KINGS COLLEGE LONDON PROPERTY LAW 2011-12 SEMINAR 2 Introduction 2 & 3: Land/ Law and Equity Statute: Law

of Property Act 1925 section 1 (ii) Conveyance includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument, disclaimer, release and every other assurance of property or of an interest therein by any instrument, except a will; convey has a corresponding meaning; and disposition includes a conveyance and also a devise, bequest, or an appointment of property contained in a will; and dispose of has a corresponding meaning; (ix) Land includes land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of buildings (whether the division is horizontal, vertical or made in any other way) and other corporeal hereditaments; also a manor, an advowson, and a rent and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or derived from land;F204. . . and mines and minerals include any strata or seam of minerals or substances in or under any land, and powers of working and getting the same . . .; and manor includes a lordship, and reputed manor or lordship; and hereditament means any real property which on an intestacy occurring before the commencement of this Act might have devolved upon an heir; (xxi) Purchaser means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property except that in Part I of this Act and elsewhere where so expressly provided purchaser only means a person who acquires an interest in or charge on property for money or moneys worth; and in reference to a legal estate includes a chargee by way of legal mortgage; and where the context so requires purchaser includes an intending purchaser; purchase has a meaning corresponding with that of purchaser; and valuable consideration includes marriage [F207, and formation of a civil partnership,] but does not include a nominal consideration in money

Reading:

Smith, Ch 7, only pp. 59-66, 87-92. Chapter 7: Original acquisition of property interests The huge majority of interests in property are created by the current owner or by the courts imposing an obligation, such as trust, on the current owner. However, some interests do no derive from another persons ownership. Three examples: (a) finding: finder is often given a better right to the thing than anyone except the owner who had lost it, (b) adverse possession: rights to ownership can be acquired by a long period of possession adverse to the owner, (c) fixtures: objects fixed to land, or to a more important object, become by law part of the land or other object 1. Finding: example- Land is leased by L to T. T employs contractors (C) to undertake work on the premises. One of the contractors employees (F) finds a gold bracelet on the premises. A jealous colleague, E, takes it from F. An inscription on the bracelet indicates that it belongs to O, who at present cannot be traced. E has physical possession of the bracelet, but could face claims by O, L, T, C and F. the fact that one of these parties may have a better right than another does not necessarily mean that they can keep it. For example, C will have a better right than F (and thereby E) by virtue of being the employer. Whether L as owner an T as occupier have better rights than C involved difficult points of law, but it is clear that O, if traced, can claim the property from whoever has it. This example highlights that it is simplistic to talk about finders owning what they have found. They may have better rights than those who take the property from them (such as E), but this does not mean that their claims will prevail against other claimants. Therefore it is important to find out the specific relationships.

A. Things found on, in or under land (i) Finder true owner disputes: where the owner of a lost article is known, that person can reclaim it from whosoever has it- this was applied in Moffatt v Kazana. The owner of bungalow sold the house forgetting about the 2,000 tin in the loft. Some ten years later, the defendant found the tin. The court claimed that the owners claim must be brought within the limitation period of six years from the time the object is demanded from the finder, therefore the personal representatives could claim it from the defendant. (ii) Finder- dispossessor disputes: Armory v Deamirie- a chimney sweeps boy found a ring, in which a stone was set. He took it to a jeweller, who removed the stone and refused to return it. Pratt CJ was emphatic that the finder has such property as to keep it against all save the rightful owner. If the finder hands the property to another person, in order to find the owner, the finder has the right to reclaim it if the owner is never found. Should the occupier have any right, it will be as a result of occupation, rather than because of the handing over of the object. (iii) Finder- occupier disputes: question of whether occupation of land carries rights to chattels whose existence of the occupier is ignorant of. (a) Wrongdoers: unless there is no stronger claimant, the occupier is to be treated as being entitled to possession- to uphold the law (e.g. not to side with trespasser/thieves etc). This rule is almost non-existent as seen in Parker v British Airways Board, unless it is dealt with thieves. Hibbert v McKiernan: the accused had taken golf balls, lost by players, from a golf course. The case raised the issue whether the gold club, as occupiers, could be treated as possessing the lost golf balls. Lord Goddard CJ- unnecessary to resolve the general rights of occupiers (b) Agreement: a finder who is not a trespasser will nearly always have permission to be on the premises. The terms of this permission may expressly or implicitly limit the rights of the finder, especially where the object is an integral part of the realty and it is found in the course of work being done on the premises. Express provision for finding may be made in some formal agreements, but it is unclear how readily terms will be implied to cut down finders rights. (c) Employees and agents: MDowell v Ulster Bank- Palles CB held that a bank porter could not keep bank notes found whilst sweeping out the bank floor. This most obviously applies where property is found on the employers premises. Especially where there is public access to the premises, it can readily be taken to be one of an employees responsibilities to hand in lost property. (d) Other situations: one group of cases favouring the occupier involves property attached to or under the land- based upon the occupiers power and intent to exclude unauthorised interference. In Parker, the court accepted the superior rights of the occupier in such cases, partly on the theory that what is found in these cases constitutes part of the land. In Waverley BC v Fletcher, the finder had used a metal detector to find a gold brooch some nine inches below the surface of a public park. Court held that the local authority owning the park had a superior right to the brooch- disturbance to land. The case shows that the finder will rarely have rights to things found in/attached to land. - Things found on land: Bridges v Hawkesworth- notes had been found on the shop floor and the court held that the finder had better right because the place of founding was in a public area of the shop. Donaldson LJ argued that an occupier in possession of lost objects is under a duty to inform the rightful owners and to care for the objects. Finally, it is occupation rather than ownership of the land that gives rise to possession of objects on the land. In Hannah v Peel, an owner who had never been in possession failed as against an honest finder. (iv) Finder- predecessor in title disputes: who has the better right as between a finder (assumed

to be also the occupier) and that persons predecessor? The problem is as follows. The predecessor may be treated as having been in possession of the lost object by virtue of possession of the land. Unless that possession of the object is given up on selling the land, it remains superior (as prior in time) to that of the purchaser of the land who finds the object. B. Things found in chattels: the facts of Merry v Green provide an excellent example of the problems that can arise. After buying a bureau at auction, the purchaser found a secret drawer containing a purse. It was held that delivery of the bureau was insufficient to pass possession of the contents, there being no intention that contents should pass to the purchaser. This reasoning is satisfactory if the seller was the owner of the purse (it accords with Moffatt), but it is highly inconvenient if it had been owned by a third party. Indeed, if sale does not pass rights to the contents, it is not clear that the seller of the bureau (not being the owner of the contents) can claim possession. Appleyard accepted that proposition that possession of an object generally includes possession of its contents. C. Treasure: treasure belongs to the Crown although compensation is normally paid. A finder who fails to disclose treasure is liable to prosecution. Under ancient common law, only gold and silver and treasure which were hidden (not lost or abandoned) were regarded treasure. Now, under Treasure Act 1996, it applies to gold and silver objects with a 10% previous metal content and to finds of more than ten coins, provided that they are at least 300 years old. Accidental finds will result in sharing the compensation between finder and occupier, deliberate search with illegal means will mean occupier will get compensation. 2. Fixtures Ownership may be affected when one object is fixed to another. Example: A builds a house and, by mistake, use bricks belonging to X. X has lost ownership of the bricks, although X has other remedies available to him Two categories: (a) person affixing the chattel is the owner of the land- its fixture becomes important on any dealing with the land. (b) the person fixing the chattel has a limited right to the land, such as life interest, but most cases involve tenants under leases. Intention plays a big part in deciding if certain fixtures are part of the land; used to argue that many trade and ornamental fixtures are not true fixtures because they are attached to the land without the intention that they should become part of the land, but merely for use of enjoyment. Elitestone Ltd v Morris: HL endorses the conventional view that they are fixtures A. General principles: early cases placed great emphasis upon the extent of physical annexation, but a more sophisticated approach was taken by Blackburn J in the leading case of Holland v Hodgson- unless the circumstances are such as to show that they were intended to be part of the land on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to show that it was intended all along to continue a chattel. However, subsequent cases emphasised on the intention than to the degree of fixing; the courts have been inclined to hold that ornamental fixtures fixed by the current occupier are fixed simply so that they can be enjoyed, rather than as permanent addition to the land. - Third party owners and intention: where there is hire purchase, the cases have been content to hold that the object is a fixture. In cases of hire, it may be easier to convince the court that there was an intention that it should remain chattel, at any rate where there is a low level of fixing. Insofar as intention is relevant, it is only as regards the object of the annexation - Fixture without fixing: where the object rests on its own weight on land without any fixing, the courts have usually applied the prima facie rule that it remains a chattel. Exceptions are where objects form part of the architectural design of the property- in DEyncourt v Gregory, carved figures, marble vases, stone lions and garden seats were regarded as part of land. - Damage; connected objects: one significant factor is whether the object can be removed without substantial damage. If it cannot, then it is a fixture - Modern application of the rules: in Bothan v TSB Bank plc, CA gave a useful ruling on

household objects, applying that test whether they are, objectively, intended to be a permanent and lasting improvement to the house. The most relevant question is whether the fixing is for the temporary enjoyment of the object as a chattel, or for the use or enjoyment of the land.

B. Removable fixtures: tenants and life interest holders have long been allowed to remove trade and ornamental fixtures. It is sometimes said that the law is most generous to tenants, but the decisions reveal little, if any, difference between he two groups. Both are described as tenants in this section. There are three categories: (1) Landlord fixtures (cannot be removed): this applies where the fixture is neither trade nor ornamental, or the nature of the fixture is that it represents a permanent part of the land. Although entire buildings can be tenants fixtures, buildings with solid foundations will be landlords fixtures as a permanent part of the land. Additions to existing building that form an integral part of them, such as central heating and lifts or windows and doors, will similarly be landlords fixtures (2) Tenants fixtures (part of the land, but can be removed): these must be either trade or ornamental fixtures. Architectural fixtures are not trade fixtures. (3) Chattels: although conventional view is that a trade or ornamental fixture is not a chattel, there have been suggestions that the tenants intention that they should be removed results in their remaining chattels. C. Is a right to remove fixtures a property interest?: the question here is whether a right to remove fixtures can bind purchasers of the land. The right to remove tenants fixtures binds any person bound by the lease. If the object is fixed before the mortgage, any right to remove must be proprietary in nature if it is to bind the mortgagee. Cases: Parker v British Airways Board [1982] QB 1004: C, Mr Parker, had a ticket entitling him to be in the executive lounge at Heathrow Airport, which was operated by British Airways Board. He found a gold bracelet on the floor of the ounge. He handed the bracelet to an employee of the Board, saying that he wished the bracelet to be returned to him if the true owner was not found. The Board sold the

bracelet for 850. Parker sued, claiming that by finding th bracelet he had acquired a title supriror to that of the Board. Held: his claim was successful, because on the facts the Board did not have prior possession of the bracelet; he was awarded 850 plus interest. Boards defence that being the operators of the executive lounge to which the public had limitd rights of access failed because the Board had not manifested an intention to exercise control over those premises and things might be found on those premises. In Donaldson LJs dicta, he considered the case where the finder was dishonest; dishonest finders will often be trespassers. They are unlikely to risk invoking the law,particularly against another subsequent dishonest taker, and a subsequent honest take is likely to have a superior title. However, h probably has some title, albeit a frail one because of the need to avoid a free-for-all. Bernstein v Skyviews & General Ltd [1978] QB: Skyviews employee flew over Bernstein's land, took photograph of his house and offered it for sale to Bernstein. Bernstein too exception and sued for trespass. Held: Griffith J. dicta: "I can find no support in authority for the view that a landowner's rights in the air space above his property extend to an unlimited height. The problem is to balance the rights of an owner to enjoy the use of his land against the rights of the general public to take advantage of all that science now offers in the use of air space. This balance in my judgment is to restrict the rights to such height as is necessary for the ordinary use and enjoyment of his land and the structures upon it; and declaring that above that height he has no greater rights in the air space than any other member of the public." The case established that a landowner does not have unqualified rights over the airspace over his land and the rights of a land owner over his land extend only to a height necessary for the ordinary use and enjoyment of his land. This case is a good example of the application of the Hobbes Theorem, which states that if parties could not negotiate to arrive at an efficient outcome, the role of the law is to allocate property rights in such a manner so as to achieve efficiency through that allocation Bocardo SA v Star Energy UK Offshore Ltd [2010] 3 WLR 654: Star drilled three wells diagonally from a site outside Bocardos Oxted Estate, but eventually got to the well under Bocardos estate. Bocardo argued that he should be allowed compensation for what has been taken under his land because of he never gave permission for anyone to drill into the well. Held: confirmed that the owner of the surface of land is also the owner of the strata below it. Lord Hope, giving leading judgment on the trespass issue, that there must be some stopping point, as at a certain depth below ground physical features such as pressure and temperature render the concept of strata belonging to anybody so absurd as not to be worth arguing about, the wells in this were far from being so deep as to reach the point of absurdity and they clearly entered and passed through the land belonging to Bocardo. As the undisputed owner of the freehold land above the wells, there had been a trespass against Bocardo. By a 3:2 majority, SA awarded damages of 1,000 to Bocardo for past and future trespass. Elitestone v Morris [1997] UKHL 15, [1997] 1 WLR 687: This case concerned a chalet or bungalow resting on concrete blocks on the ground. The chalet had been brought onto the land many years before and had been occupied by the defendants since 1971. The landowner and the occupiers seem to have proceeded on the assumption that the chalet belonged to the occupier and not the landowner, and rent was paid for the use of the land on which it stood. When there was a change in landowner, the rent for allowing the chalet to remain on the ground was increased steeply and notice was served on the occupiers to remove the chalet. As part of their legal ght to stay on the land, the occupiers needed to argue that the chalet formed part of the land. (This was so that they could claim that they were tenants protected by the Rent Actsan argument that is not relevant to the point at which we are looking now.)

The Court of Appeal decided that the chalet did not form part of the land, because it merely rested onbut was not attached tothe concrete blocks that formed its foundations. The House of Lords reversed the decision of the Court of Appeal. It found that the chalet was not designed to be removed from the land without being destroyed. It was not like a Portakabin, or a mobile home: it could not be taken down and erected elsewhere. Therefore, the House of Lords decided that, whatever the parties had originally assumed, the chalet had become part of the land. Lord Lloyd of Berwick said that he thought the terms xture and chattel were confusing ones in the context of a house or building. He preferred a different approach, using a threefold classication: An object which is brought onto land may be classied under one of three broad heads. It may be (a) a chattel; (b) a xture; or (c) par t and parcel of the land itself. Objects in categories (b) and (c) are treated as being part of the land. The chalet fell into category (c)part and parcel of the land itselfas do most buildings. It appears that, if an object cannot be removed from the land except by destruction, it has become part and parcel of the land. Chelsea Yacht and Boat Co. Ltd v Pope [2000]: In this case, it was held that a houseboat, even if permanently moored and connected to mains services, does not form part of the land. The degree of annexation to the land is insufficient. Suggested optional reading: H Conway, Case comment on Elitestone [1998] Conv 418 K Gray, Property in Thin Air [1991] CLJ 252 Introductory note: The meaning of land The meaning of land in English law varies according to the context. At common law it has a physical (though not necessarily tangible) meaning. It includes the surface of the land, the airspace above it, and subsoil below it, products of the soil such as grass, timber and crops, the beds of rivers and lakes upon the surface (though not the water itself), and fixtures to the surface and in the subsoil. Real and personal property In most legal systems property is divided into immovable and movable property. The former never changes its location; the latter may, and in fact usually does from time to time. Immovable property relates to land, and movable property to everything else, tangible or intangible. Different rules may be applied to each kind, by reason of the significant difference between them. In the English legal system that distinction is used only in the rules of English private international law, in order to facilitate the operation of those rules. It is not used, however, in English domestic property law. Instead, the primary distinction in English law is between real and personal property, also known as realty and personalty (or chattels) respectively. This is a distinction which like much else in this area has its origins in the legal procedure of the feudal period. Property of which the lawful possessor had been deprived was called real if it could be the subject of a remedy awarded by the courts restoring the thing itself (res: Latin for thing). It was called personal if the remedy awarded by the courts was mere money compensation payable by the defendant. Most property rights connected with land including intangible rights were real in this sense. On the other hand, leases, although giving rise to significant property interests in land, for historical reasons were, and still remain, personal property, and therefore chattels, although often referred to as chattels real or as savouring of the realty. All other chattels are chattels personal, and are either in possession (ie tangible, or corporeal) or in action (ie intangible, or incorporeal, such as debts, shares, and intellectual property).

What are fixtures? The law of fixtures is complex, but in broad terms it comes to this. Whether a chattel brought onto land will cease to be a chattel, and become part of the land when built into a composite structure on the land, depends on the circumstances of the case, but mainly on two factors, the degree of annexation to the land, and the object of the annexation. So electrical appliances fitted into a kitchen do not become part of the land, whilst bricks built into a wall on land do. Things buried in the subsoil are part of the land. A house constructed so as to be removable, whether as a unit, or in sections, may well remain a chattel, even though connected temporarily to mains services. But a house so constructed that it cannot be removed at all, save by destruction, cannot have been intended to remain as a chattel, even though not attached to the land, and merely resting on its own weight. These are rules of law, and cannot be modified by contract between the parties, although such a contract can give rise to a right to sever the fixture from the land (and, once severed, it will become a chattel again). The impact of legislation Legislation often employs a special meaning of land, to some extent at variance with the common law meaning. An important statutory definition of land is that set out in the Law of Property Act 1925. It is important both because the statute itself is important, and also because it is borrowed for other statutes. The definition is similar to that at common law, but with some important differences. The principal difference is that incorporeal (ie intangible) rights relating to land, such as advowsons, manors, rentcharges, rights of shooting, fishing and passage, and so on, are included in the statutory meaning of land. This makes the meaning of land for the purpose of that statute similar to the common law meaning of real property. But in other important Acts a different definition may be used. Equity and trusts The common law was so called because it was the law common to the whole country, and not restricted to parts of it (as much local law was). It was the law made b y decisions of the Kings judges, supplemented by small amounts of infrequent legislation. But, over the centuries after the Norman Conquest, a parallel system of rules grew up, almost by accident, in what was known as the Chancery, the office later the court of the Chancellor. This royal officer was then always a bishop or other cleric, and became known as the keeper of the Kings conscience. When litigants who had lost their cases in the Kings courts petitioned the King for justice, pleading that the defendants behaviour was against conscience, but that the (Kings) law afforded no relief, these petitions were referred by the King to the Chancellor. By about 1400 the Chancellor was sitting in a judicial capacity to adjudicate on these petitions, and rendering decisions building up a body of rules. The typical case involving property would be one where A before his death had transferred land to B on the faith of a promise to hold it for the benefit of C (who might be an infant child or a mistress), but B had reneged on his promise and was keeping the property for himself. At this time the common law gave no remedy, or only an inadequate one. The Chancellor would order B to perform his promise by holding the land for the benefit of C, or maybe order him to transfer it to C. B was undoubtedly the legal owner of the property, but he would not be allowed to benefit personally from it. This institution was first called the use. Later it became known as the trust. It was hugely successful, mainly employed to avoid unwelcome features (especially taxes) of the feudal system. The Statute of Uses 1535 was enacted to try to reduce its impact, but largely failed. Initially the use was a purely personal obligation. Only B could be sued in this way. So if B sold the land to D, or he died and it passed to E, A could obtain no remedy against those persons from the Chancellor. But over the centuries the case law developed the use, so that it bound, not only the original promisor, but also his successors as owners, unless they were purchasers in good faith for value of the legal estate in the land (because the consciences of such persons were not affected by the promise made by B). In this way the interests of those who benefited from the use or trust device,

instead of being merely personal rights against the original legal owner (the trustee), became good against nearly all the world, and hence analogous to property rights (recall the discussion in the first seminar about what makes a right into a property right). Lawyers talked about the legal estate in the land being vested in B, but the equitable estate (or interest) being vested in C. The language of legal and equitable estates and ownership grew up, as if there were two ownerships, one legal and one equitable. Even the modern legislation follows this convention, as in the Law of Property Act 1925, s 1. This really confuses some people, especially lawyers from other systems. Simplification of property law The complexity of the system (estates, tenures, law and equity) was a response over time to the demands of those involved in it. It just grew like that, because that was what property owners over the centuries had wanted. But this very complexity ended up by making it slow, difficult and expensive to operate, and led to demands for reform. The reforms started in the nineteenth century, and culminated in the great reforms of 1922, consolidated in 1925, and coming into force on 1 January 1926. (The process has not stopped then, of course, but 1925 really was a revolution.) Many old rules were swept away, the number of possible legal estates was reduced to two, and all other estates which had existed were for the future to be restricted to existence in equity, behind a trust. Questions to prepare: 1. Why do we need to know the meaning of land? 2. What is meant by land in s 205(1)(ix)? 3. What are some of the rights conferred upon the owner of land? What are some of the lesser rights of property that a person may have in land? 4. Does an owner of land own the airspace above the land? 5. Does an owner of land own the soil beneath his home? How far down do his rights go? Does he own the water beneath his land? The coal? The gas? The unmined silver and gold? What about things found on, but unattached to, the land? 6. What is a fixture? Why does it matter? 7. Is a building an example of land? 8. Is a top floor flat land? 9. Are trees and plants land? Is a florist an estate agent then? 10. In Elitestone, what was the issue in dispute? Who was the claimant and who the defendant? Who won in the Court of Appeal and who in the House of Lords? What did Lord Lloyd say about the Court of Appeal decision? Why did Lord Clyde refer to Scottish cases? 11. The rationale of this rule is probably... that the chattel is to be treated as an integral part of the realty as against all but the true owner: Donaldson LJ in Parker at 1010 (emphasis added). What is odd about this statement? When is land not land?