Free Law Essays - Brian recently purchased from Diane (the sole registered proprietor) a residential property in extensive grounds known as Greenacre. Brian moved into Greenacre two weeks ago and the following matters have come to light.
(a) Stella, a neighbour, has taken to using Brian's driveway to gain access to a neighbouring field which she owns. When challenged by Brian she produces a deed dated 7 June 2005 in which Diane has granted her this right of access across Greenacre to Stella and her successors in title.
(b) Brian has discovered that Fred, a neighbouring farmer, has ploughed up two fields belonging to Greenacre and is in the process of seeding them. Fred has told Brian that Diane agreed to lease these fields to him for five years and has produced evidence of this agreement, signed by himself and Diane. The agreement appears to contain all the terms of the alleged lease.
(c) Brian has received a letter from John, in which John states that he has lived with Diane for several years and made a substantial financial commitment to the purchase of Greenacre. John is a merchant seaman and is at sea at present. John also states that he has just learnt that Diane has sold the property and that all his belongings are still in the house. He claims that he is entitled to live in the property. A search of the attic revealed several large boxes which appeared to contain John's personal property.
Advise Brian.
I shall approach each of these sections in turn:
(a) The question here is whether or not Stella can be said to possess a legal [or equitable] right of access, or easement, over the driveway of Greenacre, by virtue of the deed between her and Diane, the previous owner of the property, or otherwise, i.e. by virtue of necessity.
We can assume from the facts that any such easement was not in fact registered on the Land Register, in accordance with the requirements of s.27(2)(d) of the Land Registration Act 2002, and must therefore proceed on the assumption that any easement that may be deemed to exist is merely equitable in nature.
The four requirements for the creation of such an easement were reiterated in the case of Re Ellensborough Park:
Firstly, there must be a dominant and a servient tenement, and the easement must be attached to the dominant tenement. In our case, this requirement is clearly satisfied; the burden of the easement is imposed upon Greenacre, the servient tenement, for the benefit of Sheila’s field, which can be identified as the dominant tenement to which the right of access is attached.
Secondly, the easement must accommodate the dominant tenement, i.e. benefit Sheila’s field in some way. Again, this requirement is clearly satisfied; Sheila’s field is the dominant tenement, and this land would be benefited by a right of way over the driveway of Greenacre.
Thirdly, the owners of the dominant and servient tenements must be different; in our case this requirement is clearly satisfied as Sheila and Brian are the respective owners.
Lastly, the easement must be capable of forming the subject matter of a grant, i.e. both parties to the easement must be sui juris, and the terms of the easement must be specific and unambiguous, and the rights created must be of a kind which are generally recognised as being rights created through easement. In our case, the terms of the easement are clearly defined by the deed dated 7 July 2005, and both Brian and Sheila are of sound legal capacity.
Having satisfied these four requirements, we can conclude that an easement was effectively created by virtue of the deed between Diane and Sheila. The question that must now be addressed is whether or not this equitable easement is binding on Brian, a third party successor to Greenacre, the servient tenement, i.e. can the easement in question be deemed to be an overriding interest [or as they are now termed ‘interests capable of overriding’] and bind all subsequent successors in title, whether they had notice of this interest, or not.
In light of the fact that the easement in question was granted after the 13th October 2003, it cannot, by virtue of Schedule 1(3) and Schedule 3(3) of the Land Registration Act 2002, be considered an ‘interest which overrides’: "An easement (legal or equitable) expressly granted on or after 13 October 2003 over registered servient land cannot be an overriding interest". We must therefore conclude that Brian, who did not have notice of the easement upon purchase nor a reasonable opportunity to discover it, would not be bound by the equitable easement created by virtue of the deed between Sheila and Diane in 2005.
It may be possible however for Sheila to argue for the existence of an easement of necessity, although this will depend upon whether or not there are any other access points to Sheila’s field other than the driveway of Greenacre. Whilst we are not told explicitly in the facts whether or not Sheila’s field would be landlocked but for the use of Greenacre’s driveway, if Sheila is to successfully argue for such a quasi-easement, she must show that at one point in the past the dominant and servient tenements were owned by the same person, and therefore, when the land was separated, both the grantee and the grantor would have intended that access would be permitted in the future. Buckley J discussed this reasoning at length in the case of Nickerson v Barraclough, although some authors have argued that the real reason for allowing the imposition of such implied easements is merely one of public policy; it is in the public good for land to be accessible and available for cultivation or use. On the basis of the facts presented, we cannot make any firm conclusions in respect of this particular claim; we can state however that if Sheila has no alternative means of access to her field other than the driveway of Greenacre, it is very likely that the courts would imply a binding equitable easement of necessity in her favour.
In conclusion, we must therefore argue that Brian will not be bound by any easement created by virtue of the deed signed between Sheila and Diane in July 2005, as this easement was unregistered, and unknown to Brian at the time of purchase. If Sheila’s field however would be landlocked but for this access route, then there is a very good chance that Sheila could successfully apply to the court for the imposition of an implied easement of necessity, which could then be registered and be binding on Brian as a legal easement.
(b) The question here is whether or not a valid lease can be said to have been created over the two fields, and whether or not this lease is binding on Brian.
The fact that Fred can prove the existence of an agreement purporting to grant him a lease over the fields is not enough to prove the existence of a lease. In order for a lease to exist, it must be shown that all the requirements for the proper constitution of a lease have been fulfilled. These requirements were listed in the case of Street v Mountford [1985]; in this case Lord Templeman defined a lease simply as `exclusive possession for a time at a rent'.
There is no indication that Fred is enjoying anything other than exclusive possession of these two fields. Neither is there any indication that the terms of the agreement do not include a rent to act as valuable consideration for the lease agreement. We can therefore conclude that, prima facie, it would appear that a valid lease [for the period of 5 years] was created by virtue of the agreement between Fred and Diane, the previous owner of Greenacre.
If we are to assume that a valid lease was in fact created by this agreement, then we must now turn our attention to the question of whether or not this lease is binding in law/equity on Brian, the new owner of Greenacre, despite the fact that the lease appears to be unregistered and also that Brian did not know about the existence of the lease at the time of purchase.
In light of the fact that the lease is for a period not exceeding seven years, registration of the lease is not compulsory under the Land Registration Act 2002, unless the lease took effect more than three months after grant, in which case, it would be compulsorily registrable. There is no indication from the facts presented that there was any such delay in the commencement of Fred’s lease.
In order for the unregistered lease to be binding upon Brian, Fred must argue that the interest created is an interest capable of overriding any dispositions subsequent to the grant of the lease.
In order for Fred to argue this successfully, he must prove either that Brian had notice of his actual occupation, or demonstrate that Brian would have been able to discover his occupation on a ‘reasonably careful inspection of the land’. Whilst it is clear from the facts that Brian did not know of Fred’s lease/occupancy, it seems likely that such occupation was reasonably discoverable; Fred has been busy preparing the land, having ploughed up two of the fields.
I would therefore conclude that in light of the fact that Brian clearly did not inspect the property thoroughly enough prior to purchase, Fred’s unregistered lease may be considered overriding by virtue of Schedule 1, paragraph 2(c) of the Land Registration Act 2002, and thus binding upon Brian. Whether or not Fred’s occupation would have been reasonably obvious on an inspection of the land will of course be a question for the Courts to decide, and in the absence of any statutory definition or test, it is hard to say with any certainty what the outcome would be. I do however feel, as I have argued above, that a ‘reasonable inspection’, however extensive the grounds, would have revealed Fred’s occupation; it would be hard to miss the fact that two large fields are being ploughed up; the noise alone would be a sure-fire tell-tale sign!
(c) This final section relates to issues of proprietary estoppel, the question being whether or not we can successfully argue that John, by virtue of his relationship with Diane and the significant financial contribution that he made towards the purchase of Greenacre, can be said to have an actual interest in the property. If such an interest can be established, we must then assess the nature and extent of this interest, and whether such an interest could be binding upon a third party purchaser [without notice], such as Brian.
It is generally regarded that there are three requirements that must be satisfied in order to successfully argue for the operation of proprietary estoppel. The first of these requirements is that the person seeking the estoppel, in our case John, must have believed that he was, by virtue of his actions, going to acquire a right in the property in question. Secondly, it must be shown that the legal owner of the property, i.e. Diane, encouraged this belief. Lastly, it must be shown that John acted in reliance on this belief.
On the basis of the facts at hand I do not think that there would be any difficulty satisfying the first of these requirements. If it is true that John made a substantial financial contribution towards the purchase of the house and lived in the house with Diane for some years, it seems quite reasonable that he would have expected to obtain some kind of legal interest in the property Greenacre.
Likewise with the second requirement; whilst we are not provided with any facts which specifically indicate that Diane induced John into believing that he would acquire an interest in the property, the very fact that he was living there and contributing financially to the house would seem to indicate acquiescence on the part of Diane to the idea that John would acquire a greater or lesser legal interest in the property itself. This is supported by the dicta of Lord Diplock in Gissing v Gissing [1971] AC 886, who states that where there is no direct evidence of the parties intentions, the court can infer these intentions from the parties actions, e.g. contributions to the purchase price, or to the monthly mortgage instalments.
In relation to the third requirement, again whilst there is no direct evidence that John acted to his detriment in reliance on the belief that he would acquire a legal interest in the property, again the fact that he made financial contributions towards the house may suffice as evidence to satisfy this requirement.
I therefore would argue with some certainty that a court would hold that John should, by virtue of proprietary estoppel, be awarded an interest in Greenacre, although the precise quantification of this right would need to be calculated by the court, based upon the precise proportions of his contributions compared to those made by Diane. In many respects, it is not the quantification of John’s rights over Greenacre with which we are concerned, but rather how those rights might affect Brian, a third party successor in title to the property.
Under the Land Registration Act 2002, a right arising from proprietary estoppel is a registrable interest, which will bind third party successors if so registered, i.e. is capable of being overriding. The problem that we have in our case is that John has only just now become aware of the fact that Diane has sold the house. He therefore did not have a chance to register his interest prior to the acquisition of the property by Brian. It seems most unfair to disallow John’s interest from being overriding on the sole basis of this natural and inevitable ‘lack of foresight’!
If we are to find a way to allow John to assert his property rights against Brian, the new legal owner of Greenacre, then we must look for an alternative conceptualisation of John’s interest, a conceptualisation which will allow us to form an overriding interest.
"The conventional view appears to be that interests created under estoppels cannot bind third parties, at any rate until a court has quantified the interest, and awarded a proprietary interest." However, this conventional view breaks down somewhat if you view the above situation as a common intention constructive trust. As Sir Browne-Wilkinson VC explained in the case of Swiss Bank Corporation v Lloyds Bank Ltd [1979]: "Suppose that P has contracted to allow Q to use some property owned by P. P then sells that property to R expressly subject to the terms of the contract between P and Q. There is some authority to suggest that R, by expressly agreeing to buy the property subject to Q's contractual rights is, as a constructive trustee, bound to give effect to those rights: see Binions v Evans . . . The fiduciary relationship is apparently created by R taking the property expressly subject to Q's rights." This formulation however does seem somewhat unnatural, and contrary to the notions of Privity of Contract to which we have grown so accustomed; such a formulation suggests that the rights acquired are rights in personam rather than rights in rem, but if this is the case, then surely John would only be able to seek redress against Diane; Brian after all was not a party to that constructive trust!
Alternatively, we could re-conceptualise the proprietary estoppel as giving rise to an equity rather than an actual property interest, as per the reasoning of Kitto and Menzies JJ in the case of Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965). Essentially John could argue that although his proprietary interest did not exist prior to the court hearing, he had acquired some kind of equitable right, an equitable right which, if nothing else, could at least give him the right to have the conveyance of Greenacre [from Diane to Brian] to be set aside for fraud. This formulation however does not hold up to scrutiny; to allow this approach would be to open the floodgates; all of a sudden third party legal rights would be undermined left right and centre by the equitable claims of all and sundry!
In conclusion, in light of the fact that Brian had no knowledge of John’s ‘proprietary interest’, nor would he have discovered the interest upon reasonable inspection/inquisition, I do not see how the courts would enforce John’s unregistered interest against Brian’s conveyance. Brian has not acted unconscionably, and therefore should not have his legal rights affected. This is somewhat unfair on John, but hopefully as I have shown, the Courts are continually trying to evolve this area of the law to come to a better compromise that will result in fairer possible outcomes for all concerned.
References/ Bibliography:
Statutory Instruments:
Land Registration Act 2002
Land Registry Practice Guide 62 (March 2005)
Case Law:
Re Ellensborough Park 1956 Chancery 131
Kilgour v Gaddes [1904] I K. B. 457
Phipps v Pears (1965) QB 76 CA
Hunter v Canary Wharf [1997]
Union Lighterage Co v London Graving Dock Co (1902) Ch 557
Titchmarsh v Royston Water Co Ltd (1899)
Nickerson v Barraclough [1981] Ch 426
Street v Mountford [1985] AC 809 (HL)
Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, 151H-152A
Gissing v Gissing [1971] AC 886Grant v Edwards [1986] Ch 638
Binions v Evans [1972] Ch. 359
Swiss Bank Corporation v Lloyds Bank Ltd [1979]1 Ch 548, 571E-F
Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965)113 CLR 265
Academic Articles/ Textbooks:
Simonton, Ways By Necessity (I925) 25 COL. L. REV. 57I, 575-77
Glover and Todd "The Myth of Common Intention" (1996) 16 LS 325
Hayton, D (1990) 'Equitable rights of cohabitees' [1990] Conveyancer 370
Gray, K (2005) Elements of Land Law, 4th ed. (London: Butterworths).
M.P. Thompson, Modern Land Law, ( 3rd edn, Oxford, 2003)
