Bart is the registered proprietor of all three houses.

Marge has not registered her interest in 2 North Hill as a notice on the Land Register and thus may lose priority to Springfield Bank. In order to retain an interest in the property she has two routes she can take and which we will discuss respectively. Firstly, she can try to prove that she had a beneficial interest (in other words a protected interest) under constructive trust. Secondly, that she has gained a beneficial interest under proprietary estoppel. Because the agreement with Bart was made orally hence informally the Law of Property Act 1925 s.53 (2) holds that she can only rely on implied trusts. Of the two implied trusts she will be unable to argue for a resulting trust because she did not make her monetary contribution at the time of the purchase of the property, held in Pettitt1 and Gissing2. She will however be able to argue for a beneficial interest under constructive trust. Constructive trust is described by Justice Cardozo and Lord Denning in 3 Binions as: The formula through which the conscience of equity finds its expression and as such when a holder of the legal title may not in good conscience retain the beneficial interest4. In the question because Bart has not transferred ownership of 2 North Hill as promised Marge could argue that he cannot in good conscience retain his interest. Likewise in Paragon Finance5 Justice Millett held that a constructive trust arises where it would be unconscionable for the owner of property (Bart) to assert his own beneficial interest in the property (execution of a legal mortgage) and deny the beneficial interest of another (Marges right to occupy and to the sale proceeds). Thus declaring the importance of constructive trusts as an instrument of morality in property law. Marge paid 100,000 to renovate 1, 2 and 3 North Hill in an oral agreement where she would receive the legal freehold title to 2 North Hill in return. This could lead to a constructive trust. Under the first doctrine acquisition of land subject to an undertaking: a person who has acquired legal title to land subject to an informal promise to respect anothers interest will not be permitted to avoid or deny the interest by pleading lack of formality. Meaning Marge cannot be denied a beneficial interest in 2 North Hill merely because the agreement was made orally and not in writing, hence informal. Bannister v Bannister6 also holds that equity will not permit a statute to be used as an instrument of fraud. Because Bart and Marges agreement was unwritten Bart could argue that it was void, however, this would be unconscionable and to deprive Marge of any interest from her 100,000 investment would risk defeating the moral purpose of constructive trusts. The second doctrine is common intention of which the onus is on Marge to prove7. Marge can claim a beneficial interest under common intention if she can comply with three elements. 1) Common intention. Was there an agreement between the legal owner (Bart) and the claimant (Marge) to transfer/ share the beneficial interest in the land? Yes Bart agreed to transfer the freehold title of 2 North Hill to Marge if she paid for the renovations. 2) Change of position. Lord Bridge in Rosset8 held that a claimant must have significantly altered his position in reliance on the agreement. Lord Hope in Green v Green9 held that there must be a

sufficient link between the common intention and the conduct which is relied upon to show that the claimant has acted on the common intention to his detriment. Therefore has Marge acted to her detriment on the promise? Yes she has provided a considerable sum for renovations in exchange and thought she was providing a home for her daughter. 3) Unconscionable denial. Has the legal owner acted unconscionably in denying the beneficial interest? Yes Bart did not transfer legal ownership to Marge and showed full knowledge of his breach of the common intention by offering the freehold title of 2 North Hill as security for a loan, then defaulting on the loan effectively denying Marge of her beneficial interest. I advise Marge that she falls under Rosset category 1 because of her obvious express discussions10 with Bart, but what is she to receive? What is her beneficial interest? General principles of Pettitt11 dictate that the onus is on Marge to establish the extent of her beneficial interest. Marge has expressly agreed with Bart to receive the full beneficial interest of 2 North Hill. Therefore under Rosset category 1, and, if the court find in favour of Marge; she will receive what has been expressly discussed i.e. the full beneficial interest and legal title to 2 North Hill. Marges next means of acquiring a beneficial interest is proprietary estoppel. There is much similarity with constructive trust being that they both are concerned with equitys intervention to provide relief against unconscionable conduct12 so expectedly they carry similar terms that must be met. Approved by Lord Scott in Cobbe v Yeomans13 and stated concisely in law of real property14, an equity arises where: A) the owner encourages the claimant to believe he will have a right over the owners property. B) In reliance on this encouragement the claimant acts in their detriment to the knowledge of the owner. C) The owner acts unconscionably in denying the claimant the benefit they expected to receive. As can be seen this test is identical to that for constructive trust which Marge has already met. The test was approved by Lord Walker in Thorner v Major15. Marge must meet the following elements. A) Assurance. Bart must have convinced Marge as to make her develop an expectation of future interest in the land as in the case of Crabb16. Did he do this? Yes she provided 100,000 in expectation of receiving freehold title to 2 North Hill the sum of money is considerable so therefore the deal would have been taken with serious intention. The interest to be acquired must also be sufficiently defined17. If Bart had merely said that he would reward Marge for her contribution as in Lissimore18 no specific property would have been identified and she would not have met the necessary element. As it happens Bart offered Marge the freehold title and like in Thorner19 Marges interest to be acquired was certain. B) Reliance. Marge must reasonably believe Bart intended her to receive the property and that Marges reliance on Barts offer was reasonable. As Bart is Marges son it is not unreasonable for her to place trust in his offer. Bart shows intention to respect the agreement by accepting the 100,000, Marge was not to know that his intentions were fraudulent. C) Detriment. Under Coombes20 Marges loss has to qualify as detriment it is highly unlikely that the court could reasonably consider the spending

of 100,000 with no reward not to put Marge into detriment. Under Greasly21 detriment can be monetary. Marge complies with all of these elements. The effect of this is the establishment of an equity under proprietary estoppel. This now leaves it up to the courts wide discretion as to what remedy will satisfy the situation. There are two sets of remedy available to the court. The first being expectation based. This would be where the court either awards Marge the freehold legal title to 2 North Hill or its current equivalent value of 120,000. The second remedy is compensation based and will see Marge receive her initial investment of 100,000. It is to the courts discretion as to which remedy to use although there is case law on this subject. Conflictingly Lord Scarman ruled in Crabb22 that the reward should be the minimum to do justice. This is built upon by Lord Justice Aldous in Jennings23 which holds that remedies must show proportionality between the expectation and the detriment 24. He goes on to express that in cases where the estoppel claim is based on an agreement made in clear terms then the court should award a remedy based on those terms. In other words if Marges claim under proprietary estoppel is successful the court will be obliged under Jennings to award her either the freehold title to 2 North Hill or alternately its current value of 120,000. To conclude, I advise Marge that in 2 North Hill she has, firstly, a beneficial interest under a constructive trust in particular that of common intention whose remedy depending on the courts discretion can be anything up to the awarding of full title to the property. Secondly, and similarly, Marge also has beneficial equitable interest deriving from proprietary estoppel whose reward would also be subject to the courts discretion but highly likely to be full legal title or the financial equivalent. The issue still remains, however, to the priority of Springfield Bank in relation to Marges interests. The Land Registration Act 2002 s.116 holds: an equity by estoppel has effect from the time the equity arises as an interest capable of binding successors in title. In other words Marges interests are capable of postponing that of Springfield Bank, BUT, when did the equity arise? An issue not yet raised in the courts Lord Neuberger in Thorner25 advised that the property the subject of the equity could be conceptually identified from the moment the equity came into existence. Essentially saying that when Marge relied on Bart to her detriment the equity arose; therefore this would override the banks disposition because it would be governed by the default (chronological order) rule (LRA s.28) and Marges equity came first. On the other hand Lord Neuberger also said its precise extent fell to be determined when the equity crystalised. In other words the extent of the equity arose once the bank received its interest and Bart negated on his agreement with Marge, if that was the case the banks interest would come first then they would have priority. It is therefore appropriate to advise Marge that there is no definitive answer at the present time, nevertheless, it is important to note that if the court did not find that the equity arose when Marge acted to her detriment (i.e. before the banks disposition) it would ultimately lead to an unconscionable result defeating the well founded notion of equity as a means to right and indeed prevent a wrong.

As an after note, it is important to mention that Marge could also argue that she is in actual occupation of 2 North Hill through her daughter, as an intermediary or representative26. In addition, she may also have gained beneficial interests in 1 and 3 North Hill as she has paid to renovate them. Lord Justice Chadwick in Oxley27 held each is entitled to that share which the court considers fair having regard to the whole course of dealing28. This includes renovations especially as Bart moved into 1 North Hill and treated it as his home when it was renovated at Marges expense. I would advise, however, that she would have greater chance of success over her interests (through constructive trust/estoppel) in 2 North Hill because of her express agreement with Bart over transfer of its ownership in payment.

Now to advise Lisa on the rights she has acquired in 2 North Hill, no notice has ever been made on the land register for her protection but she has been resident of the house for 3 years 2 months. Lisa has acquired her interest informally because she merely believes she is living in her mothers house, therefore could not be expected to be aware of any need to register her interest as a notice on the land register. Essentially a public policy issue the need to to protect those in identical or similar situations saw the law commission issue a consultation document stating: (where interests are acquired informally) it is unreasonable to expect the person who has the benefit of the right to register it as a means of securing its protection29. Fortunately the interests of persons in actual occupation (Lisa) are protected by schedule 3 paragraph 2 of the LRA which sets out criteria for whether an actual occupation should override a registered disposition. In the case of Abbey National v Cann30 it was held that acts in preparation for occupation do not constitute actual occupation: not an issue for Lisa as she has occupied 2 North Hill for over 3 years. Lisa was in physical occupation as in Boland31 and intended to occupy the property: link lending v bustard32. Therefore I would advise Lisa that she is in actual occupation. She did not unreasonably fail to disclose her interest as she informed the inspector it was her mothers house and her occupation was noticed by the inspector therefore obvious on reasonably careful inspection of the land at time of disposition (Thomas v Clydesdale bank 33). In order for Lisas actual occupation of the property to override the banks interest it must be shown that she had a property interest at the time of the disposition, however, before we can look at whether she was in actual occupation. Unfortunately, Lisa does not have a property interest. It does not mention in the question any dialogue between Lisa and Bart as to the nature of any rights for Lisa and even if rights could be inferred under Rosset category 2 it is still held in that case that there must have been a financial contribution at the time of acquisition. Finally, it is unlikely that Lisa has suffered detriment. The house was fully renovated at Marges expense before Lisa moved in and even if Lisa had performed

additional minor renovations herself Lord Bridge in Rosset held that this was not sufficient to infer a beneficial interest. Not to mention that Lisa has been living in the house rent free without Marge indicating that Lisa would not be made homeless as she would likely move back into the family home with Marge.

Now to advise Ralph on rights he may have acquired in 3 North Hill. Bart has agreed to lease the house to Ralph for a period of 10 years. Because it is greater than 7 years this means under s.4 of the Land Registration Act Ralph (as the grantee) is legally obliged to register his interest as a notice on the land register within 2 months of the triggering event: i.e. when he signed the agreement (s.6). If he does not do this (which he hasnt) there will be no creation of a legal estate in Ralphs favour and he will receive an interest in equity only i.e. an equitable unregistered interest (s.7/ s.27 (1) failure to register). Because of this Ralph risks losing priority to Springfield Bank unless he can prove his equitable interest overrides the banks disposition. Ralph has lived in the property since the agreement with Bart, a period of 2 years 6 months thus has paid approximately 15,000 in rent. Ralph has a valid property interest through his equitable lease so the question we must now ask is governed by the LRA Schedule 3 Paragraph 2: at the time of the disposition (Springfield Banks registered interest) was Ralph in actual occupation? If yes then Ralphs unregistered interest will override that of the bank, if no then the default rule (s.28) will apply and priority will be decided chronologically (the bank being next in line). Firstly, does Ralph fit the definition of actual occupation? The term actual occupation does not have a set definition to allow for flexibility but to use a plain English meaning it would suggest the need of a physical presence 34. Ralph is on holiday at the time of the inspection so not in actual physical occupation, his belongings are stated to be clearly visible but is he still in actual occupation? In the case of Hoggett v Hoggett35 a continuing intention to occupy is held to indicate actual occupation. Similarly, In the case of Chokar36, Mrs Chokar was found to be in actual occupation of the property throughout her time in hospital because of her intention to return to the property. I can advise Ralph therefore that if he also wishes to eventually return from his holiday even if, for example, he is delayed by the volcanic ash cloud; he is in actual occupation. Ralph need only prove that he was in actual occupation at the time Springfield Bank registered its charge. Mrs Chokars belongings and furniture also provided evidence of her occupation although Ralph should beware of arguing this point as the presence of furniture is not always evidence of actual occupation37. Ralph may be in actual occupation but for his unregistered interest to override that of the bank he will need to comply with Schedule 3 Paragraph 2 of the LRA 2002.

Firstly, Ralph will need to have a property interest which he does in his lease. Ralph only has a lease in equity and not law however because a lease over 7 years needs compulsory registration: If a disposition of a registered estate or registered charge is required to be completed by registration, it does not operate at law until the relevant registration requirements are met (s.27 (1)) and Ralph failed to register his lease within the required timeframe. Under the doctrine of equity underpinned in Walsh: equity sees as done that which ought to be done38 therefore Ralphs failure to register his lease should not affect its status as a property interest. Secondly, Ralph has proved that he has been in actual occupation (although it is up to the bank to disprove) so we move to the next step: did Ralph unreasonably fail to disclose his interest? As Ralph was absent during the inspection any response of his would be hypothetical, in similarity to the case of Marion Mary Thompson v Julie Ann Foy39 hence we move onto the final stage. Would Ralphs occupation have been obvious on a reasonably careful inspection of the land at time of disposition? Under Thomas v Clydesdale40 bank Judge Ramsey held that the court should focus on whether there are clear visible signs of Ralphs occupation. It specifically states in the question that Ralphs possessions are clearly visible. I would therefore advise Ralph that he can rely on the Land Registration Act 2002 Schedule 3 Paragraph 2 and that his unregistered interest (his equitable lease) overrides the disposition of Springfield Bank. This means that Ralphs beneficial interest in the property takes priority over that of the bank. This allows Ralph to stay in the house for the remainder of his lease. Ralph has also signed a contract for his interest. This area of law is covered by the Law of Property (Miscellaneous Provisions) Act 1989 s.2. Ralphs contract was for a lease over 3 years; made in writing; incorporated all the terms; and signed by each party: fulfilling all the obligations for a valid contract. I would therefore advise Ralph that he could also seek damages from Bart for breach of contract.

1 2

Pettitt v Pettitt (1970) AC 777 Gissing v Gissing (1971) AC 886 3 Binions v Evans [1972] Ch 359 4 Binions v Evans [1972] Ch 359 5 Paragon Finance plc v D B Thakerar & Co (1991) 1 ALL ER 400 6 Bannister v Bannister (1948) 2 ALL ER 133 7 Pettitt v Pettitt (1970) AC 777 8 Lloyds Bank v Rosset (1991) AC 107 9 Green v Green (2003) UKPC 39 10 Lloyds Bank v Rosset (1991) AC 107 11 Pettitt v Pettitt (1970) AC 777 12 Justice Walker in Yaxley v Gotts (2000) CH 162 at 176 13 Cobbe v Yeomans Row Management ltd (2008) 1 WLR 1752 14 Megarry & Wade, Law of Real Property (7th ed, 2008) para. 16-001 15 Thorner v Major (2009) UKHL 18 16 Crabb v Arun District Council (1976) CH. 179 17 Cobbe v Yeomans Row Management ltd (2008) 1 WLR 1752 18 Lissimore v Downing (2003) 2 FLR 308 19 Thorner v Major (2009) UKHL 18 20 Coombes v Smith (1986) 1 WLR 808 21 Greasley v Cooke (1980) 1 WLR 1306 22 Crabb v Arun District Council (1976) CH. 179 23 Jennings v Rice [2002] EWCA Civ 159 24 Jennings v Rice [2002] EWCA Civ 159 25 Thorner v Major (2009) UKHL 18 26 Abbey National BS v. Cann [1991] 1 AC 56 per Lord Oliver at 93 27 Oxley v Hiscock (2004) 3 ALL ER 703 28 Oxley v Hiscock (2004) 3 ALL ER 703 LJ. Chadwick para. 69 29 Law Commission and HM Land Registry, Land Registration for the 21st Century: A consultative Document, Law Comm No. 254, 1998, para. 4.4 30 Abbey National BS v. Cann [1991] 1 AC 56 31 Williams & Glyn's Bank v. Boland [1981] AC 487 32 Link Lending ltd v Bustard (2010) EWCA Civ 424
33

Thomas v Clydesdale Bank (2010) EWHC 2755

34 35

Williams & Glyn's Bank v. Boland [1981] AC 487 per Lord Wilberforce at 504 Hoggett v. Hoggett (1980) 39 P&CR 121 36 Chokar v Chokar (1984) FLR 313 37 Abbey National Building Society v Cann 38 Walsh v Lonsdale (1882) 21 Ch D 39 Marion Mary Thompson v Julie Ann Foy [2009] EWHC 1076 40 Thomas v Clydesdale Bank (2010) EWHC 2755

Bibliography
Megarry & Wade, Law of Real Property (7th edition, 2008) Martin Dixon, Modern Land Law, (7th edition, 2010) Gray and Gray, Elements of Land Law, Oxford (5th edition, 2009) Elizabeth Cooke, Land Law, Clarendon Law Series (2006) http://www.law.ox.ac.uk/theme/property