far as it decides that mortgage payments can never amount to a contribution to the purchase price so as to trigger a resulting trust.
In Stack v Dowden, the HL by majority – Lord Neuberger dissenting – opined that resulting trust should not normally be used as the basis for establishing an interest in another’s property; at least in respect of property used as family home. Because, resulting trust is narrow and focuses only one aspect of the party’s lives; the payment of money. Family relationships are complex; so a better approach is to use constructive trusts; in the sense that it reaches to a fair result. This approach was confirmed by the PC in later case of Abbott v Abbott and it looked as if any meaningful role for the resulting trust had disappeared.
Lord Neuberger, on the other hand, did not see why the well understood and relatively certain law of resulting trusts should be so easily abandoned. In his view, it had a role to play in certain circumstances precisely because it led to certain and predictable results. In Laskar v Laskar (Lord Neuberger was also a judge in this case) the court applied a traditional resulting trust analysis where the property was purchased not to live, but to use as an investment.
Perhaps, then, a tentative conclusion is that a constructive trust will normally be used in cases where the property in question is the shared home of the parties but that either a resulting trust or a constructive trust may be used in cases concerning the land purchased for other purposes. However, this is very tentative conclusion.
- CONSTRUCTIVE TRUST: In Grant v Edwards, the CA held that to acquire an equitable interest in another’s property by constructive trust three condition must be satisfied:
- There must be evidence of common intention that the claimant should have a beneficial interest,
- The claimant must have acted to his detriment on the basis of that common intention,
- There must be equitable fraud on the part of the legal owner, by him acting against his conscience disclaiming his prior agreement and denying the claimant’s right.
Common intention: According to Lloyds Bank v Rosset ‘common intention’ can be established only in one of two ways:
First, a common intention will arise where any time prior to acquisition or exceptionally at some later date (as in Clough v Killey); there has been any agreement, arrangement or understanding reached between the legal owner and claimant that the property is to be shared beneficially.
This means, there must have been an overt, express statement or agreement, promise or assurance. In many cases, this agreement will be truly expressed as where A says to B: ‘Of course half this house is yours’ or ‘This house is as much yours as mine’. However, promises are also expressly made for the purpose of establishing a constructive trust, when the legal owner makes a statement reassuring the claimant that, they have some sort of stake in the property. This can take many forms and is, ultimately a matter for construction in each case. For example, does ‘This will always be your home’ or ‘I would never sell without your agreement’ imply a promise as to ownership? If it does, constructive trust is a possibility.
A promise can be enough to trigger a constructive trust even if it is not meant or lie – (Eves v Eves, Grant v Edwards).
Assurance which is neither understood, nor intended as a promise of an interest cannot qualify – (James v Thomas). It would be otherwise, if the legal owner did not intend to make such a promise, but it was in fact understood as such, by the claimant.
Secondly, direct contribution to the purchase price by the claimant who is not the legal owner, whether initially or by payments of mortgage installments; will give rise to common intention.
Since, this is an inferred common intention; evidence showing that the parties did not agree would be fatal to such a claim – (Lightfoot v Lightfoot-Brown).
These were the only two ways by which common intention could be found. As such, normal domestic obligations, childcare responsibilities, indirect contributions, payment of household bills and all manners of other conduct that persons sharing a home might engage in; could not lead to an inference of a common intention. Accordingly, Stack v Dowden (supported by PC in Abbott v Abbott and followed by CA in Fowler v Barron) came up with a third way of finding the common intention. Since Stack, there are now three ways of proving a common intention to exist –
- Where the legal owner has promised that the claimant will have an interest (as held in Rosset),
- Where the claimant has made direct payments to the purchase of the property (as held in Rosset),
- Where one can be implied from all the circumstances.
Detrimental reliance: Once a common intention exists by any of the three ways outlined above, the claimant must then establish that, they have relied to their detriment on the existence of such an intention.
Lord Denning in Greasley v Cooke suggested – if there is evidence of detriment, there should be a presumption of reliance. This is so, even if, there is evidence to suggest that, the claimant would have acted as she did for other motives – perhaps out of love and affection for the legal owner – (Chun v Ho).
Thus, everything turns on ‘detriment’ now. In cases, where the common intention arises by express agreement, the detriment may take many forms. It can be in the conduct of the claimant such as doing extraordinary work about the house; however it is doubted whether doing normal domestic obligation or childcare responsibilities count as a detriment. Paying bills or settling other household expenses would surely do.
Detriment does not need to be detrimental in the sense of harmful. So, giving up existing accommodation in a slum to move into the legal owner’s luxurious property is a detriment (no house to fall back on). It is also clear that, the detriment need not be made in relation to the property over which the claimant seeks an interest.
Where the common intention has arisen as a result of direct contribution to the purchase price, or because of an analysis of the parties’ entire course of dealings; the actual payments made towards the purchase price or the conduct which gives rise to the intention may qualify as the detriment.
QUANTIFICATION OF SHARES: If the claimant establishes either a resulting trust or a constructive trust, she will be entitled to a share of the equitable interest. Legal title will continue to be held by the legal owner, but now as a trustee holding for himself and the successful claimant in equity under the statutory trust of land imposed by the LPA 1925 and regulated by TOLATA 1996. The equitable interest will be held by way of a tenancy in common, since only unity of possession is present.
If a claimant establishes a resulting trust, her interest in the property is to be quantified in direct proportion to the amount of the price paid. Although, Midland Bank v Cooke and LeFoe v LeFoe appeared to challenge this by suggesting that, an interest established under a resulting trust could be expanded beyond a proportional share – these cases are now better regarded as cases of constructive trust.
If the claimant establishes a constructive trust, the matter of quantification is more complex. It is clear from Clough v Killey that, if the terms of the express common intention is clear as to the size of the equitable interest, then court should not depart from this as the basis for quantification. This has been confirmed by Oxley v Hiscock.
In other cases – the share will be that share which the court considers fair having regard to the whole course of dealing between them in relation to the property – (Chadwick LJ in Oxley v Hiscock). This has been now confirmed by the HL in Stack v Dowden and the CA in Fowler v Barron.
DISPUTE REGARDING SIZE OF SHARES BETWEEN TWO LEGAL OWNERS: Historically the typical dispute has been between a legal owner and a non legal owner, the latter claiming a share in the property of the former. However, both Stack v Dowden and Fowler v Barron are cases where the parties were already joint legal owners and they were disputing the size of their shares.
Of course, if the parties have expressly declared in writing the nature or size of their shares, they will be held to this agreement – (Goodman v Gallant). Likewise, if there is no express declaration of beneficial interest, but an explicit verbal agreement as to the share, the courts are likely to hold the parties to this, probably on the basis of estoppels – (Crossley v Crossley).
In the absence of an agreement, it is difficult for one legal owner to argue that his share is bigger than the other on the basis of resulting trust or constructive trust. There is a presumption that ‘equity follows the law’. Thus, in most cases legal joint tenants will also be equitable joint tenants, unless there is an express declaration to the contrary. They would therefore, own 50/50 in equity, if the joint tenancy is severed.
However, after Stack v Dowden and Fowler v Barron, it is clear that in exceptional cases the court has discretion as to whether to apply the presumption or quantify the parties’ interest differently. The court will exercise this discretion in light of all the circumstances. Thus, in Fowler v Barron (2008) and Ritchie v Ritchie (2007) the equitable shares differed from the legal title; but in Segal v Parsam (2007) the court was happy to follow the normal rule.
POSITION OF A PURCHASER WHO BUYS CO-OWNED PROPERTY: If a purchaser buys co-owned land from two or more legal owners, then the interests of all equitable owners are overreached – (Sec 2(1)(ii) & 27 LPA 1925). The effect is that – their co-ownership interest is transferred from the land and takes effect in the proceeds of sale.
This is so, even if, the equitable owners objected to the sale, or knew nothing about it. This position is not affected by Sec. 11 of TOLATA 1996 whereby the trustees must consult the equitable owners and ‘in so far as is consistent with the general interest of the trust’ give effect to such wishes. Sec. 11 imposes a duty to consult and pay attention to such wishes, not a duty to follow them slavishly; and overreaching will occur, even if, the trustees have not consulted at all, although in such cases, the trustees may be personally liable for breach of trust.
Where the disposition originally conveying the land to the co-owners makes the legal owners (trustees) power to sale/mortgage dependant on obtaining consent of the equitable owners by Sec. 10 TOLATA 1996, and the legal owners sell/mortgage the land in breach of this requirement –
- The equitable owners interest will not be overreached in case of registered land, if the consent requirement is entered on the register of title in the form of restriction against dealings. However, if by some unlikely chance no restriction is entered, the better view is that, the purchaser obtains a good title to the land, the equitable interests are overreached, and the equitable owners are left to sue the trustees for breach of trust.
- The equitable owners interest will be overreached in case of unregistered land, if the purchaser has actual notice of the consent requirement – ( 16 TOLATA 1996).
Difficulty arises when the legal estate is vested in one person only, and another person claims a beneficial interest in the land, most commonly by the rules of resulting trust or constructive trust. In such a case, whether the purchaser/mortgagee takes free from the non-legal owner’s interest or subject to it, depends on the rules of registered and unregistered land.
- In registered land the purchaser (or mortgagee) will be bound if the equitable owner can prove that he has an overriding interest within the meaning of Sch.3 Para.2 LRA 2002 – ( 29 LRA 2002). If the equitable owner is a person in actual occupation of the land at the time of the purchase (or mortgage), he will have an interest which overrides the interest of the purchaser (or mortgagee) – (Sch. 3 Para. 2 LRA 2002).
An occupier’s protection is lost if inquiry is made of him before the disposition and he fails to disclose his interest when he could reasonably have been expected to do so – (Sch. 3 Para. 2(b) LRA 2002). Further, under Sch. 3 Para. 2(c) – an occupation which is not reasonably discoverable by the purchaser will not override.
- In unregistered land, whether they bind the purchaser (or mortgagee) who has not overreached depends upon the ‘doctrine of notice’. If the purchaser is a bona fide purchaser (or mortgagee) of the legal estate for value, without notice of non legal owner’s interest, he will take free of it.
Usually, if the equitable owner is residing in the land, the purchaser (or mortgagee) will be deemed to have ‘constructive notice’ of their interest, accordingly he will be bound by it, as discussed in Kingsnorth v Tizard.
However, in both the registered and unregistered land; a purchaser (or mortgagee) who has failed to overreach, and who is apparently bound by the priority of the equitable interest, nevertheless may be able to plead that the equitable owner has expressly or impliedly consented to the sale (or mortgage). In such cases, a court of equity will respect the express or implied consent of the equitable owner with the consequence that the purchaser gains priority over their interest – (Paddington v Mendelson (for registered land), Bristol v Henning (for unregistered land)).
Implied consent can arise by the conduct of the equitable owner in relation to the sale/mortgage (e.g. attending the bank, explaining the need for a mortgage to the bank’s employee). Consent will also be implied where the equitable owner is aware that a mortgage is the only way in which the land can be purchased – this effectively means that, it is near impossible for an equitable owner to claim priority over a mortgagee who provides funds for the original purchase of the land. Further, where the equitable owner approves of a mortgage, but is ignorant of a mortgage taken out by the legal owner to replace that mortgage, the equitable owner can be taken to consent to the replacement mortgage – (Equity and Law v Prestidge).
Note, where the only legal owner appoints another trustee and the purchaser (or mortgagee) pays the money to both of them, non legal owner’s beneficial interest would be overreached – (City of London v Flegg). Thus, the purchaser (or mortgagee) should always insist on appointing a second trustee where there is only one legal owner.
LICENCES AND PROPRIETARY ESTOPPEL
DEFINITION: A licence is a permission to enter upon, or to use land belonging to another person.
DIFFERENT TYPES OF LICENCES:
- BARE LICENCE: A bare licence is simply a permission to enter, or use land, where consideration has not been given in return.
A bare licence may be created expressly or impliedly; for example, there is an implied licence for all persons who believe that they have legitimate business to walk up the path to someone else’s house and knock on the door (or deliver a letter).
A bare licence may be revoked without notice at any time, and is automatically revoked by the death of the licensor, or by disposition of the land in question – except where a licnece is granted expressly or impliedly to a class of people by definition rather than to an individual (e.g. the postman will not have to ask each new owner or tenant of a house for permission, before walking up the path, and a new postman will be covered by the licnece given to his predecessor).
- LICENCE COUPLED WITH AN INTEREST: Sometimes a licence is granted in connection with an interest. Such licnece exists to facilitate the enjoyment of the interest. An example would be the grant of profit allowing A to cut wood on B’s land. Obviously a licence must be implied into this agreement, because A cannot cut wood, unless he is permitted to go in B’s land to do so.
Such a licnece cannot be revoked, before the interest concerned has ended. If the interest in land is binding on successors in title, the licence attached to it is also binding and may be validly assigned to third parties.
- CONTRACTUAL LICNECE: A contractual licnece is a licnece granted in exchange for consideration. Examples of contractual licences include: paying to use a commercial car park, or a ticket for a performance of a play etc.
Contracts giving rise to contractual licences will usually be expressly created, but there have been occasions on which the courts were prepared to infer a contractual agreement giving rise to the licence.
In Tanner v Tanner, a contractual licence was inferred in favour of a woman who had given up a protected tenency, in order to move into a home provided by her lover, and there to care for the children of the relationship. Lord Denning MR said that, the court should infer a contract that the woman should remain in the property for so long as the children were of school age and accommodation was reasonably required.
A contractual licence was similarly found in Chandler v Kerley, in which a man had bought a house from his mistress and her husband at less than the market price on the understanding that he and the woman would live there together, and that eventually they would marry. When the relationship ended soon after the purchase, the CA held that the woman had a contractual licence to remain, which could be terminated only on reasonable notice (a year in this instance).
Other cases, however, show that the courts will not always be willing to accept the existence of a contract in such cases. Indeed, it seems unusual to construe arrangements of this nature as demonstrating the intention to create legal relations which is necessary in the law of contract.
In Horrocks v Forray, a woman failed to establish that a contractual licence existed on the basis of a claim that, she had subordinated her choice of residence and mode of life to the will of her former lover in return for a promise that she should have a permanent home. The CA rejected her case on two grounds: first, the parties had no intention to enter into a legally binding agreement and second, she had provided no consideration (It should be recalled that the courts will not recognise consideration which they regard as being ‘immoral’ in character). The situation in Tanner v Tanner was distinguished on the ground that in that case, ‘The man and the woman were making arrangements for the future at arm’s length’.
Revocation of contractual licences: Formerly, these licences could be revoked at any time in breach of the contract; the licensee’s only remedy was to sue the licensor for damages for breaches of contract – (Wood v Leadbitter). However, the position is changed by the intervention of equity. Now an injunction can be obtained to prevent the licensor from revoking the licence, before its contractual date of expiry – (Winter Garden v Millennium Productions); or a decree of specific performance may be awarded requiring the licensor to permit the activity authorized by the licence to take place – (Verrall v Great Yarmouth).
Enforceability against successors in title of the licensor: Contractual licence cannot bind the successors of the licensor, even if he knows about the existence and rights of the licensee – (King v David, Clore v Theatrical Properties); since the successor in title was not a party to the licence, and so should not be bound by it.
However Lord Denning in Errington v Errington, Binions v Evans held – contractual licences can bind the successors of the licensor, where he knew about the existence and rights of the licnesee – by relying upon the existence of a constructive trust triggered by the knowledge of the plaintiffs of the rights of the licnesee, since it would be utterly inequitable for the plaintiffs to turn the defendant out contrary to the stipulation subject to which they took the land. In DHN Food Distributors v Tower Hamlets LBC, he stated more generally that a constructive arises in all cases involving contractual licences – a view which received some support in Re Sharpe.
But, the CA in Ashburn v Arnold stated obiter – generally a contractual licence cannot bind a successor; while recognizing that in exceptional circumstances a constructive trust may be imposed to compel a successor to give effect to a contractual licence. The court agreed that the imposition of a constructive trust was justified by the facts of Binions v Evans, where the purchaser acted in breach of the term in his contract that he would take the property subject to the occupier’s right.
The remarks of the CA in Ashburn v Arnold, although theoretically only of persuasive authority, are helpful in clarifying the law on this issue, and were welcomed by Browne-Wilkinson V-C in IDC Group v Clark.
However, it should be noted that now a licensee can take the advantage of Contracts (Right of Third Parties) Act 1999 in appropriately worded contract between the vendor (licensor) and the purchaser, without having to seek imposition of constructive trust.
- LICENCE BY ESTOPPEL (PROPRIETARY ESTOPPEL): The classic statement of the doctrine was made in Lord Kigsdown’s dissenting speech in Ramsden v Dyson which can be summarized as – where the owner of land knowingly encourages another to act, or acquiesces in his acting to his detriment on the understanding that he is to have an interest in that land, the owner will subsequently be estopped from asserting his strict legal rights.
According to Oliver J in Taylor Fashions v Liverpool, a claimant will be able to establish an estoppel if he can prove an assurance, reliance and detriment in circumstances where it would be unconscionable to deny a remedy to the claimant.
Assurance: The claimant must prove that, some kind of assurance was made, which encouraged him to believe that, he would acquire rights over that land.
The assurance may be express or implied: as where a landowner refrains from preventing the claimant using his land in a particular way, or the landowner by his actions rather than words effectively assures the claimant about a right in land.
Promises made in a will are generally unenforceable, because the testator can always revoke the will. In some circumstances, the claim will be upheld, where the testator’s promises are very clear, and are relied on by the claimant over a long period of time – (Gillett v Holt: there need not be any second assurance that the will would not be changed.)
The assurance must be as to some property right over the land, otherwise it is a mere personal assurance – (Yeoman’s v Cobbe). A typical example of such personal assurance would be: where a landowner assures the claimant that, ‘you may live in my house’ or ‘use my land as a short cut’.
The form this assurance takes is irrelevant – (Yaxley v Gotts, Banner v Luff Developments). Often it is given orally, or in the context of a written transaction that is not itself enforceable as a contract to transfer an interest in land.
Crucially, according to Orgee v Orgee, a landowner could not be held to have generated an estoppel in favour of the claimant unless, the landowner knew or ought to have known that, the claimant believed he had a right to the land.
Reliance: The claimant must rely on the assurance; in other words it must be possible to show that he was induced to behave differently, because the assurance had been given.
In Greasely v Cooke, the CA held that if clear assurances have been made and detriment has been suffered, there is a rebuttable presumption that the claimant has acted in reliance on it. There will be no reliance only if it can be shown that – the claimant would have done the detrimental acts completely irrespective of the defendant’s conduct. Conversely, Thorner v Curtis makes the point that, where the assurance is not express, there must be clear and substantial evidence of reliance.
Mixed motives for action do not thereby diminish the fact that reliance has occurred – (Campbell v Griffin). In Campbell v Griffin, there was evidence that the lodger would have assisted his landlord out of ordinary human compassion, rather than in clear reliance of the assurance. The CA nevertheless upheld the estoppel claim. Because, it would be harsh indeed to dismiss a claim, simply because the claimant was not after all, a thoroughly selfish individual who was prepared to help only because of what was an offer.
Detriment: Proprietary estoppel cannot be established unless, the claimant can prove that he has suffered some detriment in reliance on the assurance.
So long as the detriment is not minimal or trivial, it may take any form. For example, it may be that the claimant has spent money on the land, or advanced money to the landowner in reliance on the assurance – (Kinane v Alimamy), or has physically improved the land in some way, or has devoted time and care to the needs of the landowner – (Campbell v Griffin), or has forsaken some other opportunities – (Ottey v Grundy, Lloyd v Dugdale).
Detriment can exist even though the claimant has derived some benefit in reliance on the assurance – (Gillett v Holt).
The detriment need not be related to land at all or the land in dispute – (Campbell v Griffin, Jennings v Rice).
Detriment must be incurred by the person to whom assurance is made – (Lloyd v Dugdale).
Unencouraged (i.e. no assurance) detriment is not enough, however extensive – (Taylor v Dickens: there was no second assurance that the will would not be changed; on this basis the claimant’s claim was rejected. However this case now looks harsh after Gillett v Holt in this second assurance requirement. Even so, it remains the case that, an unencouraged detriment is not enough); as people do not usually act to their detriment unless they are certain they have been promised something concrete.
Unconscionability: In Gillett v Holt, the CA held that the mere withdrawal of the assurance after detriment suffered, is sufficient to establish unconscionability. The problem is, this appears to define ‘unconscionability’ purely in terms of – assurance, reliance and detriment (i.e. unconscioability exists when the assurance is withdrawn after detrimental reliance), accordingly its value as an additional requirement for estoppel becomes negligible. Indeed, if the Gillett approach becomes the norm, unconscionability will be simply a function of an assurance, reliance and detriment. At present there is no clear answer to this debate about the true nature of estoppel and the role of unconscionability.
However, recent cases such as Kinane v Alimamy and Murphy v Burrows seem to support the proposition that unconscionability is more than the sum of assurance, reliance and detriment. In this respect, the HL’s decision in Yeoman’s v Cobbe suggests that – estoppel should be available only if the parties have behaved truly unconscionably.
In Yeoman’s v Cobbe, no estoppel was found, despite the presence of detrimental reliance on an assurance – on the basis that there was no unconscionability. Here, the claimant was aware that proper formality was needed to give him enforceable rights, but he chose to act in reliance on the defendant’s oral assurances about their business deal. Hence, it was not unconscionable, because, the claimant knew that a proper written agreement should have been concluded, if he was to be protected. For some, this decision may seem harsh, but it does emphasise that estoppel is an exceptional claim – not an easy way to enforce an otherwise invalid agreement.
As it reveals then, oral agreement deliberately made ‘subject to contract’ cannot be enforced via estoppel, as there is no unconscionability in this circumstance, since neither party had thought the agreement between them had been enforceable – (Yeoman’s v Cobbe: however a remedy on a ‘quantum meruit’ basis was granted in this case).
Unconscionability is by its nature, a fluid concept and much depends on the facts of each case. It does not mean that the claimant must prove ‘fraud’ by the defendant. It means, whether, in all the circumstances, the defendant can resile from the assurance he has given and on which the claimant has relied to his detriment – (Hooper v Hooper (2008)).
Interestingly, the common understanding that a person is free to change his will, makes it difficult to plead unconscionability when a will is changed, or property left to another by a new will. Nevertheless, unconscionability may exist, if the assurance is withdrawn after it is repeated so often and so loudly that no one could doubt that the landowner meant what he said about the destination of his property on his death – as in Gillett v Holt and Ottey v Grundy.
SATISFYING THE EQUITY: The estoppels when established is said to give rise to an equity, by which the courts mean that the claimant has a right to some form of remedy in equity. Once the equity is established, the courts have to consider how to satisfy it; i.e. to decide what remedy should be given.
In deciding what remedy to give, the courts seek to achieve the minimum equity to do justice on the facts of the individual case. In other words, the court will award remedy, which is proportional between the expectation and detriment; save only that Orgee v Orgee suggests that the court cannot award more than the claimant was ever assured.
In Dodsworth v Dodsworth and Burrows v Sharpe, compensation for expenditure incurred was considered the appropriate remedy. Lifetime right to occupy was granted in Re Basham, Inwards v Baker, Greasley v Cooke. Examples of more extreme remedy can be found in Pascoe v Turner and Dillwyn v Llewellyn, where transfer of the fee simple was found to be the only way of satisfying the equity. Monetary compensation can be found in cases like Campbell v Griffin, Jennings v Rice. A combination of both monetary compensation and transfer of the part of the property was seen in Gillett v Holt. In Sledmore v Dalby, awarding nothing was found to be the right way to satisfy the equity.
In Campbell v Griffin, the court took into account that the life interest which Mr. Campbell had expected to receive would necessarily take effect under a trust of land, with resulting legal expenses, and that there could well be disputes about the maintenance of the house. It accordingly favoured the ‘clean break’ approach, which would enable those with other interests in the property to benefit from them without delay, and therefore ordered the sale of the house and the payment to Mr. Campbell of 35,000. It accepted that, this would not be sufficient to buy him a house, but considered that it would be a reasonable contribution to the cost of doing so.
In Jennings v Rice, in deciding how to satisfy the equity that had arisen, court rejected Mr. Jennings’s claim that, he was entitled to the whole property, holding that the claimant was unaware of the true extent of the deceased’s wealth and therefore could not have expected to receive her whole property. The court also rejected his alternative claim to the house and furniture (valued at £435,000), considering that the house was not suitable for Mr. Jennings to live in on his own, and also that a reward of such value would be excessive. The court took into account the fact that, the cost of full-time nursing care would have been in the region of £200,000 and that Mr. Jennings could probably buy a suitable house for £150,000, and accordingly awarded the claimant the sum of £200,000.
In Sledmore v Dalby, the court refused to give any relief at all, due to the benefits which the defendant (there was an estoppel in favour of the defendant) had enjoyed over the years and the parties situation at the time of the action. The court took into account the relative circumstances of the two parties. The defendant’s children were grown up, and had either left home or were capable of doing so; he was in employment; and he had the use of alternative accommodation, spending much of his time away from the house and using it only one or two nights each week. By contrast, the claimant was an elderly woman who could no longer afford to remain in her present home; and accordingly needed the house to live in.
WHETHER PURCHASERS WOULD BE BOUND BY THE ‘ESTOPPEL INTEREST’: Under Sec. 116 LRA 2002 an uncrystallised estoppel equity is capable of binding a transferee if protected as required by the normal rules of registered or unregistered land.
In registered land, it will bind a transferee if it is protected by an entry on the Register; or alternatively can take effect as an overriding interest within the meaning of Sch. 3 Para. 2 LRA 2002 – (Sec. 29 LRA 2002).
If the claimant is in actual occupation of the land at the time of the transfer, he will have an interest which overrides the interest of the transferee – (Sch. 3 Para. 2 LRA 2002). An occupier’s protection is lost if inquiry is made of him before the disposition and he fails to disclose his interest when he could reasonably have been expected to do so – (Sch. 3 Para. 2(b) LRA 2002). Further, under Sch. 3 Para. 2(c) – an occupation which is not reasonably discoverable by the transferee will not override.
But once the court has granted a remedy (then it is no longer uncrystallised), then whether a transferee is bound will depend on the nature of the remedy granted. If the granted remedy is proprietary in nature (such as easement, freehold etc.) it is highly likely, to come into the Register before transfer; in such a case it will bind the transferee by reason of registration. If by some unlikely chance, it is not entered into the Register before transfer, it might bind transferee if qualifies as an overriding interest by reason of actual occupation. On the other hand, if the granted remedy is personal in nature (such as a licence or financial compenstaion), it will not bind the transferee.
In unregistered land, such interest are not registerable under LCA 1972. Consequently, whether an estoppel binds the transferee depends on the old ‘doctrine of notice’ as held in Ives v High. Occupation will normally give rise to constructive notice as discussed in Kingsnorth v Tizard.
It is apparent from Ives v High that – where the transferee by words or conduct approves the continuance of the claimant’s right, he may be bound by it; even if enforceability rules are not complied with. This is because the transferee’s words/conduct give rise to a new estoppels between him and the claimant; and not a case of a pre-existing right binding the transferee.
COULD A CONTRACTUAL LICENSEE RELY ON ESTOPPEL?: As seen above, Ashburn v Arnold makes it clear that, save only in exceptional cases; contractual licence will not bind successor of the licensor. On the other side, estoppel rights are capable of binding the successors of the licensor. Thus, a contractual licensee may like to invoke an estoppel in his favour to get the benefit against the successors. But, it remains uncertain whether he could do so. Thompson suggests it should be possible, while Briggs suggests the contrary.
DEFINITION: Easements are certain limited rights which one landowner enjoys over the land of a neighbour.
REQUIREMENTS FOR A RIGHT TO BE AN EASEMENT: The essential characteristics of an easement were set out by Evershed MR in Re Ellenborough Park (This is itself an adoption of the criteria put forward by Cheshire in Modern Real Property (7th edition)) –
- There must be a dominant and a servient tenement (land): Both the dominant and servient land must be clearly identifiable at the time the alleged easement is created. The creation of easement for the benefit of land, not yet identified is not possible – (London and Blenheim v Ladbroke Retail).
- The alleged easement must accommodate (benefit) the dominant tenement: The right granted must not confer a personal advantage unconnected with the land, it must increase the normal enjoyment of the land – (Hill v Tupper: right to put pleasure boats on a canal for profit was held not to be an easement. Because, the claimant would have benefited from the right whatever land he had held, or even if he had no land at all. Thus, in no way it could be said that, there was a connection between the benefit enjoyed and the land owned. Contrast – Moody v Steggles: right to hang a sign advertising a pub on neighbouring land was held to be an easement, as the right was granted for the benefit of a trade or occupation taking place on the claimant’s land.)
Where the alleged servient land is not sufficiently proximate to the alleged dominant land, it is doubtful whether any benefit will accrue to the alleged dominant land – (Bailey v Stephens: ‘you cannot have a right of way over land in Kent appurtenant to an estate in Northumberland’). Note, they are not necessary to be adjacent – (Pugh v Savage).
- The dominant and servient tenement must be either owned or occupied, by different persons: An easement is essentially a right in another’s land. For this reason, the dominant and servient land must not be both owned and occupied by the same person – (Roe v Siddons).
Moreover, should the dominant and servient lands come into the ownership and possession of the same person, any easement over the servient land will thereby be extinguished; as a person cannot have an easement against himself. If the dominant and servient lands come into the same occupation, but not also the same ownership (e.g. where the freehold owner of the servient land takes a lease of the neighbouring dominant land in order to enlarge his premises); the easement is suspended for the duration of the common occupation and may be revived thereafter – (Canham v Fisk).
Interestingly, a tenant can acquire an easement over his landlord’s land and vice versa; because, although both the dominant and servient lands are owned by same person, they are occupied by different persons – (Wright v Macadam). Should the occupier be only a licensee, no easement can be created between that person and the licensor; as a licensee owns no estate in the land.
- The alleged easement must be capable of forming the subject matter of a grant: The right must be capable of forming the subject matter of a deed. This requires certain conditions to be satisfied –
- There must be both a capable grantor and a capable grantee: The grantor must be legally capable of making the grant. If a grantor has not got a legal estate in land, then he cannot grant an easement.
The grantee must also be capable of acquiring an easement. This means that, it must be granted to a definite person, or a definite body of persons. There could be no effective grant to a fluctuating group of persons, such as ‘people living in a village’.
- The right must be sufficiently definite: The right must be capable of reasonably exact description (e.g. right of way in Borman v Griffith); it must not be too vague (to enforce such rights it is always advisable to utilise the principles of freehold covenant).
Thus, there can be no easement of a good view or a prospect – (William Aldred’s case), easement of privacy – (Browne v Flower), right to receive light (However a right to receive light through a defined window will suffice – (Colls v Home & Colonial)), right to passage of air – (Bryant v Lefever; however a right to passage of air through a defined channel will suffice – (Cable v Bryant)).
- The right must be within the general nature of rights capable of existing as easements: Although it is often said that, the list of easements is not closed, the courts will not recognise any new negative easement – (Hunter v Canary Wharf: negative rights are anomalous and only really consist of rights to light and possible rights to support a physical structure. They are a closed category.) This is the reason why an easement was not recognised in Phipps v Pears.
Negative easements are those which prevent change on the servient land; while the positive easements are those which allow the dominant land owner to do something on the servient land.
It is unlikely that the court will recognise new easements which require the servient land owner to spend money – (Regis property v Redman). There is already a recognised easement requiring expenditure, that is easement of fencing – (Crow v Wood).
A right cannot exist as an easement where its exercise depends upon the whim of the servient land owner – (Green v Ashco Horticultural Ltd: a claim to a right to park a van failed, because the claimant had always moved his van when asked to do so by the servient land owner, and accordingly exercised his right only as far as the servient land owner permitted. See also Saeed v Plustrade.)
There is a reluctance to recognise an easement that gives the dominant land owner a large measure of occupation or control of the servient land; since an easement is a right over the servient land for a defined purpose, it is not equivalent to a right of ownership of that land.
This poses problem for easement of parking/storage. Such a claim will not be upheld where it would deprive the servient land owner of reasonable use of his land – (London and Blenheim v Ladbroke Retail). Thus, an easement of parking can only arise where the land affected is big enough to accommodate other cars, or uses of the owner – (Central Midland v Leicester Dyers (Unreported)).
However in Moncrieff v Jamieson, Lord Scott suggested – the test is not whether the alleged easement permits the servient land owner a reasonable use of his land; but whether the alleged easement deprives the servient land owner in possession and control of his land.
On this view, even very extensive use of the servient land might qualify as an easement, provided that the servient land owner retained possession and control. Accordingly the Law Commission in its March, 2008 Consultation Paper on ‘Easements, Covenants and Profits à prendre’ took the view that Lord Scott’s view is not particularly helpful. At present then, it is safer to rely on the ‘reasonable use’ test, bearing in mind that the law must be flexible in the face of changing patterns of land use.
It must be appreciated that, if these criteria are satisfied, the claimed right is only capable of being an easement. Satisfaction of the criteria is not enough to ensure that an easement exists. As well as being inherently ‘easement like’, the right must be created as an easement using the proper formalities applicable to proprietary rights. Generally, for legal easements this means a deed (plus registration in some cases) or long use through prescription. For equitable easements, it means an enforceable written instrument or a claim of proprietary estoppel. Failure to use the appropriate formalities means that the potential easement will not exist, and will take effect only as a personal license.
CREATION OF EASEMENTS: Easements can come into existence: expressly, impliedly or by prescription.
- Express reservation: An express reservation is where the owner of the dominant land deliberately and expressly keeps the right for himself when he sells or leases part of his land to another.
- Express grant: An express grant is where the owner of the servient land deliberately and expressly grants the right over his land to the owner of the dominant land.
- Implied reservation: Only in two situations easements will be impliedly reserved (easements can also be impliedly granted in these two situations).
- Implied by necessity: An easement of necessity can exist where the land sold/leased (for grant) or retained (for reservation) would be useless without the existence of an easement in its favour.
The necessity should exist at the time of the conveyance and not arise later – (Midland Railway v Miles).
It is not enough to show that, it will be more convenient if the easement is allowed – (Manjang v Drammeh (for grant), Adealon v Merton LBC (for reservation)).
But see Sweet v Sommer where an easement of way was impliedly reserved because the alternative access could be achieved only by the destruction of a physical barrier that both seller and purchaser agreed had to remain in place. Sweet is perhaps one of the more generous application of this doctrine, and the court adopted a slightly less rigid concept of ‘necessity’ than had been apparent previously.
In case of reservation, the alleged dominant land owner had power to reserve the easement expressly when he sold/leased part of his land. Failure to do it makes the law ‘lean against’ him. So, Sweet v Sommer should be seen as a decision unlikely to be followed. Accordingly, it is easier to claim an implied grant of an easement through ‘necessity’ than an implied reservation.
- Implied by common intention: An easement by common intention can exist if there is a common intention between the purchaser (or leasee) and vendor (or lessor) of the land, as to some particular use of the land, and the easement is necessary in order to give effect to that intention – (Stafford v Lee).
Unlike easement of necessity, the easement does not have to be necessary for the use of the land, merely in the joint contemplation of the purchaser (or leasee) and vendor (or lessor) at the time of the sale (or lease) would suffice – (Pwllbach v Woodman).
In Stafford v Lee an easement was impliedly granted to the purchaser by common intention; and in Peckham v Ellison, an easement was impliedly reserved for the vendor by common intention. Despite these cases, it is clear that implied creation of easement by common intention is not lightly presumed, particularly where implied reservation is argued – (Chaffe v Kingsley). We must not forget that, if the alleged easement was so crucial to the parties intention, why was it not expressly inserted in the relevant conveyance?
- Implied grant: In addition to easement of necessity and easements of common intention, easements can be granted under the rule in Wheeldon v Burrows and 62 of Law of Property Act 1925.
- The rule in Wheeldon v Burrows: Where a person transfers (either sales or leases) part of his land to another, the transfer impliedly includes the grant of all ‘easement like’ rights (known as ‘quasi-easement’), which were enjoyed and used by the transferor before the transfer for the benefit of the part of the land transferred, provided three conditions are satisfied –
- The rights were ‘continuous and apparent’,
- The rights must be necessary for the reasonable enjoyment of the part transferred,
- The rights were used by the common owner at the time of the grant for the benefit of the part transferred.
In short, a quasi-easement can become true easement if above mentioned criteria are satisfied.
It should be noted that, the rule can only operate to a sale/lease of part when prior to sale/lease, there was a common owner and occupier of the whole – (Kent v Kavanagh).
Continuous and apparent: ‘Continuous’ does not mean in continuous use in the sense that the owner continuously used the right now alleged to be an easement (e.g. There is no need to walk over the field everyday). Rather, it is that, the right was constantly available for use by the owner, and was in fact used when appropriate before the transfer.
The right is ‘apparent’ if it is visible on inspection of the land over which it is alleged to exist, or so obvious that its use for the benefit of the part sold/leased is beyond doubt.
Necessary for the reasonable enjoyment: This requirement does not produce a test as strict as that for easement of necessity. All that is needed to show that, the claimed right will enhance the reasonable enjoyment of the land.
However in Wheeler v JJ Saunders – a claimed right of way was not allowed simply because there was a second access route to the premises. Thus, this decision was subjected to a close analysis in Hillman v Rogers, which made it clear that – necessary for reasonable enjoyment should not be equated with necessity.
Use by the common owner at the time of the grant: It is not enough that some other person than the common owner used the right; save only if that other person can be regarded as the common owner’s agent, alter ego; or with his permission (as in Hillman v Rogers).
This does not mean that, a right must be in the course of being exercised at the exact moment of the transfer, but that there must be an element of user still in existence.
The rule in Wheeldon v Burrows cannot create an easement by implied reservation for the retained land – (Chaffe v Kingsley).
The rule can be expressly excluded by clear words to the effect – (Millman v Ellis).
A confusion in Wheeldon v Burrows: As matters stands currently, it is not clear whether the requirement (a) & (b) are alternatives or both are required? Wheeldon itself is equivocal and some case law suggests that both are needed (e.g. Millman v Ellis) while others imply either will do (e.g. Hillman v Rogers).
This apparent uncertainty may exist because, in the majority of cases, the alleged easement will be both ‘continuous and apparent’ as well as ‘necessary for the reasonable enjoyment’ of the dominant land. Of course, it remains open to the HL to clarify the situation by reaching a firm conclusion; although given that the rule can be expressly excluded this seems unlikely.
- 62 of LPA 1925: Under Sec. 62, a purchaser/leasee of a legal estate in the land will be impliedly granted, as easements all those rights previously enjoyed with the land, that are capable of being easements; providing there is no express provision to the contrary in the conveyance and providing that there was a diversity of occupation between the alleged dominant and alleged servient tenement at the time of the conveyance – (Sovmots v SS for the Enviornment, though some doubt has been thrown upon this requirement by Platt v Crouch).
Few points should be noted about the operation of Sec. 62:
- There must be a conveyance (save for leases for three years or less). Conveyance does not include any contract for sale or contract to grant a lease.
- There must be diversity of occupation of the two lands at the time of the conveyance. However, the case of Platt v Crouch throws doubt upon this requirement by holding that, prior diversity of occupation is not always required; provided it can be shown that the claimed right was ‘continuous and apparent’ prior to the conveyance.
After Hillman v Rogers it is quite clear that, the purchaser/leasee need not be the original occupier of the alleged dominant land.
- The right should ‘appertain or be reputed to appertain’ (i.e. be attached to the land or believed to do so), or enjoyed with the land at the time of the conveyance. Thus, if the right has already been revoked, no easement can arise. So, a seller/lessor should always revoke such rights before selling/leasing the land.
Like Wheeldon, Sec. 62 cannot create an easement by implied reservation for the retained land.
The section would not apply where the claimant knew the licence to be of finite duration, that is temporary – (Hair v Gillman).
The operation of Sec. 62 can be expressly excluded by clear words in the conveyance, or where the circumstances existing at the time of the conveyance show that the parties intended to exclude the section – (Hair v Gillman).
CREATION BY PRESCRIPTION: Where an owner of land has long use of a ‘right’ over land belonging to another then, if the ‘right’ is capable of being an easement, it may eventually become an easement simply through the long use.
To establish an easement by prescription the claimant must show two things –
- That his use has been of the appropriate nature,
- He has acquired the right by one of the three methods of prescription:
- Prescription at common law
- Doctrine of lost modern grant
- Statutory prescription.
Appropriate nature: The use must be as of right, not enjoyed by force, secrecy, or permission. It must be continuous; that is obviously a matter of degree.
The use must be by a fee simple owner of the alleged dominant land and against a fee simple owner of the alleged servient land. However, if the alleged dominant land is possessed by a tenant, the tenant’s use can be held to be on behalf of his landlord, that is on behalf of the fee simple owner. So, providing that the tenant is not asserting that the alleged easement should endure only for so long as the tenancy, tenant’s presence will not be a problem – as explained in Hyman v Van den Bergh.
If the long use occurs at a time when a tenant is on the alleged servient land, it might be difficult to prove that, the long use was against the fee simple owner; after all, at the time of the long use a tenant was on the land.
However, Williams v Sandy Lane makes clear, there is no rule of law that prevents an easement from arising simply because, the servient land was in the possession of a tenant at some time during the use. Prescriptive easements rest on the acquiescence, not on the fact of whether there was, or was not, a lease.
Thus, where a tenant is in possession of the alleged servient land before the long use commenced, it remains possible to presume a prescriptive easement against a freeholder, albeit that it might be difficult to establish on the facts. If, however, the long use commenced while a tenant was on the land and the freeholder had no power to exclude the long use while his tenant was in possession (for example, because the right to control the land had been given to the tenant exclusively for the duration of the lease), it would be almost impossible to establish an easement by prescription.
There is no objection to the presumption of an easement from long use if the fee simple owner was in possession of the alleged servient land at the commencement of the long use, but then subsequently leased the land to a tenant – (Pugh v Savage).
Prescription at common law: A claim of prescription could succeed at common law if it could be shown that the use existed before 1189 (called ‘legal memory’). Obviously, this was well neigh impossible; so it became accepted that use for 20 years raised a presumption that, the use commenced before 1189.
Accordingly, the claim could be defeated by any evidence that the use could not, in fact, have started before 1989. So, for example; a claim to a right of light even if used for 150 years, could be defeated by showing that the building so benefited was built only in the year 1190.
Doctrine of lost modern grant: The doctrine (based on the fiction that a grant was made but has been lost) means that 20 years continuous use by the owner of the dominant land is sufficient to establish an easement by prescription – (Dalton v Angus). This is so, even if, the alleged servient land owner produces evidence that, no grant had been made.
However, the claim can be defeated by evidence that, at the time of commencement of the long use, the servient land owner who is assumed to made the grant was legally incompetent (for example, being a minor or lunatic), or there was no one to whom the grant might have been made.
Statutory prescription: A period of 20 years use is sufficient to establish a prescriptive claim, provided that the right was enjoyed ‘without interruption’ for that period – (Sec. 2 Prescription Act 1832).
As an alternative Sec. 2 provides – 40 years use ‘without interruption’ ensures that the right is ‘absolute and indefeasible’, unless exercised with the consent of the alleged servient land owner.
The alleged dominant land owner cannot pick any 20/40 years of use: the 20/40 years use must be calculated by reference to the 20/40 years immediately prior to ‘some suit or action’.
No act is deemed to be an ‘interruption’, until it has been acquiesced for one year, that period starting once the party interrupted had notice both of the interruption and of the person making it.
Any period during which the alleged servient land owner was an infant, a patient under the Mental Health Act 1983 (or the Acts which preceded it), or a tenant for life – should not be counted for the purpose of 20 years time period – (Sec. 7).
Any period during which the alleged servient land was held by a tenant for life or a tenant under a lease for more than 3 years – should not be counted for the purpose of 40 years time period – (Sec. 8). However, Sec. 8 deduction should only be made, if the servient land owner resists the claim of acquisition by prescription within the 3 years following the end of the life interest or lease.
Use of light for a period of 20 years (probably that period prior to any ‘suit or action’ – again the Act is unclear) without interruption becomes ‘absolute and indefeasible’ unless the alleged servient land owner consents in writing or by deed – (Sec. 3).
There is no provision in Sec. 3 that preserves the conditions of the common law, so uninterrupted use for 20 years without written consent will mature into an easement, even if there is some defect that would have defeated a common law claim.
LEGAL OR EQUITABLE EASEMENT?
- Legal easement: Two criteria must be satisfied for a legal easement to exist:
- It must be held for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute (in other words, it must last, either, in effect, for ever or for a fixed period. Fixed in the sense that, it has to be clear for how many years/months the easement is to last.),
- It must be created by – statute; or deed (for unregistered land)/ registered disposition (for registered land); or prescription.
Where the servient land is registered, an expressly created easement must be entered on the title of the servient land in order to take effect as a legal easement – (Sec. 25 & 27, Sch. 2 Para. 7 LRA 2002). Failure to do so renders the easement equitable – (Sec. 27(1) LRA 2002). Note, both their status as a legal easement, and their ability to bind a purchaser of the servient land depends on their registration.
- Equitable easement: Easement held for a period other than either a fee simple absolute in possession or a term of years is equitable will be equitable. For example, easements held for life interest or a surviving fee tail.
An easement will be equitable if it has not been created by one of the three methods for creating legal easement; provided the easement is embodied in a written contract which equity regards as specifically enforceable – (Sec. 2 Law of Property (Miscellaneous Provisions) Act 1989, Walsh v Lonsdale), or the easement is created by proprietary estoppel. If these two alternative formality requirements for the creation of an equitable easement are not met, then the right cannot be regarded as an easement at all. It may then amount to a license to use land.
PASSING THE BURDEN & BENEFIT OF AN EASEMENT: Benefit of an easement will automatically pass to a purchaser of the dominant land. But, the burden of an easement will only pass to a purchaser (non purchasers will always be bound regardless of whether the following criteria are fulfilled or not – for registered land this being specifically empowered by Sec. 28 LRA 2002) of the servient land, if the criteria discussed below are satisfied –
It should be noted that, once electronic conveyancing is fully operational, expressly created easements will not exist until entered electronically on the register of the servient land – (Sec. 93 LRA 2002).
DEFINITION: Freehold covenants are promises made by deed between freeholders, whereby one party promises to do, or not to do certain things on their land for the benefit of the neighbouring land.
ENFORCING THE COVENANTS IN AN ACTION BETWEEN THE ORIGNAL COVENANTOR AND THE ORIGNAL COVENANTEE: Where the original covenantor and the original covenantee both are still in possession of their respective land, the original covenantor will be liable to the original covenantee for breaking any of the covenant. In such a case, the original covenantee may sue for common law remedy of damages or obtain any of the appropriate equitable remedies (i.e injunction or specific performance).
Where the original covenantor has parted with the land, he continues to remain liable to the original covenantee (and to anyone who has the benefit of the covenant). Where the original covenantee sues the original covenantor after he has parted with the land, only common law remedy of damages will be available. It is not the original covenantor who breaks the covenant but his successor; so equitable remedies can only be claimed against the successor.
Where the original covenantee has parted with the land, he will still be able to enforce a covenant against the original covenantor (and to anyone who has the burden of the covenant). Where the original covenantee sues after parting with the land only nominal damages will be available for him. No common law remedy or equitable remedies will be available, as he suffers no loss; real loss has fallen on the person in possession of the land.
PASSING THE BURDEN OF A COVENANT TO SUCCESSORS IN TITLE OF THE ORIGINAL COVENANTOR: There are separate rules for passing the burden in each of law and equity.
- At Law: Burden of a covenant can never pass at law – (Rhone v Stephans, Austerberry v Oldham Corporation).
Burden of a positive covenant however will pass at law, if it can be shown that, the related benefit is also enjoyed (rather than enjoyable – Themesmead Town v Allotey) by the successor in title – (Halsall v Brizell).
Successor in title can only be made liable to an extent up to which he enjoys the benefit; some extra burden linked merely in papers with the benefit enjoyed, will remain irrecoverable – (Themesmead Town v Allotey).
- In Equity: Burden of a covenant will pass to successor in title in equity (but only the holder of the benefited land can sue to enforce the covenant) provided –
- The covenant is negative (restrictive) in nature
- It protects the land retained by the covenantee
- It was intended to run with the covenantor’s land
– (Tulk v Moxhay).
Restrictive covenant: Whether a covenant is positive or negative, is a question of substance not form. (If a covenant requires the covenantor to spend money in order to perform it, then it is positive covenant. The covenant in Tulk v Moxhay was – ‘maintaining land as an ornamental garden’. It appeared to require expenditure, but in reality it was a covenant not to build; therefore a negative covenant. If a covenant prevents the landlord from doing something on his land then it is a negative covenant.)
Burden of a positive covenant cannot pass in equity – (Haywood v Brunswick); as it contradicts the common law rule that a person cannot be made liable upon a contract unless he was a party to it.
Must protect the land retained by the covenantee: This means the covenant must confer benefit to the land retained by the covenantee, not to any individual.
Tulk v Moxhay is also used to pass the burden of leasehold covenants. Any landlord or tenant’s negative covenant contained in a lease granted on or after 1 January 1996, shall be capable of being enforced against any owner or occupier (even the subleasee) of the land, subject to requirement of registration only; irrespective of whether it benefits the land or any individual – (Sec. 3(5) LT(C)A 1995). Dixon described it as an ‘accidental exclusion’.
Burden will not pass unless the covenantee retained the benefited land at the time of the covenant – (London CC v Allen). For example, if A sells Blackacre to B, and in the sale B covenants with A not to build on Blackacre, the burden may run to B’s successors in title only if A retained the benefited land at the time the covenant was executed.
For leasehold covenant: Where the restrictive covenant is contained in a lease it is not necessary to show that the landlord has retained the benefited land. It is enough to show that a benefit is conferred on the landlord’s reversion – (Hall v Ewin). Thus, a landlord can enforce negative covenant contained in a lease against a sublessee, provided other requirements are satisfied.
Burden will pass so long the covenant benefits a piece of land which can be identified – (Newton Abbot v Williamson). Thus, where the alleged benefited land is not geographically close to the burdened land, it is unlikely that the burden will pass, as this will mean the benefited land will be hard to identify.
Intended to run with the covenantor’s land: It is presumed that, the covenant is intended to run with the covenantor’s land, in the absence of any contrary intention – (Sec. 79 LPA 1925).
A contrary intention will appear from the instrument creating the covenant if there is anything in it indicating that successors in title or assignees of the original covenantor would not be bound – (Morrells v Oxford UFC: The covenant in exam question normally wont say anything about the intended effect of the obligation taken by the covenantor whether he himself is to be obliged or his successors in title too? Therefore, Morrells should be used on an assumption basis; i.e. ‘assuming there are no other covenant made by the covenantor specifically for himself and his successors in title, which would then give rise to an inference that a covenant with him alone was not intended to bind his successors’).
Protection of restrictive covenant: Restrictive covenants must be protected by registration; otherwise they will not be enforceable even if they satisfy the Tulk v Moxhay requirements.
Restrictive covenant entered into before 1926 must be registered by way of Notice.
Restrictive covenant entered into after 1925, must be registered by way of Notice against the burdened title for registered land in order to be enforceable– (Sec. 29 LRA 2002). An unregistered restrictive covenant will nevertheless remain enforceable, where the purchaser does not purchase it for valuable consideration, or purchases only equitable interest in the land – (Sec. 28 LRA 2002).
Restrictive covenant entered into after 1925, must be registered as a Class D (ii) land charge against the name of the original covenantor for unregistered land in order to be enforceable – (Sec. 2(5) LCA 1972). An unregistered restrictive covenant will nevertheless remain enforceable against someone who is not a purchaser, or does not give money or money’s worth consideration, or purchases only the equitable interest in the land.
PASSING THE BENEFIT OF A COVENANT TO SUCCESSORS IN TITLE OF THE ORIGINAL COVENANTEE: Like burden, benefit can also pass at law or in equity. But, the most important thing to note is – benefit has to pass in the same way by which burden passed.
- At Law: By virtue of 56 LPA 1925, a person will be regarded as an original covenantee and may enforce a covenant, even if he is not actually a party to it (i.e. have not signed it under witness), provided that the covenant was intended to confer benefit on him as a party– (Amsprop v Harris Distribution, White v Bijou Mansions) and he was clearly identifiable person in existence at the time of the covenant.
It is now clear that – Sec. 56 only has this effect when the persons identified in the covenant as being entitled to its benefit, are intended to be treated as parties, not simply additional persons to whom the benefit has been given – (Amsprop v Harris Distribution, White v Bijou Mansions).
Where a covenant is made after 11.5.2000, the Sec. 1 of Contract (Rights of Third Parties) Act 1999 provides – a person who is not a party to a contract may enforce it if it confers a benefit upon him or if the contract expressly provides that he may; as long as the contract identifies him by name, description or as a member of a class. It is does not matter if he did not exist at the time the contract was made; hence it appears that the Sec. 1 is wider in application than Sec. 56.
Benefit will pass at law if –
- The covenant ‘touches and concerns’ the land of the covenantee,
- If it is intended to run with the land and,
- If the benefit is attached to a legal estate in the land.
- In Equity: Benefit will pass in equity if it can be shown that –
- The covenant ‘touches and concerns’ the land of the covenantee
- Claimant has acquired the benefit of the covenant in one of three ways prescribed by equity – annexation, assignment or scheme of development.
ANNEXATION: This is a process whereby the benefit of a covenant becomes attached to a land, so that the benefit will pass with land at all subsequent sales. Three points should be noted –
- There must be an intention to annex the benefit to the land, rather than merely an intention to confer personal advantage on the covenantee.
Before Federated Homes v Mill Lodge such intention could be found if (even today competent solicitors use one of these formulations) –
- The covenant expressed to have been made for the benefit of particular land (e.g. ‘this covenant is entered into for the benefit of Selwyn Estate, or land marked blue on the attached plan’)
- The covenant expressed to have been made with the covenantee in his capacity as owner of a particular land (e.g. ‘this covenant is entered into with the vendor who for the time being is owner of Blackacre’)
- The covenant expressed to have been made with the covenantee and successors in title to a particular land (e.g. ‘this covenant is entered into with Jones and his successors in title to Blackacre’).
A covenant that contained no reference to land would be insufficient – (Renals v Cowlishaw: ‘with the vendors, their heirs, executors administrators and assigns’ –was held insufficient).
Now Federated Homes Ltd v Mill Lodge Properties has eliminated the need for special words of annexation by deciding that – Sec. 78 LPA 1925 operates to annex to the land the benefit of any covenant which touches and concerns the land; in the absence of any contrary intention. (Contrary intention was found in Roake v Chadha, Sugarman v Porter). It should be noted Federated Homes itself is not a sound decision, that’s why it has been subject of cricisms particularly by G.H. Newsom & David Hayton. G.H. Newsom in particular, argued that this decision was wrong.
For an effective statutory annexation to occur, the covenant must describe the land in such a way, that it is easily ascertainable, albeit with the assistance of some extrinsic evidence – (Crest Nicholson v McAllister).
Note, there can be no statutory annexation in respect of pre-1926 covenants, appropriate words of annexation will still be necessary – (Sainsbury v Enfield BC).
- There can be no effective annexation if the land is larger than can reasonably be benefited – (Re Ballard’s Conveyance: a covenant was said to be for the benefit of the whole of a larger estate (approximately 690 acres). In fact, the covenant could confer a benefit on only a small portion of the estate. Here the court said – since the covenant did not confer a benefit on the whole estate, it could not run on a sale of the estate. Nor would it run when a part of the estate which was actually benefited was sold, because the court would not sever the covenant and attach it to parts of the land where the express wording of the deed did not allow for this. As a result, when one drafts a covenant and wishes to attach it to a large area of land, it is wise to say that the covenant is for the benefit of ‘the whole or any part of the named land’). Even 78 cannot help in this situation as it cannot be shown that the covenant ‘touches and concerns’ the whole land.
Where there are different opinions as to whether the whole estate benefits from a covenant, the covenant will apply to the whole land – (Wrotham v Parkside Homes).
- Benefit of a covenant statutorily annexed to the land is prima facie annexed to every part of it and may pass with parts of the land disposed off separately, in the absence of any contrary intention – (Federated Homes v Mill Lodge: Federated Homes was a case concerning statutory annexation. So, this observation could be understood as applying to this type of annexation only. However an alternative view by Megarry & Wade is that, this observation is not confined to statutory annexation only. This approach has recently been adopted in the first instance decision in Small v Oliver for express annexation).
ASSIGNMENT: Even if there has been no effective annexation, the claimant may be able to show that the benefit of the covenant has been expressly (exception: assignment will be deemed to take place in favour of a successor in title who acquires the title at the covenantee’s death – (Newton Abbot v Williamson) as the benefit of the covenant is seen as a personal property of the deceased) assigned to him.
Again few points should be noted –
- The covenant must be entered into for the benefit of ascertainable land of the covenantee. It means the benefited land must be possible to identify from the term of the document containing covenant; or from the surrounding circumstances – (Newton Abbot v Williamson).
- The benefit must have been assigned to the claimant at the same time as the land.
- It is necessary to show a chain of assignment exist, stretching from the original covenantee to the claimant on the same terms – (Re Pinewood Estate, Farnborough), so that on each sale of the benefited land the benefit has been passed to the new owner and has finally come to the person who now seeks to enforce the covenant.
- A covenant annexed to the whole of a piece of land can be assigned on the sale of part of that land – (Stillwell v Blackman).
SCHEME OF DEVELOPMENT: Where a ‘scheme of development’ or ‘building scheme’ exists, a kind of local law is created whereby covenants are enforceable by and against the owners of plots within the scheme. This essentially means the benefit of covenants will pass to each of the owners of plots (and this includes successors in title) within the scheme from the covenantee. The burdens, of course, pass in the normal way. There should be more than two plots for the scheme to apply.
The condition of a scheme of development were laid down in Elliston v Reacher –
- There was originally a single seller of all the land within the scheme,
- The plots of land were laid out before selling,
- Mutual restrictions were established by the original seller for mutual benefit of all the buyers of plots,
- The purchasers of each and every plot knew that the covenants were to be mutually enforceable between them,
- The area of the scheme was clearly defined (added in Reid v Bickerstaff).
In recent years the, the courts have taken a much more relaxed approach to these conditions.
Baxter v Four Oaks: a valid building scheme was found despite the fact that, the land was not divided into plots in advance; instead selling each purchaser as much land as they wanted to buy.
Re Dolphin’s Conveyance: a valid building scheme was found despite there was no common vendor, the plots had not been laid out prior to sale and total area of the scheme was not fixed before selling commenced.
Emile Elias v Pine Groves: PC restated that the area of the scheme must be fixed before selling of plot commences. It appears to throw some doubt on some aspects of Re Dolphin.
Whitgift Homes v Stocks: No building scheme can exist where there is uncertainty as to how much of an area is intended to be within a scheme, even between those areas which is clearly intended to have been within such a scheme.
An estate plan is not necessary (though desirable). A scheme of development may exist if the estate affected can be identified with reasonable certainty by other means, as was possible in Re Dolphin, but not in Whitgift.
The advantage of a scheme of development is that where the plots are purchased successively it allows the benefit of later purchaser’s covenants to be annexed to the land already sold (i.e. to that owned by previous purchasers), notwithstanding that this should not be possible because the covenantee (common owner) no longer owns that land. Thus, despite the fact that previous purchasers bought their land before later purchasers had made their covenants, the benefit of those later covenants still passes; the benefit of every covenant is available to all purchasers within the scheme, irrespective of the time of their purchase. Accordingly, previous purchasers can enforce the covenant against the later purchasers. However, this result could not have been achieved through annexation.
REMEDY: Whether equitable remedy or common law remedy will be available depends upon the way in which burden passed.
DEFINITION: All leases contain ‘covenants’, whereby the landlord and tenant promises each other to do, or not to do certain things, in relation to the land and its environment, these are known as leasehold covenants.
All covenants (whether relating to the land or imposing personal obligations) are enforceable between the original landlord and the original tenant.
- RULES FOR LEASE GRANTED BEFORE 1 JANUARY 1996:
LIABILITY OF ORIGINAL TENANT AFTER ASSIGNMENT OF THE LEASE: Original tenant remains liable for the entire duration of the lease even after assignment of the lease – (City of London Corporation v Fell). This liability will be enforceable by whosoever has the benefit of the covenant. Subject to following exceptions –
- Perpetually renewable lease: The liability of original tenant will not continue after assignment of a perpetually renewable lease (a lease that can be renewed unlimited time).
If it were otherwise he would forever be liable, and there would be no limit or certainty to his obligations.
- Express exemption in the lease itself: The liability of original tenant will not continue, where the lease between original landlord and original tenant expressly stipulates that the tenant’s liability is to end after assignment.
- Breach occurring at statutorily extended period: The original tenant will not be liable, for breaches of covenant committed by an assignee, where the original duration of the lease has been statutorily extended and the breach occurred during that period – (City of London Corporation v Fell).
This is because, as a matter of contract; the original tenant’s liability is to be confined to the period of time as originally agreed and not to the subsequent legislative extension of that time.
- Surrender and regrant: The original tenant will not be liable, if a subsequent assignee of the lease and landlord agree to surrender the old lease and carry out a regrant of the lease. Because, the surrender puts end to the original tenant’s liability along with the original lease.
In most cases, the surrender and regrant will be explicit. But it can be presumed – where current landlord and tenant so vary the terms of the old lease, that in reality it ceases to exist.
Original tenant’s remedy: Where the original tenant is found liable for breach of an assignee (be it his assignee or any later assignee), he has a right to recover from that defaulting party under an indemnity obligation.
An indemnity obligation can arise in one of three ways:
- Express indemnity covenant: The original tenant can rely on express indemnity covenant made by the assignee with him.
Where there is more than one assignment, a chain of indemnity covenant must exist stretching from the original tenant to current tenant. Thus, the original tenant, frequently finds that the chain is broken, before the defaulting tenant is reached.
- Implied indemnity covenant: The original tenant may be able to rely on the indemnity covenant that is implied under 77 of LPA 1925; unless expressly excluded.
- Moule v Garrett: The original tenant may be able to rely on an action in ‘restitution’ against the defaulting party, where the original tenant is compelled to pay damages for legal default of him; but only to the extent that the defaulter was actually liable – (Moule v Garrett).
Three forms of help by LT(C)A 1995: There are few sections in Landlord and Tenant (Covenants) Act 1995, which apply to all leases regardless of when the lease was granted.
- 18: The original tenant will not be liable for any increased rent resulting from a variation of the terms of the lease, after it has been assigned (This was the situation even before LT(C)A 1995 as seen in Friends Provident v BRB).
Note, original tenant only escapes liability for the increased rent attributable to the variation; but remains liable for the originally agreed rent.
However, where the rent is increased as a result of a ‘rent review clause’ (e.g. rent may be adjusted every 5 years in line with inflation) which was itself a term of the original lease, the original tenant will be liable for the increased rent as well. Because, the increase has not been caused by a variation to the terms of the lease, but by the lease itself.
- 17: The original tenant cannot be required to pay rent or other fixed charges owed by the assignee, unless the landlord has served him a notice (a ‘problem notice’) informing him that any charge is due within 6 months of the date it becomes due.
Failure to serve a notice relieves the original tenant of all liability for that breach of covenant.
In effect, this section ensures only a maximum of 6 months charge (i.e. rent etc.) can be claimed, without the tenant being able to take action to minimize his liability.
- 19: The original tenant who has made such a payment becomes entitled to the grant of an ‘overriding lease’ so that the original tenant becomes the immediate landlord of the current tenant.
The advantage of this is that, it enables the original tenant to take action against the current tenant, perhaps by forfeiting the lease and thereby to use the land to meet the liability.
N.B. The ‘problem notice’ (Sec. 17) & ‘overriding lease’ (Sec. 19) apply only in respect of fixed charge liabilities.
LIABILITY OF ORIGINAL LANDLORD AFTER ASSIGNMENT OF THE REVERSION: Original landlord remains liable for the entire duration of the lease, even after assignment of the reversion– (Stuart v Joy). This liability will be enforceable by whosoever has the benefit of the covenant.
PASSING THE BURDEN & BENEFIT FROM THE ORIGINAL TENANT TO THE ASSIGNEE OF THE LEASE: According to Spencer’s case – burden and benefit will pass from the original tenant to the assignee of the lease if two conditions are satisfied:
- The covenant touches and concerns the land, and
- There is privity of estate between the lessor and the assignee of the lease; and there must be a legal assignment of the whole term.
Privity of estate: Privity of estate exists between the parties where they currently stand in the relationship of landlord and tenant under a legal lease. There must be a legal lease – (Purchase v Lichfield Brewery). Despite some obiter dicta to the contrary famously by Lord Denning in Boyer v Warbey; it is clear that privity of estate can only exist in respect of a legal lease.
There is no privity of estate between a landlord and a subtenant, as they are not each others landlord and tenant.
Legal assignment of the whole term: This means not only the original lease must be legal in character, but also any subsequent assignment of the lease must be in the form prescribed for legal interests; that is by deed in compliance with Sec. 52 LPA 1925.
In this respect, it is interesting to note that – even though a lease can be created without deed (e.g. if it is for 3 years or less); if the legal character of it is to be maintained, any assignment of it must be effected by deed – (Julian v Crago).
Touch & Concern: A covenant touches and concerns the land where –
- The covenant benefits only the landlord/tenant for the time being,
- It affects the nature, quality, mode of user or value of the land, and
- It is not expressed to be personal.
– Lord Oliver in Swift Investments; approving Kumar v Dunning. In both of these cases, ‘covenant by a surety guaranteeing the payment of rent’ was held to touch and concern the land.
Perhaps the safest route when attempting to ensure that a covenant touches and concerns the land, is to follow the advice of Wilberforce J in Marten v Flight Refuelling that, a covenant that expressly states that it is imposed for the purpose of affecting land will normally be taken by the court as touching and concern the land.
PASSING THE BURDEN & BENEFIT FROM THE ORIGINAL LANDLORD TO THE ASSIGNEE OF THE REVERSION: Burden (Sec. 142 LPA 1925) and benefit (Sec. 141 LPA 1925) of covenants ‘having reference to the subject matter of the lease’ will pass from the original landlord to the assignee of the reversion. Burden & benefit will pass whether the lease is by deed or not – (Rickett v Green).
‘Having reference to the subject matter of the lease’ is the same thing as ‘touching and concerning the land’. In essence, this is a statutory transfer of the butden and benefit of all leasehold covenants which ‘touch and concern the land’.
Even though ‘covenant to renew the lease’ touches and concerns the land, the burden of it can only pass to the assignee of the reversion from the original landlord – if it is registered as a class C (iv) land charge for unregistered land – (Phillips v Mobil Oil); or if it is registered by way of Notice for registered land unless it can take effect as an overriding interest under the ‘actual occupation’ provision of Sch. 3 Para. 2 LRA 2002. (This position is unaffected by Sec. 3(6)(b) LT(C)A 1995)
Even though ‘option to purchase covenant’ does not touch and concern the land, the burden of it can pass to the assignee of the reversion from the original landlord – if it is registered as a class C (iv) land charge for unregistered land; or if it is registered by way of Notice for registered land unless it can take effect as an overriding interest under the ‘actual occupation’ provision of Sch. 3 Para. 2 LRA 2002 – (Webb v Pollmount). (This position is unaffected by Sec. 3(6)(b) LT(C)A 1995)
The assignee of the reversion becomes the only person entitled to sue/the assignor of the reversion loses the right to sue; even in respect of breaches of covenant that occurred before assignment – (Re King, London and County v Wilfred Sportsman).
PASSING THE BURDEN & BENEFIT FROM THE ORIGINAL TENANT TO THE SUBLESSEE: It is well established that the benefit (but not burden) of any contract can be expressly assigned. So, benefit of covenants can pass to the sublessee, if expressly assigned to him in the sublease agreement.
Burden of covenants will never pass to the sublessee as there is no privity of estate between the lessor and the sublessee. However, the burden of restrictive covenants can pass under the rule in Tulk v Moxhay.
If the head-lease contains a forfeiture clause, the lessor can exercise it even for breaches of covenant that does not touch and concern the land. Note, original tenant can always be sued in this circumstance.
The rules relating to the enforceability of covenants against sublessees are unaffected by LT(C)A 1995.
- RULES FOR LEASE GRANTED AFTER 1 JANUARY 1996: The burden and benefit of all covenant will pass, except those expressed to be personal. It no longer matters whether the covenant touches and concerns the land. The Act makes no distinction between legal/equitable lease and legal/equitable assignments – ( 28 LT(C)A 1995).
LIABILITY OF TENANT AFTER ASSIGNMENT OF THE LEASE: The tenant is released automatically from the burden of covenants when he assigns the lease – (Sec. 5 LT(C)A 1995).
For assignments in breach of covenant, or assignments made by operation of law (on death, where the estate vests in the deceased’s personal representative; on bankruptcy, where the estate vests in the trustee in bankruptcy), the assigning tenant remains liable – (Sec. 11(2)(a) LT(C)A 1995). Such assignments are called ‘excluded assignments’ under the statute. However, his liability comes to an end by the next assignment which is not excluded one – (Sec. 11(2)(b) LT(C)A 1995).
Where the tenant enters into an ‘authorized guarantee agreement’ (by which he guarantees the assignee’s performance of the covenant in the lease), the assigning tenant remains liable – (Sec. 16 LT(C)A 1995). The guarantee is to last only while the assignee is liable under the covenant of the lease, and comes to end when his liability ceases.
The assigning tenant remains liable, for covenant that is expressed to be personal. ‘Expressed to be personal’ is discussed elaborately below.
LIABILITY OF LANDLORD AFTER ASSIGNMENT OF THE REVERSION: The landlord is not released automatically from the burden of covenants when he assigns the reversion, but may serve a notice on the tenant applying for such release – (Sec. 6 LT(C)A 1995).
Release will occur if the notice is not answered within a specified time, or if the landlord’s application to the County court is successful in the event of objection by the tenant – (Sec. 8 LT(C)A 1995).
A landlord can escape liability without having to serve such a notice, where he stipulates in the lease that his liability ceases when he assigns the reversion – (London Diocesan v Avonridge – this is a controversial decision, as it renders the ‘notice procedure’ entirely redundant).
PASSING THE BURDEN & BENEFIT: The burden and benefit of all covenant automatically pass to the assignee of the lease and reversion – (Sec. 3 LT(C)A 1995); save only that burden and benefit of covenants that are expressed to be personal will not pass – (Sec. 3(6)(a) LT(C)A 1995).
A covenant is ‘expressed to be personal’ if either it says so in words, or if its substance is such that its personal character is expressed through the nature of the obligation it imposes – (First Penthouse v Channel Hotels).
Liability for covenants which are expressed to be personal only lies within the original parties and cannot be avoided – (BHP Petroleum v Chesterfield: Sec. 8 procedure did not release the original landlord from carrying out certain remedial work to the property which was expressed to be personal).
An assignee has no rights or liability in relation to pre-assignment breaches – (Sec. 23 LT(C)A 1995). An assignor retains rights or liability in relation to pre-assignment breaches – (Sec. 24 LT(C)A 1995). Thereby, successfully reversing Re King & London and County v Wilfred Sportsman.
COVENANT AGAINST ASSIGNMENT, SUBLETTING, OR PARTING WITH POSSESSION: Such a covenant can come in one of two ways –
- An absolute covenant against assignment, subletting, or parting with possession (i.e. not to assign)
- A qualified covenant against assignment, subletting, or parting with possession (i.e. not to assign without the landlord’s consent)
In the case of absolute covenant, it is open to the tenant to ask the landlord, if he will allow a particular disposition, but the landlord is under no obligation to agree to this, even if he is acting quite unreasonably.
By contrast, if the covenant is in the qualified form, the position is governed by Sec. 19(1) Landlord and Tenant Act 1927; which provides – consent is not to be unreasonably withheld. Further Landlord and Tenant Act 1988 imposes on the landlord certain obligations, such as – tenant’s request for consent must be answered within a reasonable time, must reply to the request in writing and if refusing consent must give reasons for refusal, it is the landlord who has to prove that the refusal is reasonable.
While the provision of 1927 and 1988 Acts have the effect of improving the tenant’s position; Sec. 22 LT(C)A 1995 is designed to assist the landlord of post-1995 leases. It provides – the landlord and tenant may enter into an agreement specifying the circumstances in which the landlord may in the future withhold his consent to any assignment etc, and the conditions subject to which any consent may be given. If the landlord subsequently withholds consent on the ground that such circumstances exist, or attaches such conditions to the granting of consent, he shall not be regarded as acting unreasonably. The agreement need not be contained in the lease; it can be made at any time before the tenant seeks consent.
Long use of land, without the permission of the owner, can result in ownership over that land for the squatter, under the rules of adverse possession.
In order to claim title by adverse possession, the squatter must show that –
- He has been in possession of the land;
- The possession has been adverse; and
- The adverse possession has lasted for the prescribed time.
POSSESSION: The squatter must take possession of the land, either by disposing the owner, or by entering at some time after the owner has discontinued his own possession.
There are two elements of possession, both of which must be shown to exist – factual possession & intention to possess.
- Factual possession: What has to be shown as constituting factual possession is that the squatter has been dealing with the land in question as an occupying owner might have been expected to deal with it, and that no one else has done so – (Slade J in Powell v McFarlane; approved by HL in Pye v Graham).
Whether he was dealing as such – is a question depends on the circumstances of each case, the particular nature of the land and the manner in which that land is commonly used. Thus, whereas possession will not be presumed lightly from acts which are equivocal in nature, or temporary in purpose, such as growing vegetables, or clearing land to enable one’s children to play – (Tecbild v Chamberlain); even small acts of custody and control might suffice if the land has been abandoned, is inaccessible by the owner or is of such quality that it does not readily admit of significant possessory acts. For example, in Red House v Catchpole, shooting wild fowl was held sufficient act of possession on a marshland. In Williams v Jones, grazing sheep on quarry land constituted sufficient act of possession. Similarly, in Purbrick v Hackney LBC, the claimant’s contention that he had been in adverse possession of a burnt out shell of a building was uphold by small acts.
Note, the squatter must have exclusive possession of the land, sharing possession with the owner is not enough.
- Intention to possess: The squatter must show intention to exclude the owner and the rest of the world from the land, to the extent that is reasonably practicable, and so far as the law allows – (Powell v McFarlane, approved by HL in Pye v Graham).
The squatter must not only have this intention, he must make it clear to the world including the owner (if he is present) that he intends to possess the land – (Powell v McFarlane, Prudential Assurance v Waterloo). There is no requirement that the owner should know about the adverse possession; only the use must be open so that he has the opportunity to finding out about it. But the fact that he does not do so is no bar to the squatter’s claim – (Powell v McFarlane); and the squatter is under no obligation to draw the owner’s attention to what is happening – (Topplan v Townley).
The court will look at the conduct of the claimant, and decide whether that is indicative of such an intention. Thus, in Batt v Adams, fencing was not held sufficient to show the intention, as it was only for keeping animals in, it did not show intention to exclude all others (however note; mixed motives would not be a problem according to Minchinton); while in Buckinghamshire CC v Moran, fencing and locking the gate was held sufficient. In Lambeth v Blackburn, changing the locks of a property was held sufficient to establish the intention. Interestingly in Battersea v Wandsworth, the occupier of a bombed-out pub site allowed neighbouring tenants to have keys to the site. It was held that allowing access for others, showed that he lacked the intention to hold exclusive possession.
A willingness to pay for the use of the land does not indicate an absence of intention to possess – (Pye v Graham), as possession remains adverse until a request for payment is actually made.
The squatter need only prove an intention to possess excluding all others, and not necessarily an intention to acquire the property – (Buckinghamshire CC v Moran, approved in Pye v Graham).
ADVERSE: There is no statutory definition of adverse, but it may be understood as meaning, possession which is inconsistent with the rights of the owner (although it is clear that it does not have to be hostile or aggressive in any way). In consequence –
- Taking possession with the permission of the owner (either by way of a lease or licnece) cannot give rise to adverse possession. However when the lease/licence comes to an end, or where the lease is forfeited/licence is withdrawn; remaining on the land without acknowledging the owner’s title can be adverse.
Permission can also arise impliedly (implied licence). It is natural to draw an inference of permission, where a person is in possession pending negotiation for the grant of an interest in the land – (Colin v Howard, Batsford v Taylor).
- Payment for land negatives any claim of adverse possession, as this is an admission that the recipient has rights over the land concerned, and hence cannot be adverse. But, ceasing to make payments without acknowledging the owner’s title, can start adverse possession.
- Acknowledgement of the owner’s title by other means will prevent adverse possession, not only by the acknowledger but also by his successors in title; but only when made in writing. Such acknowledgement can be made by payment of rent; an offer to buy the property (Edgington v Clark) etc.
Land reserved by owner for specific purpose: Initially it was thought, a person could not be in adverse possession where a landowner had a piece of land which he had left vacant, but for which he had future plans, and the squatter’s act was not inconsistent with that plan – (Leigh v Jack). The acts of the squatter had to be inconsistent to defeat the owner’s title. In other words, the squatter’s act had to be such that, it would make those plans impossible to be carried out.
The practical result of the case was that, whether or not there was adverse possession depended not upon the activities of the alleged adverse possessor, but upon the state of mind of the owner.
However, the CA in Buckinghamshire CC v Moran made it clear that – where land has been acquired or retained by the paper owner for a specific future purpose, there is no rule of law that, he cannot be dispossessed by acts of squatter that are not inconsistent with that purpose. Buckinghamshire CC v Moran was expressly approved by the HL in Pye v Graham, in which Lord Browne Wilkinson described the suggestion of Leigh v Jack as ‘heretical and wrong’.
Despite such a very clear rejection of the rule in Leigh v Jack, there has been recently an attempt to revive it in the first instance decision of Beaulane v Palmer; which is put to the rest be CA in Ofulue v Bossert. Ofulue v Bossert followed the decision Grand Chamber of ECtHR on Pye v UK, which cleared the confusion created by Beaulane v Palmer.
PRESCRIBED TIME: Time will start to run against an owner, from the moment he has been dispossessed, or has discontinued possession and adverse possession has been taken by another. Time will only start to run against an owner of a land which is subject to a lease, after the lease has expired or otherwise come to an end.
There must be no gap between the periods of adverse possession. In cases of discontinued possession the relevant period of ‘adverse possession’ runs from the date of the inception of the new possession.
‘Stopping the clock’: The most obvious way to this is to start proceeding to recover the land within the time allowed. In Markfield v Evans, it was held that bringing an action for possession will not by itself stop time running; the action must be carried through to completion before it has any such effect.
Alternatively, the owner can ‘stop the clock’ by ensuring that the occupier provides written acknowledgement of his title.
Interestingly, the owner may also be able to stop time running, by simply giving permission for the squatter to remain – (BP Properties v Buckler). The decision has been criticised as allowing owners to prevent time running by a unilateral act of giving permission, without having to incur the expense or publicity of court proceedings. However, it should be noted that the court left open the question of the effect which any rejection of the licence might have (there was no express acceptance or rejection in this case). Accordingly, it remains to be seen whether there is any way in which the squatter could counteract the effect of such a unilateral licence. Meanwhile the decision has been cited without any apparent disapproval by the CA in Colin v Howard.
Completion of period by another: If another person takes possession of the land, time will continue to run in his favour and he can complete the period by adding his time to that of his predecessors; irrespective of whether he takes the possession with the co-operation of the first squatter or by dispossessing him.
However, the situation where adverse possession is taken over from an earlier squatter is outside the regime of LRA 2002; except where he is the successor of the other, having bought or inherited the land from him. In those cases, the claimants have to rely on the ‘old rules’.
The rules discussed above are relevant to all adverse possession claims. However, we have now reached the point at which the various systems diverge, in relation to:
- Adverse possession of unregistered land
- Adverse possession of registered land under LRA 1925
- Adverse possession of registered land under LRA 2002
Adverse possession of unregistered land: When a squatter has completed the limitation period, which is 12 years as stated by Sec. 15 Limitation Act 1980; the owner’s right to recover the land is barred and his title to the land is extinguished – (Sec. 17 LA 1980).
The squatter thereby becomes the owner of the land by virtue of ‘doctrine of relativity of title’, as there is now no one with better claim to the land, than the occupying squatter. Importantly, the expiration of the limitation period does not operate as a ‘Parliamentary conveyance’ (i.e. it does not transfer the owner’s title to the squatter); it merely extinguishes the owner’s title, the squatter gains a legal estate in his own right.
Accordingly, where the squatter barred a tenant of unregistered land, subsequent surrender of the ousted tenant’s lease could enable the freeholder to evict the squatter – (Fairweather v St Marylebone). Because, he does not take over the leasehold estate which was held by the tenant, instead he is regarded as holding a ‘defective freehold estate’; although the dispossessed owner held a leasehold estate. Consequently, he will not be bound by leasehold covenants. However he can be forced to perform the covenants, for the duration of the lease by threat of forfeiture.
The squatter takes the land subject to all rights which affects it, whether or not those rights are appropriately protected. He is not a purchaser in the technical sense, so cannot take the advantage of the rules which invalidate certain third party rights against purchasers.
Adverse possession of registered land under LRA 1925: These rules apply only to those claims which have completed the limitation period before 13 October 2003.
The limitation period is the same as unregistered land; that is 12 years. The owner’s title is not extinguished at the end of the limitation period (as it would be in unregistered land), but would be held by him in trust for the squatter – (Sec. 75 (1) LRA 1925). The squatter could then apply for registration in his place – (Sec. 75(2) LRA 1925).
Where the squatter barred a tenant of registered land, no subsequent surrender of the ousted tenant’s lease could enable the freeholder to evict the squatter – (Spectrum v Holmes (the surrender was attempted after the registration took place), Central London v Kato Kaguki (the surrender was attempted when no registration took place)); because the adverse possession simply transfers the leasehold interest to the squatter. Consequently he will also be bound by leasehold covenants.
The squatter takes the land subject to any interest which had not been extinguished by the adverse possession.
Adverse possession of registered land under LRA 2002: Now a person who has been in adverse possession for 10 years can apply to be registered as proprietor (Sch. 6 Para.1 LRA 2002). On receipt the Registrar, will notify the registered proprietor who is likely to object within 3 months period for this – (Sch. 6 Para. 3(2) LRA 2002). The proprietor of any registered charge or any superior title, and any person who has registered a right to receive notice, will also be notified and able to object – (Sch. 6 Para. 2 LRA 2002).
Where the proprietor or some other recipient of the notice does respond and opposes the application, it will in general be rejected. There is, however, three special cases in which despite opposition the squatter may succeed in achieving registration – estoppel, independent entitlement to the estate, and boundary disputes. In each case the squatter acquires an independent fee simple estate and entitled to be registered as proprietor.
Estoppel: Under Sch. 6 Para. 5(2) LRA 2002, a squatter can insist on registration where it would be unconscionable for the registered proprietor to dispossess him (this is a relatively straightforward restatement of the principle of proprietary estoppel).
Independent right to estate: If the squatter separately has a proprietary claim to the land e.g. where he has agreed to buy it and has taken occupation, he or she will be entitled to seek registration – (Sch. 6 Para. 5(3) LRA 2002).
Boundary disputes: It is common for houses and fences to be built slightly outside their theoretical boundaries. A squatter of any such strip of land will be registered as proprietor (Sch. 6 Para. 5(4) LRA 2002) if:
- He owns land adjacent to that for which application is made;
- The exact line of the boundary has not been determined;
- The applicant has held adverse possession for a period of at least ten years, ending at the date of the application;
- Throughout that period the applicant or his predecessor in title reasonably believed the land belonged to him (or was at least unsure who the owner was); and
- The estate to which the application relates was registered more than a year before the application.
If no objections are lodged, then after a further two years of adverse possession, the applicant can make a further application to be registered and will then receive the title of the dispossessed proprietor, subject to all existing priorities, but free of any registered charges.
As a result of this ‘owner friendly’ approach of LRA 2002, it is likely that there will be a rush towards voluntary registration of land which has a squatter.
POSITION OF THE PURCHASERS: A squatter who is not yet registered as proprietor of the registered land, can nevertheless be able to enforce his rights against a purchaser – if he has entered a notice on the register, or has an overriding interest within the meaning of Sch. 3 Para. 2 LRA 2002 – (Sec. 29 LRA 2002).
If the squatter is in actual occupation of the land at the time of the purchase, he will have an interest which overrides the interest of the purchaser – (Sch. 3 Para. 2 LRA 2002). An occupier’s protection is lost if inquiry is made of him before the disposition and he fails to disclose his interest when he could reasonably have been expected to do so – (Sch. 3 Para. 2(b) LRA 2002). Further, under Sch. 3 Para. 2(c) – an occupation which is not reasonably discoverable by the purchaser will not override.
In unregistered land, such interest are not registerable under LCA 1972. Consequently, whether adverse possessor’s right binds the transferee depends on the old ‘doctrine of notice’. Occupation will normally give rise to constructive notice as discussed in Kingsnorth v Tizard.
ONE LAST THING: After the time has passed, the conventional wisdom is that no acknowledgement of the owner’s title, written or otherwise; and no payment, rent or other sum can revive the title – (Nicholson v England). However, the CA in Colchester BC v Smith held that; in some circumstances a written acknowledgement of the owner’s title by the adverse possessor given after the time has ended can be enough – without giving any reason for that.
The court did not considered Nicholson v England; in this sense the decision might be regarded as per incuriam. However, at present, the Colchester decision appears to be authority for the proposition that a bona fide compromise of a dispute between the owner and the adverse possessor, both of whom had legal advice should be upheld on public policy ground, even if the time period has run its course. This is supported by the decision in the Trustees in the Charity of Sir John Morden v Mayrick (2007).