The claimants asserted a right to possession of land, and the defendant resisted, claiming a proprietary estoppel. A predecessor had intended to grant a sub-lease to the defendant, who had arranged for his company JAD Ltd to execute major works on the strength of that promise. JAD was given permission to store items there, but JAD Ltd took up possession. The sub-lease was never signed. The head-lease was assigned to the claimants, subject to any rights of the defendants.
Held: No notice was effective. Whatever estoppel arose, was in favour of JAD, not his company, and it was in possession, not him. The assignment defeated the claim of JAD Ltd by section 20. No constructive trust arose, because the claimant’s conscience was not deemed to be affected.
The court set out the principles applying: ‘(1) Even in a case where, on a sale of land, the vendor has stipulated that the sale shall be subject to stated possible incumbrances or prior interests, there is no general rule that the court will impose a constructive trust on the purchaser to give effect to them.
(2) The court will not impose a constructive trust in such circumstances unless it is satisfied that the conscience of the estate owner is affected so that it would be inequitable to allow him to deny the claimant an interest in the property.
(3) In deciding whether or not the conscience of the new estate owner is affected in such circumstances, the crucially important question is whether he has undertaken a new obligation, not otherwise existing, to give effect to the relevant encumbrance or prior interest. If, but only if, he has undertaken such a new obligation will a constructive trust be imposed.
(4) Notwithstanding some previous authority suggesting the contrary, a contractual licence is not to be treated as creating a proprietary interest in land so as to bind third parties who acquire the land with notice of it, on this account alone: see Ashburn Anstalt v Arnold . .
(5) Proof that the purchase price by a transferee has been reduced upon the footing that he would give effect to the relevant encumbrance or prior interest may provide some indication that the transferee has undertaken a new obligation to give effect to it: see Ashburn Anstalt v Arnold . . However, since in matters relating to the title to land certainty is of prime importance, it is not desirable that constructive trusts of land should be imposed in reliance on inferences from ‘slender materials’.’
Judges:
Lord Justice Kennedy, Lord Justice Mummery, And, Sir Christopher Slade
Citations:
Gazette 06-Dec-2001, [2001] EWCA Civ 1754, [2002] 2 PandCR 13, [2001] 48 EGCS 129, [2001] NPC 168, [2002] WTLR 863
Links:
Statutes:
Law of Property Act 1925 20(1) 70(1)(g)
Jurisdiction:
England and Wales
Citing:
Applied – Ashburn Anstalt v Arnold (1) CA 27-Oct-1987
Houses in Kensington were let together for a term of just over 50 years. There was just one title for the headlease. Informal subleases of parts had been granted granted at no rent. After several dealings with the titles, and the plaintiffs came to . .
Applied – Strand Securities Ltd v Caswell CA 2-Feb-1965
The leaving of furniture in a flat or having a key to the flat or making occasional use of it was not enough to constitute actual occupation. Where A permits B to occupy land on B’s own behalf by way of gratuitous licence, A’s capacity as licensor . .
Cited – Williams and Glyn’s Bank Ltd v Boland HL 19-Jun-1980
Wife in Occupation had Overriding Interest
The wife had made a substantial financial contribution to the purchase price of the house which was registered only in her husband’s name, and charged to the bank. The bank sought possession. The wife resisted saying that she had an overriding . .
Cited by:
Cited – Chaudhary v Yavuz CA 22-Nov-2011
The court was asked ‘whether and if so how an easement arising informally and not protected by any entry at the Land Registry can be effective against a purchaser of the land over which the easement would be exercised.’ The parties respectively . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant, Estoppel, Land, Contract, Trusts
Updated: 05 June 2022; Ref: scu.166930