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?
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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,