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National Provincial Bank v Ainsworth [1965] AC 1175 (see pp 59-64)

The Structure of Property Law: B:11. National Provincial Bank v Ainsworth [1965] AC 1175 (see pp 59-64). NPB v Ainsworth : Initial position. A. A (Mr Ainsworth) is an owner of land. B (Mrs Ainsworth) shares occupation of the land with A.

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National Provincial Bank v Ainsworth [1965] AC 1175 (see pp 59-64)

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

  2. NPB v Ainsworth: Initial position A • 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 wife’s Equity” B

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

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

  5. NPB v Ainsworth: Question 2 A’s land C Bank Charge • Does B have a pre-existing property right? B • No: B’s “deserted wife’s Equity” does not count as a property right

  6. NPB v Ainsworth: Question 2 A’s right C Bank Charge Power to impose a duty on C Bank? • Does B have a pre-existing persistent right? B • No: B’s “deserted wife’s Equity” does not impose a duty on A in relation to a specific right held by A

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

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

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

  10. Ashburn Anstalt v Arnold: Initial position A • 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 B

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

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

  13. Ashburn Anstalt v Arnold: Question 1 • In deciding whether or not B had a direct right against C, the Court of Appeal had to consider the fact that, when acquiring A’s land, C had made a promise to A to take the land “subject to any rights of B [under A’s initial agreement with B]” • B argued that C’s promise meant that C had acted in such a way as to give B a direct right against C • but B’s 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 A’s land C • Does B have a pre-existing property right? • Yes: according to the Court of Appeal, B’s agreement with A gave B a Lease: a recognised property right in land B

  15. Ashburn Anstalt v Arnold: Question 3 A’s land Defence for C? C • Does C have a defence to B’s pre-existing property right? • No: eg C cannot rely on the lack of registration defence as B was in actual occupation of A’s land when C committed to acquiring its right. B’s right is therefore an overriding interest and immune from the lack of registration defence (see eg p 89, 407-416). B

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

  17. Ashburn Anstalt v Arnold: Problems with the decision • Question 2: Did B have a pre-existing property right? • An agreement between A and B can only give B a Lease if it gives B a right to exclusive control of A’s land for a limited period (see pp 677-8) • And the agreement was that B could occupy A’s 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 688-90) • butwhilst 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) - socontrary 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. The Structure of Property Law: B:11 Lloyds Bank plc v Rosset [1991] 1 AC 107

  20. Lloyds Bank plc v Rosset: Initial position • A (Mr Rosset) is an owner of land A • 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 B

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

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

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

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

  25. Lloyds Bank v Rosset: Question 2 • B claimed that she had a persistent right under a common intention Constructive Trust (see pp 767-81) 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 B’s benefit and • ii) by assisting with the renovation of the land, B had relied to her detriment on that intention • butthe 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 A’s 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 B’s 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: • 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, B’s 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 – B’s 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 B’s agents; or (ii) given the derelict nature of the land, B’s use of it meant that B was personally in actual occupation of the land (see E2:3.6 at p 411)

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

  32. City of London BS v Flegg: Initial position • A1 and A2 (Mr and Mrs Maxwell-Brown) are owners of land A1 & A2 • 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 A1, A2, B1 & B2

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

  34. City of London BS v Flegg: Question 1 Charge A1 & A2 C • Do B1 & B2 have a direct right against C? B1 & B2 • 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 & A2’s land C Charge • Do B1 & B2 have a pre-existing property right in the land? B1 & B2 • No: eg the land is registered in the names of A1 & A2 alone

  36. City of London BS v Flegg: Question 2 A1 & A2’s right Charge C Power to impose a duty on C? • Does B have a pre-existing persistent right? • Yes: Due to B1 & B2’s 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 B1 & B2

  37. City of London BS v Flegg: Question 3 A1 & A2’s right C Does C have a defence to B1 & B2’s persistent right? • Yes: C can rely on the overreaching defence (see E2:3.4; esp E2:Example 17b) B1 & B2

  38. City of London BS v Flegg: Question 4 • What remedy will the court give to protect C’s Charge? • C’s right is specifically protected: C is allowed to: • i) remove B1 & B2; • ii) sell A1 and A2’s right to the land; and • iii) use A1 and A2’s share of the proceeds to meet A1 and A2’s debt (see G2:4 and G3:4)

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

  40. Port Line v Ben Line: Initial position A • 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 B

  41. Port Line v Ben Line: Sale to C Sale A C • A then sells its ship to C (Ben Line Ltd) - 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 B

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

  43. Port Line v Ben Line: Question 1 • In deciding whether or not B had a direct right against C, Diplock J had to consider the fact that, when acquiring A’s right, C ought to have been aware of the terms of A’s initial contract with B • B argued that, as C ought to have been aware of the terms of A’s initial contract with B, C was under a duty not to interfere with B’s rights under that contract • butB’s 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 A’s ship C • Does B have a pre-existing property right? B • No: B’s 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 A’s right C Power to impose a duty on C? • Does B have a pre-existing persistent right? B • No: B’s contract with A does not impose a duty on A in relation to a specific right held by A (see D2:1.1.2)

  46. Port Line v Ben Line: Question 4 • What remedy will the court give to protect C’s 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. The Structure of Property Law: B:11 Barclays Bank v Quistclose Investments Ltd [1970] AC 567

  48. Barclays Bank v Quistclose: Initial position • 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 A - The money was paid into a special account held by A with C Bank (Barclays Bank) B

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

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

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