Proprietary estoppel and licences

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Etherton 'Constructive trusts and prop estoppel'

  • Considerations of unconscionability to achieve justice v Parliamentary policy do underlie the decisions of the HoL. 
  • The Common Intention Constructive Trust- Stack in the HoL presumption of legal and beneficial interests being the same was rebutted by evidence of their common intention based on the whole course of dealings, giving rise to a common intention constructive trust in which they held the beneficial interest in unequal shares. In instiutional constructive trust is a property institution whcih will have arisen before the judgement date and whose existence the court declares as a subsisting private right. A remedial constructive trust however is a judicial discretionary remedy which may have retrospective effect. This is looked down upon in England but is used in America. Some say its too vague and too much discretion. HoL cases Pettitt v Pettitt, Gissing v Gissing, and Lloyds Bank v Rosset said that the CICT is to be formally analysed and categorised as an institutional constructive trust, arising only from common intention and plaintiff acted pursuant to that in his detriment. In Stack the majority sent out a mixed message but from Hale it seems to be an institutional one. 
  • Cases since Stack- courts have become increasingly aware of the need to make clear that the CICT falls within the institutional trust framework. Recent judgements have proceeded on the basis that the touchstone is express inferred intentions of the parties, not imputation.
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Etherton 'Constructive trusts and prop estoppel'

  • There remains analytical difficulty of separating imputed intention from inferred where the parties probably havent thought about interests until death or separation. The presumption of legal and equitable being the same is very strong. Presumption of advancement has a much smaller role. CICT in Stack seems to deviate from the institutional constructive trust as no requirement that claimant relied to his detriment on an agreement. Marks a move from proprietary estoppel and potential enlargement of CICT. In commercial context the presumption of a resulting trust depending on contributions is appropriate. In domestic the presumption following Stack is equitable mirrors legal. The express drawing of this distinction was new, marking a change from Pettitt as they operated in the context of presumption of resulting trust in both settings and the presumption of advancement. Laskar was commercial despite the familial relationship. Stack will apply to more than just co-habiting couples. 
  • In Laskar Neuberger adopted the test of 'primary purpose of the purchase of the property.' Seems clear that courts will apply the Stack approach in cases of single registered proprietor in the domestic sense. Frost Warren J- 'when a property is transferred into the name of one person the onus is on another person claiming the beneficial interest to show that there is a common intention that their beneficial interests should be different from legal.' Requirements have relaxed, inference may now be drawn from the whole course of dealings, in relation to the property. 
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Etherton 'Constructive trusts and prop estoppel'

  • Proprietary estoppel- Yeomans Row was a milestone case. Severe restriction on doctrine. Promises made as part of an incomplete oral agreement cannot give rise to it. Also cant arise if subject to contract. Unconscionability is not enough. Cant reconcile the facts of Crabb v Arun and Cobbe. Difficult to predict how applied in the future. Walker thought it should be applied narrowly. Walker also appears to have accepted that in a domestic setting knowledge that an assurance is not contractually binding would exclude the operation of prop estoppel. Yeomans Row was more restrictive than originally thought. 
  • Constructive trusts and prop estoppel- the overlap- Banner Homes appears to be an illustration of circumstances in which a constructive trust has been imposed in a commercial setting in order to provide a proprietary remedy in a case where the wrong doer has reneged on a promise which has not formed part of a complete and legally enforceable bargain. 
  • Yaxley Walker said 'at a high level of generality, there is much in common between the doctrines of proprietary estoppel and the constructive trust.' 'In the area of joint enterprise for the acquisition of land, the two concepts coincide.' Kinane v Mackie Conteh was a case of purely commercial context, in which the facts were acknowledged to attract equally prop estoppel and a constructive trust, but they werent said to be wrongly decided on the constructive trust front in Yeomans. Difficult to see that the relaxation in Stack of constructive trust requiements will apply to the commercial context. 
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Etherton 'Constructive trusts and prop estoppel'

  • general conclusions- not an area of the law where the court has been able to weave together various strands coherently. What is needed is a coherent legal framework across the boundaries of trusts, estoppel and restitution to provide principles and remedies for unconscionable conduct in relation to the acquisition and ownership of land. Necessity for certainty ought not be an obstacle to the provision of a principled remedy for unconscionable conduct in relation to land, whether through an institutional constructive trust, prop estoppel, restitution or constructive trust. 
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Smith 'Property Law'

  • Formalities- estoppel- courts have been prepared to go well beyond estoppel to act as a mere defence. The courts may decide the claimaint is entitled to a lease, easement or even a fee simple. Also give money. Kingsdown in Ramsden v Dyson said -'if a man under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faither of such a promise or expectation, with the knowledge of the landlord, and without objection to him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation.' Acts when there is a lack of formalities. Modern approach is Olivers 'if A on an expectation created or encouraged by B that A shall have a certain interest in B's land, thereafter on the faith of such expectation and with the knowledge of B and without objection to him, acts to his detriment in connection with such land, a court of equity will compel B to give effect to such expression.' 
  • Modern estoppel is much broader than it used to be. Where O assumes that a long standing practise will continue is not enough to give rise to estoppel. 
  • Doesnt give effect to incomplete negotiations- AG of Hong Kong v Humphreys Estate.
  • Promises to leave property in will- difficult as often a long period over which intentions may change. 
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Smith 'Property Law'

  • Cobbe isnt as restrictive as feared. HoL allowed a claim of unjust enrichment instead to get his expenditure back. 
  • Knowledge that O frequently changes his mind might be relevant to issues of reasonableness of reliance. Deals with an objective test, not subjective intentions. Proof of estoppel in commercial cases has been made much harder. Court has discretion on the remedy which is why uncertainty as to the expectation of the interest has sometimes been allowed. May be greater difficulty where the uncertainty relates to the property over which the expectation exists. 
  • Awareness of the encouragement can cause difficulty in two cases- 1) where O and C are genuinely mistaken or 2) where O merely acquiesces C's expectation. It is thought necessary that O is aware of C's detriment. 
  • Greasley v Cook said the burden was on O to prove that C didnt not rely on the presumption. 
  • Coombes v Smith- said not working and so having husband pay for house was not a detriment as it wouldve been too wide. A free house was a benefit despite the difficulties getting back onto the job market when out of work for years. Detriment will not be found where C's actions can be viewed as contributions to the costs of running the home or substitution or rent. 
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Smith 'Property Law'

  • detriment in family relationships- a more relaxed approach in other cases. Grant v Edwards- Brown Wilkinson said 'setting up a house together, having a baby, making payments to general house keeping expenses would suffice.'Need to look at whole circumstances. One point may be that if C has already obtained significant benefits, the detriment doesnt justify a remedy as there is no equity to satisfy. Even substantial detriment may not, viewing all the facts, be sufficient to make O's conduct unconscionable.
  • Estoppel has been used to enable C to claim a right in the land. Thorner has accepted that proprietary estoppel has frequently applied to promises- encrouching on contract principles? Isnt proprietary automatically where land is involved. Right to planning permission or forcing another to buy land cant be brought under proprietary. The remedy is more closely related to C's detriment, not O's promise. Estoppel isnt enforcing promises it it remedying the inequity resulting from O's encouragement in C's detriment. 
  • CoA said in Baker v Baker and Baker that no remedy can be given which exceeds to assumption or expectation. Maybe monetary awards where pursing literal enforcement wont work eg one party is dead. Money is useful where there is uncertainty in what was promised. Some have argued that this should be the standard outcome. 
  • Move to wider discretion? Scarman in Crab v Arun said 'the courts should transfer upon C the minimum equity to do justice. Most extensive discussion in Jennings v Rice.
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Smith 'Property Law'

  • Approach in Jennings v Rice- there is no right to fulfillment of expectation. Aldous LJ- 'the most essential requirement is that there must be proportionality between the expectation and detriment.' Walker said that where there is certainty the risk of disproportionality is reduced so should fufill the expectation. Where uncertain expectation, the court is likely to look at the detriment to assess what remedy is appropriate. However the court can look at a wide range of factors. 
  • Application of Jennings v Rice- Grundy v Ottey employs a test of 'appropriate remedy in respect of unconscionable conduct.' Lots of discretion since factors are unquantifiable. Arden LJ prefers the 'out of all proportion' test and so has been much more generous than Jennings v Rice. There was a discussion in Cobbe about where there was a large difference in detriment and expectation. Court upheld remedy based on expectation. 
  • Purchasers- generally the purchaser steps into the shoes of O being bound by the appropriate remedy. 
  • Misconduct towards O may influence remedy- J Wilis and Sons v Willis. Misconduct after the remedy may not be relevant if something is passed but maybe if its just an equitable interest. Denning thought you'd need exceptional facts for this to come into play. 
  • The status of the estoppel before a remedy- most cases will be decided by LRA 2002 s116. 
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Smith 'Property Law'

  • it is 'declared for the avoidance of doubt' that an 'equity by estoppel has effect from the time the equity arises as an interest capabale of binding successors in title.' Applies only to registered land. Gives rights proprietary status. Equity seems to arise when there is detriment. Contraversial that it binds purchasers as it is not always obvious what C is entitled to. Discovering rights will be hard. In most cases the claimant will be in actual occupation so is an overriding interest. If C isnt in actual occupation the purchaser wont be bound unless this is registered. 
  • Can claimant transfer the benefit of estoppel? Hasnt come up in cases, but seems odd if they couldnt. Right to reside may be personal so cant. Small authority supports assignability. 
  • Resulting and constructive trusts- benefit and burden doctrine was applied by CoA in ER Ives Investment v High. Applies because the purchaser is made liable because of his continuing benefit, rather than because the other party has an interest in the land. Burden only imposed as long as the benefit is asserted. 
  • Mutual wills- two people sometimes make wills leaving property to each other, and should the other predecease the testator to the same third party. Intention that the survivor will enjoy the property but that the property should end up with the third party. Parties must intend that the survivor should be under an obligation. Take effect as constructive trust, binding the property on first death. 
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Licences

  • any right of land that doesnt fit into a recognised property category will be a licence. Licences also exist where a right is of a proprietary nature but the necessary formalities havent been satisfied. 
  • Contractual licences- if it is to have any chance of being a proprietary right binding a purchaser, it needs to be irrevocable by the licensor. Lord Greene in Winter Gardens said that the licence should not be regarded as a separate entity from the contract, but rather as a contractual right and subject to normal contract rules. 
  • Thompson v Park- licensee had no right to return to the school when it had been revoked, lawfully or not. The court cannot specifically enforce an agreement for two people to live peaceably under the same roof. 
  • Only the parties to the licence are bound, due to privity of contract, not purchasers. King v David Allen said not binding on purchasers. Errington v Errington and Errington surprised people by holding that a successor in title was bound. Licence could be linked with a proprietary interest and thus made both irrevocable and binding on successors in title. Denning 'this infusion of equity means that contractual licences now have a force and vitality of their own and cannot be revoked in breach of contract. Neither the licensor nor anyone who claims through him can disregard the contract except a purchaser for value without notice.' 
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Smith 'Property Law'

  • Since Ainsworth major developments have centered on estoppel. Ashburn Anstalt v Arnold said that contractual licences cannot bind successors. He said Errington was based on no authority. At least for the time being contractual licences must be regarded as having no effect on sucessors in title. LRA 2002 s116 provides a possibel route for attacking Ashburn. 
  • Any form of licence can be protected by constructive trust. Binions v Evans. It is not necessary to ask if an existing interest binds a purchaser, instead a fresh trust arises at time of sale by virtue of the purchasers promise. Essential requiement is that the purchaser must promise to give effect to the licence. Can there be a trust where there is a non proprietary beneficial right? Both purpose trust cases and Binion suggest this. 
  • Estoppel licences- claimant will generally be a licencee prior to seeking a proprietary remedy. Purchasers LRA 2002 s116. Need to distinguish two stages- inchoate (before the court remedy) and after the court order. Nearly all disputes at the inchoate stage.Appears under s116 that purchasers can be bound at this stage. Given the reluctance to recognise licences as prop interests it would seem difficult to justify a licence ordered by the court as having proprietary effect. However these are now seen as proprietary in the inchoate stage.
  • It seems likely if contractual licences are not proprietary interests binding on purchasers then there are no formalities for their creation. 
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Smith 'Property Law'

  • Commercial licences were confirmed in Clore v Theatrical Properties to be able to be assigned. There is no universal restriction on the right to assign but the nature of the individual licence has to be considered carefully. Assignment of an estoppel licence seems unlikely but would probably have to be in writing because it is equitable and usually an interest in land. 
  • A licencee cannot rely on trespass or nuisance. Property based remedies dont really apply due to the non proprietary nature of the licence. Better protection now. There will be an action in contract if a licensor under a contractual licence intereferes with the licencees possession, not normally under trespass. A licence which doesnt confer possession cannot be the basis of trespass. A remedy in trespass allows full protection to the licensee. A third party who is a successor in title to the licensor will not be liable in trespass. Manchester Airport v Dutton said a licensee who has never been in possession can seek possession against a trespasser. Been criticised and said it only applies to occupational licences. Hunter v Canary Wharf HoL said licencees cannot sue for nuisance. Seems hopeless unless exclusive possession. 
  • Comparison with leases- Statutory protection for tenants doesnt apply to licencees and this is the biggest practical difference. Both lease and licences are contractual in origin. 
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