Property

What is a right? All rights correspond to duties Enforceability o In rem o Enforceable generally against others

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In personam Enforceable only against specific persons Right to post bills right in rem or right in personam? Not an easement Requires some nearby land to benefit

Eg. King v David Allen & Sons

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

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

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Human Tissue Act 2004 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

Yearworth v North Bristol NHS Trust Does injury to ones 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 o Incapable of being owned 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 o Williams v Williams [1882] 20 Ch D 659

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

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 womens 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 postmortem, 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) o No one is allowed to gain control over components of ordinary speech

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 propertywe are concerned withthe 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

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 neighbours right to use his own land Nothing defendant is doing really interfering with purpose of plaintiffs 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
Possession

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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 plaintiffs rights because while he had intention to possess fish, he did not have control

Popov v Hayashi [2002] California Superior Ct Barry Bonds 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 wouldve caught the ball had the crowd not interfered. Awarding ball to defendant assumes he wouldve 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 prepossessory 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 o Plaintiff clearly had a clear opportunity to possession, but 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

Wouldnt 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

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 balls momentum with ones 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 Defendants 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

Title

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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 o No such intention found 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 o o o Prehistoric boat embedded in land Defendants lessees, plaintiff land owner Tenant for life of realty v lessee, not finder v landowner Landowner found to own the boat

South Staffordshire Water Co. v Sharman [1896] o o o o Defendant employed by occupier of land to remove mud from bottom of pond Found two gold rings in mud Rings were held to be in the mud and thus part of the realty 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 o Occupier was held to be entitled to the rings 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 o o Bridges picks up parcel on Hawkesworths shop floor Found to contain money Bridges asked him to keep notes until owner claimed them, no claimant came forward o o Three years later Bridges asks for money 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 o Plaintiff found gold bracelet in airport lounge 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 o o Money seized on suspicion that it was proceeds of drug trafficking No convictions for drug trafficking 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 o o o Lord Browne Wilkinson Both claimant and defendant parties to illegal contract Approved and followed Bowmakers, Singh v Ali 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 o Privy Council case Unlawful sale to plaintiff of a lorry, which was registered in the defendants name as part of the illegal purpose o o Defendant took lorry without consent, refused to return it 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 o o o o Tallow kept in warehouses Warehouses caught fire, melted, flowed into sewers Collected by man with no right to it Man sold it to claimant Where owner was unknown, police had right to sell goods in question in absence of claim by real owner within 12 moths o o o o Police sold tallow to defendant before 12 month period Court held that claimant could not recover Held that he had no title beyond what mere possession gave 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 o He had no right to possession? 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 o The transferee obtains possessory title Competing titles circumstances do matter

Bowmakers [1945] o o Exception: Unlawful to deal with them at all Court will not enforce an illegal contract, but will uphold a mans 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 o o Affirms Buckley Plaintiff arrested on suspicion of robbery of 2 banks Conviction for robbery of one of the banks, the defendants in this case, quashed, plaintiff claims money seized rom him when he was arrested o o On who does the onus of proof of title lay on? Plaintiff had to prove he had title to money

Betts v Metropolitan Police District Receiver [1932] o o No magistrate order, plaintiff allowed to recover Police seize piece of cloth they believe, but could not prove was stolen

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Police returns cloth to who they suspected it was stolen from Plaintiff later convicted for felonies not concerned with cloth Plaintiff brought action claiming damages for detinue and conversion of cloth 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 o Whoevers name is on the register has the better title Owner deemed to hold in trust for the squatter

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 Clissolds 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 Clissolds 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

History Feudalism and subinfeudation

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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 Crowns title to territory and the Crowns 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] Landowners 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 owners 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 defendants land but one third of cave under plaintiffs 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 Landlords 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 Xs 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 Ys 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

Equitable Property Rights

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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 owners interest o o Either an estate in fee simple absolute in possession 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 dont 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 Fiduciary duty o Trustees 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 Enforced by charity commissioners on behalf of the Crown

Beneficiaries o o Equitable owners of trust assets and Beneficial owners of trust asset Ownership for ones 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 o Possession Interest Title Time

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 o Right to whole of property accrues automatically to surviving joint tenants 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, tenants 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 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 o They provided purchase money in unequal shares 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 o o

Prior to grant of lease agreed upon proportion of premises for each Made meticulous measures and divided rent accordingly 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 Harriss employers, protected by a life policy on life of Mr Harris, and the interest and premiums of which were deducted from Mrs Harris salary o o Mrs Harris sold this and bought the property in question Money required for the new purchase provided by Mrs Harriss employers in a similar manner Relationship broke down, Mrs Harriss 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, plaintiffs, 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 Drapers Conveyance [1969] o o Wife held to have validly severed joint tenancy 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 Harriss 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 o o o Doctrine which facilitates balance between co-owners Consisting of body of guidelines aimed at achieving justice between co-owners Eg. credit for monies paid and expenditure incurred on jointly owned property Now in statutory principles laid down in s15 of 1996 Act 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 Affirmed in Stack v Dowden [2007] UKHL 17 Likely to produce same result as equitable accounting

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
Security Interests

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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 o 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 debtors 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 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 debtors 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 o Non-possessory Wide range of assets o o Including changing pools of assets such as stocks Most jurisdictions require registration of secured interests Debtor cannot make use of goods until debt is repaid Only tangible assets can be pledged

Debtor retains title 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

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 debtors right to use proceeds floats until conversion into a fixed charge, at which point the charge attaches to specific assets Cessation of companys 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 companys 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

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 debtors 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 companys 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 companys 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

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 o o Sellers supply leather to handbag manufacturers Handbag manufacturers go bankrupt 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]

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 sellers 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

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

Unless an express contrary intention appears the sellers 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

Courts have looked at true intentions of parties Parties could not have intended for manufactured goods to be owned by seller Sellers 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 sellers 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 o Forth v Simpson [1849] 13 QB 680

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 sellers lien is a sellers 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 o o o Defendant negotiating hire-purchase of van from plaintiff Plaintiff allowed use of van in the interim Van broke down, plaintiff sends van to second defendants for repairs Plaintiff demands return of van from plaintiff, and subsequently second defendants, who refuse until payment has been made for repairs o Artificers (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

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

*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
Mortgage A charge by way of legal mortgage o o LPA 1925 s85, 87 Must be effected by way of a registered charge Land Registration Act 2002 s27(2)f

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Mortgagor retains title of land, but mortgage is registered as a charge against that title o o Mortgage of fee simple estate grant of 3000 years 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 debtors 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 transferors 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 transferors 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 o No clog or fetter on equity of redemption Since it is a security transaction, mortgagor must be able to

What are the rights of the mortgagee? o Mortgagees 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

Mortgagees power of sale

Mortgagors equity of redemption The mortgagors 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 o A mortgagor retains this right until a court deems that foreclosure is appropriate 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 mortgagors 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 mortgagors right to redeem o o Mortgagor has legal right to redeem on redemption date 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 mortgagors 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

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 mortgagors 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

Any advantage which the mortgagee obtains as a condition of the mortgagor being able to redeem Charmelyn Enterprises Pty Ltd v Klonis

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 mortgagors estate in land must be unencumbered by any interest created as a term of the mortgage

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 mortgagors 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 o o Plaintiff owned 3 properties, could not pay off debt Mortgagee sells 3 properties in auction Plaintiff asserts that selling 2 of the properties would have been sufficient, claimed that defendants 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 Mortgagors 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 Mortgagors right is reduced to an entitlement to the surplus of the sale

Mortgagees 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 mortgagors default give the mortgagee the right to possession in the absence of a contract? o Mortgagees right Enforceable barring express or implied terms in the contract Default on mortgagors 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

*Mortgagees 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 mortgagees demand for possession automatically becomes a trespasser Birch v Wright [1786] Exclusion of mortgagees 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 mortgagees right In reality large institution lenders have no interest in actual physical occupation of premises Mortgagees strict liability to account

Mortgagee who goes into possession of mortgaged property becomes subject to stringent control of equity in dealings with the land

Liable to mortgagor to any rent or profits drawn from the land

Remedies In event of default, mortgagee has remedies including o o o Action on mortgagors personal covenant to repay Appointment of a receiver Assertion of the mortgagees right to possession Almost always merely a preliminary to exercise of mortgagees power of sale o o Exercise of the mortgagees power of sale Foreclosure

Mortgagees duty Financial Services and Markets Act 2000 o o Mortgage lenders have to pay due regard to the interests of customers Mortgagees 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 o o o Has a duty to manage the property with due diligence Must conduct the business with reasonable competence Taking reasonable steps to run the business profitably 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 o o o Silven mortgaged properties to the bank Bank appointed receivers of the mortgaged properties Bank and receivers sold all the mortgaged properties 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 o Silven agrees that the bank sold the properties at market value, 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 o o No duty to exercise power of sale Entitled to remain totally passive By taking possession, he assumes a duty to take reasonable care of the property o Requires him to maximize returns from the property Without taking undue risks Preservation of property

Power of sale in conferred upon the mortgagee by the mortgagor Mortgagee has an unfettered discretion to sell

The mortgagees decision over whether to exercise the power of sale is not dependent on whether it will confer a loss on the mortgagor

o o o

He is not bound to wait for a higher price He is not bound to improve the property or increase its value 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

Should the mortgagor want further protection or a restriction of the mortgagees rights, he must provide for their inclusion when the mortgage is made

If the mortgagor redeems the mortgage, the rights of the mortgagee are extinguished

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 o o He must be active in the preservation and protection of the property

Appointed in a managerial capacity No general duty to exercise the power of sale A duty may arise if goods are perishable

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

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

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

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

Therefore receiver does not owe the duty to delay the sale for any potential planning permissions

*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 mortgagees right to possession Close association between possession and sale possibility for mortgagee to be restrained by court from exercising right to possession? o o Support from Lord Denning in Quennell v Maltby [1979] 1 WLR 318 Other judges did not share same view

Unlikely in light of Ropaigealach

Ropaigealach v Barclays Bank plc [2000] 1 QB 163 Facts o o R owned house and executed legal charge on house with Barclays 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 o R defaults on payment, Barclays exercises right of sale over house 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 Banks 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 o Adjourn proceedings Suspend and stay any order for possession

Document must be construed so as to make it illegal for a mortgagee to obtain possession of a dwelling unless under a court order

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 Parliaments 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 Mortgagees 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 Mortgagees 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 mortgagees 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) Mortgagees solicitor or agent o Martinson v Clowes [1882] 21 Ch D 857

Sale to trustee for the mortgagee Downes v Grazebrook [1817] 3 Mer 200

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 Mortgagees power of sale taken form of public auction, where only bidder was mortgagees 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 o Palk (below)
th

And must take steps to preserve its value Sterne v Victoria & Grey Trust Co [1985] 14 DLR (4 ) 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

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

As long as

Mortgagee owes both the above duties Remedies for mortgagor for wrongful exercise of mortgagees 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 Mortgagees 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 o o o o o

The amount he received was less than the amount owed for the mortgage Defendant company refused sale at below the amount owed Palk applied to court for order of sale Defendants obtained an order for possession Court suspended the order for litigation Defendants do not intend to sell immediately, but to let the property and sell when the market improves

However, this would lead to Palk having to pay interest rates on the mortgage in the mean time

Palk brings action to enforce an order of sale

General rule: an order of sale cannot be made against the mortgagees 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 o Can be done by fixing a reserve price or payment into court Foreclosure will be ordered when to postpone a sale would be to prejudice the mortgagees o o Today, foreclosure actions are rare 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

Mortgagees 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 Mortgagees right has priority over mortgagors 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 courts exercise of discretionary powers given under s91(2)

Palk ought not to be liable for mortgagees 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 mortgagors valuation of a fair reserve price might still differ from the banks

Non-possessory rights to land

land resources

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Property law has often recognized non-possessory rights to land so as to allow efficient utilization of

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 holders 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 o Profits a prendre is a property right that the holder can enforce against others 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 o Allows a neighbour to do things which would otherwise be trespass or nuisance 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 persons 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 (4 ) 641
th

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 Salvins 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 tenements 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

Held that he merely had a license right to put boats on waterway was unconnected with the use and enjoyment of the land

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 o Canary Wharf Tower causing poor reception of number of residences 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 o Created by operation of law 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 o Similar to the concept of adverse possession 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

Unlike in adverse possession whether a property right is born from the actual possession of land

Negative easement by prescription is not usually possible

Changes in use of the easement o o Usually happens when the dominant tenement changes hands 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 o Are not easements 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 anothers 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 o The owner of the park is trying to exclude the house owners from use of the park 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 o o o There must be a dominant and servient tenement It must accommodate the dominant tenement Dominant and servient tenement owners must be different persons 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 o o Have different owners In this case the confusion is over 2
nd th

and 4 criteria

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

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

But this in itself is insufficient, it needs to be shown that the right enhance the normal enjoyment of the houses

The deed explicitly stated that the houses were to be used for residential not commercial purposes

It was covenanted that the park was to be kept and maintained as a pleasure ground or ornamental garden

The vendors covenanted that they would not erect any structure on the pleasure ground

o o

The purpose of the properties as houses is important The use of a garden enhances the value of a property, and is closely connected to the use of property as a house

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

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 vendors ownership The house owners were not seeking to occupy or possess the park; their use did not exclude the vendors use

Whether it is a mere right of recreation without utility o o The park benefits the house owners 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

The wandering across neighbours land admiring it is not a right recognized under English law (this right is the right jus spatiandi)

o o

It is too vague and wide (ill-defined) to be considered a recognizable right 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

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

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 wasnt It was merely joint possession Any exclusion of the servient owners possession was only temporary

In the normal enjoyment of the park, the interference with the servients 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 owners possession by the dominant owner

Phipps v Pears [1965] 1 QB 76 (CA) Facts o Defendants tore down building that had protected plaintiffs 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 o Right to stop his neighbour from doing something to the neighbours land Right to protection from the weather is entirely negative, it is a right to stop ones neighbour from pulling down his own house o o There is no such right in law as a right to prospect or a view 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 neighbours right to his land o o Every man is entitled to pull down his house if he likes 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 Respondents land is situated such that the only road which provided vehicular access ran through the appellants 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 o o Grant Sufficiently long prescriptive use Servient owners acquiescence in the dominant owners 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 o It cannot bar the servient owner from possession of his own land 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

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

The sole/exclusive use of servient land by the dominant owner is not inconsistent with the servient owners 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

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

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 wouldve excluded the servient owner and thus could not constitute an easement

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 owners 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

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

Law commission is recommending that Parliament should legislate that it is possible to have an easement for parking

Freehold Covenants
Freehold covenants

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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 Ss predecessor covenanted with Rs predecessor to keep in repair a roof which projected from Ss house over the cottage now owned by R Lack of repair caused water leakage into Rs cottage HL held the covenant to be unenforceable *Also held that section 79(1) did not cause the burden of positive covenants to run with the land Positive covenants are not directly enforceable except against the original covenantor Reinforces rule in Austerberry

o o o o o

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 covenantors land o Original covenantor remains liable but if sued for his successors breach, may claim on the indemnity covenant to recover any damages he himself has to pay o Can extend indefinitely o However from original covenantors 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 covenantors 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 unitholder in the same way as it did the old s16(1) Doctrine of mutual benefit and burden o Halsall v Brizell [1957] Ch 169 Ds 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 Rs 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 Defendants 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 covenantors 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 covnantors 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 covenantors 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
They are rights that are part of a lease Leases are a combination of contract and property

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Unlike freehold covenants, leasehold covenants are not property rights

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

Landlords 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 Tenants 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 tenants 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 tenants 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 Councils 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 multioccupation 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 dont 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 tenants 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 Landlords 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 childs 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, landlords failure to halt an offending tenants 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 Tenants 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 Tenants 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 T10s 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 T2s 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 landlords covenant to pay the rent due under the head lease o However Clause 6 of the lease contained the landlords 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 Avonridges 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 lessors liability could be restricted to the period while the reversion to the sublease remained vested in him o When the lessors 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 tenants 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

 o o o o o

Avonridge not liable if they did not hold the term of years

estate Tenant 1 would still be liable to pay rent of he transfers lease to tenant 2 and tenant 2 does not pay rent Landlord 1 is no longer liable under the repair covenant if he transfers the fee simple reversion to landlord 2 There is an imbalance This was remedied in Act 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 Avonridges liability Such a term was incompatible with the statute

The statute is the only way in which the landlord and tenant can avoid obligations

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