Licenses and Estoppel

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What are licenses?

  • It is permission from an owner of land (licensor) to the licensee to use the land for a specific purpose
  • A licence properly passes no interest nor alters or transfers property in any thing (Thomas v Sorrell)

There are various types of licenses:

  • Bare licences - licenses given without any consideration from the licensee (when you are invited to someone's house for a party)
  • Licenses coupled with a grant -where a licence is linked to an interest in the land (licence to go onto land to collect wood resulting in a profit)
  • Contractual licences - where a licence is given for valuable consideration
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Revocation

  • Should a licence be able to be revoked (cancelled) at any time or should it be treated as an interest in land, like other land law rights?
  • A licence does not grant an interest in land and so may be revoked (Wood v Leadbitter)
  • The equitable remeedy of specific performance was granted to restrain breach of a licence (Verall v Great Yarmouth Borough Council)
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Contractual Licences and 3rd parties

  • The courts do not regard a licence as creating an interest in land, altough they will use equitable remedies to resrain revocation of a licence in breach of contract
  • This should mean that a licence should never bind 3rd parties, but the courts have often attempted to make licences bind them
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King v David Allen Ltd

Facts

  • A licence was granted allowing the fixing of advertisements to the wall of a cinema
  • The licensor then granted a lease of the cinema to a 3rd party

Principle

  • The grant of the lease had ended the contractual licence
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Errington v Errington and Woods

Facts

  • An argument was made between a father and his son and daughter in law that if they paid the mortgage instalments he would convey the house to them
  • The father died and the licence was held to bind the father's widow

Principle

  • A contractual licence can bind third parties

There could have been 4 other possible outcomes:

  • The contract could have been binding on the widow as an estate contract as she was not a purchaser (title to the land was unregistered)
  • Did the widow sue in the capacity of personal representative to her husband's estate? The court did not consider this, but if it had, it could have held that she was bound
  • Did the son and daughter in law, have a claim based on estoppel as they had paid the mortgage instalments acting on the father's representation that he would transfer the house to them?
  • Could it have been argued that a constructive trust arose in their favour?
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Binions v Evans

Facts

  • Follwing her husband's death, the defendant was allowed by his employers to live rent free in the cottage, which they had occupied
  • The employers then sold it to the claimants, subject ot their agreement with the defendant

Principle

  • They took the property subject to a constructive trust in favour of the defendant.

Why did the court not simply hold that the defendant had a lease???

  • There was no maximum duration
  • If it was argued that it was a lease for life, then s.149(6) LPA 1925 requires that rent must be payable
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Ashburn v Anstalt v Arnold

Facts

  • The defendant sold its sublease but was allowed to remain in occupation of the premises until required to leave by the purchaser
  • The claimant bought the freehold expressly subject to this agreement
  • The actual decision was that the defendant was a lesee but the court considered what the result would have been had they had a licence

Principle

  • A contractual licence does not give an interest in land
  • The court may impose a constructive trust where it is satisfied that the conscience of the existing owner is affectd but it is not sufficient just that the land was sold subject to an agreement as in this case
  • The decision in Binions v Evans is a good example on the circumstances when a constructive trust might be imposed.
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Estoppel Licences

  • Estoppel arises where 1 person (the representee) has been led to act on the representation of another (the representor). If so, and if the representee then acts to his/her detriment on the basis of this promise, then in equity the court may grant the representee a remedy
  • Estoppel can be used to grant rights other than licences and some cases discussed in connection with estoppel licences have in fact resulted in another right
  • Estoppel is an example of equity - there is a good deal of discretion and it is unwise to come to a black and white conclusion.

The essential elements of estopel are:

  • An assurance by one person to another
  • Which is relied by that other person
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Examples

Inwards v Baker

Facts

A father allowed his son to build a bungalow on land owned by the father

Principle

The son was granted a licence for life

Crabb v Arun - an oral agreement that council would grant the claimant a right of way - the claimant relied on this by selling land without reserving a right of way - the council was estopped from denying the claimant a right of way

Gillett v Holt - Even though a promise to leave property to X by will is superseded by a will which leaves the same property to Y estoppel can still apply

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Jennings v Rice

Facts

  • X worked for nearly 30 years as a gardener and odd-job man for Y
  • He was initially paid but then Y promised him that she would leave him her house
  • After this he was no longer paid
  • Y died intestate
  • X claimed either Y's whole estate (£1,285,000) or the value of the house (£435,000)

Principle

X was awarded £200,000 as a larger sum would have been out of all proportion to what X might have charged for his service.

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Consequences of Estoppel

  • The court has a discretion as to the remedy
  • Any equitable right is inchoate until it crystalises in the form of an order made by the court, which gives the claimant a specific interest
  • A right by estoppel may bind a purchaser where title to the land is registered S116 LRA 2002
  • The elevation of estoppel rights to a proprietary rights is interesting as the actual entitlement to which an estoppel gives rise can only be determined by the court, so S116 LRA 2002 allows an estoppel to take effect before it has been determined by the court.
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Checklist

  • Distinction between licences and property rights
  • Types of licences
  • Do contractual licences create interests in land?
  • When proprietary estoppel can create a licence?
  • Conditions for proprietary estoppel to apply
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