Submitted by: Luca StClair
Problem Question
In 2016 Martin purchased a large house, situated in Belfast, which had a surrounding garden containing a large shed. Title to the land is registered. Martin proceeded to convert the house into two self-contained apartments, one on the ground floor and one on the first floor of the property, with separate access points to each.
Martin lived in the first floor apartment. The ground floor apartment with two bedrooms is currently occupied by Laura, who moved into the apartment in October 2018. Before moving in, Laura signed a written agreement by which she agreed to pay Martin a lump sum payment of £40,000 for a four year occupation of the ground floor apartment. The written agreement also contained a statement to the effect that Martin was entitled to introduce an additional occupant into the second bedroom in the apartment at any time.
In December 2018, Trevor (a friend of Martin’s who had been living in Canada) decided to return to Northern Ireland. Trevor was having difficulties in finding somewhere to live and he inquired of Martin whether the ground floor apartment was vacant. Martin replied that Laura was currently living there, but that Trevor (who was a builder) was welcome to convert the shed in the garden into a dwelling and live there as long as he wished. Trevor was glad to accept this invitation and spent six months carrying out substantial renovation works to the shed and converting it into his home. Trevor has lived there ever since.
Martin died last month. His entire estate has now passed to Amanda, Martin’s sister. Amanda has told Laura and Trevor that they must vacate the ground floor apartment and the shed.
Advise Laura and Trevor on their respective positions.
Introduction
I will be advising Laura and Trevor on their respective legal positions. In doing so, it will be ascertained whether Amanda could acquire vacant possession of the ground floor apartment and the shed. Before advising the parties, it is important to note that we will be dealing with Land law applying to Northern Ireland because the property is situated in ‘Belfast’.
Laura v Amanda
In advising Laura, the extent to which Amanda could vacate her from the ground floor apartment shall be determined by considering whether Laura holds a lease or contractual licence. It will be in Laura’s interest for the agreement to constitute a lease because this will not only ensure that Laura has statutory protection under the Landlord and Tenant Law Amendment Act (Ireland) 1860 (Deasy’s Act) but it will also give her a proprietary interest capable of binding Amanda, which would otherwise not likely be possible given that licences typically only confer personal rights (Vaughan CJ in Thomas v Sorrell [1674]). Crucially, because the agreement is in writing it already complies with formalities for a valid lease under Section 4 of Deasy’s Act. However, there are other factors that need to be considered.
Lease or Licence?
A lease can commonly be found where an agreement satisfies the requirements laid out by Lord Templeman within Street v Mountford [1985] which includes exclusive possession; for a term certain; at an agreed rent. Notably, Northern Irish courts tend to regard the parties implied or express intentions as determining the existence of a lease based on Section 3 of Deasy’s Act (NIHE v McCann [1979]). Therefore, in
Northern Ireland Lord Templeman’s requirements are solely factors in ascertaining what the parties actually intended (Hayward (2017)).
Looking at the substance of the agreement, it is clear that there is ‘a certain beginning and a certain ending’ to Laura’s occupancy (Lush LJ in Marshall v Berridge (1881)). Specifically, it had been agreed that Laura could occupy the apartment for four years. It is suggested that Laura’s occupancy began when she moved into the apartment in October 2018 and was intended to last until October 2022. As well as this, there has been an agreed lump sum payment of £40,000, which would likely be construed by the court as rent for the four years. However, it is unclear whether Laura has exclusive possession over the property. This is because the agreement stipulated that Martin had the right to introduce an additional occupant into the apartment at any time. Therefore, if exclusive possession cannot be found, there is a high chance that the court would conclude that there was an intention for Laura to have a contractual licence rather than a lease. As a result, Amanda would likely be able to evict Laura because there is no evidence that a constructive trust has arisen that would make it inequitable to deny Laura a right to the property (Ashburn Anstalt v Arnold [1988]).
On the other hand, the court may regard this reserved right as being a sham. These clauses are commonly inserted in order ‘to disguise the grant of a tenancy’ (Lord Templeman in Street). Since the apartment is suitable for sharing due to its two bedrooms, it cannot be said that the terms of the reserved right are ‘wholly unrealistic and…clearly pretences’ (Aslan v Murphy (1990)). Nevertheless, courts are willing to strike such clauses out by assessing the wider circumstances of the case as shown in Antoniades v Villers [1990] where it was held that the power reserved to the landowner
was a sham because it had never been exercised and because there was evidence of an intention that the parties were to have exclusive possession. Similarly, Martin never exercised this right despite having the opportunity to do so when he was approached by Trevor, which could suggest that Martin acknowledged Laura’s exclusive possession and never intended to introduce an additional occupant. Adding to this, Laura could be regarded as being in exclusive possession because she has ‘physical control’ of the apartment and can ‘effectively call it [her] own’ (Mcbride J in Car Park Services Ltd [2018]).
Consequently, the court would likely determine that this clause is a sham designed to disguise the party’s true intentions. Hence, Amanda will be bound by Laura’s lease and will not be able to end the tenancy early to get vacant possession of the ground floor apartment.
Trevor v Amanda
In contrast to Laura’s contractual arrangement, Trevor never entered into legal relations with Martin and was merely given a bare licence to occupy the shed. While bare licences do not enjoy a ‘degree of permanence and stability’ due to their personal nature (Lord Wilberforce in National Provincial Bank v Ainsworth (1965)), Trevor could potentially claim an equitable interest over the shed through the doctrine of proprietary estoppel.
Proprietary Estoppel:
This doctrine will operate if Trevor relied upon a representation to his detriment making it inequitable for Amanda to insist upon her strict legal rights (Crabb [1976]). I will now take each of these elements in turn.
Firstly, although there is no evidence of strong and repeated representations as in Gillet v Holt [2000], it is obvious that Trevor was given a positive assurance by Martin in December 2018 that he could live in the shed ‘as long as he wished’. This is evidently ‘clear enough’ (Thorner v Major [2009]) to give Trevor a ‘firm expectation and belief’ (Orgee v Orgee) that he would acquire rights over the shed. As in the case of Cobden Investment Ltd [2008], this assurance could equally have been made by silence because Martin stood by as the shed was being renovated knowing that Trevor had an expectation of acquiring an interest in it. Secondly, in McDermott v McDermott [2008] a couple relied upon a representation by returning to Northern Ireland, leaving behind their established lives in America. There is no doubt that Trevor relied upon Martin’s representation and changed his position through the six months he spent converting the shed into his home. Thirdly, this was clearly a detrimental reliance which makes it inequitable to deny Trevor’s claim because he prejudiced himself by incurring expenditure through the renovations he carried out. However, detriment is not solely measured in financial terms (Gillet) so it could also be said that Trevor acted to his detriment by not taking steps to locate another property to live in after the representation was made (Lloyd v Dugdale [2001]). Lastly, in order for the claimant to be given a remedy under proprietary estoppel they ‘must come to equity with clean hands’ (Murphy v Raynor [2011]). Although, there does not seem to be any bar to equity which would deny Trevor relief.
Remedy?
Accordingly, it is highly likely that Trevor would be able to successfully claim an equitable interest through proprietary estoppel which will bind Amanda so that she will be estopped from denying Trevor a right to the shed.
In granting the claimant a remedy, the court will search for ‘the minimum equity to do justice’ (Jennings v Rice (2003)). This means that the maximum relief that Trevor would get would be what he expected to get from Martin; to live in the shed for ‘as long as he wished’. The court may potentially grant Trevor an estoppel licence over the shed on this basis following Inwards v Baker [1965]. In this case, a son was encouraged to build a bungalow for himself and when his father’s trustees sought possession of the bungalow, the court held that the son’s expenditure at his father’s encouragement raised an equity which was satisfied by granting the son a licence for life. Likewise, Martin encouraged Trevor to convert the shed into a dwelling giving him an expectation that he could live there on a permanent basis. Importantly, since we are dealing with registered land in Northern Ireland, an estoppel licence will only bind successors as an overriding interest supported by actual occupation. It follows that if an estoppel licence was granted, it would bind Amanda because there is a ‘degree of permanence and continuity’ (Cann [1991]) to Trevor’s occupation of the shed since he has lived there for nearly a year. Alternatively, the court may decide that granting Trevor the equivalent of his expectation would be inequitable. In fact, estoppel licences are only one possible remedy that the court might grant. Therefore, in order to fulfil the reasonable expectations of both parties, the court may allow Amanda to acquire vacant possession of the shed but require her to reimburse Trevor for any improvements made as in Dodsworth v Dodsworth [1973].
Summary
Overall, it is evident that ‘satisfying the equity is an exercise in judicial discretion’ (Conway (2016)) and this was very clear in Davies v Davies [2016] where the court of first instance awarded £1.3million to the claimant, which was later reduced to £500,000 by the Court of Appeal. Hence, a successful claim in proprietary estoppel cannot guarantee that Trevor would be protected from Amanda getting vacant possession of the shed.