term 1 property notes
TRANSCRIPT
Property 10/10/11 9:05 PM
What is a right?
All rights correspond to duties
Enforceability
o In rem
Enforceable generally against others
o In personam
Enforceable only against specific persons
o Eg. King v David Allen & Sons
Right to post bills – right in rem or right in personam?
Not an easement
Requires some nearby land to benefit
Ownership vs Posession
Mr King – Ownership
Picture Palace – Possession
Right to post bills a personal right, not enforceable on Picture Palace
company
Assignability
o Grady v HM Prison Service
Things in possession
Claims in relation to person – eg. defamation
Things in action – claim for unfair dismissal?
Right to money/property
Wrongful dismissal v Unfair dismissal
Thing in action or Thing in possession?
Remedy for wrongful dismissal – damages, possibility for
right to get job back
Remedy for unfair dismissal – right to get job back,
possibly compensation
For purposes of insolvency, is claim for unfair dismissal assignable?
Court held that unfair dismissal claim was a personal right and was not a
“thing in action” which was vested in her trustee upon bankruptcy
o Rights are assignable, obligations are not
Property Rights to Human Tissue
Law designed to protect people and things
Personal rights designed to protect persons, property rights meant to protect the things
they own
Parts or products of a living body
o Human Tissue Act 2004
o Moore v Regents of University of California (US Case)
Physician removed spleen and other body parts of leukaemia patient,
produced treatment for leukaemia with great economic potential
Held that claimant no longer owned body parts following removal
o Yearworth v North Bristol NHS Trust
Does injury to one’s sperm constitute a personal injury or a damage to
property? Or neither?
Men diagnosed with cancer, advised that treatment might damage their
fertility, produced samples which were freezed and stored for future use
Technical problem with freezing tank, sperm perished
Held that damage to sperm did not constitute a personal injury
Court rejected argument that sperm was ejaculated with view for
being kept, and its intended function was identical to its former
function when inside the body, and that the sperm remained
“biologically active”
Court felt compelled to “deal in realities”
Stretching personal rights too far
Held that there was an application to the sperm of work and skill as
recognised in Doodeward, and the sperm could be owned by the men
Regards Dobson as a claim which failed because the pathologist
never undertook to the claimants and was not obliged to continue
to preserve the brain – whereas in this case the trust was obliged
to preserve the sperm
Men had key characteristic of ownership – negative control –
they could require the destruction of the sperm at any time
Living human body
o Incapable of being owned
o Dominus membrorum suorum nemo videtur (No one is to be regarded as the
owner of his own limbs)
o Nor can one possess it
R v Bentham [2005] UKHL 18
Corpses
o Cannot be owned
Williams v Williams [1882] 20 Ch D 659
o Reasons
No ownership of living human body, death does nothing to trigger
ownership
Coke and Blackstone – body is a temple of the Holy Ghost
In the interests of public health to disallow cross-claims to ownership of
corpse – it should be buried as soon as possible
o Exceptions
Doodeward v Spence (Australian High Court )
Body of still-born two-headed baby preserved and exhibited for
profit
Held that when a person by “lawful exercise of work or skill so
dealt with a human body or part of a human body in his lawful
possession that it has acquired some attributes differentiating it
from a mere corpse… he acquires a right to retain possession of
it
Parts of a human corpse
o Dobson v Tyneside Health Authority [1997] 1 WLR 596
Pathologist removes brain from women’s corpse for future examination
Brain transferred to second defendant
Plaintiff seeks to claim possession of brain, but it could not be found
Court dismisses claim for negligence
Held that while Doodeward was decided correctly, the fixing of the brain
in paraffin did not transform the brain into a property which could be
possessed – did not amount to the lawful exercise of work or skill as
recognised in Doodeward
Removal and storage of brain in paraffin was done as part of post-
mortem, with view to later analyse the cause of death, not to preserve it
for exhibition
o R v Kelly and Lindsay [1999] QB 621
Defendants convicted for theft of human body parts, appeal
Body parts were in possession of the Royal College of Surgeons for
purposes of training surgeons
Parts of corpse are capable of being property within section 4 of the Theft
Act 1968 if they “have acquired different attributes by virtue of the
application of skill… for exhibition or teaching purposes”
Obiter: Law could in the future recognise body parts even without the
“acquisition of different attributes, if they have a use or significance
beyond their mere existence”
Organ transplant operation, extraction of DNA for exhibit at trial
Information
Giving people a limited monopoly over certain types of information as an incentive for
inventiveness – books, art, music
Copyright: forms of expression
Patents – rights to inventions
o Davis v Commonwealth of Australia [1998] HCA 63 (Australian Case)
No one is allowed to gain control over components of ordinary speech
o USA: International News Services v Associated Press [1918] (US Case)
Is there property in news freely available?
“News of currents events may be regarded as common property…we are
concerned with…the business of making it known to the world”
Rights not between news agencies and public, but rights between news
agencies
News “must be regarded as quasi-property, irrespective of the rights of
either as against the public”
It can be considered “quasi-property”, quasi because it is not generally
enforceable against others, only other news agencies
o Victoria Park Racing & Recreation Grounds Co Ltd v Taylor [1937] HCA 45, 58
CLR 479 (HC Australia)
Defendant owner of land near racecourse, uses platform to see what
takes place on the racecourse and subsequently broadcasts
commentaries
Claim in nuisance – when one uses land in such a way that interferes
with neighbour’s right to use his own land
Nothing defendant is doing really interfering with purpose of plaintiff’s
land – to be a racecourse. Plaintiff can still hold races, invite people, sell
tickets, just earning less money
Held that defendant was allowed to continue to broadcast commentaries
Rejects argument of “property in a spectacle”
English law has not followed course of development in the US,
which recognises “broadcasting rights” and the “quasi-property”
created by enterprise, organization and labour
Possession 10/10/11 9:05 PM
Possession
Degree of physical control appropriate to the nature of the thing possessed
An intention to possess
Young v Hichens [1844] 6 QB 606
Plaintiff about to catch fish, defendant interrupts
Plaintiff would have had possession but for the act of defendant, but he did not have
possession yet
No one has right to possession for a wild fish
No interference with plaintiff’s rights because while he had intention to possess fish, he
did not have control
Popov v Hayashi [2002] California Superior Ct
Barry Bond’s record setting homerun ball
Pre-possessory intent (?), Right to possession, Conversion
Plaintiff almost catches ball, crowd causes him to drop ball, defendant Hayashi picks it up
Difficulty: Awarding ball to plaintiff assumes he would’ve caught the ball had the crowd not
interfered. Awarding ball to defendant assumes he would’ve dropped it.
Plaintiff had no possession, but pre-possessory interest in property. Can still support act
in conversion
When defendant caught ball, it had already been “encumbered by the qualified pre-
possessory interest of plaintiff”
Conflict of rights: Pre-possessory intent v Possession
Claim to property equal, hence entitlement equal
Does pre-possessory intent equate to a right to possession?
o Plaintiff clearly had a clear opportunity to possession, but
o In English Law: Only way to acquire right to possession would be to acquire
actual possession
o In general for disputes between claims for possession between to people ask:
“Who had possession first?”
If applied to this case defendant clearly would have won as he had both
intent and control first
Several problems would arise with the acceptance of the notion of pre-possessory intent:
o Recognition of pre-possessory intent would unnecessarily complicate cases with
competing claims
o When exactly is pre-possessory intent established?
“When an actor undertakes significant but incomplete steps to achieve
possession of a piece of abandoned personal property”
Difficulties with determining where and when pre-possessory intent
occurs
Wouldn’t everyone in the vicinity have “pre-possessory intent”?
How can pre-possessory intent be recognized legally to be a claim of
“equal quality” as against one who has attained complete possession
o As judge notes, “possession” already has a degree of versatility to it and varies
from industry to industry
In this particular case everyone attending a baseball game in hopes of
catching the record setting baseball must expect a certain amount of
physical contact and jostling, especially so for those in the standing only
section where Barry Bonds hit the most number of home runs.
Everyone in the stands already had the intent to gain possession of the
ball, stopping the ball’s momentum with one’s glove hardly excludes
others from possession
Interference with Possession
Trespass
Direct interference with possession of goods or land
Conversion (formerly known as trover)
Involves a greater interference than trespass
Definition as in Kuwait Airways Corporation v Iraqi Airways Co [2002] UKHL 9, per Lord
Nicholls
o In general, the basic features of conversion are
Defendant’s conduct was inconsistent with rights of owner
Conduct was deliberate, not accidental
Conduct was so extensive an encroachment on the rights ot the owner as
to exclude him for use and possession of the goods
Jus tertii – a claim that a third person has a better right to possession than the claimant
Does not excuse wrongful interference at common law
Section 8 Torts (Interference with Goods) Act 1977
o Allows use of jus tertii
Relativity of Title, Adverse Possession 10/10/11 9:05PM
Title
Title is relative, it decides which of the claimants has a better claim, not who in the world
has a better claim
Concept of “true owner”
Oft-used, but does not indicate anything but someone with a better title
Right to Possession – Would Flack be considered to have possession if the bag was full of drugs?
Better to say she had better right to possession, rather than she was in possession of everything in
her house.
Flack v National Crime Authority [1998] (Australian Case)
Police seize bag containing money, Claimant was unaware of bag, but claimed to be in
possession of it
Held that claimant had manifested an intention to exercise control over any chattels on
her premises, including those chattels she was unaware of
Costello v Derbyshire Constabulary [2001]
Claimant arrested, car seized by police
Claimant aware that car was stolen, but if he was in possession of the car when it was
seized, is he entitled to its return and wrongful detention?
Claim can only be defeated by proof of a title superior to his possessory title
Claimant entitled to return of the car
Supports notion
o Possessor of stolen goods still have possessory titles
Exceptions to obligation to restore
o Due to nature of good is illegal, not circumstances to which possession was
obtained was illegal (eg. Drugs, a gun) (Bowmakers)
Land owners
Flack v National Crime Authority [1998 FCA 932 (Australia)
o Found that she had an intention to exercise control over any chattels on in her
house, whether or not she was aware of their existence
Parker v British Airways Board [1982] QB 1004
o No such intention found
o Occupier of land has rights superior to those of a finder of chattels in or attached
to that land, whether or not the occupier is aware of the presence of the chattel
o Occupier has rights superior to finder over chattels upon or in, but not attached to
land, only if before the chattel is found, he has manifested an intention to exercise
control over land and things which may be upon it or in it
Elwes v Brigg Gas Co. [1886]
o Prehistoric boat embedded in land
o Defendants lessees, plaintiff land owner
o Tenant for life of realty v lessee, not finder v landowner
o Landowner found to own the boat
South Staffordshire Water Co. v Sharman [1896]
o Defendant employed by occupier of land to remove mud from bottom of pond
o Found two gold rings in mud
o Rings were held to be in the mud and thus part of the realty
o Furthermore finders were employed by occupier to remove the mud – surely had
the right to decide how the mud and any other objects found were to be dealt with
o Occupier was held to be entitled to the rings
o Possession of land carries with it possession of everything attached to or under
that land, in absence of better title elsewhere; occupier must have manifest
intention to exercise control over it
Bridges v Hawkesworth [1851]
o Bridges picks up parcel on Hawkesworth’s shop floor
o Found to contain money
o Bridges asked him to keep notes until owner claimed them, no claimant came
forward
o Three years later Bridges asks for money
o Found that Bridges, the finder, had a better title and place that notes were found
should not make a difference
o Ratio: Unknown presence of notes on premises occupied by Mr Hawkesworth
could not give him any rights
Finders
Armory v Delamirie [1722]
Parker v BA Board
o Plaintiff found gold bracelet in airport lounge
o Gave bracelet to employee of BA, with his own name and address and requested
that it be returned to him if not claimed by the owner
o British Airways sells bracelet when it is not claimed
Waverly Borough Council v Fletcher [1996] QB 334
o “the English law of ownership and possession, unlike that of Roman Law, is not a
system of identifying absolute entitlement but of priority of entitlement” – Auld LJ
Property possessed by people as a result of illegal activity
Webb v Chief Constable of Merseyside Police [2000]
o Money seized on suspicion that it was proceeds of drug trafficking
o No convictions for drug trafficking
o Police do not claim to have title, but advance illegality as defence on public policy
grounds
o Claimants could rely on right to possession at the date of seizure by the police as
conferring sufficient title to recover money from the police even if police could
establish that the money was likely proceeds of drug trafficking
Tinsley v Milligan [1994]
o Lord Browne Wilkinson
o Both claimant and defendant parties to illegal contract
o Approved and followed Bowmakers, Singh v Ali
o “In my judgment the court is only entitled and bound to dismiss a claim on the
basis that it is founded on an illegality in those cases where the illegality is of a
kind which would have provided a good defence if raised by the defendant. In a
case where the plaintiff is not seeking to enforce an unlawful contract but founds
his case on collateral rights acquired under the contract (such as a right of
property) the court is neither bound nor entitled to reject the claim unless the
illegality of necessity forms part of the plaintiffs case."”
o Possession is only illegal if plaintiff is trying to enforce an illegal contract, but if he
obtains possession through an illegal contract, he still has title
Singh v Ali [1960]
o Privy Council case
o Unlawful sale to plaintiff of a lorry, which was registered in the defendant’s name
as part of the illegal purpose
o Defendant took lorry without consent, refused to return it
o Held that despite the contract for sale of the lorry being unlawful, plaintiff derived
the right to immediate possession and could sue in trespass
Buckley v Gross
o Tallow kept in warehouses
o Warehouses caught fire, melted, flowed into sewers
o Collected by man with no right to it
o Man sold it to claimant
o Where owner was unknown, police had right to sell goods in question in absence
of claim by real owner within 12 moths
o Police sold tallow to defendant before 12 month period
o Court held that claimant could not recover
o Held that he had no title beyond what mere possession gave
o Thief obtains a good possessory title against a wrongdoer against him, but that if
possession is lawfully divested from him and vested in another, his prior
possession will not avail him to recover possession
o He had no right to possession?
o Competing titles – dishonest taker v honest taker (lawful taker), honest taker
wins?
o If stolen property in possession of thief or receiver is seized by police and
pursuant to statutory authority possession is transferred to someone else
o The transferee obtains possessory title
o Competing titles – circumstances do matter
Bowmakers [1945]
o Exception: Unlawful to deal with them at all
o Court will not enforce an illegal contract, but will uphold a man’s right to
possession provided that he does not have to found his claim on the illegal
contract, or plead its illegality in order to support his claim
Irving v National Provincial Bank Ltd [1962]
o Affirms Buckley
o Plaintiff arrested on suspicion of robbery of 2 banks
o Conviction for robbery of one of the banks, the defendant’s in this case, quashed,
plaintiff claims money seized rom him when he was arrested
o On who does the onus of proof of title lay on?
o Plaintiff had to prove he had title to money
Betts v Metropolitan Police District Receiver [1932]
o No magistrate order, plaintiff allowed to recover
o Police seize piece of cloth they believe, but could not prove was stolen
o Police returns cloth to who they suspected it was stolen from
o Plaintiff later convicted for felonies not concerned with cloth
o Plaintiff brought action claiming damages for detinue and conversion of cloth
o Suspicion of stealing was not tried in court, thus defendants could not rely on this
Thieves may rely on possessory title, but must be qualified
When there are competing titles, only then do circumstances really become significant
In other words, strength of rights to possession are determined by circumstances
Distinction between objects attached to or in land compared to objects found on it?
An object in land “is to be treated as an integral part of the realty as against all but the
true owner” (Parker)
Removal of object in or attached to land normally would involve interference and
damaging of land
An object buried in the ground is most likely lost to the true owner forever, whereas an
object on the ground still carries a realistic hope of being found by the true owner. The
law therefore, looks for a substitute owner
Adverse Possession
When one obtains possession of goods or land and they have a right to possession good
against everyone else in society, except someone with a better right to possession.
o Registered Title
Land Registration Act 2002
Whoever’s name is on the register has the better title
Owner deemed to hold in trust for the squatter
o Unregistered Title
Limitation Act 1980
If someone is in adverse possession of a land for more than 12
years, the person with the better right to possession has his title
extinguished
Title acquired by adverse possessor is an independently acquired possessory title
o Not a transfer of title from owner to adverse possessor
Perry v Clissold [1906] 4 CLR 374, [1907] AC 73 (PC)
Land in New South Wales compulsorily acquired by the Crown
Clissold had possession of land acquired, owner was unknown
After Clissold died, executors sued Perry, the Minister of Public Instruction for
compensation under statute which authorized compulsory acquisition
Clissold entered into possession of land in 1881, fenced it
At expiration of 20 years his title would have been absolute, before the expiration
possession could be terminated by act of the true owner
Submitted by appellants that those rights to possession of true owner were succeeded by
the Crown through force of legislation, and that Clissold was a mere trespasser
Submitted by respondents that he had an interest in the estate and rights enforceable
against everyone but the true owner
Privy Council advised that appeal should be dismissed in favour of Clissold’s executors
o Cannot be disputed that a person in possession of land in the assumed character
of owner and exercising peaceably the ordinary rights of ownership has a
perfectly good title against all the world but the rightful owner
Claimants qualified for the payment as they “would have been such owners” if not for the
Act. Clissold had occupied the land for 10 years with no adverse claim, was in effect the
owner of the land, and would have been officially and legally recognized as so once 20
years had passed. Lands for Public Purposes Acquisition Act deprived Clissold (and
subsequently executors) of ownership.
Lord Macnaghten was worried that the act would have the ability to convolute claims to
property where ordinarily they would be clear. If decided against Clissold’s executors, the
normally unquestioned rule that one who has established possession has a better title
than all but the rightful owner would be superseded by the act.
JA Pye (Oxford) Ltd v Graham [2002]
Limitation Act 1980
Tenure and Estates 10/10/11 9:05 PM
History
Feudalism and subinfeudation
Crown grants land to lords who holds land in fee
Lords divide up land among lesser tenants and so on
Created a pyramid, with Crown on top and tenants at bottom
Abolished by statute, tenants became mostly directly under the Crown
Different types of tenure
Socage
o Nature and amount of service – normally agricultural – were fixed
eg. Number of days plowing per year
Mabo v Queensland (No 2) [1992] HCA 23, 175 CLR 1
When there is a change in sovereignty English Common Law has to be
imported
Tenure is essential to English Land Law
Crown only has ownership only in the sense of two main rights – the right
to take land from someone and to grant land to someone. Only
“possesses” land if there is land occupied by no one (terra nullius)
Whether acquisition of sovereignty had the effect of vesting in the Crown
absolute ownership of, legal possession of and exclusive power to confer
title to, all land in the Murray Islands
Distinction between the Crown’s title to territory and the Crown’s
ownership of land within a territory (of its colonies)
Acquisition of sovereignty over land not equal to acquisition of title and
ownership of land within colony
Estates
Right to possess space on earth for a period of time
Measured by 2 horizontal dimensions delineating area of land
Vertical Dimension giving it volume
Time, determining how long the estate will last
Freehold – measured in lives
Types
Fee simple
o Only freehold estate you can create in law currently
o Fee – inheritable; simple – without condition
o Allows for perpetual private ownership
Makes for better stewardship of the land
Landowners more likely to install cost-justified permanent
improvements
Fee tail
o Lasts only as long the lineal descendants of the grantee
o Can only exist as an equitable interest
Law of Property Act 1925, s1, 130
Life
o Comes to an end on the death of the grantee
o Grantee may grant it to someone else, although estate still comes
to an end on the death of the original grantee
Second grantee would be said to have had a life estate per
autre vie (for the life of another)
o Can only exist as an equitable interest
Law of Property Act 1925. S 1(3)
Commonhold
Canada: Didow v Alberta Power Ltd [1988]
Landowner’s right to airspace above the ground
Electrical utility company constructs powerline above farm yard, plaintiffs
claim this is trespass
Judge rules in favour of plaintiffs
Right to use land includes right to use and enjoy the airspace above the
land
Intrusion by an artificial or permanent structure into airspace of another is
forbidden as trespass
Cujus est solum est usque ad coelom et ad inferos – owner of a piece of
land owns everything above and below it
o Not to be taken literally; law has developed to give the Latin maxim
limited application
Any incursion into the air space at a height which may interfere with
ordinary user of the land as trespass rather than nuisance
Neighbouring owners have no right to erect structures overhanging or
passing over into other land, no need to show the overhanging structures
cause damage or annoyance (as would have to be proven for an action in
nuisance)
Land owner’s entitlement to freedom from permanent structures which in
any way impinge upon the actual or potential use and enjoyment of his
land
North America: Edwards v Sims [1929]
Great Onyx Cave
Entrance on defendant’s land but one third of cave under plaintiff’s land
Plaintiff wants to send his surveyors into cave to determine how much of
the cave is under his land
Leasehold – measured in defined periods
Definitions
Person granting the lease – lessor/landlord
Person lease is granted to – lesee/tenant
Landlord’s interest in land (excluding what has been granted to tenant) –
reversion
What elements are essential for a valid lease? Is rent required?
Defined period with start and the maximum duration of the lease
Formalities – not a necessity
o S54 of LPA 1925 – must grant a legal lease without a deed except
for a lease not exceeding 3 years
Exclusive possession for a term of years
o Term of years – refers to a period of time, not necessarily more
than a year
o Exclusive possession – a right
Possible to have valid lease without rent according to LPA 1925
Types
Fixed-term
o Comes to an end on a specific date (21 November or in 5 years)
Periodic
o Automatically renews at the end of each period (monthly/yearly)
unless landlord/tenant gives notice to end it
o Or a tenancy which continues until determined by notice
At will
Prudential Assurance Co Ltd v London Residuary Body [1991] UKHL 10
Facts
o Memorandum of agreement proposes to create lease “until the
tenancy shall be determined as hereinafter provided”
o Only relevant clause was that the tenancy would continue until
required by the Council for road widening
o Meant to be temporary, but road might never be widened –
indefinite lease?
At law, only estates that can exist are an estate in fee simple absolute in
possession, or a term of years absolute
o Law of Property Act 1925 s205
o Recognised in Lace v Chantler [1944] KB 368
Leases which propose to create a tenancy for an uncertain term, will likely
be construed as yearly/monthly tenancies
o Doe d Warner v Browne [1807] 8 East 165
Held that agreement failed to grant an estate in land
o The tenant by entering into possession and paying a yearly rent,
meant that there was an agreement of a yearly tenancy – which
was determinable by the landlord or the tenant by six months’
notice
o Extends principle set in Lace v Chantler, that a term must be
certain, to all leases and tenancy agreements
o Lease cannot be partly certain because tenant can determine it at
any time and partly uncertain because the landlord cannot
determine it for an uncertain period
However what about periodic tenancies?
Lord Templeman – it is as if it renews at the end of
each period
*Partially(?) overruled in Mexfield
Mexfield v Berrisford
Housing association granting accommodation
Landlord covenanted that he would not give notice to quit unless tenant fell
behind rent by a certain number of months
Prior to 1925 an uncertain term was converted to a lease for life
Under LPA 1925 all leases for life were converted to a lease for 90 years –
a fixed term lease, which could be terminated by the death of the tenant,
or by any other terms in the lease
*What if the lease was to a company?
o Logic would not work for companies as a company could not have a
lease for life
o Lease granted to company in uncertain terms would likely be void
for uncertainty
*Partially overrules prudential assurance
License v Lease
Must have exclusive possession
Joint tenants are one unit – spouses would be able to have exclusive
possession
Bruton v London and Quadrant Housing Trust [1999] UKHL 26
Rent acts protect tenants
Licensee with contractual rights v tenant with rights under rent acts
Agreement purports to create a license, not a lease
Grantee had right to exclusive possession – irrelevant what language is
used in agreement if upon its true construction it has identifying
characteristics of a lease
Manchester Airport plc v Dutton
Future interests
Would the following leases be valid?
Lease of farm land to A for 25 years
o Fixed term lease, provided it has a start date
Lease of flat to B until B graduates from college
o Uncertain period – converted to a lease for 90 years after mexfield
Lease of flat to C for 7 years, but if C graduates from college, lease may
be terminated by landlord or C giving 2 months notice in writing
o Fixed-term lease, maximum duration for 7 years
Lease of house to D for 3 years, followed by monthly tenancy to D
o No definite start date – arguable that monthly tenancy would be
void
Lease of house to E for 5 years, to begin when X’s monthly tenancy ends
o Can be considered void as there is no definite start date
Lease of house to E for 5 years, to begin when Y’s 10-year lease ends
o No definite start date – 10 years is only the maximum duration
Lease of bedroom in house to G for 2 years
o Fixed-term lease
o Lease could be valid if G had exclusive possession of bedroom
o But usually would be a license as G would have to have access to
common areas etc
Equitable Interests and Co-ownership 10/10/11 9:05PM
Equitable Property Rights
Manner in which estates and other interests in land are generated or transferred depends on whether
they are legal or equitable
In general more formality is required for legal interests
Legal rights in general more durable than equitable property rights
The Queen v London Borough of Tower Hamlets, ex parte Von Goetz [1998] EWCA Civ 1507
Applicant obtained 10 year assured shorthold tenancy of property
o Tenancy granted under agreement for a term longer than 3 years
No deed under seal so tenancy could not take effect as legal estate in property
She applies for grant for renovations, which requires “an owner’s interest”
o Either an estate in fee simple absolute in possession
o Or a term of years absolute
Basically a lease, which is in possession or will come into possession
Even though applicant did not go through formal procedures, does she still have a valid
term of years absolute in equity?
Walsh v Lonsdale [1882] 21 CHD 9
o A specifically enforceable lease is as good as a lease
In most cases an equitable lease grants the person the same rights as a legal lease
*Law Property Act 1925 does not make it impossible for creation of equitable fee simple
absolute in possession or equitable term of years absolute – the act states such interests
may be legal, but don’t need to be legal
Trusts
Relationship in which trustees are owners of trust assets which they are required to use according to
the terms of the trust for the benefit of the beneficiaries
Trust requires two different people, at least
Trust cannot exist unless there is beneficiary who can enforce it
o Except in case of a trust for charitable purposes
Enforced by charity commissioners on behalf of the Crown
Fiduciary duty
o Trustee’s duty to avoid situations where personal interests or other duties conflict
with their duties as trustees
Trustees
o Legal owners of trust assets, although equitable interests and rights can also be
held in trust
o Not allowed to use trust assets for own benefit, despite being legal owners
Beneficiaries
o Equitable owners of trust assets and
o Beneficial owners of trust asset
Ownership for one’s own benefit, can be legal or equitable
Co-ownership
Joint tenancy
Tenants do not have shares, but collectively own the whole in a way which requires their
interests to be identical to one another
o Four unities
Possession
Interest
Title
Time
o Each tenant is entitled to possession of the whole, has the same interest in it,
deriving from the same title, arising at the same time
If joint tenant dies, his interest simply disappears and the surviving joint tenants continue
as owners of the whole
o Right to whole of property accrues automatically to surviving joint tenants
o Ie. No right of survivorship
Can be turned into an equal tenancy in common by process of severance
o Joint tenancy only form of co-ownership that can exist at law, severance hence
only works in equity
Law of Property Act 1925 ss34, 36
Easier to look at joint tenants as one unit
o One of the tenants may not do anything with the others’ consent
Tenancy in common
Tenants have undivided shares of the whole which do not have to be equal
May have four unities, but requires only possession
Carries right of survivorship
o Upon death, tenant’s interests continue to exist and will be distributed as part of
his estate
LPA 1925 – imposes a statutory trust wherever there is co-ownership
Prior to 1925 Act, parties could hold estate as tenants in common
When land comes as a whole to be sold, buyer would have to investigate the shares of
the different parties
S34 LPA
o Co-ownership
Co-owners of the legal estate will always be joint tenants, cannot hold as
tenants in common
Whenever there is co-ownership, there is a statutory trust
Eg. if I convey to ABCD they will hold the legal estate on trust for ABCD
in equity
Equitable interests can be severed
Eg. C can sell his equitable interest in the land to X,
whereby ABCD will hold the land on trust as joint tenants
for X as a tenant in common for ¼ of the share, and for
Malayan Credit Ltd v Jack Chia-Mph Lrd [1986] AC 549
Defendant and plaintiff agree to share premises
Area occupied unequal – agreed to rent and service charge being apportioned in
accordance with areas they occupied
Landlord executed lease as joint tenants at law
Paid deposit in same proportion
Paid fees such as stamp duty and survey fees in unequal shares
Dispute arose over areas of occupation
Plaintiff sought order for sale of leasehold premises and equal division of net proceeds of
sale, or alternatively equal partition
Were they tenants in common in equity with equal shares, tenants in common in equity
with unequal shares, or joint tenants in equity?
Plaintiff argues that in absence of express agreement joint tenants at law only are tenants
in common in equity if
o They provided purchase money in unequal shares
o Grant consists of a security for a loan and the grantees were equal or unequal
contributors to the loan (Co-mortgagees)
o They are partners and the subject matter of the grant is partnership property
Court rejected that these are the only three cases
o May infer beneficial interest is intended to be held as tenants in common in other
situations as well
Such as where the grantees hold the premises for their several individual
business purposes
Court sees tenancy in common in unequal shares
o Lease clearly taken to serve separate commercial interests of defendant and
plaintiff
o Prior to grant of lease agreed upon proportion of premises for each
o Made meticulous measures and divided rent accordingly
o Paid stamp duty and survey fees in unequal shares
Harris v Goddard [1983] 1 WLR 1203
Plaintiffs are executors and children of the deceased Mr Harris
Defendants are Mrs Harris – second wife, and two trustees of a fund which came into
existence following the sale of a property originally conveyed jointly into Mr and Mrs
Harris as joint tenants in equity
Another earlier property secured by mortgage made by Mrs Harris’s employers, protected
by a life policy on life of Mr Harris, and the interest and premiums of which were deducted
from Mrs Harri’s salary
o Mrs Harris sold this and bought the property in question
o Money required for the new purchase provided by Mrs Harris’s employers in a
similar manner
Relationship broke down, Mrs Harris’s solicitors told him she wanted a petition for divorce
Mr Harris dies – did petition for divorce contain severance notice?
o If it did not, Mrs Harris takes whole interest of fund which represents sale price of
the property
o If it did, plaintiff’s, children of Mr Harris, entitled to half
Severance of joint tenancy
o According to Williams v Hensman [1861]
Disposal of one of the interests
Mutual agreement
By any course of dealing sufficient to intimate that the interests of all
were mutually treated as constituting a tenancy in common
o Law of Property (Amendment) Act 1926
s36(2)
“do such other acts or things as would.. have been effectual to
sever the tenancy”
Prior to 1925 no such thing as unilateral severance, but can
because of LPA 1925
“”a notice in writing of such desire”
Petition held not to contain severance notice
o Notice in writing which expresses desire to end joint tenancy in the future not
effective
o Need to show a desire to sever, intended to have statutory consequences
Mrs Harris entitled to entire fund
Re Draper’s Conveyance [1969]
o Wife held to have validly severed joint tenancy
o Summons and sworn affidavit claiming that the property be sold and the proceeds
be distributed equally accordingly held to be sufficient as severing joint tenancy
o Present case distinguished as Mrs Harris’s petition sought relief only in the “most
general and unparticularised terms”
Murphy v Gooch [2007] EWCA Civ 603
Murphy and Gooch in relationship, purchased family home under shared ownership
scheme a 25% interest in a 99 year lease of the Property
Relationship broke down, Murphy leaves property, Gooch remains in sole occupation until
Murphy brings action
During 1994-1999 Gooch paid interest instalments, rent, and premiums under the policy
But he had sole occupation –he give a sum in the nature of an occupation rent to Murphy
Equitable accounting
o Doctrine which facilitates balance between co-owners
o Consisting of body of guidelines aimed at achieving justice between co-owners
o Eg. credit for monies paid and expenditure incurred on jointly owned property
o Now in statutory principles laid down in s15 of 1996 Act
Affirmed in Stack v Dowden [2007] UKHL 17
Likely to produce same result as equitable accounting
Issues
o Murphy disavowed intention to maintain claim to credit for an occupation rent
Does not preclude her form using her entitlement to this credit as a form
of set-off against credits claimed by Gooch
o Was Murphy barred from claiming such credit in absence of proof of ouster from
occupation
Open to court whether just to do so
When she left property should be regarded as constructively excluded
from property
Held that Ms Murphy entitled to setoff the credit to which she is entitled for an occupation
rent against the credits to which Mr Gooch is entitled to in respect of payment of Interest
and Rent
Security Interests 10/10/11 9:05 PM
Security Interests
Property rights for the limited purpose of making it more likely that an obligation will be
performed
o Eg. a mortgage
Possession
Pledge/Pawn
Debtor transfers possession of goods to creditor until debt is repaid
Cons
o To creditor: restricted to small items, or creditor has to have premises to store
large items
o Debtor cannot make use of goods until debt is repaid
o Only tangible assets can be pledged
Title
Wider variety of assets than pledge allows
Debtor retains use of assets while debt is being repaid
As creditor already has title, realisation of security in event of a default easier than
pledging
Cons
o Third parties may be deceived by debtor’s apparent wealth into thinking debtor is
a good credit risk
o Might buy or take interests in secured assets when debtor does not have good
title
Most jurisdictions require registration of secured interests
Encumbrance
Only possession and title interests possible at common law
Equitable charges and liens developed as forms of encumbrance
Equitable charges
o Confers a right on secured party to look to a particular asset in event of the
debtor’s default, enforceable by power of sale or appointment of a receiver
o Does not include transfer of proprietary interest in the charged asset – if it does, it
is an equitable mortgage
o Non-possessory
o Wide range of assets
Including changing pools of assets such as stocks
o Debtor retains title
o Can be fixed
Gives holder of charge an immediate proprietary interest in the assets
subject to the charge
Unless consent is obtained by holder, company unable to deal with its
assets without committing a breach of terms of the charge
Cannot give customers good title to goods sold
Cannot make use of money customers paid for the goods
o Or floating
Charge over a fund of changing/fluctuating assets
Not necessary that if assets fluctuate, then it can only be subject
to floating charges
Eg. future book debts
Can be subject to fixed charges if creditor limits debtor’s
right to use proceeds
“floats” until conversion into a fixed charge, at which point the charge
attaches to specific assets
Cessation of company’s right to deal with assets in ordinary course of
business leads to automatic crystallisation – conversion into fixed charge
Developed as compliance with term of fixed charge on company’s
fluctuating assets would paralyse its business
With floating charge company at liberty to carry on business as freely as
if the charge does not exist
In re Yorkshire Woolcombers Association Ltd
Identifies 3 characteristics of floating charges
A matter of nature of charge, not a matter of drafting or specific language
used in document
Cons
Enables holder of charge to withdraw all or most of assets of an
insolvent company
Allows company to trade and incur credit despite charge, putting
ordinary trade creditors of company at risk
Companies Act requires all floating charges to be
registered
o Agnew v Commissioner of Inland Revenue [2001] UKPC 28
Assets subject to floating charges can be used to pay
“preferential debts”, holders of fixed charges have priority over other
creditors
Subject of charge debtor’s book debts, a fluctuating pool of assets, being
the money owned to the debtor by its customers and others
If charge is fixed, proceeds payable to company’s bank as holder of the
charge
If charge was floating at time it was created, payable to Commissioner of
Inland Revenue as preferential creditors
Debenture expresses to create fixed charge on book debts of the
company which arise in the ordinary course of trading and its proceeds,
but not the proceeds which are received by the company before the
charge holder requires them to be paid
Debenture prohibits company from disposing of uncollected book debts,
but permits it to deal freely with assets
Company retained right to collect debts and deal with their proceeds free
from security
Does this mean it is a floating charge until appointment of its
receivers, even though it purported to create a fixed charge?
Possible to assign future property in equity
Holroyd v Marshall [1862]
Possible to assign future book debts by way of security
Tailby v Official Receiver [1888]
Whether fixed or floating not a matter of construction
Two stages
Gather intentions of parties – not whether they intended to create
a fixed or floating charge, but what rights and obligations they
intended to grant each other in respect of charged assets
If intention is inconsistent with nature of fixed charge, it cannot be
a fixed charge
Proceeds of debts collected by company to be placed into blocked
account with charge holder
Proceeds were not at the company’s disposal
Company at liberty to turn uncollected book debts to account – company
had control of process by which charged assets were extinguished and
replaced by different assets
Inconsistent with nature of a fixed charge
o Retention of title clauses
Romalpa Clause – Aluminium Industrie Vaassen BV v Romalpa
Aluminium Ltd [1976] 1 WLR 676
Court found fiduciary relationship on bailor bailee basis and
allowed tracing into proceeds of sale in priority to other creditors
Where seller of material retains title until payment has been made for
materials sold
Purpose to secure payment for price
Usually, these materials are bought on credit, as they have to first
manufacture the goods, and sell them
Can in some cases be construed as an equitable charge
Seller still loses title in some situations
Buyer sells the goods
s25(1) of Sales of Goods Act 1979
Four Point Garage Ltd v Carter [1985] 3 All ER 12
National Employers Mutual General Insurance
Association v Jones [1988]
Where retention of title purports to apply to new substance which
has been made, it would essentially mean a charge on the new
substance, and would be void if it was not registered
Re Peachdart [1984] Ch 131
o Sellers supply leather to handbag manufacturers
o Handbag manufacturers go bankrupt
o At this time there was leather uncut, cut pieces
of leather, and handbags
o Held that only leather in original form remained
with seller
o For cut leather, the process of manufacture has
commenced, and thus they are to be treated as
manufactured goods and hence was owned by
the buyer
o If manufactured goods were being used as a
security interest, this would be a charge and
would be void for not being registered
Where seller has a clause that provides that on re sale of the
goods, the proceeds are held on trust for seller, can be construed
as a charge, which may be void for non-registration
E Pfeiffer v Arbuthnot Factors [1988]
o Clough Mill Ltd v Martin [1984] 1 WLR 111
Retention of title clause, or Romalpa clause
Where the seller seeks to reserve title until payment has been made for
materials sold
Suggested, obiter, that title can remain with seller even where there are
manufactured goods, if that was what was intended
Addresses problems to do with allowing seller’s to retain title in
manufactured goods
Court held that romalpa clause was effective in seller retaining title, and
is not a registrable charge
*obiter, adds strength to possibility of romalpa clauses being more far
reaching than has been recognised in courts so far
Rights granted to buyer to consume or sell goods do not negate retention
rights until goods are consumed or sold
o Borden (UK) Ltd v Scottish Timber Products Ltd [1979] All ER 961
Clause provided that any chipboard manufactured by buyers using resin
sold by the sellers to the buyers would be charged for amount owing to
the sellers and should the manufactured goods be sold, the sellers
claimed to be entitled to trace into the proceeds of the sale
Held that sellers rights over resin ceased to exist once resin became
incorporated in newly manufactured chipboard
Also held that even if an interest had arisen in the chipboard, it would
amount to a charge which would have to be registered
o Unless an express contrary intention appears the seller’s property in the goods
will vest in the buyer if identity of the goods is lost or if working changes the
product into new goods
Except where it is possible to detach the original goods without damage
to the goods sold or the item in which they were incorporated
Hendy Lennox (Industrial Engines) Ltd v Grahame Puttick Ltd
[1984] 1 WLR 485
Seller supplies electric motors to buyers, who
manufacture generating sets
o Courts have looked at true intentions of parties
Parties could not have intended for manufactured goods to be owned by
seller
Seller’s intention to get money for goods sold
*In order to be considered true intentions, must cater for case where
manufactured goods exceed value of debt owed, must include clause
that money over and above the debt owed will be paid back to the buyer
(as in Clough Mill)
*Must include provision for buyer to sell seller’s property as agent, until
debt is paid back
Equitable liens
Lien at common law
A right to retention
Similar to pledge, but arises by operation of law
Remedy for breach of contract
Where debtor has delivered goods or documents to creditor for some other purpose,
creditor is allowed to retain possession until bill is paid (usually for services such as
repair)
o May be excluded by terms of contract expressly or by necessary implication by
other terms inconsistent with the exercise of a possessory lien
Forth v Simpson [1849] 13 QB 680
o But does not mean that remedy is only available where implied
A remedy in rem exercisable upon the goods, its exercise requires no intervention by
courts
Not a enforceable by action, but affords a defence to an action for recovery of the goods
by a person who, but for the lien, would be entitled to immediate possession
An unpaid seller’s lien is a seller’s right to possession of the goods sold until the purchase
price is paid
Can only be exercised if his possession was lawful at the time the lien was first attached
o Bowmaker Ltd v Wycombe Motors Ltd [1946] KB 505
*Sale of Goods Act 1979 s38, 39, 41, 43
o
Tappenden v Artus [1964] 2 QB 185
o Defendant negotiating hire-purchase of van from plaintiff
o Plaintiff allowed use of van in the interim
o Van broke down, plaintiff sends van to second defendants for repairs
o Plaintiff demands return of van from plaintiff, and subsequently second
defendants, who refuse until payment has been made for repairs
o Artificer’s (skilled repairman) lien when a bailee has handed over possession of
vehicle to artificer for repairs
Can bailor get possession or can artificer rely on lien? (Lien at common
law)
o *If a bailee hands over possession of a good to an artificer, the artificer may
exercise right of common law lien against the bailor only where the owner
authorised (or is estopped against the artificer from denying he authorised) the
bailee to give possession of the goods to the artificer
o Whether bailee has authority relies upon the purpose of the bailment and the
terms of the contract under which the goods are bailed to him
Singer Manufacturing Co v London & South Western Railway Co [1894] 1
QB 833
o *For bailor-bailee relationship – unless it is expressly denied, if purpose of
bailment is for use of goods, bailee is entitled to make reasonable use of goods,
and to do in relation to the goods all things reasonably incidental to their
reasonable use, including giving possession to a third person
o Held that bailor gave bailee by implication authority to get van repaired should it
become unroadworthy, and thus bailee handed over possession to artificer on
authority of bailor; artificer entitled to common law lien against bailor
Mortgages 10/10/11 2:05 PM
Mortgage
A charge by way of legal mortgage
o LPA 1925 s85, 87
o Must be effected by way of a ‘registered charge’
Land Registration Act 2002 s27(2)f
Mortgagor retains title of land, but mortgage is registered as a charge against that title
o Mortgage of fee simple estate – grant of 3000 years
o Mortgage of leasehold estate – sub-lease one day shorter than mortgaged estate
A mortgage is recognised not by language any particular document uses, but can be
applied to any transaction aimed at securing a loan of money upon a debtor’s real
property
o Courts maintain jurisdiction to determine whether a transaction is a mortgage or
not, and apply the relevant common law/statutory rules in relation to mortgages
Grangeside Properties Ltd v Collingwoods Securities Ltd
Harman LJ – ‘once a mortgage, always a mortgage and nothing
but a mortgage’
Courts will look at the intention of parties
Lavin v Johnson [2002] EWCA Civ 1138
Unregistered estate worth over £400 000 conveyed for
£1 to transferee, who pays off transferor’s business
debts
Court held that £1 transfer must have been intended to
operate as way of security
There was an earlier agreement that the land would be
reconveyed for £1 upon the transferor’s repayment of the
debt to the transferee
Held that transferee took title to the land as a mortgagee,
not as an absolute owner
Debtor who grants mortgage – mortgagor
Creditor who receives mortgage – mortgagee
Exam approach whenever there is a mortgage
What protection does borrower (mortgagor) have?
o ‘No clog or fetter’ on equity of redemption
o Since it is a security transaction, mortgagor must be able to
What are the rights of the mortgagee?
o Mortgagee’s right of possession
Administration of Justice Act 1970
For residential homes, courts can postpone enforcement of right
of possession where they think mortgagor can repay debt within
a reasonable time
o Mortgagee’s power of sale
Mortgagor’s equity of redemption
The mortgagor’s equitable beneficial ownership of the land
A property right in the land recognised in equity
Transferrable, inheritable property right
Redemption is, as the name implies, protected in equity – a mortgagor retains his right to
redemption even after the due date at law
o A mortgagor retains this right until a court deems that foreclosure is appropriate
o As such usually the common law (or contractual) date for repayment of the entire
capital sum is very brief – but is in reality quite meaningless
Although this date accelerates time at which mortgagee may exercise his
power of sale
And time at which mortgagor may offer full repayment of debt – he might
want to do so if he can secure better mortgage terms elsewhere
o Any provisions inconsistent with a mortgagor’s right to redemption cannot be
enforced (Browne v Ryan [1901] 2 IR 653)
Even at the expense of the ‘sanctity of contract’
Redemption also protected by statute
o By the Financial Services and Markets Act 2000, large part of mortgage industry
regulated by the Financial Services Authority (FSA)
o Imposes upon lenders standards of conduct to ensure fair treatment of
consumers
Mortgage terms which typically are struck down in equity
Curtailment of mortgagor’s right to redeem
o Mortgagor has legal right to redeem on redemption date
o After redemption date, mortgagor has equitable right to redeem until equity of
redemption is extinguished by sale or foreclosure
o Grant of an option to the mortgagee
Samuel v Jarrah Timber and Wood Paving Corpn Ltd [1904] AC 323 (HL)
House of Lords held that a term which granted the mortgagee an
option to purchase the mortgaged property outright within 12
months of the date of loan was invalid
Court was reluctant to come to such a decision given that parties
were well aware of what they were contracting to do, but was
bound by the doctrine that no term may exclude a mortgagor’s
equity of redemption
Although doctrine is disapplied where the mortgagee is granted the
option in a separate transaction, independent of the original mortgage
Reeve v Lisle [1902] AC 461
o Postponement of the date of redemption to the point where it would be
unconscionable to uphold
Fairclough v Swan Brewery Co Lrd [1912] AC 565
Court invalidated a mortgage term which precluded redemption
until six weeks before expiry of the mortgagor’s leasehold term of
17 years and 6 months
Date of redemption cannot be postponed
Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441
Mortgage term stipulated that loan money should not be repaid
before expiry of 40 years from granting of the mortgage
Interests rates in the market fell, mortgagor sought early payment
of the loan so as to secure more desirable mortgage terms
elsewhere
Court refused to allow mortgagor to redeem in advance of legal
redemption date
Sir Wilfred Greene MR in the CA
o ‘Equity does not reform mortgage transactions
because they are unreasonable’
o Only to see that ‘the essential requirements of a
mortgage transaction are observed, and that
oppressive or unconscionable terms are not
enforced’
Mortgagor had secured substantial long term loans
which were reasonable at the time
Court was not prepared to view the agreement ‘as
anything but a proper business transaction’
*Date of redemption can be postponed
**Contrast Knightsbridge and Fairclough – can date of redemption be
postponed?
Unfair collateral advantages
o ‘Any advantage which the mortgagee obtains as a condition of the mortgagor
being able to redeem’
Charmelyn Enterprises Pty Ltd v Klonis
o In modern day collateral advantages are not automatically struck down as they
used to be; nowadays only collateral advantages which are excessive or
oppressive are struck down
G & C Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914]
AC 25 (HL)
Collateral advantages are only to be struck down if they are
Either unfair and unconscionable or
In the nature of a penalty clogging the equity of
redemption
Inconsistent with or repugnant to the contractual and
equitable right to redeem
Jones v Morgan [2001] EWCA Civ 995
M procures loan from J secured on land which M was interested
in
M sought to transfer to J a one-half interest in the mortgaged
land
Court declined to order specific performance as mortgagor’s
estate in land must be unencumbered by any interest created as
a term of the mortgage
o Solus ties
Where a mortgagee (such as petrol company or brewery) imposes on
mortgagor a condition that the mortgagor shall only deal in products
manufactured or distributed by the mortgagee
Case law seems to dictate that courts will strike down as void any
collateral benefits which remain in force after the redemption of the
mortgage
Ie. Solus ties which were not limited to actual duration of a
mortgage
This would encroach upon a mortgagor’s equity to
redemption – full repayment of debt would not restore
mortgagor to his original position
Although this has been qualified by Kreglinger (above)
If collateral advantage is neither part of the mortgage transaction,
nor one of the terms of the loan
**For unconscionable mortgage, see
City land v Dabrah, Multi Service book binding
Nolan v MBF Investments Pty Ltd [2009] VSC 244 (Australian Case)
Facts
o Plaintiff owned 3 properties, could not pay off debt
o Mortgagee sells 3 properties in auction
o Plaintiff asserts that selling 2 of the properties would have been sufficient,
claimed that defendant’s conduct was not in good faith
Held that mortgagor was within his statutory rights to sell the property and recover the
debt
o Plaintiff could have prevented the contract of sale by exercising his equitable right
by paying off the mortgage – but he did not
o Mortgagor’s right to repay the loan and demand reconveyance the basis of
mortgages
o Once all obligations are fulfilled under terms of the mortgage, owner has a right to
redemption
o Equitable right to redemption after due date of payment
Equity will effectively postpone the effect of the contractual right
Upon default, title possession passes to mortgagee, but mortgagor is still
entitled to court order preventing sale of property if
Contract of sale has not been signed yet
Mortgagor pays to defendant what has been owed
Once contract of sale is signed
Mortgagor’s right is reduced to an entitlement to the surplus of
the sale
Mortgagee’s right to immediate possession
Mortgagee has right to possession, usually exercised only in the case of a default
Four Maids Ltd v Dudley Marshall Ltd [1957] Ch 317
o Does mortgagor’s default give the mortgagee the right to possession in the
absence of a contract?
o Mortgagee’s right
Enforceable barring express or implied terms in the contract
Default on mortgagor’s part unnecessary
Mortgagee may come into possession unless there is something in the
contract which expressly or impliedly deprives him of that right
In instances where mortgage is upheld by periodic payments, mortgagee
precludes himself from possession, so long as those payments are
fulfilled
o *‘Mortgagee’s right to possession arises before the ink is dry on the mortgage’
Right to possession arises from mortgage transaction, not by default
Mortgagor who resists mortgagee’s demand for possession automatically becomes a trespasser
Birch v Wright [1786]
Exclusion of mortgagee’s right to possession
Express or implied
o Common for bank to expressly grant mortgagor right of possession until default
Instalment mortgages
o For instalment mortgages, court will readily find an implied term that mortgagor is
entitled to remain in possession against the mortgagee unless he makes some
default in payment
Esso Petroleum Co Ltd v Alstonbridge Properties Ltd
Although it was added that the mere fact that it is an instalment
mortgage does not automatically mean such an exclusion is
implied
Non-instalment mortgages
Western Bank Ltd v Schindler
o Defendant mortgagor borrowed £32000 on terms that no payment of capital or
interest was due until 10 years after the date of execution
o Court held that mortgagee could assert a right to possession within the 10 year
period, despite the mortgagor having not defaulted
Only way that a mortgagee could ensure that the property was properly
managed and maintained, and that the value of the security preserved
throughout the loan term
Attornment clauses
Whereby a landlord-tenant relationship is created between the mortgagee and the
mortgagor
Mortgagee as similar rights as a landlord
However mortgagee must serve notice to quit to terminate tenancy before exercising any
right to possession
o Hinckley and Country Building Society v Henny [1953] 1 WLR 352
Factors inhibiting actual exercise of mortgagee’s right
In reality large institution lenders have no interest in actual physical occupation of
premises
Mortgagee’s strict liability to account
o Mortgagee who goes into possession of mortgaged property becomes subject to
stringent control of equity in dealings with the land
o Liable to mortgagor to any rent or profits drawn from the land
Remedies
In event of default, mortgagee has remedies including
o Action on mortgagor’s personal covenant to repay
o Appointment of a receiver
o Assertion of the mortgagee’s right to possession
Almost always merely a preliminary to exercise of mortgagee’s power of
sale
o Exercise of the mortgagee’s power of sale
o Foreclosure
Mortgagee’s duty
Financial Services and Markets Act 2000
o Mortgage lenders have to ‘pay due regard to the interests of customers’
o Mortgagee’s must put into place a ‘written policy and procedures’ for complying
with the objective of fair dealing
Should indicate that eviction of mortgagor from his home is a last resort
Mortgagee will use reasonable efforts to agree with the mortgagor
Appointment of a receiver
If mortgagee does not presently wish to realise his security or undertake responsibility of
going into possession of mortgaged property
Acts as agent of the mortgagor
o LPA 1925, s 109(2)
Must be active in protection and preservation of mortgaged premises (See Silven)
Medforth v Blake [2000] Ch 86
Receiver owes a duty of care to the mortgagee, the mortgagor, and all others who have
an interest in the equity of redemption
Not obliged to carry on any business conducted on the premises, but if it does,
o Has a duty to manage the property with due diligence
o Must conduct the business with ‘reasonable competence’
o Taking ‘reasonable steps’ to run the business profitably
o Can be made liable to the mortgagor (and others) for feats of managerial
incompetence which contribute to ruination of the commercial enterprise involved
Silven Properties v RBS [2003] EWCA Civ 1409
Facts
o Silven mortgaged properties to the bank
o Bank appointed receivers of the mortgaged properties
o Bank and receivers sold all the mortgaged properties
o The mortgage agreement provided that the receivers should be the agents of
Silven
o Silven claim that the bank as mortgagee and receivers sold the properties at
undervalue
o Silven agrees that the bank sold the properties at market value,
o But they claim the bank should have pursued planning applications for
development of the properties before selling, which would have had the effect of
increasing the price of the properties
o They also claim that the receivers should have leased the vacant properties while
waiting for planning permissions
o Receivers had pursued planning applications, but decided against it later and
sold the properties immediately
Mortgagees’ duties
o No duty to exercise power of sale
o Entitled to remain totally passive
o By taking possession, he assumes a duty to take reasonable care of the property
Requires him to maximize returns from the property
Without taking undue risks
Preservation of property
o Power of sale in conferred upon the mortgagee by the mortgagor
Mortgagee has an unfettered discretion to sell
o The mortgagee’s decision over whether to exercise the power of sale is not
dependent on whether it will confer a loss on the mortgagor
o He is not bound to wait for a higher price
o He is not bound to improve the property or increase its value
o He is free to investigate any potential ways to increase the value of the property,
but he is also free to halt such an investigation at any time
o Should the mortgagor want further protection or a restriction of the mortgagee’s
rights, he must provide for their inclusion when the mortgage is made
o If the mortgagor redeems the mortgage, the rights of the mortgagee are
extinguished
o When the mortgagee exercises his right of sale:
He is under the equitable duty to the mortgagor to take reasonable care
in obtaining a fair price for the property
He has to ensure that this fair price is at the date sold, not the date the
decision is taken to sell
Duty of receivers
o Owe the same equitable duty as mortgagees to take reasonable care to obtain
the best possible price
o Receiver has no right to remain passive if it would be damaging to the interests of
the mortgagors and the mortgagees
He must be active in the preservation and protection of the property
o Appointed in a managerial capacity
o No general duty to exercise the power of sale
A duty may arise if goods are perishable
o When an agent is acting for his principal alone
He is under the obligation to pursue single-mindedly the interests of the
principal
He owes a duty of care with regards to the time of sale
Also, owes a duty of care to take all necessary pre-marketing steps to
achieve the best price
o Type of agency of the receiver
Principal (mortgagor) has no say in the appointment of the receiver
No duty owed in common law (contract or tort) by the receiver
Receiver only owes rights in equity
This equitable duty is owed to the mortgagee also
He has a general primary duty to ensure the secured debt is paid
He manages the property for the benefit of the mortgagee not the
mortgagor
o As the primary purpose of the receiver is to ensure the debt is paid
He must have the same entitlement to sell the property as the mortgagee
To sell the property in the same way as the mortgagee
o Therefore, the duty owed to the mortgagor by the receiver are the same as those
owed by the mortgagee
Held that the agency of the receivers to Silven must be viewed in light of the special
relationship between receiver and mortgagor
o There is no added fiduciary duty imposed on the receivers to act as typical agents
o The duty owed by the receiver must reflect the purpose of their appointment as
well as the special relationship
o Therefore receiver does not owe the duty to delay the sale for any potential
planning permissions
o *Receiver not obliged to take pre-marketing steps which would improve the value
of the security, only entitled to sell the property in the condition in which it stands
Assertion of mortgagee’s right to possession
Close association between possession and sale – possibility for mortgagee to be
restrained by court from exercising right to possession?
o Support from Lord Denning in Quennell v Maltby [1979] 1 WLR 318
o Other judges did not share same view
Unlikely in light of Ropaigealach
Ropaigealach v Barclays Bank plc [2000] 1 QB 163
Facts
o R owned house and executed legal charge on house with Barclays
o Terms of charge
R was to make payments periodically
If he should fail to do so, Barclays had to demand payment, after which
they could exercise their power of sale
No express provision for r to be in possession of the property under the
charge
o R defaults on payment, Barclays exercises right of sale over house
o R claims that a mortgagee must first obtain leave of the court before proceeding
to enforce its right to possession/power of sale under s36 of the Administration of
Justice Act 1970
Bank’s entitlement to possession under s36
o Court can exercise its powers when it deems the mortgagor to be likely to be able
to repay any sums due within a reasonable time
o Court may
Adjourn proceedings
Suspend and stay any order for possession
o Document must be construed so as to make it illegal for a mortgagee to obtain
possession of a dwelling unless under a court order
o Statutory purpose of s36
Mortgagor demises his estate to the mortgagee
Mortgagee becomes entitled to possession
Mortgagee is entitled to immediate possession if no provision was made
for the retention of possession by the mortgagor
Equity does not interfere, even if there was no default by the mortgagors
Case Authorities: Court has no power to refuse or suspend an order for possession by a
mortgagee who was otherwise entitled by virtue of his estate (demised to him by the
mortgagor), unless there was a chance of the mortgagor paying off the money due in the
reasonable future
Typically, the mortgagee has full rights to possession of a property (dwelling or
otherwise), unless provisions are made for the restriction of this right
S36 only can be applied when the mortgagee applies for an order for possession
o If the mortgagee were to pursue other ways of obtaining possession – in this case
peaceable repossession – the court would be powerless
Courts considered whether to
o Construe s36 as conferring discretion to the court to restrict the rights of
mortgagees in all cases (Western Bank v Schindler)
o Construe s36 as only applying to those cases in which an order for possession is
applied for
Court held that the former would be outside Parliament’s intention, and that a mortgagee
can only be restricted under s36 if he applies for possession through the court system
o Limits the power of courts to intervene under s36
Only allows court discretion to offer some protection to homeowners
where the court thinks the mortgagor can pay any sums due within a
reasonable period, and if an action is brought for an order of possession
by the mortgagee
Exercise of power of sale
Mortgagee has no common law power of sale over mortgaged land
Conferred by express terms of mortgage, OR
LPA 1925 s101 - dictates when power of sale arises
o Mortgagee’s power of sale arises if all of the below 3 conditions are met
Mortgage in question must have been effected by deed
Mortgage money must have become due
Legal date of redemption passed
Or any instalment of mortgage money has become due under an
instalment mortgage
Mortgage deed must contain no expression of contrary intention which
has effect of precluding a power of sale
LPA 1925 s103 – dictates when power of sale becomes exercisable
o As long as mortgagee can show any one of the below conditions
Mortgagor has been in default for three months following the service
upon him of a notice requiring payment of the mortgage money
Some interest under the mortgage has remained unpaid for two months
after becoming due
There has been a breach of some mortgage term ‘other than and besides
a covenant for the payment of mortgage money or interest thereon’
*LPA 1925 s105
Duty of selling mortgagee
Mortgagee’s primary interest is the speed and efficiency he can obtain a price to cover
the amount of the outstanding loan, interests and costs
Mortgagee has duty to act in good faith and to discharge a duty of reasonable care
towards his mortgagor
Subjective criterion of good faith
o Duty for the mortgagee’s primary interests to be securing repayment of the
mortgage money and cannot, for example, take preference towards a particular
purchaser because of an existing relationship
o Sale to mortgagee or representative
Mortgagee cannot exercise power of sale to effect a sale to,
Himself or himself and others (Martinson)
Mortgagee’s solicitor or agent
Martinson v Clowes [1882] 21 Ch D 857
Sale to trustee for the mortgagee
Downes v Grazebrook [1817] 3 Mer 200
o Sale to associated person or entity
Such as employee or business acquaintance
Burden of proof rests on mortgagee to demonstrate that his desire to
obtain the best price was given absolute preference over any desire than
an associate should obtain a good bargain
Australia and New Zealand Banking Group Ltd v Bangadilly
Pastoral Co Pty Ltd [1978] 139 CLR 195
If mortgagee cannot produce sufficient evidence, transaction liable to be
impugned
Tse Kwong Lam v Wong Chit Sen
Mortgagee’s power of sale taken form of public auction, where
only bidder was mortgagee’s wife, acting as representative of
family company of which both were directors and shareholders
No competitive bidding, property purchased at reserve price,
purchase finance from funds provided by mortgagee
Privy Council held that mortgagee had failed to discharge burden
of proof that he had acted fairly to the borrower
Objective criterion of reasonable behaviour
o Mortgagee ‘must take reasonable care to maximise his return from the property’
Palk (below)
o And ‘must take steps to preserve its value’
Sterne v Victoria & Grey Trust Co [1985] 14 DLR (4th) 193
Although court also held that the court looks at the effort rather
than the result
No need for mortgagee to necessarily obtain ‘perfect’
market price, as long as he takes reasonable care
o Must take ‘reasonable precautions to obtain the true market value of the
mortgaged property at the date on which he decides to sell it’
Cuckmere Brick Co Ltd v Mutual Finance Ltd[1971] Ch 949
o As long as
Mortgagee owes both the above duties
Remedies for mortgagor for wrongful exercise of mortgagee’s power of sale
o Normally, trend is to reserve remedy of rescission for instances of equitable fraud
(not in good faith), while imposing a money liability where mortgagee has failed to
adopt means which a reasonable man would have to get the best price for the
land
o Rescission only available where there is evidence of fraud, or if purchaser has
actual knowledge of, or participates in an impropriety in the exercise of power
Corbett v Halifax Building Society [2003] 1 WLR 964
Mortgagee’s employee purchases mortgaged premises at an
undervalue
Court refused to rescind the sale as mortgagee was unaware
that it was purchased by an employee and that this was at an
undervalue
Palk v Mortgage Services Funding plc [1993] Ch 330 (CA)
Facts
o Palk was a victim of recession, obtained a mortgage from the defendants on his
house
o Palk unable to keep up with monthly mortgage payments, negotiated and agreed
the sale of the house
o The amount he received was less than the amount owed for the mortgage
o Defendant company refused sale at below the amount owed
o Palk applied to court for order of sale
o Defendants obtained an order for possession
o Court suspended the order for litigation
o Defendants do not intend to sell immediately, but to let the property and sell when
the market improves
o However, this would lead to Palk having to pay interest rates on the mortgage in
the mean time
o Palk brings action to enforce an order of sale
General rule: an order of sale cannot be made against the mortgagee’s wishes unless the
property is sold for an amount that would discharge the debt, or if security is provided for
the debt
LPA s91(2)
o Purpose: Enables court in its discretion to direct a sale in order to avoid the delay
and expense of foreclosure and redemption
o In reality banks usually seek possession under s91 and subsequently do not
lease them out, allowing them to lie vacant
If mortgagee seeks to foreclose, court will only direct a sale contrary to his wishes if
repayment of his debt is fully secured
o Can be done by fixing a reserve price or payment into court
o Foreclosure will be ordered when to postpone a sale would be to prejudice the
mortgagees
o Today, foreclosure actions are rare
o Problem in this case is that mortgagee is applying to hold on to the house,
without becoming a mortgagee in possession, with a view to exercising its power
of sale later
o No applicable case law
Mortgagee’s are insured against almost any losses by holding out its power of sale –
personal claim against Palk would still inflate if property prices go up
Need for fairness
o Duty owed by the mortgagee to the mortgagor
If he decides to exercise his rights over his security, he is under a duty to
act fairly
Mortgagee’s right has priority over mortgagor’s
Mortgagee is entitled to carry out his own business without unfairly
prejudicing the mortgagor
He is accountable for his actual receipts from the property should he take
possession of it and leaves it empty
Accountable to mortgagor for what would have been received if he had
not taken possession
He has a duty to maximize returns
He must take reasonable care of the property
He cannot sell the property at a knock down price just to cover his own
security, he must have consideration of the liabilities of the mortgagor
Mortgagor is under personal liability for the shortfall
Mortgagee must exercise reasonable care to only sell at proper
market value
In present case
o The defendants intend to lease the property for the short term and sell it in the
long term
o However, rent from leasing in the short term would not be able to cover the
amount of interest Palk would pay on the mortgage amount
o This can be avoided by the court’s exercise of discretionary powers given under
s91(2)
Palk ought not to be liable for mortgagee’s chosen course of action
Court orders a sale of the property
*s91(2) allows the court to utilise discretionary powers over a wide range of
circumstances, after having considered the relative positions of both parties. To force
Palk to undertake a big risk of incurring even more liabilities, against the possibility of a
gain to the benefit of the defendants, would be unfairly prejudicing Palk.
o However it was acknowledged that these were ‘extreme and exceptional’
circumstances which may not be readily available to all mortgagors
When bank exercises power of sale
The title passes directly from the mortgagor in default to the purchaser
The bank does not attain any title to the land
The mortgage charge is terminated once the sale is completed
If there is a surplus to amount owed from the proceeds, the bank holds the surplus on
trust for the mortgagor
The mortgagor has a personal claim against the bank for the amount
Negative equity – property sold for less than amount owed
Bank has personal claim against the mortgagor for outstanding amount owed
According to Palk, bank must act in good faith
Bank owes duty to take reasonable care to TRY to attain a fair price
Bank is not required to ACTUALLY attain a price which the mortgagor would consider fair
This duty is procedural
Bank basically owes a duty to take the reasonable steps to attain a fair price
Whether they do or not is irrelevant
In the setting of a reserve price, the bank can possibly achieve both, however, the
mortgagor’s valuation of a fair reserve price might still differ from the bank’s
Non-possessory rights to land 10/10/11 2:05 PM
Property law has often recognized non-possessory rights to land so as to allow efficient utilization of
land resources
Profits a prendre
Right to take something from land belonging to another
o Eg. sand, soil, grass, crops, wild animals, fowl or fish
It is not a property right to the thing but a property right to the land from which the thing is
taken
Profit holder does not own the subject matter of the profit until he acquires possession of
it b severing it or taking it from the land
o Act of severance results in holder acquiring title to the thing
Interference with the profit holder’s right is a nuisance
It is a right carved out of an estate and transferred to the holder
The modified estate is a servient tenement
Can be a shared or exclusive right
Subject matter of a profit can only be natural produce of the land except for water
o Cannot be granted with respect to products of industry – these are products of
human labour not the land itself
Distinguished from a contract of sale – contract of sale is usually a license, payment in
exchange for a temporary right to enter the land and for the things that are taken from it
o Profits a prendre is a property right that the holder can enforce against others
o Contract of sale is a personal right enforceable only against the seller
Profit a predres can be for any duration not exceeding the duration of the estate of the
person creating it – does not require same certainty of term as valid leases
Easements
A positive or negative right to derive some limited advantage from the land of another
Positive Easements
o Allows a neighbour to do things which would otherwise be trespass or nuisance
o It allows the dominant the positive ability to do something on the servient land
Negative Easements
o Prevents the occupier of the servient tenement from doing certain things which
would otherwise be permitted as normal use of land, enforceable by the dominant
owner
The right of the dominant tenement is attached to the land, not the owner
Possession of part of an estate cannot be an easement at law
An easement is carved out of one person’s right to possession and granted to another
Does not entitle to dominant owner to do anything positive on the servient land
Land subject to the burden of the easement is the servient tenement
o This must be identified
Re Gordon and Regan [1985] 15 DLR (4th) 641
Neighbouring land benefitted by easement is the dominant tenement
o Must be identified
London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1992] 1
WLR 1278
o The dominant owner (grantee of easement) is regarded as holding a limited
quantum of property in the land over which his right is exercisable – his
proprietary interest in this servient tenement is known as an easement
Dominant and servient land need not be contiguous (sharing a border)
o Re Salvin’s Indenture [1938] 2 All ER 498
But must be sufficiently close for a practical benefit to be conferred
o Bailey v Stephens [1862] 12 CB (NS) 91
Easement or profit a predre?
Easement is essentially a privilege to the land but without the profit
Grantee of easement may not take any part of soil or produce
Profit can exist without the holder owning any adjoining or neighbouring land or even any
land at all
Easement or license?
License grants permission to do something on land which would otherwise be regarded
as a trespass
License can be used to permit conduct of almost any activity, easement more restrictively
defined
License may comprise an element of exclusive occupation of the land, whereas any claim
to wholly exclusive rights over the land tends to be inconsistent with an easement
Creation of easement requires formality and registration, licenses do not
Easement creates a proprietary interest capable of binding third parties, licenses
generally do not
Easements and restrictive covenants?
Closely related, restrictive covenants sometimes are in essence negative easements
Easements enforceable in law and in equity, restrictive covenants exist only in equity
Subject matter of easement also significantly more limited
Re Ellenborough Park, Danckwerts J defining essential qualities of an easement
There must be a dominant and a servient tenement
An easement must accommodate the dominant tenement, that is, be connected with its
enjoyment and for its benefits
The dominant and servient owners must be different persons
o If 2 parcels of land were owned by the same person, but another held a lesser
estate over one of the parcels (e.g. a lease), an easement can be granted either
way
The right claimed must be capable of forming the subject-matter of a grant
Any right which fulfills the criteria will very likely be considered an easement, regardless
of what label the parties have given to the right
o Riley v Penttila [1974] VR 547
‘liberty’ to enjoy and use land construed to be an easement
Expressly granted easement confers on its owner rights incidental to exercise of the easement
Inclusive of rights that are necessary for the convenient and comfortable use and
enjoyment of the easement, objectively foreseeable by the parties at the date of the grant
o Moncrieff v Jamieson [2007] 1 WLR 2620 (HL)
HL held that right of vehicular access over servient land carried with it a
right to park cars on the land
Easement would have been quite useless otherwise – owner would have
to walk 150m up a hill to his house
An easement has to enhance the dominant tenement’s use of his own land and must not
amount to possession or a nullification of the rights of the occupier of the servient
tenement
Any assertion of rights in excess of what is reasonable is actionable in trespass or
nuisance
Similarly any wrongful interference by a servient owner would be an actionable nuisance
Benefit to the dominant tenement is accommodation
Will only be considered an easement if it can be shown that the right confers significant
benefit on the dominant land
It cannot be a mere personal advantage or convenience, must be real, rather than
personal – would benefit the dominant land and all its successors in title
Hill v Tupper [1863] 2 H&C 121
o Plaintiff claimed to have an easement as owner of a canal granted him exclusive
right to put pleasure boats on canal
o Third party put boats on canal as well, plaintiff brings action, claiming to have an
exclusive proprietary right over waterway
o Held that he merely had a license – right to put boats on waterway was
unconnected with the use and enjoyment of the land
o Court also reluctant to grant an easement which created a blatant commercial
advantage for the dominant owner
Plaintiff would have had a monopoly on putting pleasure boats on canal
A right cannot be an easement unless it is less than possession
Easement cannot be for possession of any part of the servient tenement
Limit to the degree of interference allowed on servient tenement
It has to be less than possession
It cannot interfere with the use and enjoyment of the servient tenement to the extent that it
would nullify the rights associated with the estate
E.g. parking – cannot occupy all the parking spaces (amounts to possession and
excludes occupier from enjoyment of that right) – amounts to possession
An easement must be clearly defined
For example, cannot be to ensure a good view
No easement for entitlement to uninterrupted access of light or air except through defined
apertures in the building
o Harris v De Pinna [1886] 33 Ch D
Rationale – easements, unlike licenses or contracts, have capacity to affect future owners
of the land
o Needs to be clearly defined so as to prevent undesirable long-term burdens on
the land
Hunter v Canary Wharf Ltd [1997] AC 655 (HL)
o Canary Wharf Tower causing poor reception of number of residences
o HL held that there was no easement to receive a television signal
Courts generally unwilling to recognise new categories of easements
o Phipps v Pears
Normally, an easement must not impose positive duties on the servient tenement
Only in exceptional cases
o Jones v Price [1965] 2 QB 618 (CA)
CA found that a right to require a neighbour to maintain a boundary fence
may be considered an easement
The duty to maintain the easement and foot the costs falls on the holder of the easement
o Moncrieff v Jamieson
Exclusivity
An easement may or may not be exclusive to the grantee
An easement may never be entirely exclusive of the grantor
o Cannot bar the grantor from possession and control over the land
Easements are limited rights – the greater the intensity of the control, the less likely the
courts will be willing to recognise such an easement
o Jackson v Mulvaney [2003] 1 WLR 360
Courts have not been consistent, sometimes seen to uphold easements which grant the
owner a degree of exclusivity
o Wright v Macadam [1949] 2 KB 744
Moncrieff v Jamieson
Creation of easements by:
Intention
o Courts will recognize the intentions of parties and enforce them
Division of land
o When land is divided, it may be useful or necessary to create an easement over
one part in favour of the other
o Created by operation of law
o Quasi-easements: when dominant and servient tenements are owned by the
same person, the easement exists but not as a real easement
o Wheeldon v Burrows (1879)
When land is divided and sold, all those easements that are necessary to
the reasonable enjoyment of the property granted or sold will pass to the
buyer
This is if the owner of the land had enjoyed and used the land in the
same way prior to division
Therefore, the buyer would be enabled to enjoy and use the land in
exactly the same way the previous owner had used and enjoyed it before
division
The quasi-easement is turned into an actual easement
Easement by prescription/ long use easement
o Similar to the concept of adverse possession
o If a neighbour has used the land for a long period, the occupier may lose the right
to prevent that use
o Easement is granted to the neighbour by operation of law only after a sufficient
amount of time
o Unlike in adverse possession whether a property right is born from the actual
possession of land
o Negative easement by prescription is not usually possible
Changes in use of the easement
o Usually happens when the dominant tenement changes hands
o Courts will deny the use of an easement if it significantly exceeds the initial
contemplated purpose of the parties
o Expressly created easements
Easement may not be used for a purpose wholly different from that
originally envisaged by the grantor and grantee
o Easements arising by prescription
McAdams Homes Ltd v Robinson [2005] 1 P & CR 520
Dominant owner is deprived of right of a prescriptive easement
only if 2 conditions are satisfied
Radical alteration of purpose underlying easement
o Eg a prescriptive easement of access to
premises used for residential and warehousing
purposes cannot survive the conversion of the
dominant tenement into an underground railway
station
Substantial increase in burden on servient land
o ie. radical alteration of purpose must be coupled
with a greater strain on the land
o eg. an easement of natural surface water
drainage would be unaffected by the
development of the dominant land from
agricultural land into a large housing estate,
unless it results in an increased burden on the
water drainage
Privity of contract
o Easements allow for the exception to be made to the rule of privity
Rights of way
o Are not easements
o It is a public law right of way, do not attach to land for the benefit of another piece
of land
o Easements are private law rights to another’s land
Re Ellenborough Park [1955] EWCA Civ 4 (CA)
Facts
o People who owned houses nearby claim right of easement to use of fenced off
park
o The owner of the park is trying to exclude the house owners from use of the park
o Covenants in place for both house owners and park owner
House owner: not to use their property for anything other than residential
purposes
Park owner: not to build buildings on the park land
Issues
o Do the owners of the houses have an enforceable right against the owners of the
park to the use and enjoyment of the park as a pleasure ground?
o Does the right take on the form of an easement which is enforceable against
subsequent owners?
o In order to decide whether an easement is present, the following issues need to
be decided:
o Whether the rights purported to given are expressed in terms too vague
Whether such rights would amount to rights of joint occupation or would
substantially deprive the park owners of legal possession?
Whether such rights constitute mere rights of recreation and possessing
no quality of utility of benefit
Definition of an easement
o There must be a dominant and servient tenement
o It must accommodate the dominant tenement
o Dominant and servient tenement owners must be different persons
o A right over the land cannot amount to an easement unless it is capable of
forming the subject matter of a grant
Park (servient) and houses (dominant) in this case
o Have different owners
o In this case the confusion is over 2nd and 4th criteria
o It is clear from the deed that the right of enjoyment of the garden was intended to
be annexed to the premises sold, rather than given as a privilege or license to the
purchaser
o The use contemplated and granted was the use of the park as a garden, the
proprietorship of which remained vested in the vendors and their successors
One of the fundamental principles concerning easements is that they must be not only
appurtenant to the dominant tenant but also connected with the normal enjoyment of the
dominant tenement
o The right to full enjoyment of the park did enhance the value of the houses
o But this in itself is insufficient, it needs to be shown that the right enhance the
normal enjoyment of the houses
o The deed explicitly stated that the houses were to be used for residential not
commercial purposes
o It was covenanted that the park was to be kept and maintained as a pleasure
ground or ornamental garden
o The vendors covenanted that they would not erect any structure on the pleasure
ground
o The purpose of the properties as houses is important
o The use of a garden enhances the value of a property, and is closely connected
to the use of property as a house
o The park in the present case was contemplated to provide, to the neighbouring
houses, the same amenities that a garden would provide to a house
o This satisfied the test of connection
The right must be capable of forming the subject matter of a grant
o Depends on whether the right conferred is too wide and vague
Deed is well defined and commonly understood
Distinct from the indefinite and unregulated privilege of wandering all over
the park (license) – such a right is substantially different from any subject
matter of a grant
Grant in this case is for the neighbouring houses to be granted use of the
park as a single private garden
o Whether it is inconsistent with the ownership and possession of the occupiers
The right of the house owners granted by the deed does not exclude or
affect the possession of the vendors any more than it would under a right
to passage through the park
Neither does it amount, under joint possession, more rights being granted
to the house owners than a right to passage
There is nothing repugnant to the vendor’s ownership
The house owners were not seeking to occupy or possess the park; their
use did not exclude the vendor’s use
Whether it is a mere right of recreation without utility
o The park benefits the house owners
o Constitutes a beneficial attribute of residence in a house as ordinarily understood
– therefore benefitting the owners
Easement must be clearly defined
o Right of way across servient land is clearly an easement in UK law
o The wandering across neighbours land admiring it is not a right recognized under
English law (this right is the right jus spatiandi)
o It is too vague and wide (ill-defined) to be considered a recognizable right
o The right to the garden in the above case would typically be considered jus
spatiandi if not for the covenants providing that it be kept as an ornamental
garden, which made the right sufficiently defined
o It is understood that the house owners were not allowed to wander all over the
place, they were restricted to the pathways and were not allowed to trample on
the flowers
o The main question is whether too many rights have been transferred to the
dominant owner such that it excluded the servient owner from possession or
interfered with possession
Held that it wasn’t
It was merely joint possession
Any exclusion of the servient owner’s possession was only temporary
o In the normal enjoyment of the park, the interference with the servient’s
possession by the house owners (their physical persons and the space they
occupy) is temporary, there is no reasonable permanent use of the land and no
interference with the servient owner’s possession by the dominant owner
Phipps v Pears [1965] 1 QB 76 (CA)
Facts
o Defendant’s tore down building that had protected plaintiff’s building from
weather, building damaged as a result
Is there a negative easement that obligates the defendant to not tear down his building?
Negative easements
o Right to stop his neighbour from doing something to the neighbour’s land
o Right to protection from the weather is entirely negative, it is a right to stop one’s
neighbour from pulling down his own house
o There is no such right in law as a right to prospect or a view
o The only way to restrict a neighbour building on his own land is to make a
covenant
o If an easement was to be granted under such circumstances, it would unduly
restrict the neighbour’s right to his land
o Every man is entitled to pull down his house if he likes
o Inhibitions on development of adjoining land can normally only be enforced after
an explicit process of bargain resulting in the creation of a restrictive covenant
Moncrieff v Jamieson [2007] UKHL 42 (HL)
Facts:
o Respondent’s land is situated such that the only road which provided vehicular
access ran through the appellant’s land
Issues:
o Does the right of vehicular access to the respondents’ land over the appellants’
land entitle the respondents to park on the appellants’ land
Easement can be created by
o Grant
o Sufficiently long prescriptive use
o Servient owner’s acquiescence in the dominant owner’s use accompanied by
some for a detriment or benefit
In the present case it is conceded that the right to park should be dependent on that right
having been created when the right of access was granted
Common law recognizes the right to park as an easement, subject to qualifications:
o Must not be inconsistent with the beneficial ownership of the owner of the
servient land
o It cannot bar the servient owner from possession of his own land
o It cannot require a positive act from the servient owner
Did the grant to right of access carry with it a right to park?
o It is obvious from the geography of the land in the present case that vehicular
right of access to the dominant land cannot be enjoyed without the right to park
on the servient land – it is impossible to bring a vehicle onto the dominant land
o Servient land owners claim that dominant land residents cannot are not entitled to
park on the servient land – they must park further away and walk back
o They concede that other patrons of the dominant land can stop on the servient
land temporarily
o It is thus plain from the facts that the grant of a right to vehicular access must
have been contemplated by the servient land owners to be accompanied by the
right to park
Dominant land owners spent money to develop parking space on servient land
o Once the dominant land owner has incurred expense, the agreement is not open
to variation by the servient land owner
o It does not deprive the servient owner to his rights of possession because he is
free to park on the space from time to time
Ouster principle
o Deprivation of ownership by preventing possession of servient land
o Every easement implies some restriction on the use of servient land, prevents the
use of land that would interfere with the reasonable exercise of the easement
o The sole/exclusive use of servient land by the dominant owner is not inconsistent
with the servient owner’s retention of possession and control
Servient owner is still able to exercise his possession of the land, as long
as it does not conflict with the rights of easement
o Ouster principle would apply when the right granted to the dominant land owner
to park his car within an certain area would leave the servient owner without any
reasonable use of his land
It would be impossible to state that there would be absolutely no use of
parking land by the servient owner (e.g. he has use of the land above
and below the parking space)
It also places a restriction on the extent on the easement that a servient
owner can grant
This test is rejected
The test should be whether the servient owner retains possession and
control over the servient land subject to the exercise of the easement
o Ouster principle is inapplicable in this case because
Dominant owner does not have possession of the parking land
Servient owner retains possession and control of the parking land
Dominant owners can only park on the parking land whereas the servient
owners can do whatever they want with it
Principle of civiliter
o The principle of civiliter, a Scottish law principle which regulates the manner in
which a servitude may be exercised is, if I have understood the principle
correctly, equally applicable, although not so named, under English law and
o requires the dominant owner, the owner entitled to exercise a servitudal right over
the land of his neighbour, to exercise the right reasonably and without undue
interference with the servient owner's enjoyment of his own land.
o The converse of this principle is that an interference by the servient owner with
the dominant owner's exercise of the servitude will not be an actionable
interference unless it prevents the dominant owner from making a reasonable use
of the servitude.
Ouster principle analysis
o If the claimed right would prevent the reasonable use of the land it cannot be an
easement if it is inconsistent with the continued ownership of the servient owner
o Wright v Macadam
Dominant owner had right to use coal shed on servient land
It was deemed to be consistent with the servient owner having
possession and not interfering with his right
The dominant owner did not exclude the servient owner from the coal
shed
Dominant owner does not have exclusive possession against the servient
owner
If the dominant owner put a padlock on the door of the coal shed he
would’ve excluded the servient owner and thus could not constitute an
easement
o In the present case, the judge disagreed and stated that the servient owner
should have the right to grant any easement he wants without limitation
Does parking look like an easement?
Judge held that when the dominant owner’s car is parked the land above
and below the car can still be used by the servient owner
This is a very problematic decision because of impractical solution
suggested by the judge
o Inconsistent with Copeland v Greenhalf [1952] Ch 488
Wheelwright had for 50 years used a narrow strip of land belonging to the
claimant for storing vehicles awaiting and undergoing repair
Held that this right was to extensive to constitute an easement in law as it
virtually amounted to a claim to possession of the servient tenement
o Law commission is recommending that Parliament should legislate that it is
possible to have an easement for parking
Freehold Covenants 10/10/11 2:05 PM
Freehold covenants
An undertaking contained in a deed by which one party (the covenantor)
promises another party (the covenantee) that he will or will not engage in
some specified activity in relation to a defined area of land
Freehold
o Between landowner and neighbours
Leasehold
o Between tenant and land lord
Positive
o Covenantor agrees to do something
Negative
o Covnantor agrees to refrain from doing something
‘Running with the land’
o Imposes duties or restrictions upon use of the land regardless the
owner
o Also known as a covenant appurtenant
Transmission of benefit of freehold covenant
At law
Two main requirements:
Covenant must ‘touch and concern’ the land
o P & A Swift Investments v Combined English Stores Group plc
[1989] AC 632 (HL)
Covenant must ‘touch and concern’ the land
Covenant was entered into for benefit of the land, not
as a personal benefit to the owner
Must benefit only the dominant owner in the time
being such that if he is separated from his land, he no
longer derives the advantage
Must affect the nature, quality, mode of user, or value
of the land of the dominant owner
Subsequent covenantee must have some legal estate in the land
o Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board
[1949] 2 KB 500 (CA)
Facts
D covenanted with X to repair and maintain flood
banks of a river
X sells dominant land to P1, who in turn leased it to
P2
Question was whether P2 was able to benefit from the
covenant originally made between D and X
Court held that there was a covenant, and allowed an action
for damages for breach of covenant on the suit of both P1
(owner in fee simple) and P2 (holding a term of years)
Must be shown that the parties intended the benefit of the
covenant to run with the land
Reinforces section 78(1) of LPA 1925
Covenant must have been made not merely
with covenantee but also his successors in title
Prior to this case, common law had general rule that
transferee of the dominant land must show that he had the
same legal estate in the land as the original covenantee
Eg. a lessee could not benefit where the original
covenantee had an estate in fee simple
*However the court took the view that section 78(1) had
abolished the general rule
Subsequent claimants of covenanted benefits need
only hold some legal estate in the land
Statutory methods
Assignment of a chose in action
o May be assigned in writing as a chose in action, pursuant to section
136 of LPA 1925
Must be in writing
Must be served upon the covenantor
LPA 1925 s56
o Thought to have abolished entire doctrine of privity of contract
Transmission of burden of a covenant at law
Common law dictates that only benefit, not the burden of positive
covenants may run with the land
o Austerberry v Oldham Corpn [1885] 29 Ch D 750 (CA)
Based on principle that the land should not be constantly
burdened for future generations
Rhone v Stephens [1994] 2 AC 310 (HL)
o S’s predecessor covenanted with R’s predecessor to keep in repair
a roof which projected from S’s house over the cottage now owned
by R
o Lack of repair caused water leakage into R’s cottage
o HL held the covenant to be unenforceable
o *Also held that section 79(1) did not cause the burden of positive
covenants to run with the land
o Positive covenants are not directly enforceable except against the
original covenantor
o Reinforces rule in Austerberry
Courts unwilling to hold covenants enforceable at law – made it necessary
for equity to devise a mean where at least the burden of restrictive
covenants could be made to run with the land and affect third parties
o See Tulk v Moxhay
Problems with the common law rule
o Conflicts with efficiency-based argument that dictate it is preferable
to allocate the burden to the current owner of the servient land
rather than to the original promisor
o Inconvenient in modern times, where orderly coexistence largely
depends upon enforceability of such positive covenants
o Property law in the past highly individualistic, needs to be adapted
for modern times
Indirect mechanisms of enforcement of positive burdens
Chain of indemnity covenants
o Whereby the covnantee requires a chain of indemnity covenants to
be undertaken by successive purchasers of covenantor’s land
o Original covenantor remains liable but if sued for his successor’s
breach, may claim on the indemnity covenant to recover any
damages he himself has to pay
o Can extend indefinitely
o However from original covenantor’s standpoint this is risky – if any
one of the covenantors along the line disappear or go insolvent, he
will remain liable
Compulsorily renewed covenants
o For covnenantor to require the successive owner of the land to
enter into a new, direct covenant with the covenantee
Use of a long leasehold, such as a term of 125 years or 999 years
o Burden of covenants may run with leasehold land – Vendor can
grant original covenantor a leasehold estate, which will run with the
land by virtue of privity of estate or by statute
Enlargement of leaseholds into freeholds
o Positive covenants in long leases may be enforceable against the
covenantor’s successors if the leasehold is enlarged into a freehold
pursuant to section 153 of LPA 1925
Commonhold schemes - Commonhold and Leasehold Reform Act 2002
o Where each unit holder takes a registered freehold estate in his or
her unit, the act provides that on transfer of that estate, any duty
imposed by the commonhold community shall affect the new unit-
holder in the same way as it did the old
s16(1)
Doctrine of ‘mutual benefit and burden’
o Halsall v Brizell [1957] Ch 169
D’s predecessor in title had been granted a right to use the
roads and sewers on that estate, in turn covenanted to pay a
proportionate share of the cost of maintenance
Court held that D could not exercise these rights unless he
contributed to the costs of maintenance
o Expansion of the doctrine could make the ruling in Austerberry
redundant
There has been steady retrenchment of the doctrine
o Argued in Rhone v Stephens (above) that S was bound by the
burden of repairing the roof as she enjoyed the benefit of having her
roof supported by R’s adjoining cottage together with the benefit of
roof water drainage
HL held that the ‘benefit and burden’ doctrine could not
apply, CA held that the benefit was ‘minimal’
o Thamesmead Town Ltd v Allotey [2000] 79 P & CR 557
Identified two preconditions for enforcing a positive covenant
against successive owners
There must be a correlation between the burden and
the benefit which the successor has chosen to take
Cannot be merely incidental
Successors in title must have opportunity to elect
whether to take the benefit or renounce it, in order to
escape the burden
In equity
Common law precludes straightforward enforcement of covenants – equity
stepped in to ensure at least negative covenants could be enforced
Tulk v Moxhay [1848] 2 Ph 774
o Claimant sold a vacnt piece of land to E, who covenanted on behalf
of himself and his heirs that the would keep and maintain that land
in an open state, uncovered by any buildings
o Defendant’s conveyance did not contain any such covenant,
although he had notice of the restrictive (negative) covenant
imposed
o Defendant attempted to build on the land, claimant brings action
seeking an injunction
o Court upheld the grant of an injunction restraining the defendant
from acting in violation of the covenant
Conscience-based
Defendant was aware of the undertaking given by the
covenantor, had duty to perform the terms of the
original covenant
Unjust enrichment
If covenant is not enforced, covenantor could make a
covenant and sell the servient land
Proprietary analysis
Right to build on land was never vested in original
covenantor – therefore he could not pass such a right
to successive owner
Covenantee has an equitable proprietary interest in
the land, carved out of the covenantor’s interest in the
land
Scope in Tulk v Moxhay has been increasingly restricted, must now satisfy
all of the below criteria:
o Covenant must be negative or restrictive of the user of land
Haywood v Brunswick Permanent Benefit Building Society
[1881] 8 QBD 403
Principle in Tulk does not apply to positive covenants
Burden of positive covenant unenforceable in law, as
well as equity
Also held that the test for whether a covenant is
positive or not, is whether it requires the expenditure
of money
Covenants can be phrased in a negative way –
eg. to ‘not let the premises fall into disrepair’
would still be a positive covenant
o Covenant must relate to an identifiable dominant tenement
Covenantee must own an estate in dominant tenement,
covenantee must own an estate in servient tenenment at the
date of making the covenant
London County Council v Allen [1914] 3 KB 642 (CA)
Court held that claimant could not enforce restrictive
covenant against covnantor’s successor, as claimant
was not interested in any land for the benefit of which
the covenant had been taken
Enforcement requires dominant ownership
o Covenant must benefit or accommodate the dominant tenenment
Similar to requirement that benefit must ‘touch and concern’
the land
Basically benefit must affect either the value of the land or
the method of its occupation or enjoyment
Value must be real, not personal
Filters out long-term burdens and ‘clogs’ on the land
Courts in general however, interpret this quite widely and
presume that a covenant confers benefit upon the dominant
tenement unless it is evident that such a conclusion is
untenable
o Covenant must have been intended to run with the land
Unless covenant expressly binds only original covenantor,
there is statutory presumption that a covenant shall be
assumed to have been made on behalf of the covenantor’s
succesors in title
Land obligations
Proposed reform of covenants
Making Land Work: Easements Covenants and Profits a Prendre – Law
Commission
New legal interest in land – land obligation
o Can be positive or negative
o No need for indemnity covenants (or other methods) to secure
positive obligations
Leasehold Covenants 10/10/11 2:05 PM
Unlike freehold covenants, leasehold covenants are not property rights
They are rights that are part of a lease
Leases are a combination of contract and property
Leasehold covenants can be implied or expressly stated in the contract
Statute can imply covenants into leases
o Parliament is reacting to the inequality of bargaining power in
leasehold contract agreements
Intentions of parties can imply covenants into leases
Landlord covenants and tenant covenants
Landlord’s implied covenants
Quiet enjoyment
Landlord has a duty to ensure tenant remains free from any ‘substantial
interference with the ordinary enjoyment of the premises’ during the
currency of the lease
Tenant should have a right to exclusive possession – and landlord cannot
interfere with this right as long as the tenant is using his land in an ordinary
and lawful way
Hart v Windsor [1844]
No implied term of tenancy that a property let should be fit for the purpose
for which it is let – eg. landlord who leases a house is not obliged to
ensure that the premises is fit for use as a house
Tenant is obligated to make his own checks
Southwark LBC v Mills [2001] 1 AC 1 (HL)
Facts
o Two separate cases being heard together in HL
o Tanner lives in a block of flats in Herne Hill, Baxter occupies first
floor flat in converted Victorian House in Kentish Town
o Flats have no sound insulation, so both T and B can hear their
neighbours, although neighbours do not do anything out of the
ordinary
o T and B bring proceedings against their landlords seeking an order
to remedy the situation
o CA held in both cases that there was no remedy available for T and
B
o Neither tenancy agreement has any warranty on the part of the
landlord that the flat has sound insulation or is in any other way fit to
live in
HL held that there was no obligation that the landlord must provide sound
insulation
Sound insulation does not fall under provisions of s604 of the Housing Act
1985
o Included are dampness, lighting, heating and ventilation, facilities
for cooking and effective drains
Covenant of ‘quiet enjoyment’
o Any harassment or unlawful eviction would be a breach of the
covenant of quiet enjoyment
Quiet enjoyment is not literal – merely means that there will
be no interference with possession
o However covenant of quiet enjoyment is narrowly interpreted
o Breach of the covenant requires 2 conditions to be fulfilled
Substantial interference by lessor
Browne v Flower [1911]
There must be some physical interference,
creating of a personal annoyance insufficient
Excessive noise can constitute substantial
interference
Tenant’s possession must have been interfered with by the
landlord or anyone claiming under him
Covenant is prospective in nature, does not apply to
things done before the grant even if it has continuing
consequences for the tenant
Anderson v Oppenheimer [1880]
It is not a covenant which requires the landlord to
make sure the land is fit for some special purpose
There is no breach if the premises suffers from some
inherent defect – landlord only is obliged not to
interfere with tenant’s use and enjoyment
Tenant should take the property as it is and also
contemplate that the landlord may lease out other flats
as well
In the context of a flat in a building constructed
for multiple occupation, it must have been
contemplated that the adjoining flats would be
let to residential tenants and that the new
tenants would make noises incidental to normal
living
Would only be a breach of covenant should the
landlord use the other areas for some abnormal
use; in the present case it was merely let out to
other tenants
In present case, they cannot complain of
presence of other tenants, nor can they
complain that there was a lack of sound
proofing
Public policy
o Neighbour acting reasonably and normally, had they been acting
unreasonably, liable under tort of nuisance
The contract between the landlord and tenant said nothing
o It was a silent agreement – no express terms
o The common law and statute both do not imply a term regarding
excessive noise
o When there are no express terms, court will look at the implied
terms of the contract
o The basic rule for agreeing on implied terms is to use a reasonable
observer – what would the reasonable observer understand from
the ordinary implications of the contract
S8 Housing Act 1957
o Statutory implied term of fitness for human habitation for leases
o Annual rent cannot exceed $80
o In reality, inflation has rendered this statute useless
o Parliament has not updated the statute – possibly by choice as
suggested by Dillon
o Possibility of regulating local authorities
o However none of these work in this case
o It is only from the use of normal contractual rules, implying a normal
contractual term, that the landlord can become liable for noise – this
term was not found in the contract by the court
Claim would only succeed perhaps if landlord caused it and prevents the
tenant’s right to exclusive possession
o Such as if the noise was so unbearably loud that the tenant cannot
remain on the premises
Landlord will not derogate from the grant
Because landlord has reversion of fee simple
He covenants to protect the use and enjoyment by the tenant of his
demise
Landlord cannot engage in conduct inconsistent with the purpose for which
the lease was granted, or renders the land materially less fit for that
purpose
o Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 (CA)
Landlord leases land for express purpose of storing
explosives
Subsequently allows adjoining land to be used for mining
operations
Held that this was a derogation of his grant
Must also restrain nuisance committed by other tenants
o Chartered Trust plc v Davies [1997] 76 P & CR 396
Landlord held to have obligation to restrain nuisance
committed by tenant in shopping mall and not to do so would
be a derogation from the landlord’
He cannot grant easements that interfere with the enjoyment of other
tenants
Landlord will keep premises in repair
o In leases that are less than 7 years – implied by statute
o It is in short term leases that there is an inequality of bargaining
power between the parties
Obligations in respect of fitness
As Southwark held, there is no implied obligation for the condition of the
demised premises to be fit for the purpose of their letting
o Caveat lessee
Exceptions to caveat lessee
Liverpool CC v Irwin [1977] AC 239 (HL)
Facts
o Defendants moved into maisonette of two floors in the Council’s
building
o Consistent trouble with vandalism, refuse to pay rent due to
troubles
Council sues for possession, defendants counter claim for damages
and injunction claiming that Council was in breach of its implied
covenant for quiet enjoyment and the covenant that the Council was
to keep common parts in repair
o Judge inspected property and found many problems with the
common parts, some due to vandalism some due to poor
maintenance, some also due to irresponsible action by tenants
Court held that the landlord had a contractual duty to take reasonable care
to keep in reasonable repair and usability the common parts and facilities
in the block
o There is no formal contract signed by both parties – tenancy
agreement only signed by tenant
o Court infers a contract from the conduct of the parties – the court
will establish what the contract is because the parties have not fully
stated the terms
o Terms of the contract
Premises are let to the tenant – tenant allowed exclusive
possession
Implied covenant of quiet enjoyment
There is an implied covenant to maintain the common parts
Demise is useless without the use of the lifts and
chutes – must be an easement to use both
The tenants must have the right to use the lifts and
chutes
Any obligation to maintain the rights of the tenants
should be implied in the contract – it is a test of
necessity (to maintain the necessary easements for
tenants benefit)
The landlord must be subject to obligations because
of the essential nature of the easements
Miller v Hancock [1893]
o When the landlord let the flat to the tenant, he impliedly grants to
the tenants an easement over the staircase for the purpose of
enjoyment of the flats let
o He retains occupation of the staircase
o It is obvious when considering the nature of the demise that the use
of the staircase is the only way the demise can be enjoyed
o Thus it must have been a necessary implication contemplated by
both parties
Obligation of the landlord
o A grant of an easement does not automatically give rise to a duty to
maintain the easement being placed on the landlord
o The duty can be imposed on the tenant instead
o However, in the present case the staircase is an essential means of
access, retained in the landlords’ occupation in a building of multi-
occupation
o The landlord can expressly place the obligation on the tenants –
this was not done in the present case
o If not, there is an implied obligation on the landlord to maintain the
common parts
o This obligation is not absolute – it is an obligation to take
reasonable care to keep in reasonable repair and usability
The implied contract
o Grant of exclusive possession
o Implied covenant of quiet enjoyment
o When grant of exclusive possession is made, there is implied a
grant of access to the property – therefore landlord is required to
grant easement where necessary
o Right to use lifts, staircases and rubbish chutes (this would be
essential to the use and enjoyment of the flat) – these are
contractual rights, they don’t have to be easements
o On top merely granting a right of access, the landlord is obligated to
ensure that the lifts etc are useable – is it necessary for the use of
the lifts and staircases that the landlord maintains and repairs
them?
This obligation is affirmed in Irwin
Landlord is under a positive obligation to maintain their own
(servient) land
Typically, there is no requirement in an easement that the
servient owner perform a positive act
The landlord is only under a duty to take reasonable care to
ensure the lifts are useable
If repair cannot keep up with vandalism, it is irrelevant as
long as the landlord discharges his duty to take reasonable
care
Still, the implied contractual duty of care is limited in scope
o Confers rights only upon contracting tenant – not others such as
family members
o May be excluded by express contractual provision
o Only applicable where absolutely necessary – more applicable for
high-rise blocks designed for multiple occupation
Landlords statutory liability for fitness of premises
Landlord and Tenant Act 1985
o Section 8(1)
For letting of a dwelling-house, there is an implied term that
the house is fit for human habitation at the commencement
of the tenancy and that it will be kept fit for human habitation
during the tenancy
Cannot be excluded by contractual provision
Effect of the legislation however has been drastically limited
(See Southwark)
o Section 11
For leases of less than 7 years, certain covenants relating to
repair and maintenance impliedly undertaken by landlord,
although landlord must first be notified
Interpretation of ‘disrepair’ also extremely limited
See Quick below
Quick v Taff Ely BC [1986] QB 809 (CA)
Facts
o Council owned an estate in which the respondents house was
located, respondent entered into a weekly tenancy agreement with
the council
o Under s32(1) of Housing Act 1961 – implied in the tenancy
agreement a covenant by the lessor to keep in repair the structure
and exterior of the dwelling house
o S32(3) – standard of repair required determined by age, character
and prospective life of the dwelling house
o Plaintiff claimed specific performance of covenant and damages for
breach – property affected by condensation
o The house was redecorated before the tenant moved in, but the
problem of condensation soon became apparent
o It was serious problem which renders the living conditions appalling,
plaintiff complained many times about problem
o House was built in accordance with the regulations and standards
in force at the time
Held that the implied statutory covenants were inapplicable to the house
o ‘disrepair’ is related to the physical condition of whatever has to be
repaired, not a question of lack of amenity or inefficiency
o In absence of evidence of physical damage to walls or windows,
landlord would not be in breach of any implied statutory covenant
Ravenseft Properties v Daystone Holdings [1980]
o Damage to walls and structure
o Forbes LJ rejected the argument that no liability arose under a
repairing covenant if it could be shown that disrepair was due to an
inherent defect in the building
o Improvement is sometimes necessitated in order to remedy the
disrepair
o It is not the case that just because something is an improvement, it
falls outside the scope of the repair covenant
Elmscroft Developments v Tankersley-Sawyer [1984]
o Damage to walls
o It was necessary in order to repair the damage caused by an
inherent defect, even though this was considered an improvement
to the property demised
o However, this improvement did not alter the nature and locality of
the property demised, it did not give the tenant a different thing from
that which was demised
The council is only under a duty to repair the structure and exterior of the
house
o They are not under a duty to repair the interior decorations which
were damaged as a result of water damage
o There is no evidence that walls were damaged
o Any disrepair in the house does not fall under the covenant
Trial judge had held that the obligation to repair included remedying
inherent defects in the property, and that anything that was not an
improvement in the premises would constitute repair
o This was rejected by the CA – imposing this duty would be
potentially onerous on private landlords
Lee v Leeds CC [2002] 1 WLR 1488
Affirmed restrictive approach in Quick
Also held that article 8 of ECHR imposes on local authority landlords an
obligation to maintain premises let out in sufficiently good condition and
that this obligation is breached where the social housing is ‘unfit for human
habitation or in a state prejudicial to health’
In the present case, where the tenant’s home had acquired mould as a
result of severe condensation, the court ruled that the circumstances were
not sufficiently serious to constitute a breach of article 8
Landlord’s liability in negligence
Landlord may be liable where, because of some action or omission on
areas retained within his exclusive possession damage is caused to the
area let to the tenant
o Cockburn v Smith [1924] 2 KB 119
Landlord may also be liable for personal injury where a duty of care is
shown
o Yet this too is limited – landlord is only obliged to take reasonable
care to ensure the safety of those persons who might reasonably be
expected to be affected by his actions or omissions
Ryan v LB of Cambden [1982] 8 HLR 75 (CA)
Six-month-old baby suffered severe burns after falling
on exposed and uninsulated central heating pipe in
bedroom of council flat
Court held that local authority had no duty of care and
was entitled to rely on the child’s parents to protect
the baby from the danger presented by the central
heating system
Cavalier v Pope [1906] AC 428 (HL)
o HL held that a landlord cannot be liable in negligence by reason of
the defective nature of the demised premises at the
commencement of the tenancy
Landlord is only liable in respect of events occurring after the
commencement date
o Criticised as landlord has special knowledge of hidden defects and
concealed dangers
o Courts have adhered to this much criticised rule
McNerny v LB of Lambeth [1988] 21 HLR 188
Court held that Parliament would have to intervene
through legislation to overrule the precedent set in
Cavalier
Landlord liability for nuisance
For nuisance committed by other tenants, landlord is generally not liable
unless he has expressly or impliedly authorised the other tenant to
committing the nuisance, and also only if the acts by the other tenant are a
nuisance in themselves
o Southwark LBC v Mills
However tenant is protected to some extent by statute
o If landlord is a public authority, landlord’s failure to halt an offending
tenant’s nuisance likely to be an infringement of the right to respect
‘private and family life’ as protected by the ECHR
o Housing Act 1996
Authorises issue of injunctions for anti-social conduct,
unlawful use of rented premises, and other breaches of
tenancy agreement
Tenant’s implied covenants
Obligation not to commit waste
o Tenant holding fixed term of years, in absence of contrary
agreement, liable for both voluntary and permissive waste, and is
liable for any repair for which his landlord is not expressly or
impliedly responsible
Yellowly v Gower [1855] 11 Exch 274
o Warren v Keen [1954] 1 QB 15 (CA)
Denning LJ suggested that a tenant for a fixed term of years
has no duty to the landlord to keep the premises in repair,
only to use the premises in a tenantlike manner
To take proper care
He must do the little jobs about the place which a
reasonable tenant would do
He must ensure that he and his family and visitors do
not damage the place willfully or negligently
He must not do waste to the property
Pay rent
Carry out minor repairs
Tenant’s covenants are contextual in nature
Landlord and Tenant (Covenants) Act 1995
Always privity of contract/privity of estate between original landlord and
original tenant
Privity of contract
Where there was privity in the estate, all covenants between original L and T would
be enforceable against L2 and T2 – regardless of number of times tenancy changes
hands
Say T10’s goes bankrupt, and L2 cannot find anyone to let out to, L2 may
sue T1 for their original contractual liability – original tenant has agreed to
pay rent for the entire period agreed
Landlord and Tenant (Covenants) Act 1995
o 3 provisions applied to leases before 1995, the rest only apply to
leases made after 1995
Landlord could not claim more than 6 months after the
amount became due – L2 cannot go to T1 to claim more than
6 months rent
Original tenant cannot be responsible for variations in the
lease that subsequent tenants have agreed – only
responsible for agreements he had agreed to
If original tenant had paid, he could then claim an overriding
lease from the landlord
Eg. T1 can claim a lease from L2, overriding the lease
between L2 and T2, effectively becoming T2’s
landlord
May terminate the lease between himself and T2
o If T1 wants to assign his lease, he can enter into a guarantee
agreement whereby he guarantees to the landlord that T2 will
adhere to all the covenants, if not T1 will be responsible
T1 only responsible for immediate assignee- eg, from T1 to T2; does not
guarantee T3, T4 etc
London Diocesan Fund v Avonridge Property [2005] (HL)
Facts
o Avonridge leased 7 properties from LDF (fee simple proprietor) for a
set number for years
o They subleased 6 units to subtenants
o Subtenants each paid £75 000 as premium for each lease, there
was no requirement for annual payment
o Avonridge liable to pay periodical sums to LDF, but subtenants did
not have to pay Avonridge any periodic payment – peculiar situation
o Avonridge then sold lease to an individual (P) for £50 000, who then
disappeared; neither parties having paid any rent to the head
landlord, LDF
o As a result subtenants had to take on the market rent liability under
the head lease
o Ordinarily subtenants would have had a claim against Avonridge as
the sublease would normally contain the landlord’s covenant to pay
the rent due under the head lease
o However Clause 6 of the lease contained the landlord’s covenant
for the payment of the rent reserved by the head lease – Avonridge
limited their liability to the period that it owned the property
Subtenants had no claim against Avonridge
o Ordinarily landlord might have a claim against Avonridge as usually
when a tenant is selling a lease, he would have to seek consent
from the landlord, who would impose on the purchaser a liability for
the duration of the lease
In this case the head lease contained no restriction on the
lease being sold, thus limiting Avonridge’s liability to the time
which it owned the property
o Subtenants were granted relief but had to pay rent owed in arrears
to the head tenant with interests – they were protected from being
evicted but they had to pay rent that Avonridge owed to the LDF –
they got a bad bargain because they paid premiums and ended up
paying rent also
o Obvious that Avonridge was a fraudster
Issues
o Prior to the 1995 Act, it was possible for lessor in a sub lease to
limit his liability under the covenant to pay the rent due under the
head lease
o The lessor’s liability could be restricted to the period while the
reversion to the sublease remained vested in him
o When the lessor’s liability was confined in this way, his successors
would be liable under privity of estate but not privity of contract
o The issue in this case is whether the 1995 Act precludes a lessor
from limiting his liability as such
Held that the 1995 Act did not preclude a landlord from limiting his liability
in such a way
o Defendants could end its liability to pay rent at any time
o Assignee would be liable to the head lessor in respect of the
tenant’s covenants in the head lease – as well as liable under
clause 6 to pay the rent owed under the head lease because an
exception was made for Avonridge only
o This liability arises from privity of estate
Covenants arising out of contract
o Privity of contract – subsequent landlords and tenants cannot
enforce the covenants of the original contract
o Landlord may set a contractual term wherein tenant must ask for
permission before transferring tenancy (term of alienation)
When the landlord transfers the fee simple reversion to another landlord
o Subsequent landlord will be bound by the terms of years estate
(lease) granting exclusive possession to the tenant
o Do the repair covenant and other obligations transfer? They cannot
be transferred by contract law
o When land is transferred, new landlord and tenant have privity of
estate, no privity of contract
o All leases granted after 1996 are now covered by the Landlords and
Tenants (Covenants) Act 1995
Landlords and Tenants (Covenants) Act 1995
o Clause 6 – Avonridge limited their own liability to LDF
Avonridge not liable if they did not hold the term of years
estate
o Tenant 1 would still be liable to pay rent of he transfers lease to
tenant 2 and tenant 2 does not pay rent
o Landlord 1 is no longer liable under the repair covenant if he
transfers the fee simple reversion to landlord 2
o There is an imbalance
o This was remedied in Act
o S3 – when lease or ownership is transferred, covenants are
transferred
o S5 and s6 remedy the imbalance
o This does not apply to personal covenants
Those that refer to a particular person are not transferrable
Covenants are either transferrable or personal
There is no double liability
o S5 when tenant is released from burden of any obligation
When lease is transferred, tenant 1 is released from all the
leasehold covenants
Tenant 1 is no longer entitled to the benefit of any of the
landlord covenants
o S6 equivalent provision for landlord
If landlord 1 transfers reversion to landlord 2 the obligations
on landlord 1 do not automatically stop
S6 provides way in which landlord 1 can make obligations
stop
The tenant can consent to covenants being transferred to
landlord 2 – if tenant fails to object landlord 1 can transfer
If tenant rejects, landlord 1 is bound unless he applies to the
court and the court says it is reasonable that he should be
released from his obligations (unreasonable that landlord
should remain bound)
The court can insist that both landlords are bound by the
obligations under the lease – this is not possible for tenants
because only one tenant can be bound
o In Avonridge, the question was over the validity of the contractual
agreement limiting Avonridge’s liability
Such a term was incompatible with the statute
The statute is the only way in which the landlord and tenant
can avoid obligations
10/10/11 2:05 PM
10/10/11 2:05 PM