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Land Law

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Question 1(a) A mortgage is a charge over land or other property to secure payment of a debt or compliance with some other obligation. Undue influence is some improper pressure falling short of duress. Equity identifies three categories of undue influence (O’Brien/Aboodi). The first (Class 1) requires the claimant to demonstrate actual undue influence. The second and third categories require the claimant to demonstrate a particular type of relationship (in the second category (2A) are listed a number of often fiduciary relationship, ie doctor/patient; but not husband and wife): in the third (2B) the relationship is one of “trust and confidence”). Once the relationship is made out, the burden shifts to the defendant to prove that there was no undue influence. If the undue influence is made out, the claimant is entitled to have the contract/mortgage set aside as against the unduly influencing party.

It is rare that that party is the mortgagee. For the charge to be set aside as against the mortgagee on the basis of the undue influence of another party, it is necessary for the claimant to show that the mortgagee had constructive notice of the possibility of undue influence (Compare O’Brien and COBC Mortgages –v- Pitt for the circumstances where notice arises – for instance, that the mortgagee is aware that a wife is standing surety for her husband’s business debts) and that the mortgagee failed to take steps to “clean the taint”. Etridge explains the steps necessary to clean the taint: advising the wife about the risks she is taking and inviting or ensuring that she receives independent legal advice. This may be from the husband’s solicitor, but it should not be in the presence of the husband. Ordinarily, a certificate from that solicitor that the wife has been advised is sufficient to clean the taint.

Question 1(b) The fundamental conflict at a policy level is between the need for mortgagees to lend with some certainty that their charges can be enforced (which is good for the economy – we wouldn’t want the banks to stop or limit lending), set against the need to protect vulnerable people from oppressive conduct: in simple terms, where should the balance lie between the economic benefit of secured lending and the rights of the “innocent” wife to keep her home? Prior to Etridge, it was recognised that a lender could be tainted where the charge was not for the wife’s benefit, but there was no clear judicial guidance on how that taint could be removed. Etridge provided that guidance and, in particular, enabled the solicitor’s letter to clean the taint. There is little prospect of unjust results here: if the wife goes against good advice, she cannot be said to have been unaware of the risks (and she retains an action against her husband, although if the bank is enforcing its charge, such action would probably not be worth powder and shot), whilst if the advice was negligent, she has an action against the solicitor.

It should also be recognised that equity will not assist the wife in any case if she is a party to a fraud or misrepresentation to the lender (by, for instance, signing an application form which states, untruthfully, the purpose of the loan (CIBC -vPitt)). Question 2 Prior to the 1995 Act, the benefit and burden of leasehold covenants would run to assignees of the lease and reversion where those covenants “touch and concerned” the estate, and “had reference to the subject matter of the lease”. Thus personal covenants and terms by way of option for the tenant to purchase the reversion would not run (See Spencer’s Case and Woodall –v- Clifton). It was recognised that there were some unjust results from the notion that the original tenant would be liable for breaches by his or her assignee for the duration of the lease. In poor economic climates, this could mean that an original tenant who had long since assigned his or her interest could become liable for breaches of the covenant to pay rent or repair where he or she had no direct control over the property or the tenant.

Conversely, of course, it was recognised that the landlord had contracted with the original tenant: some would argue that, particularly where the landlord had no control over to whom the lease was assigned, it was not unreasonable that the original tenant indemnified the landlord against breaches by a “tenant of straw”. The former tenant’s position was ostensibly protected by indemnity covenants and the rule in Moule –vGarrett, but the reality was that if the landlord was not seeking to enforce against the instant tenant, it would be because that instant tenant had no means to pay, rendering the former tenant’s indemnity valueless. The new Act provides that the benefit and burden of all covenants contained in the lease run on assignment unless they are expressly stated to be personal (s3). Thus, in the ordinary course of events, an option will run. The original tenant (and any subsequent tenant assigning his or her estate) is automatically released from the burden of the tenant’s covenants unless the lease provides for an Authorised Guarantee Agreement (ss5 & 16).

An AGA provides an indemnity from an assigning tenant to the landlord, but only for breaches committed by the tenant to whom the lease was immediately assigned. Thus the original tenant liable at most for his or her own breaches and for those of the tenant to whom her or she assigned. Even here, the outgoing tenant’s position is enhanced, as should the assignee be in breach and the landlord seeks to rely on the AGA, the outgoing tenant can call for an over-riding lease (this part of the Act applies equally to old leases)(ss17-20). Page 2 of 9

To deal with concerns about the assignee of the lease being less financially reliable than the original tenant, the Act provides that the Landlord may provide in the lease for an assignee of the lease to have certain characteristics, thus potentially limiting the original tenants ability to assign to a “tenant of straw”. One recognised potential pitfall of the new regime is the possibility that an assignee of the lease may become bound by trivial and/or onerous covenants which would have been considered personal in an old lease, but run as they are not expressed to be so in a new lease.

Question 3(a) Under the old regime, still applicable to unregistered estates, the doctrine was based on the principles of limitation: that a claimant who “sits” on his or her rights (in this case to regain possession of a squatted estate) should not be able to do so for considerable periods of time (the threat of litigation should not be permitted to hang over another party like Damocles’ sword). The relevant provisions of the Limitation Act 1980 provided, generally, a period of 12 years for actions to regain possession of land: in some cases (actions concerning Crown land, or estates held by the mentally incapable) the period was longer. If a claimant could show factual possession, together with the intention to possess (that is to exclude the world: not necessarily an intention to own) for the requisite period, he or she was entitled to the estate. See Powell –v- MacFarlane and JA Pye –v- Graham. The LRA 2002 disapplies the Limitation Act to registered estates. Schedule 12 of the Act substitutes a new regime, whereby a person who can show possession of land (with the necessary intention) can apply to be registered as proprietor after ten years. When the application is made, the registered proprietor is given notice of the application (as are any other interested parties: mortgagees, for instance).

The RP has 65 days within which he or she can object (perhaps on the basis that adverse possession is not made out: the squatter lacks the necessary intention) or consent to the squatter’s registration. If there is no objection, but the RP responds to the notice, the squatter can only be registered as proprietor of the land if the registrar is satisfied that he or she should be registered on one of three bases: first, entitlement by some estoppel; secondly, some other reason (perhaps an un-completed contract for purchase where the money has changed hands – if it was a long time ago, the Limitation Act may prevent the occupier enforcing the contract in itself); or, thirdly, where the matter amounts to a claim over the boundary between two estates. If the RP makes no response, the squatter will be registered as proprietor. The RP has a further two years to take action to repossess.

If the squatter is still in possession after two years, he or she is entitled to be registered as proprietor (subject to limited exceptions, including un-concluded possession actions). Question 3(b) There were a number of concerns about the old regime. It was perceived by some as “legitimated theft of land”. There have been a number of high-profile cases over the years where there has been a perception that squatters have acquired valuable estates “illegitimately”. More recently there were concerns that   the old regime, at least where registered land (and thus a system operated by the government) was involved, breached the owner’s Human Rights by depriving him or her of property without compensation. See JA Pye –v- UK and Beaulane – v- Palmer. The other side of the argument recognises that, for policy reasons (economic and social), land should not become “sterile”. The system for adverse possession allowed “abandoned” land to come back into use. That argument is noticeably weaker where the land forms a part of a registered estate.

The problem with unregistered land that is believed to be abandoned is that the owner is probably not capable of being discovered or identified. With registered estates, the owner should be identifiable from the register, and thus can be approached with a view to the sale and purchase of the estate. The new regime recognises issues of abandoned land: where, for instance, a registered proprietor is no longer present at the address listed in the Proprietorship register, it seems reasonable to assume that the land is abandoned. Conversely, institutional land owner without a presence on the land (because, for instance, it has been acquired for some future purpose) will be “tipped off” and can take steps. The provision dealing with boundaries recognises that the boundaries on the Title Plan are not conclusive and provides, it is hoped, a relatively straightforward way of resolving disputes. The new regime should also comply with the Human Rights Act requirement for proportionality.

Question 4 Unless the contract provides otherwise, the purchaser of an estate in land acquires nothing more than that estate. Where, for instance, the purchased estate is a house, the law needed to determine what parts of the building and other things on the land forming the estate were land. Moreover, there needed to be some certainty over the vertical extent of the estate to determine whether a trespass had taken place. The theory that the owner of land owns the estate to the depths of the earth and to the heavens above proved, particularly after the Wright brothers managed to fly, problematic. The law recognised that mines and minerals, certain watercourses and “treasure trove” were not a part of the estate. Statutory powers for utility and transport organisations to lay pipes, wires and tunnels further mitigated the notion.

In terms of altitude, the law began, through the twentieth century, to recognise that the estate, whilst notionally extending to the heavens (does one own the moon for the period it is directly above one’s estate?), gives enforceable rights to the owner only to such altitude as is reasonably necessary for the enjoyment of the estate (s76 Civil Aviation Act 1982). This will, of course, depend on the use of the land and the height of any buildings on it. That “things attached to land” are land is also a notion which has seen development through the nineteenth and twentieth century. It is accepted that fructas naturales form land, but that fructus industriales” do not. The distinction is drawn by human cultivation: thus, in theory, “wild” mushrooms deliberately grown are not land. Buildings tend to be seen as land, as they are attached – the original test to distinguish fixtures (land) and fittings (chattels) being the “degree of annexation   test”, although problems can arise with “temporary” or “lean to” buildings. Other things attached to land were seen as land so long as they were firmly attached.

Thus if a one ton statue was bolted down, it was land, if not, a chattel (Compare Holland –v- Hodgson and Berkeley –v- Poulett). The courts recognised the problem and addressed issues with consideration of whether things on the land formed a part of an “architectural scheme of decor”. Thus a tapestry nailed to the wall which was in keeping with a theme of decoration was land, whilst one simply nailed to the wall so it could be seen, was not (Compare Leigh –v- Taylor and Re Whaley). This idea seems somewhat incongruous in an age where “schemes of decor” are the result of a trip to the DIY shop and a weekend’s painting. The more modern test is the “purpose of annexation” test. This test asks why the object has been attached: for its own purpose, or for the enhancement of the land. The recent case of TSB Bank plc –v- Botham casts some light on its application to things one expects to find in a modern home.

SECTION B Question 1(a) The benefit of a covenant will pass at law where the covenant “touches and concerns” (that is, it is not personal – Smth and Snipes Hall Farm Ltd –v- River Douglas Catchment Board), where the covenantee had the legal estate of the dominant tenement and the assignee derives title therefrom, and where there was an intention that the covenant bind the land (although now such intention is deemed by s78 LPA 1925). The burden of covenants does not, subject to some exceptions (including the rule of mutual benefit and burden), run with the servient tenement’s ownership at law (Austerberry, affirmed by Rhone –v- Stephens) (although it may indirectly be enforced, to the extent of a damages claim, where there is a chain of indemnity covenants). The benefit will run in equity where it is annexed or assigned.

A covenant will be deemed annexed in the absence of words to the contrary, by s78 LPA 1925 (Federated Homes Ltd –v- Mill Lodge Properties Ltd). For covenants created before 1926, the covenant must be expressly annexed (by wording in the deed creating it – for example see Newton Abbot Co-Operative Society –v- Williams – v- Threadgold) or assigned (by wording in the transfer from the original covenantee to the next owner of the dominant tenement) (Miles –v- Easter).

The burden will run in equity pursuant to the rule in Tulk -v- Moxhay: the covenant must be restrictive in nature (the “hand in pocket” test – a test of substance not form); the covenant must “accommodate the dominant tenement”, in effect “touch and concern”; the covenantee must have owned the dominant tenement at the date of the covenant’s creation; and, the covenant must have been intended to run with the land, although this will be deemed to be so by s79 LPA 1925 in the absence of words to the contrary. It is not clear whether Greenacre of Blackacre are registered – it is assumed that the covenants have been adequately protected, either by noting on the register or registration of a Land Charge. The first covenant is positive. Davina has the benefit in both law and equity, but the burden has not passed to Chris (at law, because the burden does not run, and in equity because it costs money to comply. Davina may be able to pursue Page 5 of 9

Bobby for damages. Bobby may, if he secured an indemnity covenant when he sold to Chris, be able to rely on that indemnity (whether to pressurise Chris into compliance or to recover and damages he pays to Davina). The second covenant is also positive, and, on the face of it, will not run for the same reasons. However, the law requires a person taking the benefit of an easement to comply with any positive obligation directly related to that right (usually to pay for its upkeep). Assuming that the servient tenement benefits from a right of drainage over Blackacre, Chris must pay unless he chooses to disclaim the right of easement. The third covenant is a classic restrictive covenant. Davina takes the benefit at both law and in equity, and Chris the burden in equity (unless the original conveyance contains express words to the contrary). Davina has an action for equitable damages or injunction to prevent the build: if she wishes to injuct, she must act promptly and come to the court with “clean hands”.

Any action for damages will require her to show loss: that the extension reduces the value of her own estate. If her claim is damages only, she may be better going against the original covenantee, as her claim would be at law and she would be entitled to damages as of right. Question (1b) Commonly purchasers will ensure against the costs of compliance with an action in respect of their breach of covenant, but that is not the case here: insurance, would, in any case be unavailable under these circumstances. The covenant would be extinguished if Chris could persuade Davina to sell him the whole of Blackacre: the whole of the original benefiting and burdened land must come into common ownership. Similarly, and assuming that Davina owned the whole of the benefiting land, he may persuade her to grant an express release. If Davina showed a fixed intention not to enforce the covenant, it would be deemed extinguished.

More likely would be an application to the Land Tribunal pursuant to s84 LPA 1925, which permits the tribunal to vary or extinguish a covenant on various grounds, most notably on the basis that the covenant is obsolete. Even where the covenant is varied or extinguished, the tribunal can require the owner of the servient tenement to compensate the owner of the dominant tenement. Question 2(a) There are two ways in which estates can be held where a trust of land arises: joint tenancy and tenancy in common. A joint tenancy requires four unities (time, title, possession and interest).

Each joint tenant “owns the whole yet owns nothing”. On the death of a joint tenant, the rule of survivorship applies and the estate is held by the remaining joint tenants: this applies irrespective of the will of the deceased or of the intestacy rules. A joint tenancy can be severed by various means. The severance will results in the joint tenant effecting the severance acquiring a share as tenant in common equal to 1/n, where n is the number of joint tenants.

A tenancy in common is the “default” in the absence of a joint tenancy. A tenant in common owns an identifiable proportionate share of the estate. The legal estate cannot be held other than by joint tenants. Thus a legal estate cannot be severed to give an identifiable share unless the estate is physically divided. On the purchase of an estate, law and equity raise certain rebuttable presumptions about the ownership. As to the legal estate, this will be held by the first four named purchasers, unless the deed specifies otherwise (s34 Trustee Act 1925). Where there are unequal contributions to purchase price, equity will presume a tenancy in common, again, unless there are words to the contrary (Bull –v- Bull; Barton –v- Morris). Here the legal estate will be held by the first four named (presumably E, F, G & H) on trust for E, F, G, H & I as joint tenants (as the express wording of the transfer rebuts the presumption that they would be equitable tenants in common.

That the purported transfer amounts to an alienation by E severs her joint tenancy, leaving the property held by E,F,G&H on trust for E&J holding one-fifth as joint tenants inter se, and F,G,H&I as joint tenants as to four-fifths. That the charge by F severs her share (again an alienation), and on the death of her and G, the property is held by E & H on trust for E&J as to one-fifth as joint tenants inter se, F’s estate as to one fifth as tenant in common, and H&I as to three-fifths as tenants in common. The rule of survivorship applies only between joint tenants. The homicide of H may sever the joint tenancy between him and I, subject to relief under the Forfeiture Act (which is possible as this was not, in the sense that he intended to kill another joint tenant, a “voluntary” homicide). Thus E holds on trust for E&J as to one fifth, F’s estate as to one-fifth, H’s estate as to three-tenths and I as to three-tenths.

Question 2(b) The relevant provision of the Trusts of Land and Appointment of Trustees Act 1996 include the prima facie right for a beneficiary to occupy (subject to the intentions of the settlor) (ss12 & 13) and the right of any party with an interest in the property to apply to the court for an order for, inter alia, sale (s14). The Act lists various factors the court will take into account (s15). There is also a requirement that the trustees consult the beneficiaries (s11). The purpose of the trust was for the parties to live there, so, assuming there is enough room, Ian should be permitted to occupy. If he applies to the Court to order sale, the Court may take the view that the purpose of the trust has all but failed (in that most original parties have died) and that the interest of the majority of the beneficiaries are no longer served by the retention of the property.

Question 3 The rules for determining the priority of interests affecting a registered estate (ss28 and 29 LRA02) are that interests rank in order of creation unless the instant transaction is a registered disposition for value, which is subject only to those matters on the register or which over-ride (per Schedule 3 LRA02). A registrable disposition is one of the transactions listed in s4 of the Act. A failure to register such a transaction means that it takes effect in equity only (s7). Interests which override a registered disposition are listed in Schedule 3 of the Act. They include certain short leases (subject to exceptions including “reversionary leases” – leases which give the tenant a right to possession three months or more after the date of the lease)(para 1); legal easements (express legal easements are registrable dispositions, so, if not registered, exist only in equity. Para 3 – thus applies only to implied and prescriptive easements) to the extent that the easements is “obvious on a reasonably careful inspection”, is known by the purchaser, or has been exercised within the last year (para 3); and interests protected by the actual occupation of the person with the benefit of that easement (para 2).

Actual occupation is determined as a matter of fact, and the occupation must have commenced prior to the transaction (the date of the transaction; not the date it was registered). The occupation must be “obvious on a reasonable careful inspection” or known of by the purchaser. It is important to note that the occupation is not itself protected per se. It is the fact of occupation which provides protection to any interest the occupier has. Given that Keith purchased at auction, it is reasonable to assume he paid value, and, on registration of his purchase, he therefore takes subject only to those interests on the register or which override. As to the first flat, Linda has a legal lease (it is short enough to be excepted from the requirement to register) which overrides in its own right per Schedule 3. Her lack of occupation is, therefore, irrelevant. As to the second flat, the lease takes effect in possession more than three months from grant.

Therefore, although a short lease, it required substantive registration and is excepted from Schedule 3. It will only be protected as an over-riding interest by Morris’ actual occupation if Morris took possession before the date of Keith’s purchase. Morris moved in after the purchase (although before registration of the purchase). Thus his interest does not override in its own right, nor was it protected by actual occupation on the relevant date. As to the third flat, Narinder has a lease which, to acquire legal statutes, required substantive registration. It was not registered and takes effect in equity only.

Therefore it does not override in its own right. It may be protected as an overriding interest by Narinder’s actual occupation (only to the extent that it is equitable) if that occupation was obvious on a reasonably careful inspection. As to the right of way, assuming that the Court Order was pursuant to Oliver’s application to the Court for a determination that he had a prescriptive or implied grant of easement, Keith will be bound to the extent that the right was obvious on a reasonably careful inspection, or, more likely, that the right has been exercised within the last year.

Question 4 An easement is a right to do something on someone else’s land falling short of a right to possession. In order to be an easement a right must fall within the criteria laid down in Re Ellenborough Park. The right must: relate to a dominant and servient tenement; which are owned or occupied by different persons; accommodate the dominant tenement; and “be capable of forming the subject matter of a grant”. The final point takes in both the capacity of the grantor and grantee and that the right claimed falls within the range of rights recognised by the courts as being capable of amounting to easements. In the absence of an express grant (and providing that there are no express words to the contrary in the transfer) the courts may imply a grant of easement under one or more of four heads: necessity (eg Union Lighterage, Nickerson –vBarraclough, Wong –v- Beaumont), common intention (eg Liverpool –v- Irwin), the rule in Wheeldon-v-Burrows, and the effect of the operation of s62 LPA 1925. The basis of such claims is the notion of “non-derogation from grant”.

This is the idea that someone selling land should not deny the purchaser the right to use that land as the parties intended. It is for this reason that the reservation of an easement can only (and then with difficulty) be implied by necessity or common intention. Each of the rights here is capable of satisfying the Re Ellenborough Park test (there is no evidence that either party lacks capacity by way of age or of insanity). Where land is absolutely land-locked (access cannot be made at all without committing a trespass) the law is willing to imply a grant of a right of way by necessity. This would seem to be the case as to access over the “ransom strip”. Common intention is less rigorous: here, it is reasonable to assume that the courts would find it within the parties common intention that the purchaser be able to access the estate. The rule in Wheeldon -v- Burrows requires evidence of a “quasi-easement” – the use in a way like an easement of a part of a single estate.

Where a part of that estate is sold, the continued user (assuming the user “crosses” both estates) will be implied as an easement where the quasi-easement was “continuous and apparent” and where its continuation as a “full” easement is “reasonably necessary for the enjoyment” of the dominant tenement (the part of the estate sold). Here, the use of the drop kerb would suggest that, if access was made to the cottage this way prior to the sale, the user was continuous and apparent. It would be difficult to argue that its continuation was not reasonably necessary to the enjoyment of the cottage. The presence of the cess-pit means that no claim for necessity for the user of the drains running under Steven’s estate will lie.

Equally, if Ronan did not know about the drains prior to his purchase, it will be difficult for him to rely on a claim based on common intention. His ignorance will not prevent a claim under Wheeldon -v- Burrows so long as the user would have been “apparent” had he looked. This may not be the case, although the apparency may be made out by evidence of a series of “drain covers”, or perhaps a different colour of concrete over the track where the pipes might have been laid. Steven’s claim to use the track will not be made out by necessity unless his retained estate became landlocked when he sold the cottage to Ronan. Again, it will be very difficult for him to make out a common intention claim if Ronan was ignorant of his intention to continue to use the track after the sale. Page 9 of 9

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