Case Studies in Property and Land Law

INTRODUCTION

The facts present a number of issues which require resolution. The majority concern land law and the rights over land; there is also one question of contract law that needs to be answered. Because the facts are unique to each individual case, they will be discussed in turn.

MARK DONALD

Mark is a neighbour of Jack and owns a farm that includes pigs. For thirteen years Mark has allowed them to roam around the farm that is owned by Jack. This was not discovered by Jack until 2006 when he visited the land. It is only at this point that he has told Mark to desist from letting his pigs enter the woods. The crucial question is whether Mark has obtained rights over the land through the law of adverse possession.

This is the one type of possession that resembles Mark’s claim that “possession is nine tenths of the law”. It involves a “wrongful taking [that] eventually generates rightful title”^[1]. The basic principle is that once land has been occupied for a lengthy period of time, without objection, the rights should be deemed to have been waived. The law of adverse possession has been greatly affected by the Land Registration Act 2002^[2]. The result was summed up in JA Pye (Oxford) Ltd v Graham^[3] by Lord Hope who emphasised that the new law was far more lenient towards the rightful owner.

Traditionally the crucial question was how long the squatter had been in possession. Section 96(1) of the Land LRA removes this as a consideration, displacing section 15 of the Limitation Act which had previously allowed the action to accrue. It is irrelevant how long the squatter remains in possession, this is not sufficient to alter the title of the land. The first question therefore is whether the factual requirements for adverse possession have been achieved.

There are four criteria to be satisfied. First there must be factual possession. In Powell v McFarlane^[4] Slade J placed great emphasis on “physical control” of the land. Of immediate concern is whether merely allowing the animals to graze is sufficient to amount to possession. In Bligh v Martin^[5] the court ruled that allowing heifers to graze on the land was not sufficient to constitute possession. A saving analogy may emerge from Fowley Marine (Emsworth) Ltd. v Gafford^[6]. Here, the existence of financial advantage gained from the land was significant. It can be argued that the use of the land has increased the revenue from the pigs and that this should constitute “physical control”. Once possession is established, it is essential that is “inconsistent with [Jack’s] title”^[7]. In this case Mark has not been granted permission nor has he leased the land. As such it will not be difficult to show that any possession was adverse.

The final requirement the much debated requirement of intention to possess. This is a concern here because it could be argued that Mark had no intention of ever possessing the land. The crucial point in the cases appears to have been whether or not the use of the land conflicts with that intended by the owner. This was hinted at in Leigh v Jack^[8] and highlighted in Buckinghamshire CC v Moran^[9]. In this case it can be argued that the grazing of the pigs was contrary to the intentions of the owner as he was periodically cutting down the trees that served the purpose for letting the pigs graze in the woods.

In sum, it can be argued that there may be a finding of factual adverse possession. On that basis the Land Registration Act 2002 must be considered.

If Mark wishes to take over the title, he will have to make a positive application to the Land Registry to claim the title^[10]. In this case it appears that Mark will be able to make the challenge as he has used the land for at least the past 10 years. If Mark does file this, then so long as Jack files an objection, he will not lose title. There are though several exceptions that require contemplation. These are contained in paragraph 5 of Schedule 6 of the Act. The latter two exceptions of ‘other legitimate reason’ and a boundary dispute do not seem to apply in this case. The potential applicable exception concerns estoppel. This exception is present to ensure that where it is unconscionable to deny the squatter the right of possession, the new rights will be added to the Register.

Because of the recent enactment of the legislation, there have been very few cases in this area; Gray^[11] does detail though what will likely be required. In essence the test as it appears in the statute is in two parts. First there must have been explicit or implied encouragement that the squatter had rights over the land, and secondly it must be demonstrated that it would be unconscionable for the owner to assert his or her legal rights.

In this case, the latter will likely prove easier to demonstrate. Mark has allowed his pigs to use the land for over a decade and has grown accustomed to the additional benefits that have accrued. It is certainly arguable that it would be inequitable to force him to change the nature of his business at this stage.

The difficulty will be showing any encouragement. The only likely chance is to suggest that Jack abandoned the land and did not exercise sufficient diligence, thus encouraging Mark that it would be satisfactory for him to use the land. This argument is unlikely to be compelling in light of the stricter direction that has been taken by the 2002 Act and it is unlikely that a claim for adverse possession will succeed.

LISA

Lisa is/was the un-married partner of Lee from 1993 until 2006. From 1995, when the premises were acquired, until 2006 she lived with Lee in Warmunster. The property was acquired solely by Lee who was registered as the sole proprietor. At no point did Lisa make a financial contribution to the mortgage payments. She did keep the flat “clean and tidy” and also helped out in his business, apparently unpaid. When the business expanded, Lisa contributed £75,000 verbally stating that she “expected a good return”. Now that they have broken up, the question is what, if any, rights Lisa has in the property.

The first point is that for Lisa to have any rights, at some point rights must have been transferred to her. Typically for this to happen, the law requires that formalities are observed, normally a disposition in writing under the Law of Property Act 1989. Clearly in this case these formalities have not occurred. For Lisa to succeed she will have to fall within an exception to the formality rules.

The first of these exceptions is a resulting trust. This comes about when two parties contribute to the purchase of property but the deeds name but one as owner. In this case though there has been no initial contribution by Lisa to the purchase and so there can be no resulting trust.

The second traditional exception has been the constructive trust, although Lord Diplock noted that “it is unnecessary to distinguish between these classes of trust”^[12]. The crucial purpose behind constructive trusts is that it is the purpose of equity to give effect the intentions of the parties and that it would be unconscionable to prevent one party from acting on those intentions.

In order to establish a common intention that Lisa should have an equitable interest in the property, she will have to either show discussions with Lee that demonstrate such an intention, or be able to demonstrate by her conduct that such intentions exist. These were the criteria laid down in Lloyds Bank v Rosset^[13] by Lord Bridge.

It does not appear that there have been any conversations between the parties, at least initially. The question is whether her conduct demonstrates a common intention. In Lloyds Bank^[14], Lord Bridge suggested that only direct contributions would suffice. The courts appeared to follow the Burns v Burns^[15] decision where payment of the household expenses was insufficient. Nor in Pettit v Pettit^[16] were the improvements to the property that were made by the husband sufficient to warrant an equitable interest. It has been argued that the law discriminates against a non-working partner as non-financial contributions can often assist with saving money, which in turn can indirectly contribute to paying the mortgage. However the courts continue to hold to the traditional position.

It is therefore unlikely that the non-financial contributions by Lisa will be sufficient to establish any interest in the property.

The £75,000 that was contributed is a different matter. There is the potential for both a resulting trust and a constructive trust. Because Lisa is not married to Lee there is no presumption of advancement, and the evidence points towards this being a professional rather than a domestic arrangement. This is supported by the amount of the transaction and the words used to accompany the transaction. These words clearly display an intention that the transaction was intended not as a gift but as a loan.

There is less force in an argument of a common intention constructive trust as it does not appear that there was ever an intention that they should share in the property; Lee merely promised a “good return”. As such, it is unlikely that there will be a finding of a constructive trust for the £75,000.

KEVIN

The law in Kevin’s case is similar to the law discussed with regard to Lisa. In order for Kevin to be able to re-claim the £2,000 he will have to demonstrate either a resulting trust or a constructive trust. Because it does not appear that there was ever a common intention, the crucial question is whether there is a resulting trust. Because siblings are not included within the ‘presumption of advancement’ category, the starting point is that a trust does exist.

Smith notes though that “the presumption is generally of small importance”^[17]. In Sekhon v Alissa^[18] the presumption of advancement was defeated by the evidence that pointed towards a loan. In this case the evidence stems from Kevin’s words when stating that Lee shouldn’t worry about “put[ting] things right” with him.

Given that the presumption has apparently limited significance it is unlikely that Kevin will be able to re-claim the £2,000.

CONTRACT

Given the preponderance of property law issues, a very brief mention shall be made of the contract. The basic principle is that if one party (Jack) breaches his contractual obligations, then the other party (Lee) is entitled to a remedy, potentially damages. If Jack doesn’t deliver the timber, Lee will certainly not be liable for the remaining 75% of the purchase price.

NED

Ned has found a watch in Bluebell Woods, the woods owned by Jack Lumber. He was in the act of leaving his employment at Mark’s farm to return home and so the question is who has the better claim to the watch; Ned, Mark, or Jack.

Legally it is important to determine the status of the watch at the time of receipt. Although the watch was beneath “some leaves”, to all intents and purposes it can be said that it was on the land. Had it been embedded in the land or underneath the land then the better right would have vested with the land owner: Jack. This has been confirmed in Waverly BC v Fletcher^[19] where the object was buried 9 inches beneath the ground. It is unlikely though that the covering of leaves will be sufficient to trigger this line of authority.

Assuming that the watch is deemed to have been found on the ground, the question enters a confused area of law. In Parker v British Airways Board^[20] a bracelet was found in an airport lounge. The Court of Appeal found in favour of the passenger although it was difficult to see how British Airways could have further acted to satisfy a test that required “exercise of manifest control”.

In this case it appears that there had been no attempt to suggest that any items found on the land were property of Jack and so Ned is likely to have a strong claim as against him.

Theoretically, Mark could argue that Ned found the watch in the course of his employment, thus bringing the case under the employee line of authorities in M’Dowell v Ulster Bank^[21] which stated that when found in the course of employment, the employer had a strong claim on the item. In this case Mark would have difficulty proving in fact or law that Ned was acting as an employee as at the time he was walking home and had finished work for the day.

Therefore it is likely that Mark will be able to keep the watch as long as it is held that it was found on rather than in the land.

CONCLUSION

In conclusion, it can be said that Mark is unlikely to succeed in a claim of adverse possession in light of the new strict rules under the Land Registration Act. As long as the watch was found on rather than in the land, Ned will likely have a good claim to the watch, unless the actual owner can be found. Lisa will likely have a resulting trust for £75,000 that she will be able to claim from Lee, while Kevin will be unlikely to be able to claim the £2,000 that he lent his brother. Finally, it is highly unlikely that Lee will have to pay the remaining 75% of the contract unless Jack provides the goods. The main question will likely focus on whether the contract has been frustrated.

BIBLIOGRAPHY

Bridge M‘Personal Property Law’ 3^rd Edition

Published by Oxford University Press

Gray K‘Elements of Land Law’ 4^th Edition

Published by Oxford University Press

Riddall JG‘Land Law’ 7^th Edition

Published by Oxford University Press

Smith R‘Property Law’ 5^th Edition

Published by Pearson Longman

Land Registration Act 2002

Law of Property Act 1989

Limitation Act (1980)

Bligh v Martin [1968] 1 All ER 1157

Buckinghamshire CC v Moran [1990]Ch 263

Burns v Burns [1984]Ch 317

Fowley Marine (Emsworth) Ltd. v Gafford (1968)2 QB 618

Gissing v Gissing [1971] AC 886

JA Pye (Oxford) Ltd v Graham [2003]1 AC 419

Leigh v Jack (1879)5 Ex D 264

Lloyds Bank v Rosset [1991]1 AC 107

M’Dowell v Ulster Bank (1899)33 ILT 225

Parker v British Airways Board [1982]QB 1004

Pettit v Pettit [1970]AC 777

Powell v McFarlane (1997)38 P & CR 452

Sekhon v Alissa [1989]2 FLR 94

Waverly BC v Fletcher [1996]QB 334

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Footnotes

^[1] Gray at page 367

^[2] LRA

^[3] [2003] 1 AC 419

^[4] (1977) 38 P & CR 452

^[5] [1968] 1 All ER 1157

^[6] (1968) 2 QB 618

^[7] Riddal at page 582

^[8] (1879) 5 Ex D 264

^[9] [1990] Ch 623

^[10] LRA (2002) section 97 Schedule 6 para 1(1)

^[11] ‘Elements of Land Law’ 4^th Edition

^[12] Gissing v Gissing [1971] AC 886 per Lord Diplock

^[13] [1991] 1 AC 107

^[14] ibid

^[15] [1984] Ch 317

^[16] [1970] AC 777

^[17] Smith at page 130

^[18] [1989] 2 FLR 94

^[19] [1996] QB 334

^[20] [1982] QB 1004

^[21] (1899) 33 ILT 225