Daily Archives: November 19, 2013

Licenses and proprietary estoppel

Standard

the nature of licence

a licence is permission to enter or remain on land belonging to another person . it may be granted expressly or impliedly   to function merely as a n exemption from what woul otherwis eb trespass

it might be in some circumstances that the licensee has even greater rights – approaching those of the landowner.

source of confusion –             variety of approaches that courts have taken to what appear to be very similar  fact situations

legal status f party in occupation of land pursuant to some family type arrangament

court may say

———- that he is a BARE LICENSEE   whose licence may be revoked

——————— that eh is a CONTRACTUAL LICENSEE whose licence may NOT be revoked in breach of contract’—

——————— that an EQUITY   has arisen in his favour   under the doctrine of proprietary estoppel  which entitles him to remain   on the land under a ”licence by estoppel”

——————– he is entitled to a PROPRIETARY INTEREST  under resulting or constructive trust

not always possible to PREdict  which solution will commend itself to the courts

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DEFINITIONS AND   CREATION    OF LICENCES

BARE LICENCE

a bare licence     is sompy   a permission to ebnter   or use land where consideraiton has not been given

the licence prevents a claim of  trspass   unless he exceeds the bounds of the licence

scrutton LJ  in the calgarth ”when you invite a person  into your house to use the staircase you do not expect him to slide down the bannister”

bare licence created   expressly   or impliedly  for example   there is an implied licence for all persons to walk up the path and knocked on the door.

a bare licence    may be revoked without notice at any time  and is automatically   revoked   by the death of the licensor    or by disposition   of the land in question –    expect where a  licence is granted expressly ir impliedly to c alss f people by definition rather tha  to an individual

i e to postmen

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CONTRACTUAL LICENCE

a contracual licence  is unsurprisingly   granted in exchnage for consideraiont

as a result   general principles  of contract   law are relevant  to their creation

very often contractual    licence has been  used in an attempt    by a landowner    to evade   the stattuoery protection   afforded to leaseholders   but remember that courts    do not like sham licences

contracual licences include    paying to use a car park –      a ticker for the perfomrnace of a play

it can be seen that the contracual tlicence is v flexible      and capable of covering many dealins

key issue are about contrcial licences

– revocbaility

–              wether they bind third  parties

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LICENCE COUPLED BY INTEREST

SOMETIMES a licence     is granted   in connection   with an interest     such as profit a prendre   . when a person   is given the right     to shoot animals   on land they may be granted    a licence to enter the land     to remove the dead anima;s    the licence exists ti faciliate    the eomployment of the interes        . such a licence        cannot be revoked before the interesr     concerned hads ended

if the interest   in land   binding   on successors   in title   the licence   attached   to it is    also binding    and may   be validly    assigned    to third parties.

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LICENCE BY ESTOPPEL

these licences    arise by way    of the doctrine of proprietary estoppel   whereby a person has acted     to his detriment   in reliance on an assertion    by the landowner    that he will acquire       an interest in the land

detrimental       reliance may take the form    of expenditure     such as improving   the land    in question  or failure   to take advantage    of offers of other land

in such cases        the courts may find    that it would be unconscionable   for the landowner to rely on   his own strict legal rights and hence to deny the existence         of any interest in land for C    – the court will then    decide that kind of interest C       should bi given in order       to satisfy    his equitable    right

in some cases   this has resulted in  grant of land    to C   of a  licence by estoppel    in others the transfer  to C or freehold

ottey v grundy   2003      the CA decided   whether   there had been    detrimental reliance    on the part    of the claimant   and how to give effect   to the equity   that arise    in her favour

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CONTRACTUAL LICENCES

FORMATION

a contractual licence to occupy land   or premises   to exist – all essential ingredients  of a contract  mjust be rpesent     ie e thre must be offer and acceptance   , consideraiton , any required   formalities and an intention to creat legal relations

———- tanner v tanner contrcualy licence

———– horrocks v     forray   – no contrcualy licence

——————- coombes v smith   – no contrcualy licence

although dealings within a family   often do not show intenion to create legal relations they may smetimes do so

the privy council  in goomti  ramnarace v    harrypersad  lutchman  2001

this was in spite    of it being a family arrangament   and at leats partyl an act of generosity    an agreement that a persion   could  ove into land and later buy it when she could afford it and to so gave rise   to a TENECNY AT WILL and NOT to a lience

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REVOCABILITY

a while  a bare licence    may be revoked    at any time  and a ,licence   coupled with a grant may be irrevocable , the question of whether  COtrcutal licence   may be reviked   in breach  of cobtract has only     been resolved   in recent  years

the posito a t common law   was formerly   that the licensee   only remedy was toi sue the licensor  for damages   for breach  of contract

wood v leadnbitter

thimpson v park

the intervention of equity   has mean that reviocation of a licence in vreach of contract will generally be restrined by the grant  of an injunctii

winter garden   theatre london v  millennium productions ltd

as it is a discretonary remedy    an injunction wil not be granted to proect  licensee who ahs been guily of laches     – undue delay –    or who has been himself in breach   of the terms of the licnese

on the other hand it may be garnetd even though the contarc ius one of which equity   qwould not normall  order spieic performance

london borioygh iof hiubslow v twickenham   garden develooments   ltd

equity    may even order specific performance    of a contractual licence   that has no te been netred upon

varrall bv great yarmouth   borough council

it appeared for a time that the use of equitable remEDIES   to uphold contractual      licence has given the latter more of a proprietary flavour       i e contractual licences    were becoming   more difficult    to distinguish    from lease sin terms of the rights which they confer upon   the holder

the case of ahsburn   astalta   has made the differences   clear and confirmed       that contractual  licences  are   not proprietary   interests

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ENFORCEABILITY    AGAINST THIRD PARTIES

usually a contract  – and hence   a contractual licence – affects  only the parties   who have  entered  into the agreement. thus a contractual licence should not be capable of   binding third parties   ; a purchaser   of the land   is not a party    to the licence   and so should be able  to evict   the licensee   in spite of the apparent  unfairness   of this situation

the orthodox view    illustrated   by king  v david allen   and sons billposting ltd   and clore   v theatrical  properties ltd   is that a contractual licence  cannot be a proprietary  right and therefore   cannot bind a third party even if there is notice – ie. he knows of existence  and the rights or the license

against  this views which  is supported   by the weight  of academic authority   stand lord dennings’s   judgments   in errington   v errington   and woods

bionons v   evans

in bionions v evans    lord denning built on  his arguments   in favour   of enforceability of the  licence   against third parties   by relying upon the existence  of a constructive   trust triggered  by the knowledge   of the plaintiffs   of the rights of    licensee since ”it would be utterly inequitable   for the pinatuffs to turn the defendant out contrary   to the stipulation   subject to which they took the premises”

a constructive trust  is a trust created to prevent   fraud   or unconscionable   behaviour   and which has sometimes   been used by courts   to achieve justice   in a situation   where strict legal    rights would not do so

DHN food distributors   he stated more generally   that a contractual   licence gives rise    to a constructive trust   a  view which  receives  some support on re sharpe

court of appeal   in  ashburn anstalt   v arnold   1989   has more recently  criticisetd    the iew   that contrcualt licences are generally binding   on third   parites while    recgnsig    that in some circumstances    a constructive trusts   may be imposed   to compel a purchaser   to give effect   to a contractual licence

ashburn anstalt

”before   errington   the law appears   to have been clear    and well understood.  it rested on an important   and intelligible   distinction   between contractual   obligations   which gave rise   to estate or interest    in the land and proprietary rights  which by definition     did. the    far-reaching  statement   of principle  in errington   was not supported   by authority   not necessary    for the decision      of the case and per incuriam   in the sense that it was made   without reference     to authorities     which if they   would not have compelled   would surely have persuaded   the court to adopt    a different ration. of course    the law must be free   to develop. but     as a response     to problems    which had arisen    the errington rule   (without more) was     neither practically         necessary not theoretically     convincing.   by contrast   the finding on   appropriate facts  of a constructive   trust may well be regarded as a beneficial   adaptation     of old rules to new situations.”

 

in general a contractual licence will not be capable of binding a third party

previously   it was laos thought that the holder of any type of licence could not sue in trespass or in nuisance

but this has been challenegd in dutton  v Manchester airport  1999

hunter v canary wahrf ltd 1997

note that  in duttion a 2 to 1 majority decision – the dissenting member of court of appeal was a property lawyer

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