The Law of Property - Assignment Example

INTRODUCTION TO THE LAW OF PROPERTY ASSESSED RESEARCH EXERCISE 2, WINTER SEMESTER 2009/10 PART A (70 i) Nina lives in a small terraced house inIslington, of which she is the sole legal proprietor. She bought the freehold in 2002, financed by a mortgage. At the same time, Nina’s fiancé Liam started staying over at the house several nights a week. Liam gave her irregular sums of money to help her out with the mortgage bills when she was short of funds. In 2004 Liam got a job in north London and moved in properly. Over several conversations at this time, they agreed that the property was theirs ‘equally’ and as such it would be appropriate for Liam to pay exactly 50% of each of the mortgage bills, which he duly did. In February 2007 Liam got a job overseas and began spending no more than a couple of nights per month at the house when he needed to stop over in London, although still paying half the mortgage bills and still engaged to Nina. Nina has gradually been developing an emotional relationship with her gardener, Jonathan. With Liam away, they spent more time with each other and Nina would often light-heartedly say that ‘one day Liam will be gone and it’ll just be the two of us here forever.’ Jonathan has stopped charging her for gardening services and has done some roof repairs on the house. Liam has now discovered Nina’s affair. He is unsure what interest he has in the house, if any, but wants to sell whatever he has. Liam is also worried that Jonathan might plan to claim an interest in the house, as since Liam’s discovery Jonathan has given up his council flat and moved in. In 1,000-1,200 words, write a report explaining the nature of the legal and equitable interests that may exist in the house, how Liam might realise the purchase value of any interest he might have, and any ways in which Jonathan might assert rights in the property. PART B (30%) In 500-600 words, explain your research methods, including the strategy you used to find the relevant information, the sources you consulted and the electronic searches that you made. Outside the word limit, include a fully-cited bibliography of books, journals, databases and cases that you consulted in your research (whether you used them in your final report or not). Property law by Roger J. Smith sixth edition Report in relation to any claims that the listed parties might have against the aforementioned property. Legal principles applicable in relation to rights of ownership of the property In order to advise the parties in relation to any claims they might have over the property it is necessary to consider the law in relation to resulting trusts, implied and constructive trusts, and proprietary estoppel. It will also be necessary to consider legal interests in the property as well as any equitable interests that might exist. This will involve consideration of the law relating to overriding interests, in order to determine whether any overriding interests would be deemed to be in existence by the courts. Implied trusts An implied trust can include statutory, resulting or constructive trusts. Resulting and constructive trusts exist in equity only and are used by the courts to correct unfairness, where, without the application of equity, one party would gain an unjust enrichment over the other. In general terms, this usually occurs in situations were the property has been registered in one name only, but other parties have contributed either to the purchase price of the property, or expended money on the property, either towards the mortgage payments, or for bills or repairs to the property. If the court finds that a resulting or constructive trust does exist, the property is deemed to be held by the registered owner on trust for the other party. Resulting trusts Where there is evidence that a party, not listed on the register, has made a contribution to the purchase price of the property, the law in relation to resulting trusts will apply. Persons claiming under this principle will have to demonstrate that they provided the money with the intention of acquiring an interest in the property proportionate to the amount invested1. In Gissing v Gissing2 Lord Diplock stated A resulting, implied or constructive trust…is created by a transaction between the trustee and the cestui que trust in connection with the acquisition by the trustee of a legal estate in land, whenever the trustee has so conducted himself that it would be inequitable to allow him to deny the cestui que trust a beneficial interest in the land acquired. Resulting trusts are regarded as making an express declaration3 that any person contributing towards the purchase price will have an interest in that property. This has the effect of making an equitable interest a right in property4. In Tinsley v Milligan5, the respondent was attempting to rely on the fact that the property was registered in her name only, to claim full. In the final determination the court held that the plaintiff was entitled to a share of the property in proportion to the amount she had contributed to the purchase price. By doing this, an interest that was essentially only an equitable interest was given proprietary rights over the property. Constructive trusts Constructive trusts are implied where the claimant has not paid any money directly towards the purchase price of the property, but has either contributed to the mortgage payments or towards other household bills or repairs. In order to determine whether a constructive trust has been created, the courts will examine the conduct of the parties. In Grant v Edwards6 direct contributions towards the mortgage were sufficient for a constructive trust to be implied. A similar decision was reached in Passee v Passee [1988] 7, where payments towards the mortgage entitled the court to determine that a constructive trust had been created. Conversely, in Buggs v Buggs [2003]8, the court rejected the suggestion that a constructive trust had been created despite the fact that the defendant had made contributions towards the mortgage. In this case, evidence was presented to show that the defendant was fully aware that she would not gain a beneficial interest in the property, even though she was paying towards the mortgage. Similarly, in Griffiths v Cork [2007]9 the claim for a constructive trust to be implied was rejected. In this cases, the payments made by the defendant were for repairs to the property and not direct payments to the mortgage. The court held that the money spent on the repairs should be regarded as a gift in gratitude for being provided with accommodation. Detriment In order to succeed in a claim for a constructive trust, the plaintiff has to show that they acted in their detriment. This was demonstrated in Lalani v Crump Holdings Ltd [2007]10, in which the plaintiff attempted to rely on a promise, made verbally, that even though her name was not on the register, she would be entitled to a share of the property. It was decided by the court that the payments towards repairs and furnishings was insufficient proof that she has acted in her detriment. The court also struggled to accept that a verbal promise had been made as there was no corroborating evidence. Proprietary estoppel. In cases were the plaintiff is able to prove that they have acted in their detriment the doctrine of proprietary estoppel can be applied. In Ramsden v Dyson11 Lord Kingdown held that a claim for proprietary estoppel should succeed, stating that If a man, under a verbal agreement with a landlord for a certain interest in land, or under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and, upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation. However, in Thorner v Curtis [2007]12 an application for proprietary estoppel was rejected because the defendant was unable to support his claim in relation to acting to his detriment13. In this case, the encouragement on which the defendant had hoped to rely was on verbal and could not be corroborated. The courts have also rejected claims where it is clear that the party only had a mere hope that they would have an interest in the property14. In Gillet v Holt15 the court held that the plaintiff had a duty to prove that the defendant was expecting them to rely on the promise made. Legal interests When purchasing property, the legal ownership of that property will be determined examining the property register, in order to discover who has been named as the legal owner of that land. This gives the owner a right in rem over the property16, entitling them to dispose of the property in any way they choose17. Rights in personam are based on a personal relationship with the property and cannot exist independent of the law18. Equity is based on the principle of justice and fairness and is generally applied to right a wrong19. Equity acts on the conscience of the legal owner, dictating how they should conduct themselves in relation to the property20. Under s53(2) of the Law of Property Act 1925 there is no legal requirement of evidence in writing in order for a claim for a constructive trust to succeed. As mentioned above, the conduct of the parties will be a key factor in determining whether such a trust will be inferred. Overriding interests There is no requirement for an overriding interest to be entered onto the register in order for it to bind a new owner21. Overriding interests include short term leases, legal easements22, squatter’s rights and the rights of persons in actual occupation23. In Williams & Glyn Bank v Boland24, the wife claimed an overriding interest in the property based on the fact that she had made a substantial contribution to the purchase and was in actual occupation. This case demonstrates how actual occupation might be regarded as an overriding interest25. In general, the courts are unlikely to interfere with the right of a person in actual occupation to remain in the property if they can show that they have an interest in that property. Any person who can prove such an interest might be able to rely on proprietary estoppel to prevent the sale of the property26. Conclusion From the above, it is possible that Liam might be able to claim an equitable interest in the property under the doctrine of constructive trusts. This would entitle him to apply for proprietary estoppel, preventing Nina from selling the property. He would not be able to insist on the house being sold or on Nina repaying him the money owing, as he has no legal interest in the property. If Nina sells the property, Liam might be awarded a share if the courts agree that a constructive trust has been created. If he had paid towards the purchase price he might have gained a right in the property under a resulting trust. Jonathon might also be able to claim an interest in the property on the basis of the work he has done on the property, however, the court might regard this contribution as a gift in gratitude for being allowed to live in the property. Research strategy In order to write the above report, I considered the relevant principles on which the parties might be able to rely. Through examining case law, I was able to determine how an equitable interest might be inferred in situations were the claimant has not contributed towards the purchase price. I then examined the effect of these equitable interests, in order to determine whether these could be relied on to claim a share of the property. Since it was Liam’s intention to try to sell any interest he might have in the property, it was necessary to determine whether any legal right to the property could be inferred. To determine this, I consulted the textbooks listed below, as well as case law and internet sources, and discovered that, since the interest would only be an equitable interest, Liam would not be able to force Nina to sell the property, and would only be entitled to either prevent her from selling the house, or receive a share of the money once the hose was sold. My sources of information came from the textbooks below as well as the listed websites and lecture notes. I used general search terms on Westlaw to find cases on proprietary estoppel, detriment and constructive trusts and selected those that supported the arguments as well as those that damaged the claims. Using Westlaw I selected cases in which the claimant had been successful in proving the various issues discussed above, as well as cases where the claimant had not succeeded. From the above, I was able to conclude, that the comments made by Liam, and the conduct of the parties was sufficient to suggest that Liam would have expected to gain an interest in the property. Evidence that Liam had paid towards the mortgage was also sufficient to lead to the conclusion that a constructive trust might be implied. A more complete report would have included any counter claims that Nina might have been able to raise in objection Liam’s claim, however, the word limit for the report prevented me from doing this. As well as using Westlaw I also accessed Justis.com and did a general web search on case law. I also accessed www.baillii.org as a further reference point for cases. I used quite a few textbooks not on the recommended reading list as well as those that were available in the library and those that I had purchased for the course. Many of the internet sites I accessed were of little use and were not always from trustworthy sources so I chose not to use this in my report. I have in the main restricted myself to the use of textbooks and case law to prepare the report. I was unable to find any journals in the library to use in this research. Bibliography Ashburner, W, (1933), Principles of Equity, 2nd Ed, Butterworths Birks, P, (1985), An introduction to the Law of Restitution, Oxford University Press Bridge, M, (2002), Personal Property law, Clarendon Press Bryn P, (2000), Understanding Land Law, 3rd Ed, Cavendish Publishing Ltd Civil Procedure, (2002), The White Book, Volumes 1 & 2, Sweet & Maxwell Cockburn, T & Shirley, M (2005), Equity in a Nutshell, Lawbook Co Cockburn, T, Harris, W, & Shirley, M, (2005), Equity & Trusts, Butterworths Dixon, M. (2005). Modern Land Law, 5th Ed, Cavendish  Glover, N & Todd, P, (1995), ‘Inferring share of interest in home: Midland Bank v Cooke’, 4 Web JCLI 28 September 1995. Gravells, N P, (1999), Land Law Text and Materials, 2nd Ed, Sweet and Maxwell Gray, K & Gray, S, (2005), Elements of Land Law, 4th Ed, Oxford University Press Gray, K & Gray, S F (2006), Land Law, (4th Ed), Oxford University Press. Hayton, D J, (2001), The Law of Trusts and Equitable Remedies, 11th Ed, Sweet & Maxwell Pearce, R and Stevens, J, (1998), The Law of Trusts and Equitable Obligations, 2nd Ed, Butterworths Smith, R J, (2006). Property law: Cases and materials, 3rd Ed, Pearson Education Thomas, M, (2001) Statutes on Property Law, 8th Ed, Blackstone’s Zander, M, (1998), The Law-Making Process, 3rd Ed, Weidenfield & Nicolson www.bailli.org www.opsi.gov.uk www.westlaw.ac.uk Read More