Common Law - Property cases

Costello v. Chief Constable of Derbyshire (2001)

Regarding ways to acquire a property right

-Facts: the claimant acquired a car from someone else, which was previously stolen. The car is taken by the police.

-Legal question : has the claimant the right to reclaim the stolen Ford, despite being in possession of it unlawfully ?

-Solution: as long as the original owner doesn’t manifest himself, the claimant has a possessory title (no matter if it was unlawfull) that is enough to win against the statutorily limited/temporary possession of the police.
The claimant can seek damages for wrongful detention from the police.

Parker v. British Airways Board (1981)

Regarding the way to acquire a property right

Case content

-Facts: a person (Parker) waiting in an Airport finds a gold bracelet, gives it to an employee with instructions to give it back to him if the real owner does not show up.

-Legal question: does finding property gives you a property right? Who has the best right between the finder and the occupier of the land ?

-Outcome: here, the plaintiff (finder) wins by application of the following rules

Rights and duties of a finder

• Rights only if the chattel has been abandoned AND the finder takes it into his care and control

• Acquires limited/weaker rights if it is done with dishonest intent or while trespassing

• Finder’s rights are always weaker than those of the true owner, those who claim through the true owner or those who can assert a prior and subsisting right to keep the chattel before it was found

• An agent/employee who finds a chattel while being in that position does so on behalf of his employer/principal, who’s the one actually aquiring finder’s rights !

• Someone having finder’s rights has an obligation to take such measures as in all the circumstances are reasonable to acquaint the true owner and care for it meanwhile

Rights and duties of an occupier of land on which a thing is found

• Occupier has superior rights to finder’s rights over chattel attached to the land/building he occupies, whether in either case the occupier aware of the presence of the chattel

• Occupier of building has superior rights to finder’s rights over chattel upon or in (but not attached to) the building, only if he has manifested an intention (express or implied) to exercise control over the building and the things which may be upon it or in it

• Occupier of building that manifest such an intent is under an obligation to take such measures as in all the circumstances are reasonable to ensure that lost chattels are found and acquaint the true owner of the finding and to care for the chattels meanwhile

• “Occupier” of a chattel (i.e. ship, motor car…) is to be treated as the occupier of a building

The Winkfield (1902)

Regarding the protection of property rights

-Facts: collision between 2 ships, caused by carelessness of the Winkfield’s owners. The other ship carried letters.
The Postmaster-General (bailee) claimed to recover the value of the lost goods, but is not their owner, simply possessor.

-Legal question: can the bailee (employed by the owner) recover the value of the lost goods ?

-Solution: a possessory title is enough against a wrongdoer (here: the Winkfield), which is better than every bailor asking for the value of the lost stuff to the wrongdoer.

Spartan Steel & Alloys Ltd v. Martin & Co Ltd (1973)

Regarding the protection of property rights

-Facts: electricity cable negligently cut by the defendant’s contractor, cutting off power for the claimant’s factory. Claimant had to throw away ingots that ere being processed, and suffered a loss as being unable to process other ingots in the meantime

-Solution: only the damage caused to the claimant’s machinery and the ingots that were actually being processed could be recovered
→ Only the property damage is recoverable, not the pure economic loss

Cattle v. Stockton Waterworks Co (1874-5)

Regarding the protection of property rights

-Facts: claimant had a contract with K (owner of land) to cut a tunnel in his land. Delayed because of a leak due to the defendant waterworks company.
Economic loss for the claimant

-Legal question: can the claimant recover compensation, if the defendant had been careless ?

-Solution: it is not the claimant’s property that was injured, but K’s property. It is simply economic loss because he lost the contract. Therefore, even if it was due to the defendant’s negligence, the claimant has no right of action.

Crabb v. Arun District Council (1976)

Regarding the application of Equity - Proprietary estoppel

-Facts: owner of a land next to the district council’s land negotiates about a right of access the road through the council’s land. Negotiations seemed to be fine, but the owner does not want to pay the necessary 3 000. The owner ends up selling his land blocked in, as the right of access is not granted.

-Solution:

• The owner gets a way of access without paying anything, because he spent so long without any right of access.

• The promise is enforceable through proprietary estoppel (that can be used as a sword/a cause of action, unlike promissory estoppel which can only counter a claim).

• In that case, no need for the promise to have consideration, and the promise can arise from mere words or conduct.

What is proprietary estoppel : proprietary estoppel can be used to enforce a promise of giving something regarding a proprietary interest.

Guest v. Guest (2022)

Regarding the application of Equity - Proprietary estoppel

-Facts: Parents promise one of their children that he’d inherit enough of the farm to carry on the farming business.
A fight happened with the parents, they make a new will, and the child does not get anything anymore.

-Legal question regarding the evaluation of what the child should get.

-Solution: there is a proprietary estoppel preventing the parents from denying the child to inherit the farm.
However, full specific performance (putting the child back in the will) would be unfair.
There is a need to deduct the benefit the child made from his expectation interest: nothing he did on reliance was based on the parents reneging/repudiation of the promise, all was done before the wrong.
They leave a choice to the parents: either pay immediately the child the evaluated sum, or put it in a trust.

-Guidance test for lower courts: “if that came from the promisor directly, would that be unconscionable?” If yes, then it’s not the right remedy.

Pennington v. Waine (2002)

Regarding the application of Equity - Gifts

-Facts: Ada’s a shareholder wanting to give her shares to Harold (gift), and asks him to be a director of the company.
Regarding the transfer of the shares, she does it through a third person (Pennington), who did not do his job properly.
In the end, the shares aren’t transferred, and Ada died…

-Legal question: did the ownership of the shares pass? What is necessary for the purposes of a valid equitable assignment of shares by way of gift ?

-Solution: the shares were indeed transferred despite Pennington’s conduct.
Since it was close enough of a gift, Equity will perfect an imperfect gift (which goes against the general rule, and sets uncertainty regarding imperfect gifts).
On top of that, Harold could not become a director without being a shareholder himself.
(According to the Internet, it is said that the shares were held on a constructive trust to the benefit or Harold.)

Cukurova Finance International Ltd v. Alfa Telecom Turkey Ltd (2013)

Regarding the application of Equity - Forfeiture

-Facts: Someone loaned money to another. The loan is secured by a pledge of shares: the debtor will forfeit their shares if they fail to repay. By the time the loaner asked for the shares, the debtor could pay the missing payment and interests. But the loaner still wanted the shares.

-Solution: the share for the company would confer a disproportionate benefit to the loaner.
Equity does not like forfeiture.

Westdeutsche Landesbank Girozentrale v. Islington LBC (1996)

Regarding Equity property rights - Trusts

Case content

-Facts: The claimant (bank) had paid money to a local authority (Islington LBC) under a contract that was in fact void (because the local authority acted ultra vires). The local authority admitted that it had to repay back the bank, which however claimed that the local authority also held sums on trust for it. As the law then stood, this claim of a trust was necessary if the bank were to claim compound interest, rather than merely simple interest on that sum.

-Solution: there was no trust because when the contract was found void, the authority had already spent the money of the bank. Therefore, the authority could not at any point have held the money as being “the bank’s money”. The principles were not satisfied.

Relevant principles of trust law

i) Equity operates on the conscience of the owner of the legal interest (here: trustee). In the case of a trust, it requires him to carry out the purposes for which the property was vested in him (express or implied trust) or which the law imposes on him by reason of his unconscionable conduct (constructive trust).

ii) One cannot be a trustee of the property if and so long as he is ignorant of the facts alleged to affect his conscience, i.e.:

• In an express/implied trust: until he is aware that he is intended to hold the property for the benefit of others in the case of an express or implied trust

• In a constructive trust: until he’s aware of the factors which are alleged to affect his conscience

iii) In order to establish a trust there must be identifiable trust property

iv) From the date a trust is eestablished, the beneficiary has, in equity, a proprietary interest in the trust property, enforceable in equity against any subsequent holder of the property (whether the original property or substituted property into which it can be traced) other than a purchaser for value of the legal interest without notice.

The Aliakmon (1986)

Regarding equitable interests in a contract of sale of goods

-Facts: Contract to buy some steel coils, stipulating that the coils were “at the risk” of the purchaser in case of damage. While they were shipped to the claimant, the coils were damaged due to the defendant’s carelessness.
However, at the time of the damage, the coils still belonged to the vendor, not to the claimants.

-Legal question: could the claimants recover any compensation from the defendant for the loss they had suffered?

-Solution: after looking for equitable rights of the claimant, he ends up not allowed to recover compensation, because:

• It is a contract of sale regarding goods, which is not enough to create strong enough equitable interests to overcome the owner’s interest

• The claimant had neither legal ownership nor possession of the goods at the time of damage

Webb v. Webb (1994)

Regarding the nature of the beneficiary’s right under a trust against the trustee

-Facts: A father buys a flat in France and puts the name of his son as being the legal owner of it. The whole family’s been using the flat.
The father wants to be granted an order from the English courts for his son to vest legal ownership of the flat to him. But the son challenges their jurisdiction, saying it should be French courts. On top of that, the son claims the flat was gifted to him.

-Legal questions: which courts have jurisdiction over the matter? Is there a trust?

-Solution: there is a trust held by the son to the benefit of the father, not a gift from the father to the son (otherwise the father would’ve asked permission to use it).
The son’s situation cannot be defended by article 16(1) of the Brussel’s Convention, because here the father has an action based on a right in personam, not in rem, as the son’s the only one he can sue (he does not claim enjoying rights over the flat).
The father wins.

→ to determine whether there is a right in rem or in personam, we have to look at the source of the right rather than the ultimate goal of it.

Akers v. Samba Financial Group (2017)

Regarding the strength of an equitable interest under a trust compared to other property rights

-Facts: Al-Sanea holds the shares on trust for SICL (beneficiary of the trust, has an equitable ownership) under agreements governed by Cayman Islands law (tax paradise). SICL starts going into bankruptcy.
Then the trustee for SICL disposes of the shares to Samba.

-Legal questions: was the property of the shares disposed of?
Is it possible to have a trust of shares situated in Saudi Arabia, when Saudi Arabian law does not recognise the concept of the trust ?

-Solution:

• It is possible to have the concept of trust in Saudi Arabia, we don’t care about the kind of property involved, or where it is.

• Since Samba bought the shares without knowing about the bankruptcy, they get all of the property (not just the legal title as they would’ve, had they known about the trust).

• The trustee (Al-Sanea) did the beneficiary wrong.

• In equity, the bonified purchaser’s rights come before the equitable right. Thus, the equitable interest of the beneficiary is overriden.

Shell (UK) Ltd v. Total (UK) Ltd (2010)

Regarding the strength of an equitable interest under a trust compared to a contractual right

-Facts: explosions and fires on a pipeline due to Total (defendant), that caused economic damage to Shell (claimant), which could not distribute oil for a long time.
Shell wants to recover the losses, but is not the owner of the terminal. It only has an equitable interest in it (co-beneficiary).
Total says it’s not liable to Shell, but only to the trustee (legal owner of the pipeline).

-Legal question: is having an equitable interest enough for Shell to bring a claim?

-Solution: Shell having an equitable interest in the pipelines from a trust is enough to bring a claim, as long as there’s also the legal owner that brings the claim.
It is anyway stronger than a right solely coming from a contract between Shell and Total.

Thomas v. Sorrell (1677)

Regarding Licences

“A dispensation or licence properly passeth no interest, nor alters or transfers property in any thing, but only makes an action lawful which, without it, had been unlawful. As a licence to go beyond the seas, to hunt in a man’s park, to come into his house, are only actions, which without licence, had been unlawful.”

→ a licence is a permission turning something unlawful without it into something lawful

Street v. Mountford (1985)

Regarding the difference between a licence and a lease

-Facts: contract between Street (owner) and Mountford, giving the latter a right to have exclusive control of the land for the duration of the contract. The contract was described as a licence.

-Legal question: does the agreement between the parties involve a license or a lease/tenancy?

-Solution: despite being called a licence, the contract is in fact a lease/tenancy, granting Mountford a property right as it is a “right to exclusive possession of the land”. This is more than a licence.

Hunter and ors v. Canary Wharf Ltd (1997)

Regarding the need for a property right (lease) to bring a nuisance claim

-Facts: claimant and others claim a tort of nuisance as they say their television reception has been affected by a construction on land belonging to the defendant.

-Legal questions: is interference with television reception is capable of constitution an actionable nuisance ?
Is it necessary to have an interest in property to claim in private nuisance and if so, what kind of interest in property is satisfactory?

-Solution:

• The claim fails as interference with television reception, at least when caused by the construction of a building on the defendant’s land, cannot amount to a nuisance

• To sue in nuisance, a claimant must have a property right in land, and that property right must give the claimant exclusive possession of land (no matter whether it is lawful or not)
  → therefore, you need a LEASE, a licence isn’t enough to bring such a claim (as it’s not a property right).

King v. David Allen and Sons (Billposting) Ltd (1916)

Regarding the effects of a licence compared to the effects of a lease

-Facts: A made a contractual promise to B allowing B to display posters on the wall of A’s cinema. A leased the cinema to C and C refused to allow B to display the posters. B brought a claim for breach of contract against A.

-Legal question: Has the contract created a property right for B that he can simply assert against C ?

-Solution: the contract (which is a licence) gives B a mere personal right against A, not a property right against the rest of the world like a lease would.
Therefore, there is indeed simply a breach of contractual licence on A’s part.

Errington v. Errington & Woods (1952)

Regarding the effects of a contractual licence on third parties

-Facts: Someone buys a house with a mortgage, lets his son and daughter-in-law live there. If they reimburse the mortgage, the house will be theirs. The couple ends up separating but still pays directly to the bank.
The father dies, and his widow (claimant) wants to evict the daughter-in-law who still lives there, although she still pays !

-Legal question: Who gets the house? What is the nature of the daughter-in-law’s interest?

-Solution:

• The couple had a contractual licence to stay in the house (as there was no tenant/landlord relationship), which binds the widow.
  → gives proprietary effects on contractual licences !

• Since the house was intended to go to the couple once the payments were made, although they did not have a property interest yet, they would in the end.

• The promise is about a property transfer ! Had it been a lease, the father’s widow (claimant) would be in a better position.

• Obiter: the initial promise was a unilateral contract, unrevokable as they start paying for the mortgage and which can only have effect if all the payments are made.

N.B.: had the couple made the payments through the father, this would have been different (there would have been a lease).

→ only the outcome (not the weird reasoning) of that case was later approved by Ashburn Anstalt v. Arnold, which otherwise overturned it for the confusion it sets between contractual rights such as licences (which should not bind third parties) and property rights (binding on third parties).
According to the Internet, the overruling of the reasoning suggests that actually, by paying, the daughter-in-law changed her position to give rise to a constructive trust on the house to her benefit, held by the widow (just like in Binions)

Binions v. Evans (1972)

Regarding the effect of a contractual licence on third parties

-Facts: an employer provides a cottage for his employee. The widow of the employee entered in an agreement with the employer which allows her to stay in the cottage for the rest of her life.
The employer sells the cottage to someone else (C), that wants the widow out.

-Legal question: what is the nature of the widow’s right? Is it fair to kick her out?

-Solution:

• The widow had a contractual licence with the employer to stay in the cottage for the rest of her life, which gives her an equitable interest in the cottage

• C bought the land at a reduced price BECAUSE there was this right of the widow.

• As a result of C’s conduct, the court imposes to C a constructive trust for B’s benefit, as it would be inequitable/unconscionable to kick her out

→ Grants B a new right under a trust, because of this situation of a land “subject to” a contractual right (=licence), because of the purchaser’s wrong conduct.
However, in an obiter of Ashburn Anstalt v. Arnold, that would not have been done because of a lack of evidence of the defendant’s conduct.

Ashburn Anstalt v. Arnold (1989)

Regarding the effects of a lease compared to the effects of a licence on third parties

-Facts: A made a contractual promise to B that B could remain in occupation of the land (whose lease B previously sold to A) until it was needed for redevelopment. C then acquired A’s land, “subject to” the agreement between A and B.
Although C had no plans to redevelop the land, he sought its possession from B.

-Legal question: does the agreement between A and B gives the latter a (property) right that he can assert against C ?

-Solution:

• Here, there is a lease that B can assert against C, as it is a property right (application of Street v. Mountford)

• According to the Internet, this case supports that a lease does not require rent to be a lease (since Street v. Mountford does not say anything about the need of a rent)

• Obiter exploring the hypothesis in which there was a licence instead of a lease : here, the court would not do what’s been set in Binions (= would not impose a constructive trust upon the purchaser of land subject to a contractual right), because there is not enough evidence.

→ criticism of Errington, which sows confusion between contractual rights (licences) and property rights (leases), but the present court of appeal cannot overturn it (as it is a court of appeal case): only the UKSC can.