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National Provincial Bank v Ainsworth [1965] AC 1175 (see pp 59-64) The Structure of Property Law: B:11.

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Presentation on theme: "National Provincial Bank v Ainsworth [1965] AC 1175 (see pp 59-64) The Structure of Property Law: B:11."— Presentation transcript:

1 National Provincial Bank v Ainsworth [1965] AC 1175 (see pp 59-64) The Structure of Property Law: B:11

2 NPB v Ainsworth: Initial position A B - A (Mr Ainsworth) is an owner of land - B (Mrs Ainsworth) shares occupation of the land with A - A then leaves and B acquires a right against A: a deserted wifes Equity

3 NPB v Ainsworth: Charge to C Bank A B - In return for a loan from C Bank (National Provincial Bank) A then grants a Charge to C Bank C Bank Charge - C Bank thus has a prima facie power, if A fails to pay back the loan as agreed, to sell As land and use the proceeds towards paying off As debt

4 NPB v Ainsworth: Question 1 A B - Does B have a direct right against C? C Bank Charge - No: C has not acted in such a way as to give B a direct right

5 NPB v Ainsworth: Question 2 As land B - Does B have a pre-existing property right? C Bank Charge - No: Bs deserted wifes Equity does not count as a property right

6 NPB v Ainsworth: Question 2 As right B - Does B have a pre-existing persistent right? C Bank Charge - No: Bs deserted wifes Equity does not impose a duty on A in relation to a specific right held by A Power to impose a duty on C Bank?

7 NPB v Ainsworth : Question 4 - What remedy will the court give to protect C Banks Charge? - C Banks right is specifically protected: C Bank is allowed to: i) remove B; ii) sell As right to the land; and iii) use the proceeds to meet As debt (see G4:5)

8 1.Does B have a direct right against C? - No = go to 2 NPB v Ainsworth: Applying the Basic Structure Does B have a right against C Bank? 2.Did B have a property right or persistent right when C acquired Cs right?- No = C wins, go to 4 4.What remedy will a court give to protect Cs right? - C is entitled to remove B from the land and to sell As right to the land A B C Bank Charge

9 Ashburn Anstalt v Arnold [1989] Ch 1 The Structure of Property Law: B:11

10 Ashburn Anstalt v Arnold: Initial position A B - A (Cavendish Land Co Ltd) is an owner of land - A is under a contractual duty to B (Arnold & Co) to allow B to occupy that land until it is needed for development

11 Ashburn Anstalt v Arnold : Sale to C A B - A then sells its land to C C Sale - B, by continuing to occupy the land, therefore breaches its prima facie duty to C

12 Ashburn Anstalt v Arnold : Question 1 A B - Does B have a direct right against C? C - No: C has not acted in such a way as to give B a direct right

13 Ashburn Anstalt v Arnold : Question 1 - B argued that Cs promise meant that C had acted in such a way as to give B a direct right against C - In deciding whether or not B had a direct right against C, the Court of Appeal had to consider the fact that, when acquiring As land, C had made a promise to A to take the land subject to any rights of B [under As initial agreement with B] - but Bs argument is based on the receipt after a promise principle and the Court of Appeal found that C had not promised to give B a new right (for the effect of a subject to promise see pp 273-4)

14 Ashburn Anstalt v Arnold : Question 2 As land B - Does B have a pre-existing property right? C - Yes: according to the Court of Appeal, Bs agreement with A gave B a Lease: a recognised property right in land

15 Ashburn Anstalt v Arnold : Question 3 As land B - Does C have a defence to Bs pre- existing property right? C - No: eg C cannot rely on the lack of registration defence as B was in actual occupation of As land when C committed to acquiring its right. Bs right is therefore an overriding interest and immune from the lack of registration defence (see eg p 89, ). Defence for C?

16 Ashburn Anstalt v Arnold : Question 4 As land B - What remedy will the court give to protect Bs property right? C - Bs right is specifically protected: C is prevented from removing B from the land until the end of Bs Lease

17 Ashburn Anstalt v Arnold : Problems with the decision - An agreement between A and B can only give B a Lease if it gives B a right to exclusive control of As land for a limited period (see pp 677-8) - Question 2: Did B have a pre-existing property right? -And the agreement was that B could occupy As land until it was developed: such an agreement cannot give B a Lease (as confirmed by the House of Lords in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386: see G1B:Example 10a)

18 Ashburn Anstalt v Arnold : Problems with the decision - However, as a result of his payment of rent to A, B still had a Lease: an implied periodic tenancy (see pp ) - but whilst such a property right can bind C, it will give B only very limited protection: C can end the implied periodic tenancy by giving the relevant notice that C does not intend to renew it. And once the implied periodic tenancy ends, C is free to remove B from the land (see pp 678-9) - so contrary to the decision of the Court of Appeal, C should not be under a duty to allow B to remain in occupation until the land is developed

19 Lloyds Bank plc v Rosset [1991] 1 AC 107 The Structure of Property Law: B:11

20 Lloyds Bank plc v Rosset: Initial position A B - A (Mr Rosset) is an owner of land - The land is derelict and building work is carried out - B (Mrs Rosset) carries out decorating work on the land, buys materials and supervises the builders

21 Lloyds Bank v Rosset: Charge to C Bank A B - In return for a loan from C Bank (Lloyds Bank) A then grants a Charge to C Bank C Bank Charge - C Bank thus has a prima facie power, if A fails to pay back the loan as agreed, to sell As land and use the proceeds towards paying off As debt

22 Lloyds Bank v Rosset: Question 1 A B - Does B have a direct right against C Bank? C Bank Charge - No: C Bank has not acted in such a way as to give B a direct right

23 Lloyds Bank v Rosset: Question 2 As land B - Does B have a pre-existing property right in As land? C Bank Charge - No: eg the land is registered in As sole name

24 Lloyds Bank v Rosset: Question 2 As right B - Does B have a pre-existing persistent right? C Bank Charge - No: A is not under a duty to B in relation to As ownership of the land Power to impose a duty on C Bank?

25 Lloyds Bank v Rosset : Question 2 - B claimed that she had a persistent right under a common intention Constructive Trust (see pp ) as: i) A and B had a common intention that A would be under a duty to use his ownership of the land, to some extent, for Bs benefit and ii) by assisting with the renovation of the land, B had relied to her detriment on that intention - but the House of Lords found that A and B had no such common intention – none had been expressed and, as B had made no direct financial contribution to the acquisition of As land, none could be inferred

26 Lloyds Bank v Rosset : A problem? - In finding that A and B had no common intention that A would be under a duty to use his ownership of the land, to a certain extent, for Bs benefit, the House of Lords adopted a narrow test to inferring such a common intention: Lord Bridge stated that direct contributions to the purchase price [by B] whether initially or by payment of mortgage instalments, will readily justify the inference [of common intention]. But, as I read the authorities, it is at least extremely unlikely that anything less will do ([1991] 1 AC 107 at 133).

27 Lloyds Bank v Rosset : A problem? - However, in Stack v Dowden [2007] 2 AC 432, the House of Lords advocated a different approach to finding a common intention: i)a court can look at a wide list of factors to see what A and B intended (see discussion in G3:2.4 at p 770) and ii) a court may even be able to impute that A and B had such a common intention (see pp 772-3)

28 Lloyds Bank v Rosset : A different result? - So, applying the new Stack v Dowden approach, would Mrs Rosset (B) now be able to show she has a right under a common intention Constructive Trust? - Probably not: although A and B were married, and planned to live together on the land when renovated, Bs lack of a direct or indirect financial contribution may well still be decisive: compare eg James v Thomas [2007] EWCA Civ 1212 (see G3:2.4 at p 774)

29 Lloyds Bank v Rosset : A different result? - If Mrs Rosset (B) were able to show she had acquired a right under a Constructive Trust, we would then have to consider Question 3: the defences question - The Court of Appeal in Rosset considered that question as it held that B had acquired a right under a Constructive Trust ([1989] Ch 350)

30 Lloyds Bank v Rosset : A different result? - The Court of Appeal held that C Bank could not rely on the lack of registration defence – Bs right was an overriding interest and so immune from that defence as B was in actual occupation of the land either because: (i) the builders occupied the land as Bs agents; or (ii) given the derelict nature of the land, Bs use of it meant that B was personally in actual occupation of the land (see E2:3.6 at p 411)

31 City of London Building Society v Flegg [1988] AC 54 The Structure of Property Law: B:11

32 City of London BS v Flegg: Initial position A1 & A2 A1, A2, B1 & B2 - A1 and A2 (Mr and Mrs Maxwell- Brown) are owners of land - B1 and B2 (Mr and Mrs Flegg: parents of Mrs Maxwell-Brown) pay part of the purchase price of the land - As a result, A1 & A2 hold their right to the land on Trust for A1, A2, B1 & B2

33 City of London BS v Flegg : Charge to C Bank A1 & A2 A1, A2, B1 & B2 - In return for a loan from C (City of London Building Society) A1 & A2 then grant a Charge to C C Charge - C thus has a prima facie power, if A1 & A2 fail to pay back the loan as agreed, to sell A1 & A2s right to the land and use the proceeds towards paying off As debt

34 City of London BS v Flegg : Question 1 A1 & A2 B1 & B2 - Do B1 & B2 have a direct right against C? C Charge - No: C has not acted in such a way as to give B a direct right

35 City of London BS v Flegg : Question 2 A1 & A2s land B1 & B2 - Do B1 & B2 have a pre-existing property right in the land? C Charge - No: eg the land is registered in the names of A1 & A2 alone

36 City of London BS v Flegg : Question 2 A1 & A2s right B1 & B2 - Does B have a pre-existing persistent right? C Charge - Yes: Due to B1 & B2s contribution to the purchase price, B1 & B2 have a right under a Trust: A1 & A2 are under a duty to use their right to the land, in part, for the benefit of B1 & B2 Power to impose a duty on C?

37 City of London BS v Flegg : Question 3 A1 & A2s right B1 & B2 C - Yes: C can rely on the overreaching defence (see E2:3.4; esp E2:Example 17b) Does C have a defence to B1 & B2s persistent right?

38 City of London BS v Flegg : Question 4 - What remedy will the court give to protect Cs Charge? - Cs right is specifically protected: C is allowed to: i) remove B1 & B2; ii) sell A1 and A2s right to the land; and iii) use A1 and A2s share of the proceeds to meet A1 and A2s debt (see G2:4 and G3:4)

39 Port Line Ltd v Ben Line Steamers Ltd [1958] 2 QB 146 The Structure of Property Law: B:11

40 Port Line v Ben Line: Initial position A B - A (Silver Line Ltd) is an owner of a ship - A makes a contractual agreement with B (Port Line Ltd) allowing B to use that ship for a fixed period

41 Port Line v Ben Line : Sale to C A B - A then sells its ship to C (Ben Line Ltd) C Sale - The ship was then requisitioned by the Ministry of Transport – C was paid compensation as a result - B claimed to be entitled to the compensation payments received by C – that claim depended on B showing that it had a right, binding on C, to use the ship

42 Port Line v Ben Line : Question 1 A B - Does B have a direct right against C? C - No: C has not acted in such a way as to give B a direct right

43 Port Line v Ben Line : Question 1 - B argued that, as C ought to have been aware of the terms of As initial contract with B, C was under a duty not to interfere with Bs rights under that contract - In deciding whether or not B had a direct right against C, Diplock J had to consider the fact that, when acquiring As right, C ought to have been aware of the terms of As initial contract with B - but Bs argument is based on the de Mattos v Gibson principle and Diplock J refused to accept the validity of that principle (see D3:2.3.5)

44 Port Line v Ben Line: Question 2 As ship B - Does B have a pre-existing property right? C - No: Bs right to use the ship does not count as a property right (see D1:1.4.3)

45 Port Line v Ben Line: Question 2 As right B - Does B have a pre-existing persistent right? C - No: Bs contract with A does not impose a duty on A in relation to a specific right held by A (see D2:1.1.2) Power to impose a duty on C?

46 Port Line v Ben Line : Question 4 - What remedy will the court give to protect Cs right to the ship? - In Port Line, the dispute was about the compensation payments received by C: the ruling of Diplock J meant that C was entitled to keep those payments and had no duty to pay their value to B

47 Barclays Bank v Quistclose Investments Ltd [1970] AC 567 The Structure of Property Law: B:11

48 Barclays Bank v Quistclose: Initial position A B - B (Quistclose Investments Ltd) gave a sum of money to A (Rolls Razor Ltd) so that A could use that money to pay a dividend to its shareholders - The money was paid into a special account held by A with C Bank (Barclays Bank)

49 Barclays Bank v Quistclose : A goes into liquidation A B - A had not yet spent the money given to it by B and deposited in the special account with C Bank C Bank - A owed C Bank money (it has a large overdraft with C Bank) Right v A - When A went into insolvency, C Bank debited the special account and set off the value of that account against As debt to C Bank

50 Barclays Bank v Quistclose : Question 1 A B - Does B have a direct right against C Bank? C Bank - No: C Bank has not acted in such a way as to give B a direct right

51 Barclays Bank v Quistclose: Question 2 ?? B - Does B have a pre-existing property right? C Bank - No: B cannot identify a specific thing in relation to which it has a right: A does not own a specific set of notes or coins, it simply has a personal right against C Bank

52 Barclays Bank v Quistclose: Question 2 As right B - Does B have a pre-existing persistent right (ie a right against As right against C Bank)? C Bank - Yes: A holds its right against C Bank on Trust for B as A is under a duty to B not to use its right for As own benefit (although A also has a power against B to use its right for a specific purpose: see F4:2.4.2) Power to impose a duty on C Bank?

53 As right B C Bank - No: eg C Bank cannot rely on the bona fide purchaser defence as it knew that A was not permitted to use the special account for any purpose other than paying dividends (see per Lord Wilberforce at 582) Does C Bank have a defence to Bs persistent right? Barclays Bank v Quistclose: Question 3

54 Barclays Bank v Quistclose : Question 4 - Bs right is specifically protected: C Bank holds the right taken from A on Trust for B and so can be made to account to B for the value of that right – as B is the sole beneficiary of the Trust, B can force A to hand over a sum equal to the value of the bank account A held on Trust for B (see eg p 301 and F3:4.1) - What remedy will the court give to protect Bs persistent right?


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