Property Law and Basic Principle in Voluntary Dealings - Essay Example

Research Exercises Report: In this case, the question of must be determined in this instance where a transfer has taken place between family members. According to the Land and Property Act of 19251, a statutory trust is created when there is a co-ownership of land. The basic question that is to be determined in the case of the council house for which Debra holds the title, is whether Stan can claim a beneficial interest in the house on the basis that Fred was the substantial owner in equity. It must be noted at the outset that although Fred initially had the title on the property, this title has not passed on to Debra. Furthermore, it is Debra who has been making payments on the mortgage for five years and she was also the guarantor for Fred in the initial few years. As a result, she is the one who has a considerable financial investment in the house. The basic principle that applies in the case of voluntary dealings is the presumption that a person making a transfer intends that the transferee remains a nominee only, while the person making the transfer is to retain a beneficial interest in the property2. This applies in the case of Fred, who originally had the title to the property, but later transferred it to Debra. It may be possible to apply proprietary estoppel on the basis of representation3, i.e, despite Debra owning title to the property, Fred is to have rights in respect of the property. As a result of such rights which Fred may have in the property because he has been living in the council house and the property was also in his name initially, his interests in the property may pass on a beneficial interest to Stan.4 But in this instance, it must be noted that Fred has not left a will, therefore the question of beneficial interest in the property passing through the will5 does not apply. In arriving at a determination of whether or not equity will apply, Lord Scarman has stated that the conduct and relationship of the parties must answer three questions: “First, is there an equity established? Secondly, what is the extent of the equity, if one is established? And, thirdly, what is the relief appropriate to satisfy the equity?"6 Firstly, in establishing whether Fred was the substantial owner in equity, the question that arises is whether Debra allowed or encouraged Fred to assume that he had rights in the property, rather than a mere hope for such rights, which is not sufficient7. In this case, it was Fred who was the continuous resident of the council house and Debra was the one who moved back in with him. Furthermore, when Fred asked her to be the guarantor for the loan Debra acceded without demanding any ownership rights in the property. When she asked for the property to be shifted in her name, she asked for it to be transferred into her name for reasons of practicality rather than to deny Fred ownership. On this basis, the assumption is sufficiently certain for the Court to give effect to the inference8 that Debra allowed Fred to believe that he had rights in the property. The next aspect to consider is whether Fred relied on this assumption to his detriment. Where the issue of establishing detriment is concerned, it need not necessarily be quantified in financial terms, but more on whether it would be unconscionable to deny such an expectation. In this case Fred has failed to take any steps for his future security9, which suggests that he relied on his expectations about his rights in the property. Moreover, in Fred’s case, he has also invested 60,000 pounds in the property and has helped Debra to pay of the mortgage, therefore his interest in the property cannot be denied. Since he was also the primary resident and has made a substantial financial contribution to the property, his interests in the property will be established, at least proportionally to his investment10. Since Fred has contributed to the price of the property, which was in another’s name, i.e, Debra’s, it is presumed that he intended to retain a beneficial interest.11 A common intention constructive trust may be held to have come into existence on the family home, based upon the intention for all the family members, Fred, Stan and Debra to share in it,12 especially because an unwritten agreement exists between Fred and Debra to share in the beneficial interest and it would be unjust to deny Fred’s rights of ownership13 on the basis of lack of writing and possession of title. Even if a legal agreement for possession of joint title14 does not exist, an express agreement may still be held to exist, especially in the case of family members. In this instance, Fred has also made a financial contribution to the property, despite not holding the title in his name, therefore the Courts may determine what is a fair share that can be allotted to Fred, on the basis of the amount that he has contributed to the mortgage payments15. Thus, on an overall basis, it appears that Stan may have good grounds for contending that Fred was the substantial owner of the house in equity, since it may be unconscionable to deny his rights to the property on the basis that he is not the legal owner of the title to the property. Therefore it appears unquestionable that Debra will not be held to be the sole owner of the house and the Courts may well find the existence of an implied trust for Fred, at least in proportion to the amount he has contributed towards the mortgage, despite not retaining the title. But the question of transfer of these rights to Stan may be in question, because Fred has not left a will. Moreover, Stan has not made any financial or other kind of contribution to the house, therefore any beneficial interest that is transferred may only be at the discretion of the court on the basis of a common intention constructive trust, since Stan is a family member……………………………………..1028 words Research Strategy: The most important source for research on this scenario was Moffatt’s book on trusts and Gray and Gray’s Elements of Land Law. Mofatt’s book provided a wealth of detail about the various kinds of trusts that can exist on land, while Gray’s book was my primary source for material and cases on the issue of proprietary estoppel. A reading of both of these books helped me to derive a good understanding of the issues that could apply in this case and led me to an inference that there could be an implied trust existing in favor of Fred, despite the lack of written agreement between Debra and Fred and the transfer of title on the house from Fred to Debra. These two books also provided salient details from several cases where the issue of equity had been involved, specially between family members, such as Pettit v Pettitt, and Lloyds Bank v Rossett. In particular, Moffatt’s book was useful because it also mentioned an obiter statement from the case of Dyer v Dyer, which specially states that a person transferring title on a property may still intend to retain beneficial interest. This was particularly relevant in the case of Fred, who owned the title first but may have transferred it in the expectation of retention of a beneficial interest. I was able to pull up the detailed judgments on these cases by logging into the Westlaw site and searching for these case names under case law links. A reading of these cases also provided details of other cases, which were cited in the judgments, which I used as a basis to read up on the cases in order to determine whether they would have any relevance to the issues raised in this scenario. I also conducted another search on Lexis Nexis, using the search term “cohabitee interest”, since I wanted to determine what would be the rights of a person cohabiting a property with another. This pulled up several articles, many of which mentioned the recent case of Oxley v Hiscock, in which the Court divided assets in proportion to the share of investment, which each person had made. This led me to search for the judgment of the case on Lexis Nexis and I found that the Court had also taken into account non financial contributions in deciding upon the share to be attributed to each person. This led me to the conclusion that since Fred had not only contributed financially to the mortgage but had also lived in the property for many years and may have made non financial contributions as well, the Court would be likely to uphold his interests as a substantial owner in equity……………………………….467 words B. Report: (i) The question of determining whether an agreement is a license or a lease has traditionally been based upon the conferring of exclusive possession16 of the premises to the occupier, to the exclusion of the landlord and others17, which makes him a tenant under Part II under the Landlord and tenant Act of 1954. This section of the Act applies specifically to tenancies where the property is occupied for business purposes and it seeks to secure the rights of business tenants to continued occupation of a property. This is because the tenants may have built up goodwill in terms of property, possessions and customers, which will be lost by severing of occupation; hence the rights of business tenants to renew their leases are provided under this Section of the Act.18 One of the aspects that must be considered is whether Micawber is a license or a tenant, because the latter instance will grant him protection and enable him to continue to renew his occupation of the property, which can be resisted by the landlord only in specific instances which are laid out in the Act.19 It is clear that Micawber is entering into the agreement on the property for business purposes, therefore the law will favor him in terms of extending the occupation period since the arrangement is one related to business. The primary issue that will assume relevance in determining whether an agreement is a lease or a license and whether tenancy rights are to be accorded20 is the question of whether or not the landlord intends to confer exclusive possession rights on the person/s occupying the property. In the case of Marchant v Charters21, exclusive possession had been given to the occupier of the premises and therefore tenancy was established. In the case of Westminster C C v Clarke22, there was a clear intent not to give exclusive possession and this issue was relevant in the determination of whether an agreement was a lease or a license. In the case of Street v Mountford, Lord Templeton clearly stated "If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence”.23 The question of the lease/license distinction was raised in the recent case of Bruton24 and the Court held that irrespective of the intention of the parties to create only a license, the occupier will have the status of a tenant if the right to exclusive possession is provided for a certain term. Applying this precedent, Micawber will be deemed to be a tenant, if Botolphs Investments Inc granted exclusive possession rights, despite the fact that the agreement was intended to be a license. In the case of Micawber, the agreement with Botolphs Investments plc was determined on the basis that it was a license. The first issue that must be examined therefore, is whether Botolphs Investments Inc had the clear intent not to give exclusive possession. In this content, clause (ii) of the agreement between the parties clearly states as follows: “this licence confers no exclusive right for the licensee to use and occupy the premises." There are further indications that Botolphs did not intent to give exclusive possession, because clause (iii) states that the licensor and other persons are also allowed to enter the property. Moreover, there is no time limit or specification associated with this clause, in general this provision allows the landlord to enter at will whenever it is deemed necessary to carry out any work. There are further indications that a tenancy was not intended. One aspect that supports the validity of a lease is the fact that the certainty of term doctrine can be applied when the maximum period of the lease is specified.25 But in the case of the agreement between Micawber and Botolphs, the term of lease is not specified and only the notice period is specified. This uncertainty in the lease term, or the fact that a fixed term of lease has not been specified further supports the contention that there was no intent to specify a definite term of lease, hence the certainty of term doctrine will not apply and a tenancy cannot be established. The case of Prudential Assurance Co Ltd v London residuary Body26 was significant27 because it exploded the certainty of term by pointing out that in some instances a periodic tenancy may still be valid when uncertainty exists, provided both parties agree on indeterminate time frames. In this case, both the parties appear to have agreed to an indeterminate term of lease, but the question of a periodic tenancy may be questionable because both parties have agreed that a three month notice period will be adequate grounds for either party to terminate the lease. Therefore, the doctrine of repugnancy, which does not allow a total clampdown on one party’s right to issue notice to quit the premises,28 will also not apply in this case. When the licensor has limited rights to enter the premises for certain defined purposes, the presumption of a tenancy is enhanced. But in this instance, the licensor’s, i.e, Botolphs’ rights to enter the premises whenever it is deemed necessary has been clearly stated, therefore the intent of the agreement as expressed under clauses (ii) and (iii) appears to be to not grant exclusive possession to Micawber. Therefore this agreement cannot be held to be a tenancy on the basis of the precedent established in Bruton. The judgment in Bruton has been criticized29 on the grounds that the defendant was itself a licensee and therefore not in a position to confer exclusive rights to the tenant. But this may not apply in the case of Botolphs Investments plc, which may have rights on matters relating to the grant of rights of possession of the property. Therefore, in consideration of all these aspects above, it appears that the agreement of Botolphs with Micawber cannot be held to be a tenancy. There is no indication of any right to grant exclusive possession, the term of lease is indeterminate and the lease is not invalid on grounds of repugnancy either, because it does not favor one party to the exclusion of the other but allows both parties the same time frame and right to determine the lease. On the basis of all these grounds therefore, it must be concluded that the agreement between these two parties will be held to be a license and will not qualify to be a tenancy, despite its use for business purposes. ………………………………..1097 words (ii) Section 4 of the Defective Premises Act of 1974 places an obligation upon a landlord to maintain or repair the premises being occupied by a tenant. The landlord has a duty to ensure that all persons who might potentially be affected by defects are protected from personal injury. This obligation will arise especially if the landlord knows or is in a position to have known about the defect.30 This section was applied in the case of Gardner v Marsh & Parsons31 where a property was found to have a structural defect three years after it was acquired on a long lease. On the threat of proceedings under the Defective premises Act, the landlords carried out the repairs without cost to the laseholders. The defendant surveuyors were held responsible for their failure to discover the defect and were held liable for payment of 29,000 pounds – the difference between the price the plaintiffs paid for the property on its assumed condition and its wrth based on its actual condition.32 Another case which dealt with damages recoverable under the Defective Premises Act was Bayoumi v Protim Services Ltd.33 In this case, structural repairs carried out by defendants to address defects in the property were found to be unsuitable and caused injury to plaintiffs by flooding of the property. The defendants were found liable for payment of damages under the Defective Premises Act because they were aware of the defect and had not taken adequate measures to protect the plaintiff against injuries resulting from those defects. Section 4 of the Act was specifically applied in the cases of Steel v Newham LB34 where damages were awarded against the landlord for disrepair of premises. In the cases of Hubble v Lambeth LB35 and Downie v Lambeth LB,36 non compliance with a nuisance order based upon inconvenience caused by defects in the property resulted in the landlords being held liable. The case of Warner v Lambeth LBC37 involved a case where structural defects existed in the property but the landlord was not held liable for them because the tenant had refused to cooperate in allowing the repairs to be carried out. In the case of Liverpool City Council v Irwin38 faulty structure of appliances in council housing was required to be replaced due to the obligation to repair as specified under the Act. All of these cases demonstrate that the provisions of the Defective Premises Act have made it possible for tenants to seek redress when they have suffered injuries due to the failure of the landlords to address structural defects in leased properties, or in properties that have been sold and where the defects have been discovered later. Section 4 of the Act has specifically been applied in the case of council housing and has been especially useful in this context, because there may be a greater tendency for structural defects to remain unaddressed in such properties due to the lack of economic resources of the tenants in such instances. On an overall basis, it must be noted that in general, there has also been a move towards filing for damages in cases of personal injury arising out of structural defects under tort law, where plaintiffs file for negligence. As a result, the Defective Premises Act has not been used very often. Nevertheless, its provisions are still relevant and have been applied or considered in several cases, as detailed above. ………568 words Research Strategy: In carrying out my research for part (i) of this question, I realized that the statutory provisions that would apply to this issue would be the Landlord and Tenant Act of 1954. I was able to obtain a copy of the Act from Westlaw by typing in “Landlord and tenant Act” into the link to search specifically for statutes. I found Section II of the Act to be relevant, because it deals specifically with business tenancies. I wanted to check whether I could establish that since Micawber was a business tenant, he would be entitled to the additional protection of a tenancy. Based upon the class notes, I was also aware of the importance of certain cases on the issue of licenses versus leases, such as Street v Mountford, Westminster C.C. v Clarke and other cases, for which I accessed the judgments on the case using Lexis Nexis, by directly typing in the name of the case within quotes. I then proceeded to search for journal articles that were available on the issue of licenses. My search term was “lease or license” and I selected UK Journals, which pulled up two relevant articles, one by Pawlowski and one by Blles. The article by Pawlowski was of specific interest to me because it also contained a discussion of another recent case – Bruton. This case had specifically dealt with the issue of determining whether an agreement was a lease or a license, so I found it very relevant in examining the issues raised by the agreement between Botolphs and Micawber. The articles by Blles was similarly very useful, because it discussed another important case, Prudential Assurance Co Ltd v London residuary Body, where the certainty of term as a factor impacting upon the nature of a lease is discussed. The last stage of my research was to enter the search term “invalid lease” into the search bar in the Lexis Nexis website – this pulled up several articles, none of which specifically dealt with the issue of licenses. But I did find a reference to the case of Lace v Chantler, which dealt with an invalid lease; on pulling up the case judgment on Westlaw, I found it relevant to the question. For part (ii) of the project, I accessed the Defective Premises Act of 1972 using Westlaw. Then on Lexis Nexis, I carried out a search of UK laws journals using the search term “Defective Premises Act of 1972. This led me to an article by Boyle, which also mentioned the case of Gardner v Marsh and Parsons. I was also able to pull up the case notes on Bayoumi v Protim Services Ltd, which was an appeal based on the Act. I refined my search for UK journals in Lexis Nexis by using the search term “Section 4 of the Defective Premises Act 1972” and was able to find law updates detailing other cases of council housing where the provisions of Section 4 of the Defective Premises Act had been applied. …………………………………500 words Bibliography * BIles, M, 1994. “One thing is certain and the rest is lies” New Law Journal, 156 * Boyle, 1997. “Surveys, Defects, repairs and loss”, Estates Gazette, 5th July, 1997, p 115 * Gray and Gray: Elements of Land Law” (5th edn), Oxford University Press * Moffatt, Graham, 2005. “Trusts Law: Texts and Materials”, Cambridge University Press * Pawlowski, M and Greer S, 2000. “Leases, licenses and contractual tenancies.” 9(1), Nottingham Law Journal 85 Legislation cited: * Defective Premises Act of 1972 * Landlord and Tenant Act of 1954 * Law of Property Act of 1925 Cases cited: * A-G of Hong Kong v Humphreys Estate (Queens Gardens) Ltd. [1987] A.C. 114, M&B(L) 72 * Bruton v London and Quadrant Housing Trust (2000) 1 AC 406 * Centaploy Ltd v Matlodge Ltd (1974) Ch 1 * Crabb v Arun D.C. (1976) Ch 179 * Diwell v Farnes [1959] 1 W.L.R. 624 * Dyer v Dyer (1788) 2 Cox Eq. 92; 30 E.R. 42 * Gardner v Marsh and Parsons (1997) 15 EG 137 * Greasley v Cooke [1980] 1 WLR 1306 * Hammond v Mitchell [1991] 1 WLR 1127 * Lace v Chantler (1944) KB 368 * Layton v Martin [1986] 2 FLR 227 * Lloyds Bank v Rosset [1991] 1 A.C. 107 * Marchant v Charters (1977) 1 WLR 1181 * Oxley v Hiscock (2004) EWCA Civ 546 * Pettit v Pettit [1970] A.C. 777 * Prudential Assurance Co Ltd v London residuary Body (1992) 3 WLR 279 * Ramsden v Dyson (1866) LR 1 HL129 * Re Basham [1986] 1 W.L.R. 1498 M&B(L) 604 * Street v Mountford (1985) AC 809 * Westminster C.C. v Clarke [1992] 2 A.C, 288 Read More