Distinguish between personal licences over land and proprietary interests in land. Show how this definition has been affected by the doctrine of proprietary estoppel. Illustrate your answer with examples from the case law.

This has been the main area of debate, and it seems appropriate to discuss the cases in chronological order.  Despite the orthodox view that licences are personal, and cannot be proprietary in nature, there were four pre-1926 cases holding estoppel licences to be capable of binding third parties.  The first of these, Duke v. Patrick is clear authority that estoppel rights are capable of binding purchasers, with actual or constructive notice.  The second case, Unity Joint Stock Banking v. King, is authority that, as well as estoppel rights being able to bind purchasers with notice, the rights crystallise at the time of incurred expenditure, or reliance, rather than when the courts recognise this.  And so legal history unfolds, with the third case, Dillwyn v. Llewelyn, expanding on the principle of reliance as consideration and the fourth, Plimmer v. City of Wellington Corpn, confirming this.  These four cases are important authority that, pre-1926, rights arising under estoppels relating to land are capable of binding third parties, thereby giving them status as proprietary interests.  But, the drafters of the Law of Property Act 1925, in an early draft of the Act, made it quite clear that these estoppels should be seen as a method of creating existing forms of equitable interests, rather than a new separate form.

Since the 1925 legislation, the Court of Appeal has held successors in title to be bound in two cases and a purchaser to be bound in only one case.  It is submitted, however, that the judges in Hopgood v. Brown wrongly relied on the authority of Taylor v. Needham, which based its argument not on estoppel by representation, but on the doctrine of benefit and burden.  Furthermore, if we look at the wording of the 1926 legislation, it certainly appears to have prohibited the creation of novel equitable interests in land, this leaves estoppel licences as proprietary interest open to further doubt.  In addition to this doubt, we have clear authority from Ashburn Anstalt v. Arnold that a contractual licence creates personal rights only and does not give rise to any estate or interest in land.  A third party, it is held, will therefore only be affected in exceptional circumstances where the court is prepared to impose a constructive trust as the third party’s conscience has been affected.  Moreover, three years later, it was further suggested that no licence of any kind may bind a third party.  Most recently, we have the case of Lloyd v. Dugdale confirming the orthodox view.  These developments, as is aptly suggested by Battersby, are “a welcome and clear return to orthodoxy”.  However it must be noted that these developments only clarify the contractual licence, not the estoppel licence.  

Ashburn does not tell us what to do when presented with an estoppel situation, such as in Inwards.  Jonathan Hill, in his learned case-note on Ashburn, suggests the following:

“…it might be concluded that, in view of the basic similarities between contractual and estoppel licences, both in terms of the circumstances in which they occur and the issues of policy to which they give rise, they should have the same effect on purchasers.  According to this view…the courts should reconsider the impact of estoppels on third parties.  Alternatively, it can be argued that there is nothing objectionable in principle about a system in which estoppel licences are capable of binding third parties and contractual licences are not.”

His concern to maintain ‘the general coherence’ of the law, it is submitted, is a reasonable concern on which to base one’s view on the matter.  It is therefore submitted, that the courts need to look at licences and proprietary estoppel as separate issues.  Proprietary estoppel has no necessary connection with the law of licences.  The fact that the claimant is a licensee should be irrelevant where a court gives effect to an equity arising from an estoppel.  There has been a trend of modern decisions to adopt this approach.  

If such seemingly sensible conclusions can be drawn now, why was there so much confusion only two decades ago?  Obviously the above suggestions are still not affirmative, or by any means clear enough, but the academics now seem to be a lot more comfortable with the idea of licences and proprietary estoppel.  In the 1980’s however, the vigorous debate led to a “confused and difficult” state of the law and the need for rationalisation.  Dewar believed the confusion to be as a result of the development of the law, and argued that principles have been obscured as the courts have tried to reduce its complexity for their own benefit.  His claim that the courts were concerned more with ‘conceptual formalism’, rather than practical consequences, appears to illustrate precisely the reason for this confusion.  This, he writes, is “a refusal to regard anything other than conceptual arguments”.  It is submitted that this was one of the main reasons for the problems in the development of the law at that time.  The policy areas of the argument appear to have been set-aside in this desire for orthodox legal principles.  

However policy and moral issues play an important role in most of these cases, partly because the cases are usually concerned with family, or at least quasi-family, situations.  In the late 1970s, Lord Denning confirmed that the courts do need to impose their own view of the parties’ needs, rather than find themselves bound by their own formal concepts.  By this time, phrases and words with moral connotations started to appear in court dicta, such as the legal consequences of “family arrangements” and the use of “reason and justice” in the decision of remedies.  Obviously some degree of concept must be applied by the courts, but clearly not to the level that they appeared to have previously been so concerned about.  Briggs has argued that licences could be accommodated within “basic” concepts, while Moriarty criticised this approach, and Everton submitted the need for a new concept of “quasi-property”.  Criticising Everton’s approach as “fanciful”, Moriarty suggests that licences are “no more than orthodox property rights, simply denuded of formality in their creation”.  He also argues, however, that rules of formality are distinguishable from rules of substance (rightly criticised by Dewar as ‘logically impossible’), and that licences serve only to subvert the former and not the latter (again, licences must be explained as a subversion of both procedure and substance).  So do contractual licences therefore form a distinct and unique category of rights over land, completely separate from estoppel rights?

There is of course no simple answer.  There is still constant conflict between formality, a general requirement in the creation of proprietary rights since the Statute of Frauds 1677, and the ever-emerging issues of morality and policy.  It is submitted that contractual licences, because of their nature, do indeed form a distinct category of rights, not binding on third parties, and that estoppel licences are an equitable solution in situations where it would be ‘unfair’ to defeat expectaions.  The two types need to be considered as separate rights, with separate rules governing them.  This ‘dual approach’ appears to be prefered after the decision in Dugdale.   Contractual licences, especially in the ‘family’ context serve the specific purpose of protecting the occupation of the land, and must be seen of as personal and non-assignable.  Estoppel rights, on the other hand, may be binding on third parties if that was what was reasonably expected and relied upon.  It is, in many respects, the simple divide between law and equity.  The law of contract is simply the exchange of promises, whereas estoppel requires this equitable concept of reliance on an expectation, whether express or implied.

The law relating to estoppel rights is by no means certain.  As suggested by Battersby, proprietary estoppel need further intervention by the courts for the ‘ultimate proprietary interest’ to be crystallised and properly defined.  The courts are likely to decide in favour of estoppel licences as proprietary interests in land, but it is submitted that they must then chose from the range of interests already availiable, rather than invent another new category of interests.  It is also suggested that estoppel licences should only be made proprietary interests by the courts if they deem it desirable or necessary, thus maintaining the equitable aspect of estoppel.  As suggested above, however, we must not expect that contractual licences will then follow the same pattern.  It is far more likely that contractual licenses will remain personal and non-assignable, as the common law has already laid its foundations in this area, and made the principle perfectly clear.  

---