Introduction to a Land Law - Article Example

Land Law Introduction Land being one of the most valuable asset to man has led to disputes mainly based on present and future benefits due to ownership concerns. Land like other assets is under Law, Property Act 1925 section 53(1) (b)1. This law claim that any beneficial interest in land must involve title deeds or signed documents by all the parties involved in the property. This Act was revised and several reforms made in the Law of Property (Miscellaneous Provisions) Act 1989 (c 34)2. This law laid several requirements for any contracts for the sale and disposition of an interest in land must be in writing to prove the agreed terms in a single document. These requirements have led to people wondering if it is possible to sue a person who breaches an oral promise to another person. In the law of contract, any verbal agreement is only reliable if there are witnesses, but invalid if there are no witnesses. These distinct on validity of oral promises made property owners take advantage of unsuspecting workers to make them loyal for many years working for them with the hope that they are the future beneficiaries of the land. The workers would receive lower payments and would even use their earnings to improve the property only for the owners to rethink their promise thus resulting to detriments of the worker3. The House of Lords thus formulated and adopted new laws that would ensure that the owners kept their promise and any unjust withdraw from his word would be used by the worker or beneficiary to transfer the beneficiary interest of the property. The promised person would use proprietary estoppel, or constructive trust in their suit to claim their rights. Proprietary estoppel may amount to constructive trust to ensure that oral contracts are honored as claimed by Neuberger LJ in his reference to Kinane v Mackie-Conteh case where he claimed that if Kinane could only establish proprietary estoppel and not a constructive trust the case would fail. This makes it easy to assume that the two laws are similar. This article intends to evaluate Neuberger LJs approach to the relationship between the respective doctrines of the constructive trust and proprietary estoppel by reference to decided cases and academic commentary. Proprietary Estoppel This is a legal process under the property law that ensures a property owner is estopped from denying the interest of another person in his property. This law is closely related with constructive trust and uses three main elements as its doctrines for a court of law to ensure remedy to the claimant. The three elements are assurance, reliance and detriment based on claimant’s reliance. Assurance is whereby the property owner or his representative leads the claimant to believe that he will enjoy future benefits of the property or the property will be his in the future4. This assurance takes different forms, as it can be verbal or any form of encouragement to the claimant by the owner. Reliance on the other hand, signifies the interest of the property of the claimant, which may lead to detriment. The reliance must be reasonable to ensure that the claimant had faith, thus deciding against his career or small payments or none to gain the property or become a benefactor of the interest. “If A, under an expectation created or encouraged by B that A shall have a certain interest in land thereafter, on the faith of such expectation and with the knowledge of B and without objection from him, acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.”5 Although all the elements of the doctrines should be identified for, they claim to hold, it has to have unconscionable conduct for equity identification. The court investigates on the impact of the property promise or encouragement actions and the promisee conducts to prove that the repudiation of the assurance is unconscionable under all circumstances. The equity makes it possible for the promisee to seek relief. The establishment of equity does not guarantee relief as the court uses a wide discretion to ensure the presented to satisfy the equity thus avoid unconscionable results. For the unconscionable conduct to hold even after the court’s investigation, it has to portray the elements of the doctrine. If the proprietary estoppel stands, the interest, transfer is proportional to the expectation of the claimant and the detriment or the transfer of the property to the claimant. This approach uses the maximum claimant’s equity, thus determines the minimum action to ensure justice for both parties. For instance in Thorner v Major, “David worked on Peters farm for 30 years and believed he would inherit it. This probably was intended, but after Peter fell out with other relatives, he destroyed his will, leaving David with nothing. Even though no specific assurance, and only some vague conduct indicating an assurance, was present, the House of Lords held that David had a good proprietary estoppel claim.”6 Constructive trust This is an equitable remedy that prevents unjust enrichment imposed by the court after a person is denied benefits wrongly due to the other person has legal rights to the property. The defendant may fail to honor the claimant’s trust. The claimant may have used his time and resources to improve the property with the aim that they would share the interest with the defendant. It is based on parties having a common intention, detrimental based on reliance and unconscionable denial of the rights of the owner. The court decides to establish a constructive trust without any evidence that the claimant suffered any detriments, but the judgement is based on unjust enrichment that was led by unconscionable conduct to deprive the title to the property of the claimant. The defendant is ordered to give the profits accrued since his breach of trust to the claimant. The claimant is given a choice to make on the best equitable remedy, but since both parties had a common interest, ownership is not deprived, but the claimant is made a beneficiary of the interest property. In most proprietary estoppel cases, the court imposes a constructive trust for the case to stand thus offering an alternative remedy other than transfer of property’s ownership. Similarities and differences of proprietary estoppel and constructive trust The main similarity is the essence that both are used to ensure oral contracts are enforceable. The claimants in both experiences detriments due to their reliance of the owner to keep his word. The parties have common interests in constructive trust, as they are interested in the property, hence the need to become beneficiaries of the properties of interest. This is slightly different where proprietary estoppel parties have different interest, for instance, in Kinane v Mackie-Conteh, Kinane wanted to be the owner of the house, whereas Conteh wanted capital for his company but they both wanted profits of the investment7. The other difference between proprietary estoppel and constructive trust is the end results of the suit where the aim of estoppel is to transfer property, whereas that of trust is to give equitable remedy and title. Proprietary estoppel relies on unconscionable conduct to establish equity and the bases of its claims, whereas constructive trust depends on the unconscionable denial of rights. In constructive trust, the claimant must prove he made material sacrifices to improve the property, whereas in proprietary trust the claimant is not restricted to prove material sacrifice but can use the time spent. The claimant files proprietary estoppel, but constructive trust is invoked by the court on recognition of breach of trust and unjust enrichment. Case study to evaluate Neuberger LJ claims Neuberger LJ claimed that in Kinane v Mackie-Conteh if the claimant only established proprietary estoppel and not constructive trust would fail. This notion is complex since the ruling claimed that the lack of legal documents to complete the transactions did not comply with section 2 of 1989. The argument of the essence of proprietary estoppel and constructive trust was not to undermine s.2 of 1989 Act, but to provide a basis to enforce informal contracts that would amount to constructive trust under s.2(5)8. This is similar to Yaxley v Gotts case where Yaxley was promised to be the beneficiary after building and improving the flats. Gotts had promised Yaxley and with this assurance Yaxley spent money and time to plan and build the flats and enjoyed the interest by collecting rent from the ground floor flats before Allan, Gotts son, came and did not honor his father’s promise. This case was dismissed, although Allan new about the agreements. Mackie-Conteh argued that estoppel would not be effective to validate the contract since it is invalid under s.2 of the 1989 Act since it failed in Action strength Ltd v International Glass Engineering SpA, but the case could hold if the court referred to Attorney General for Hong Kong v Humphreys Estate Ltd. Kinane v Gotts failure to provide validity of the contract since the documents were not signed as they are supposed to prove a contract9. Neuberger LJ approach is based on such lack of constructive truth will lead to failure. His aim is to prove that the claimant should thus use trust to the defendant to establish constructive trust. This would ensure that the court understood the lack of valid documentation was due to trust, thus make the contract valid. The court would then establish the unjust enrichment of the defendant thus transfers interest benefactors to the claimant and a title on the property of interest. This claim is valid, but the assumption to succeed only by establishing constructive trust is wrong since establishing equity using proprietary estoppel would also validate the informal contract. The claimant claim that the double assurance of the defendant was enough assurance for him to provide the money without having valid documentation as the assurance was reliable. The claimant’s conduct was unconscionable and since it is not an order to provide reliable documentations if there is unconscionable conduct, then the claimant would win the case and the home would be transferred to him. Arden LJ claimed, “…cause of action in proprietary estoppel is thus not founded on the unenforceable agreement, but upon the defendants conduct which, when viewed in all relevant respects, is unconscionable” This proves that proprietary estoppel can be solved without giving rise to constructive trust. Etherton J in Cobbe v Yeomans Row Management Ltd where the claimant won the case by proving his unconscionable conduct, but the defendant did not honor his promise. The claim by the defendant was the lack of compliance of the contract of sale of property but the claimant established that the agreement was adequately assuring that he relied on it. This led to him encountering detriments in his improvement of the house and use of personal money. This reasoning was enough for Etherton to respect the contract due to the unconscionability of the claimant’s conduct10. . Conclusion There several cases where proprietary estoppel gives rise to constructive trust due to the lack of proper differentiation of the two terms. The law does not clearly show the difference thus making it hard to identify the cases that can be solved using propriety estoppel without giving rise to constructive trust. The main difference to use when courts are to decide to impose constructive trust are the material investment by the claimant since they prove a common interest in the property. This is different in proprietary estoppel cases since they involve general conduct of the claimant that makes him forego payments in order to own or become the benefactor of the property. It is to my conclusion that Neuberger’s approach is contradictory based on ways to justify a proprietary estoppel. In conclusion, the House of Lords should establish a law that will separate the two rules. This will change the understanding of the terms. Bibliography Pettit, Philip Henry. 2012. Equity and the law of trusts. Oxford, U.K.: Oxford University Press. Read More