The Provisions of the Land Registration Act - Essay Example

Introduction The extent of potential legal rights in the Property will depend on the nature of the right (whether equitable or non-equitable) andas the Property is registered, the provisions of the Land Registration Act 2002 (“LRA1). The LRA sets out the requirements regarding registration of third party rights and the extent to which such rights bind the interests of the purchaser. The LRA distinguishes third party rights that are required to be registered and those that are considered overriding2and I shall consider any potential equitable rights when considering the legal position of Miss Kaur, Ms Winston and Miss Thomas. 2: Miss Kaur Mr Winston was the sole registered proprietor of the Property and with regard to Miss Kaur’s legal position it is evident that she gave Mr Winston ?15,000 for the purpose of them being a home together and Mr Winston used this sum to purchase the property along with a mortgage in his sole name. There doesn’t appear to be any express valid trust regarding Miss Kaur’s contribution however Miss will most likely have a proprietary right in equity under resulting trust3. Resulting trusts usually involve contribution to the initial cost of the family home, which is registered solely in the name of another person4. Equity does not presume an outright gift, but rather a presumption that the contributing party intended to retain a beneficial interest in the property5 (despite no evidence of actual intention). Whilst this approach has been criticised theoretically as the imposition of an “artificial presumption6”, it is arguably a necessary approach to protect third party interests7. On this basis, Miss Kaur may be able to claim an equitable interest in the Property under resulting trust and on this basis Mr Winston will have held the Property as sole trustee with there being two co-owners in equity8. As the Property was held in trust and there is only one trustee of the land and two co-owners, Ms Winston will not be able to rely on the doctrine of overreaching to negate Miss Kaur’s interest9. Moreover, as Miss Kaur has an equitable interest on grounds of resulting trust, Section 3310 of the LRA provides that trusts are not registerable as notices on the register and therefore Miss Kaur’s interest will not have been registered. Furthermore, the effect of Section 26 of the LRA is that purchasers are entitled to proceed, in the absence of such an entry on the register on the basis that there are no limitations on the owner’s powers11. As Miss Kaur has an equitable interest in the Property under the trust, her interest will only be binding on third parties if it constitutes an overriding interest12. Schedule 3, paragraph 2 of the LRA protects overriding interests of those with rights to the property that are in actual occupation13. However, in the current scenario, Miss Kaur was away for over a year and did not live in the property. Accordingly, Miss Kaur will not be able to establish an overriding interest by virtue of actual occupation. Therefore, on this basis Ms Winston will hold the Property on trust for Miss Kaur and any proceeds of any potential sale will be held on trust for Miss Kaur in proportion to her contributing share to the purchase price14. 3: Miss Thomas With regard to Miss Thomas, she did not contribute to the purchase price however she undertook significant renovations and modernisation to the kitchen and gave up her local housing authority home to live in the Property on the basis of Mr Winston’s representations. Therefore, Miss Thomas may have an equitable proprietary interest under common intention constructive trust15. The leading case of Lloyds Bank plc v Rosset16 highlighted the essential requirements for the imposition of a constructive trust asserting its foundation in the common intention of the parties to share the properties. Lord Bridge further asserted in this case that intention could be express or inferred from conduct17. Furthermore, Lord Bridge in highlighting the reasoning in Gissing v Gissing18 asserted the concept of detrimental reliance in order for there to be a constructive trust. A prime example of this is Eves v Eves19. Notwithstanding the widening interpretations of trust law, the courts’ approach has been positively inconsistent in relation to indirect contributions. Therefore if we apply the case law rationale by analogy to Miss Thomas’s legal position, it is evident that Mr Winston told Miss Thomas that she would never have to worry about finding a home again and that she could always live in the Property. On this basis, Miss Thomas gave up her local authority housing home and she also used her life savings to redo the kitchen. This would therefore point in favour of a constructive trust. However, there is no consistent approach to what constitutes a “substantial contribution” under constructive trust20. The decisions of Gissing v Gissing21 and Midland Bank plc v Cooke22 suggest that the share can be inferred by conduct. In the current scenario therefore Miss Thomas’ share under the constructive trust would be a question of fact dependent on the level of contribution to the overall property value23. Alternatively, as Mr Winston encouraged Miss Thomas to believe she would always have a right to live in the Property and Miss Thomas relied on these representations to undertake the modernisation on the kitchen using her life savings along with giving up her local authority housing rights; she may also be able to rely on proprietary estoppel to claim proprietary rights in the Property. The doctrine of proprietary estoppel, was acknowledged in Ramsden v Dyson24 where it was asserted that if there was an agreement or arrangement between two parties which indicated that one party had been encouraged to believe that they would have a specific interest in the property; if the party then acted upon this believe to their detriment, the courts would be required to give effect to the promise on equitable grounds.25 To this end, it is arguable that the equitable roots of proprietary estoppel were clearly intended to operate as a narrowly applicable doctrine in cases involving unconscionability26. This is further supported by the judicial rationale in Wilmott v Barber27 where the Court of Appeal went further and established what has been coined the “Wilmot v Barber Probanda28”, which sets out five elements that must be present before an estoppel will be granted29. These five elements were as follows: the plaintiffs must have made a mistake as to his legal rights; he must have spent money or relied on mistaken belief; the defendant must be aware of the true position; the defendant must be aware of the plaintiff’s mistake; and the defendant must have encouraged the plaintiff’s expenditure or other act of reliance30. However, the leading decision in Taylor Fashions v Liverpool Trustees Co Ltd31, saw the courts take a broader and relaxed approach to the Wilmott v Barber probanda on the basis of unconscionability, particularly where a party had knowingly encouraged another party to act to their detriment32. This is evident in ReBasham33 where it was held that if a property owner encouraged a claimant to behave in a specific manner in reliance on the belief of a specific property right or benefit pertaining to the property, this would constitute a representation under the estoppel formula34”. On the other hand, the doctrine of estoppel would appear to go further and acknowledge rights outside the narrow confines of proving “contribution” to the property again undermining any notion of an “orthodox” application. For example, in Pascoe v Turner35, the doctrine of estoppel was utilised to transfer the estate to the plaintiff. Additionally in Matharu v Matharu36 the daughter in law continued to live in her in-laws house after the breakdown of a marriage. The Court of Appeal nevertheless held that she had rights under the doctrine of proprietary estoppel and was entitled to remain the property. The second element of the Taylor proprietary estoppel test is that of reliance and is closely linked to detriment37. It must be demonstrated that the claimant relied upon the representation to the extent that they were influenced or induced38, which has created problems in practice. For example, in Greasley v Cooke39, Lord Denning asserted the objective reasonable man test and held that satisfaction of the objective test would lead to a presumption of influence.40 This undermines Taylor however, the courts often go to great lengths in awarding the substance of the representation of entitlement originally made to the claimant41. With regard to detriment, in Grant v Edwards42, Lord Edwards stated that detriment required proof that a claimant acted to their detriment or substantially changed their position as a direct result of the representation43. Moreover in Gillett v Holt44, Walker felt that the courts had adopted an extremely narrow application of the detrimental reliance requirement and that detriment was wider than simply financial detriment.45 As such, whilst the lines between proprietary estoppel and the common intention trust are clearly blurred, the doctrine of estoppel clearly goes further in widening the ambit of what constitutes “detrimental reliance”. For example, in Ottey v Grundy46, the claimant had given up a career to look after the deceased to her detriment. She was not named in the deceased’s will however, it was held that she went beyond the role of girlfriend, there was reliance upon a promise made, once reliance was made upon the promise, it became irrevocable in equity47. If we apply the principles of proprietary estoppel to the current scenario, it is evident that Mr Winston clearly wanted Miss Thomas to live in the Property as they were in a relationship and encouraged her to give up her local authority housing rights and contribute to the kitchen renovations using her life savings. As such, this points to Miss Thomas’ reliance and detriment on Mr Winston’s request and acquiescence in Miss Thomas and her 8 year old son living in and continuing to live in the Property. Accordingly, whilst the onus of proof would be on Miss Thomas, the factual scenario indicates that this points towards grounds for asserting proprietary rights in estoppel. In order for the interest to be overriding, Miss Thomas would need to establish actual occupation. Moreover as highlighted by the decision in Malory Enterprises v Cheshire Homes48 it is evident that the definition of property and actual occupation is very wide. If we apply this to the current scenario, it is evident that Miss Thomas has been living in the Property and will satisfy the requirement of actual occupation. Accordingly, Miss Thomas will have an overriding interest in the Property. 4: Ms Winston Whilst Mr Winston’s rights in the Property passed to Ms Winston under the rules of intestacy, the factual scenario highlights that Ms Winston holds the Property on trust for Miss Kaur and Miss Thomas. Therefore, Ms Winston’s desire to sell the Property is subject to the rights of Miss Kaur and Miss Thomas, particularly as Miss Thomas’ rights will be overriding on any third party purchasers. Additionally, in the current scenario there is no evidence of any express declaration of trust, and as such, the Trust of Land and Appointment of Trustees Act 199649 (TLA) imposes a trust of land. Under the TLA provisions, Ms Winston will be the trustee of the Property. As trustee she will have absolute power in the Property, which means that Ms Winston can effectively sell, lease or mortgage the Property.50 However, the general trust law principles impose a positive obligation on trustees to act in the best interests of the trust and therefore Ms Winston will have to apply to the court for a sale of the Property, which will only be granted if determined to be in the best interests of the trust51. Bibliography D. Chappelle, Land Law (8th Edition, Pearson Education 2007). K Gray & S. F. Gray, Elements of Land Law, (Oxford University Press 4th Edition, 2009). J MacKenzie& M Phillip, Land Law. (12th Edition Oxford University Press, 2008) Jill E. Martin, Modern Equity, (18th Edition, Sweet & Maxwell, 2009). Megarry and Wade., The Law of Real Property. (7th Edition Sweet & Maxwell, 2008) R. Smith, Property Law: Cases and Materials (4th Edition, Longman, 2009). S. Wilson, Todd & Wilson’s Textbook on Trusts, (9th Edition, Oxford University Press, 2009) Legislation Trusts of Land and Appointment of Trustees Act 1996 Land Registration Act 2002 All legislation available at www.opsi.gov.uk accessed January 2011. Read More