Land Law Essay Help: Equitable rights in or over land

Land Law Cases referred to in this section:
 Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555
Mason v Clarke (1954) 1 QB 460
Warmington v Miller (1973) QB 877
Attorney General v Blake (2001) 1 AC 268
Sonenco (No 77) Pty Ltd v Silvia (1989) 89 ALR 437
Oughtred v IRC (1960) AC 206
Lysaght v Edwards (1876) 2 Ch D 399
Raineri v Miles (1981) Ac 1050; (1980) CLJ 21

There are a range of proprietary entitlements which subsist not at law, but in equity. These include, for example, estate contracts, equitable liens, restrictive covenants and beneficial interests arising under a trust. Other examples of rights which would be legal rights if they complied with some necessary formality, but do not so subsist as equitable rights, are leases, easements, profits a prendre and mortgage charges.

When considering whether an equitable interest may exist, there are a number of guiding maxims that may assist:

  • Equity has regard to intent rather than form
  • Equity follows the law
  • Equality is equity
  • Equity will not suffer a wrong to go without remedy
  • He that comes to equity must come with clean hands
  • Equity looks on that as done which ought to be done
  • Equity will not assist a volunteer

These are not binding rules - their application is flexible and they work more as guidelines to aid the reasoning process, or to help find a solution when all other avenues have been explored.

Specifically Enforceable Contracts
A contract relating to land will generally be enforced by specific performance although, as with all equitable remedies, this is ultimately discretionary. Where one contracting party fails to perform his part of the bargain, i.e. to grant or transfer the interest in the land to the other party, the court will usually order him to perform the contract by completing the disposition. The contract must be for value - where contracts are not supported by valuable consideration, equity will not grant specific performance (Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 at 599 per Dixon J). The contract must also been in writing and specific performance cannot usually be ordered for oral contracts entered into on or after 27 September 1989 in relation to the disposition of land (Law of Property (Miscellaneous Provisions) Act 1989 - the contract must be in writing and signed by or on behalf of each contracting party with some exceptions such as for short leases not exceeding three years, s.2(5)(a)). The contract must incorporate all agreed terms between the parties (and where there are two contracts, for exchange, both contracts must do so).

There are other rules that relate to specific performance - for example, that the party seeking specific performance must come with 'clean hands' (Mason v Clarke (1954) 1 QB 460 at 471-472 per Romer LJ). Any unconscionable act will disqualify him from equitable relief. Specific performance will also not be granted where to do so would prejudice third parties or cause them hardship (Warmington v Miller (1973) QB 877; see also Attorney General v Blake (2001) 1 Ac 268).

Equity looks on that as done which ought to be done
Where land is not effectively transferred in accordance with the parties' contractual obligations, equity can act as an 'accelerator' to bring about the effect of the contract. Where a contract for land is made, equity views the purchaser as acquiring not only a contractual right, but also certain rights of a proprietary nature (Sonenco (No 77) Pty Ltd v Silvia (1989) 89 ALR 437 at 457 per Ryan and Gummow JJ). The proprietary right arises in anticipation of the execution of the transfer to the purchaser (Oughtred v IRC (1960) AC 206 at 240 per Lord Jenkins). Note that the effect of execution of an estate contract for value will also transfer the insurable risk in the land to the purchaser, in absence of any contractual provision to the contrary ( Lysaght v Edwards (1876) 2 Ch D 399 at 507 per Jessel MR).

Where the estate contract relates to registered land, it must be protected by an entry on the register by way of a notice (Land Registration Act 2002, ss32(1) - (2)). In practice, this rarely happens unless some sort of fraud is suspected or completion of the transfer has been delayed. The protected contract is enforceable on any disponee of the registered estate, including a mortgage lender.

In unregistered land, the contract needs protecting by entry of a Class C(iv) land charge against the estate owner's name (Land Charges Act 1972, ss2(4) - 3(1)). This registration will make the contract binding 'against the world' (Land Charges Act 1972 s.198(1)) but failure to register the contract means that it will be void against any subsequent purchaser of the estate for money or money's worth (Land Charges Act 1972 s 4(6)).

Rather than specific peformance where the contract has not been performed, it is open to the aggrieved party to rescind the contract and seek damages by way of financial compensation. Where for example completion does not take place on the date provided for in the contract, it is possible to seek a decree for specific performance or damages for breach of contract under the Supreme Court Act 1981, s.50. The right to rescind only arises when time becomes 'of the essence' - this can be where the party seeking completion has served a notice on the delaying party to complete, or where there is unreasonable delay (Raineri v Miles (1981) Ac 1050; (1980) CLJ 21).

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