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Proprietary Estoppel and Third Parties After the Land Registration Act 2002

Published online by Cambridge University Press:  24 November 2003

Ben McFarlane
Ben McFarlane*
Affiliation:
St. Peter’s College, Oxford; Christ Church, Oxford.
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Extract

Much has changed since 1925, even in land law. The emergence of principles of proprietary estoppel has been one of the most striking developments. For some litigants, these principles have been a source of new opportunities; for many judges and academics, they have been a source of new problems. It is therefore no surprise that, by means of what is now section 116 of the Land Registration Act 2002, the Law Commission attempted to deal with one of these problems, albeit only in disputes relating to registered land.

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The Cambridge Law Journal , Volume 62 , Issue 3 , 03 November 2003 , pp. 661 - 696
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Copyright © Cambridge Law Journal and Contributors 2003

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Footnotes

Particular thanks are due to Roger Smith for comments on an earlier draft; thanks also to John Cartwright and Robert Stevens for helpful advice. All opinions and errors are those of the author.

References

1 See Law Com. No. 271, Draft Bill, clause 114.

2 Ibid., at paras. [5.29-5.32].

3 On one view, section 116(a) does not aim to make the “inchoate equity” proprietary for all purposes, but rather limits itself to ensuring that, in registered land, such an equity operates as though it were a property right when it comes to the question of binding third parties. If this is the case, then s. 116(a) will not be of assistance if B wishes to show that his “inchoate equity” is proprietary for a reason unconnected to binding a third party: e.g. in order to bring himself within the Family Law Act 1996, s. 33.

4 The majority view is that the “equity” does have proprietary effect: see e.g. Smith, R.J., “How Proprietary is Proprietary Estoppel?”, in Rose, F.D. (ed.), Consensus ad Idem: Essays on the Law of Contract (London 1996)Google Scholar; G. Battersby, “Contractual and Estoppel Licences as Proprietary Interests in Land” [1991] Conv. 36 esp. pp. 45-46 and “Informal Transactions in Land, Estoppel and Registration” [1995] M.L.R. 637; K. Gray and S.F. Gray, Elements of Land Law (3rd edn., 2001) (“Gray and Gray”), pp. 1020-1023; C. Harpum, Megarry & Wade: The Law of Real Property (6th edn., 2000) (“Megarry and Wade”), at [13-029-13-032]. For opposing views see D.J. Hayton, “Equitable Rights of Cohabitees” [1990] Conv. 370 and “Constructive Trusts of Homes—a Bold Approach” (1993) 109 L.Q.R. 485; P. Ferguson, “Constructive Trusts—A Note of Caution” (1993) 109 L.Q.R. 114 and Hopkins, N., The Informal Acquisition of Rights in Land (London 2000), p. 154Google Scholar.

5 For proprietary effect: Morritt L.J. in Lloyds Bank v. Carrick [1996] 4 All E.R. 630, 642 and His Honour Judge Boggis in the High Court in Habermann v. Koehler [2000] E.G.C.S. 125, The Times, 22 November 2000. Against: Peter Gibson L.J. in United Kuwait Bank plc v. Sahib [1997] Ch. 107, 142, and Robert Walker L.J. in the Court of Appeal in Habermann v. Koehler (above), at [23].

6 See Birks, P.B.H., “Equity in the Modern Law: An Exercise in Taxonomy” (1996) 26 Univ. Western Australia Law Rev. 1Google Scholar; Swadling, W. in Birks, P.B.H. (ed.), English Private Law vol. I (Oxford 2000)Google Scholar, 4.378-4.484. Of course, this point is even stronger if proprietary estoppel is regarded as a sub-set of one of these three categories: e.g. as based on consent, as suggested by S. Moriarty, “Licences and Land Law: Legal Principles and Public Policies” (1984) 100 L.Q.R 376, or as based on unjust enrichment, as suggested by G.H. Jones (ed.), Goff and Jones, The Law of Restitution (6th edn., 2002), pp. 230-235.

7 Re Polly Peck (No. 2) [1998] 3 All E.R. 812, 831 per Nourse L.J: “It is not that you need an Act of Parliament to prohibit a variation of property rights. You need one to permit it See also Birks, P.B.H., “The Remedial Constructive Trust: Proprietary Rights as Remedies” in Birks, (ed.), The Frontiers of Liability, vol. 2 (Oxford 1994)Google Scholar.

8 Law Com. No. 271 at [5.29].

9 Gray and Gray, p. 773 describes a claimant in such a position as having an equity “entitling him to bend the ear of the court of conscience to listen sympathetically to his plea for a restraint upon the landowner's exercise of his rights”.

10 See e.g. Gray and Gray, p. 773; Megarry and Wade, at [13-028]; Smith, R.J., Property Law (4th edn., London 2003), p. 182Google Scholar; Hopkins The Informal Acquisition of Rights in Land, pp. 127-128.

11 See Battersby, G., “Informally Created Interests in Land” in Bright, S. and Dewar, J. (eds.) Land Law—Themes and Perspectives (Oxford 1998), pp. 503504Google Scholar. See also Swadling, W. in Birks, (ed.), English Private Law vol. I, (Oxford 2000)Google Scholar 4.185.

12 [1989] Ch. 1.

13 See the discussion of Inwards v. Baker [1965] 2 Q.B. 29 in the text below at n. 85-92.

14 E.g. Inwards v. Baker; Williams v. Staite [1979] 1 Ch. 291.

15 Either in the period between Errington v. Errington and Woods [1952] 1 K.B. 290 and the House of Lords decision in NPB v. Hastings Car Mart Ltd. [1965] A.C. 1175 or, under the constructive trust device, between Binions v. Evans [1972] Ch. 359 and Ashburn itself.

16 E.g. see the interpretation of E.R Ives Investment Ltd. v. High [1967] 2 Q.B. 379 shared by G. Battersby [1995] M.L.R. 637 and Peter Gibson L.J. in United Bank of Kuwait v. Sahib [1997] Ch. 107, 142.

17 Hence the possibilty of such a trust was considered in Lloyd v. Dugdale [2002] 2 P & C. R. 13.

18 [2002] P. & C.R. 13.

19 Unrep. 4 May 1995, C.A.

20 However, the Court of Appeal held that B could not bring himself within s. 70(1)(g) and B therefore had to argue, in the end unsuccessfully, that he had an independent right arising directly against C by means of a constructive trust.

21 Megarry & Wade, at [13-032].

22 Per Balcombe L.J. (with whom Auld L.J. and Sir Ralph Gibson agreed).

23 The reasoning in Singh v. Sandhu was approved by Lawrence Collins Q.C. in Locabail (U.K.) Ltd. v. Bayfield Properties Ltd. (unrep., 9 March, 1999) at [32]: “If, therefore, the question arose for decision in this case (which, as will appear, it does not) I would have decided both on principle and on the authority of Singh v. Sandhu that the interest of a claimant in occupation who asserts an interest by way of proprietary estoppel can be protected against a third party under section 70(1)(g)”.

24 [1983] Q.B. 382.

25 See e.g. Gray and Gray, p. 774.

26 (1884) 9 App. Cas. 699.

27 [1983] Q.B. 382, 391.

28 See e.g. Gray and Gray, pp. 774, 1020. However, it can be argued that this statement simply avoids addressing the question, rather than expressing a view on it.

29 Similarly, as it was assumed that the estoppel claimant in Canadian Imperial Bank of Commerce v. Bello had only acquired a licence, it is no surprise that Dillon L.J. doubted that he could have an overriding interest: (1991) 64 P. & C.R. 48, 52.

30 (1996) 73 P. & C.R. 515; [2000] E.G.C.S. 125, The Times, 22 November 2000.

31 At least in Law Com. No. 254: para [3.35], n. 96. Habermann is not mentioned in Law Com. No. 271.

32 H.H.J. Taylor had found that A's representation to B had been: “You can live here rent free for the remainder of my life and you can buy the property for the sum that I paid for it”.

33 See e.g. Megarry and Wade, at [13-029]. Robert Walker L.J. notes in Habermann v. Koehler at para. [21] that H.H.J. Boggis relied on Battersby (1991) Conv. 36, in which the debate is conducted in terms of the status of a general “inchoate equity”.

34 And also in Canadian Imperial Bank of Commerce v. Bello (1991) 64 P & C.R. 48, 52.

35 See e.g. Gray and Gray, p. 774 n. 14.

36 On a natural reading s. 4(1) prohibits the recognition of equitable property rights in land not in existence before 1926: see e.g. Lawson, F.H. and Rudden, B., The Law of Property (2nd edn., Oxford 1982), p. 220Google Scholar and A. Briggs, “Contractual Licences: A Reply” [1983] Conv. 285, 290-291. However, it has been argued that the section has a more limited effect: see e.g. Smith, Property Law, p. 46.

37 (1991) 62 P. & C.R. 290.

38 Ibid., at p. 295.

39 Indeed, one could argue that the terminology used by Dillon L.J. (ibid., at p. 294) is more consistent with the two stage approach: “I do not find any indication that the court has sought to protect a volunteer successor in title from a donor who has notice of the circumstances from which an equity has arisen and notice that the claimant to an equity is, and was at the time of the deed of gift to him, in occupation of the property”.

40 Ibid., at p. 294.

41 Note Lawrence Collins Q.C. in Locabail v. Bayfield (unrep., 9 March, 1999), at [30]: “The decision in Voyce v. Voyce (1991) 62 P. & C.R. 290 is inconsistent with the argument that the estoppel claimant has no interest in land until the court makes the final order”. Or, as Nourse L.J. put it in Sen v. Headley [1991] Ch. 425, 440: “Where an application of [proprietary estoppel principles] gives the promisee a right to call for a conveyance of the land no doubt it could be said, perhaps it has been said, that the right is the consequence of an implied or constructive trust which arises once all the requirements of the doctrine have been satisfied”.

42 For further examples, see the list given by C.J. Davis, “Proprietary Estoppel: Future Interests and Future Property” (1996) Conv. 193, n. 3.

43 (1884) 9 App. Cas. 699.

44 (1858) 25 Beav. 72. See also S. Baughen, “Estoppels over Land and Third Parties: An Open Question?” [1994] 14 L.S. 147.

45 [1997] Ch. 107.

46 Ibid., at p. 142.

47 See P. Critchley, “A Via Media for Estoppel and Third Parties?” [1998] Conv. 502, 504.

48 Ibid., at p. 141.

49 Law of Property (Miscellaneous Provisions) Act 1989, s. 2.

50 B's principal argument was that an equitable mortgage had been created by means of a deposit of title deeds. This was rejected on the basis that such a means of creating a mortgage depended on there being a valid contract and hence required writing. Peter Gibson L.J. at p. 142 was unhappy with the prospect that “in every case of a deposit which is invalid as an equitable mortgage by reason of section 2, an effective security would nevertheless arise by reason of estoppel or constructive trust”.

51 [2000] Ch. 162.

52 (1999) 80 P. & C.R. 256.

53 Ibid., at [23-28].

54 Hence the formulation of the issue adopted by G. Ferris & G. Battersby “The General Principles of Overreaching and the Modern Legislative Reforms 1996-2002” (2003) 119 L.Q.R. 94 at n. 110 is misleading.

55 Ibid., at [28], supporting the analysis in Megarry & Wade, The Law of Real Property, (5th edn., 1984) at p. 409: see now Megarry & Wade at [4-080].

56 Indeed, the distinction seems to be unworkable. Would the result in City of London Building Society v. Flegg [1988] A.C. 54 have been any different if the beneficiaries had all been business partners and the land used as business premises as well as a home.

57 [1980] 1 W.L.R. 219.

58 Ibid., at p. 223.

59 [1980] 1 W.L.R. 219, 225.

60 It should be stressed again that this point is stronger still if proprietary estoppel is regarded as simply an example of rights being acquired through consent, unjust enrichment or the commission of a wrong: see n. 6 above.

61 [1972] 1 W.L.R. 1286.

62 Lord Denning M.R. said of the trust which arose in that case: “It is an equitable remedy by which the court can enable an aggrieved party to obtain restitution. It is comparable to the legal remedy of money had and received”. ibid., at p. 1290.

63 [1971] A.C. 886.

64 See e.g. Lord Bridge in Lloyds Bank v. Rosset [1991] 1 A.C. 107, 132-133 and Robert Walker L.J. in Yaxley v. Gotts [2000] Ch. 162, 177.

65 Further, the rights which lead to a constructive trust in cases such as Pallant v. Morgan [1953] Ch. 43 and Banner Homes Group pic v. Luff Developments Ltd. [2000] Ch. 372 are acquired on a basis apparently similar to proprietary estoppel and seem to arise before any order of the court: see Time Products Ltd. v. Combined English Stores Ltd. (unrep., 2 December 1974, Oliver J.).

66 E.g. Plimmer v. Wellington Corporation (1884) 9 App. Cas. 699; Voyce v. Voyce (1991) 62 P. & C.R. 290.

67 Particularly in cases relating to the enforceability of contracts under the doctrine of part performance: e.g. Steadman v. Steadman [1976] A.C. 536 and also to describe a right of equitable set-off: e.g. Federal Commerce v. Molena Alpha (The Nanfri) [1978] Q.B. 927. The usage can also be seen in relation to equitable defences: e.g. Ministry of Health v. Simpson [1951] A.C. 251, including promissory estoppel: e.g. Brunner v. Moore [1904] 1 Ch. 305. “An equity” can also be used to refer to any reason justifying the intervention of a court of equity: e.g. Strong v. Bird (1874) L.R. 18 Eq. 315, 316.

68 [1976] Ch. 179, 193.

69 See also text below at n. 97-102.

70 [1976] Ch. 179, 198-199.

71 Ibid., at p. 199.

72 With which Donovan L.J. agreed.

73 [1964] Ch. 665.

74 Ibid., at p. 686.

75 (1853) 11 Beav. 60.

76 (1862) 4 De G.F & J 511.

71 (1884) 9 App. Cas. 699.

78 [1955] 1 W.L.R. 213.

79 [1964] Ch. 665, 681.

80 [1965] A.C. 1115.

81 [1948] A.C. 173.

82 The same false inference (that protection for the licensee as against the licensor necessarily leads to protection as against a third party) is made by Lord Denning in Errington v. Errington and Woods [1952] 1 K.B. 290, 299.

83 [1965] A.C. 117.

84 At least until Binions v. Evans [1972] Ch. 359 and DHN Food Distributors Ltd. v. Tower Hamlets LBC [1976] 1 W.L.R. 852, when the same idea was reborn under the guise of a constructive trust.

85 [1965] 2 Q.B. 29.

86 Judgment was given by the Court of Appeal in NPB on 26 June 1964 and by the House of Lords on 13 May 1965. Inwards v. Baker was decided on 13 January 1965.

87 [1965] 2 Q.B. 29, 37.

88 Ibid..

89 [1965] A.C. 1175, 1237-123.

90 [1964] Ch. 665, 686.

91 See e.g. D.H.N. Food Distributors Ltd. v. Tower Hamlets L.B.C. [1976] 1 W.L.R. 852.

92 The result in Inwards, but not Lord Denning's reasoning, can be explained in two other ways. First, the case did not involve a purchaser but only trustees taking the land under a will. These trustees would be bound by any personal rights binding A, such as a licence for B's life. Secondly, the trustees were happy to allow B to occupy the property for a further 12 years. This acquiescence may have been sufficient to found a new estoppel claim personally binding the trustees.

93 [1967] 2 Q.B. 379. The right acquired by B in Ives was clearly an equitable easement, yet it was described as an “equity” by Lord Denning M.R. and Danckwerts L.J. and as an “estoppel” by Winn L.J. partly in order to circumvent registration requirements applying to equitable easements.

94 Compare the submission of counsel in Birmingham Midshires Mortgage Services Ltd. v. Sabherwal (1999) 80 P. & C.R. 256 at paras. [24-28], discussed in the text above at n. 52-56.

95 Proprietary Remedies in Context (Oxford 2002), p. 308.

96 S. Gardner, “The Remedial Discretion in Proprietary Estoppel” [1999] 115 LQR 438, 464-465 considers this point, noting in particular the “modern equitable tradition of exaggerated reference to discretion”. Equally, there is a tendency to play down the degree of discretion available at common law, as noted by A.S. Burrows, “We Do This At Common Law But That In Equity” (2002) 22 O.J.L.S. 1. Indeed, the argument made in this section (that the differences between estoppel as an equitable source of rights and common law means of acquiring rights have been exaggerated) closely matches that of Burrows.

97 This analysis can be seen in obiter remarks of Cumming-Bruce L.J. in Williams v. Straite [1979] Ch. 291 at 300-301: “I do not think that in a proper case the rights in equity of the defendants necessarily crystallise forever at the time when the equitable rights come into existence … the true analysis is that, when the plaintiff comes to court to enforce his legal rights, the defendant is then entitled to submit that in equity the plaintiff should not be allowed to enforce those rights and that the defendant, raising that equity, must then bring into play all the relevant maxims of equity so that the court is entitled then on the facts to look at all the circumstances and decide what order should be made, if any, to satisfy the equity”.

98 [1993] 2 F.L.R. 247.

99 As Birks has often noted e.g. in “Proprietary Rights as Remedies” in Birks (ed.), Frontiers of Liability, 214, this distinction between the right and the order giving effect to it can be glossed over by a careless use of the idea of a “remedy”; such usage is particularly prevalent in discussion of estoppel claims.

100 See per Roch L.J. [1993] 2 F.L.R. at p. 257.

101 See e.g. Wroth v. Tyler [1974] Ch. 30, Patel v. Ali [1984] Ch. 283. Rotherham relies in particular on the decision of the Australian High Court in Giumelli v. Giumelli (1999) 161 A.L.R. 473 as demonstrating the wide remedial discretion conferred on a court adjudicating an estoppel claim, yet J. Edelman, “Remedial Certainty or Remedial Discretion in Estoppel After Giumelli?” (1999) 15 J.C.L. 179 convincingly shows that the factors taken into account in that case are no wider than those applicable when deciding whether to order specific performance of a contract.

102 See Part I of the Trusts of Land and Appointment of Trustees Act 1996. The point also holds good for cases arising when the Law of Property Act 1925, s. 30 was in force: see e.g Moriarty's explanation of Dodsworth v. Dodsworth (1973) 228 E.G. 1115: (1984) 100 L.Q.R. 376, 385.

103 (1996) 72 P & C.R. 196.

104 Proprietary Remedies in Context, p. 308.

105 Ibid., at pp. 204-205.

106 See e.g. British Westinghouse v. Underground Electric Rlys Co. of London Ltd. [1912] A.C. 673. The phrase “compensating advantage” is taken from Burrows’, A.S. discussion in Remedies for Tort and Breach of Contract (2nd ed., London 1994), pp. 119132Google Scholar. It is also clear that a claim in unjust enrichment will be reduced by relevant advantages received by the claimant from the defendant, as the only claim which may be brought is to the defendant's net enrichment: see e.g. Westdeutsche Landesbank Girozentrale v. Islington L.B.C. [1994] 4 All E.R. 890, Q.B.D. per Hobhouse J at p. 491; B. McFarlane & R. Stevens “In Defence of Sumpter v. Hedges” (2002) 118 L.Q.R. 567, 583-584.

107 See Hobhouse L.J. in Sledmore v. Dalby at pp. 208-209, relying on the judgment of Mason C.J. in Commonwealth of Australia v. Verwayen (1990) 95 A.L.R. 321.

108 [2003] 1 P. & C.R. 100.

109 Subject to the fact that the expectation of B will set the maximum limit of any such rights, as B obviously cannot complain about enjoying exactly the rights he expected when incurring the detrimental reliance: see e.g. Baker v. Baker [1993] 2 F.L.R. 247 and per Hobhouse L.J. in Sledmore v. Dalby at p. 209. The order in Crabb v. Arun D.C. may seem to surpass B's expectation as he was not required to pay for the easement. However, this can be explained as compensation for interference with B's existing equitable easement which occurred before the court order. See text above at n. 71 and Gardner (1999) 115 L.Q.R. 438, 445.

110 Note in particular Lim Poh Choo v. Camden & Islington Health Authority [1980] A.C. 174 (award of damages revised due to fresh evidence, brought forward during the hearing of an appeal in the House of Lords, as to the cost of future care.)

111 This is exemplified by the change of position defence: see e.g. Lipkin Gorman v. Karpnale Ltd. [1991] 2 A.C. 548, Scottish Equitable pic v. Derby [2001] 3 All E.R. 81.

112 [2000] 2 All E.R. 289.

113 [1982] Q.B. 133.

114 [2000] 2 All E.R. 289, 301. Robert Walker L.J.'s statement echoes both the approach and language of Lord Donaldson M.R. in J.T. Developments Ltd. v. Quinn (1991) 62 P. & C.R. 33, 55. See also Aldous L.J. in Jennings v. Rice [2003] 1 P. & C.R. 100 at [36].

115 [1965] A.C. 1175, 1247-125.

116 See R.J. Smith, “How Proprietary is Proprietary Estoppel?”, in F.D. Rose (ed.), Consensus ad Idem: Essays on the Law of Contract (1996), p. 245.

117 This link between a very flexible conception of estoppel and the two stage approach is very clear in the writing of Professor Hayton: see “Developing the Law of Trusts for the Twenty-First Century” [1990] 106 L.Q.R. 97 at n. 26; [1990] Conv. 370; (1993) 109 L.Q.R. 485. Hayton's view was explicitly adopted, extra-judicially, by Lord Browne-Wilkinson: Holdsworth Lecture (1996) 10 Trusts Law International 98.

118 See United Bank of Kuwait v. Sahib [1997] Ch. 107 and also an obiter dictum of Robert Walker L.J. in Habermann v. Koehler [2000] E.G.C.S. 125, The Times, 20 November 2000 (C.A.), at [23]: “[I]t is only by the judge's order, made years after [C] became registered proprietor, that the inchoate rights created by proprietary estoppel have crystallised into a defined proprietary interest”. In Campbell v. Griffin [2001] EWCA Civ 990 (27 June 2001, C.A.), at [36] Robert Walker L.J. also stressed that “the court has a very wide discretion in satisfying an equity arising under the doctrine of proprietary estoppel”.

119 Sledmore v. Dalby and Baker v. Baker both involve an assessment by the court of the future needs of the parties.

120 Gardner (1999) 115 LQR 438, 459-460. Or, it might be that proprietary estoppel would be used as a vehicle to promote the allocation of property rights based on what J.W. Harris calls “home needs”: see “Doctrine, Justice and Home-Sharing” [1999] 19 O.J.L.S. 421, 432433 and 439-441.

121 This would mean that in Gillett v. Holt [2000] 2 All E.R. 289, B had no proprietary right during any of the 38 years in which he worked for A.

122 Note Gardner's reference to the rule of law: (1999) 115 L.Q.R. 438, 462 and see also Harris n. 123 below.

123 Or, in a more sophisticated and slightly different analysis, in terms of a conflict between “utility rationality” and “doctrinal rationality”: see Harris, J.W., “Legal Doctrine and Interests in Land” in Eekelaar, J.M. & Bell, J.S. (eds.) Oxford Essays in Jurisprudence (Oxford 1987)Google Scholar.

124 For contributions to that debate supporting the view of proprietary estoppel put forward here see Birks, P., “The Remedial Constructive Trust: Proprietary Rights as Remedies” in Birks, (ed.) The Frontiers of Liability, vol. 2 (Oxford 1994), 214223Google Scholar and re Polly Peck (No. 2) [1998] 3 All E.R. 812, especially per Nourse L.J. at p. 831.

125 [1980] 1 W.L.R. 219, 226.

126 See Yaxley v. Gotts [2000] Ch. 162.

127 See N. McBride, “A Fifth Common Law Obligation” (1994) 14 L.S. 35 and Harris [1999] 19 O.J.L.S. 421, 447-448.

128 E.g. Unity Joint Stock Mutual Banking Association v. King (1858) 25 Beav. 72; Voyce v. Voyce (1991) 62 P. & C.R. 290.

129 Unrep., 9 March, 1999, at [3.

130 See Rotherham, Proprietary Remedies in Context, esp. pp. 33-42 and 296-297.

131 [1998] 3 All E.R. 812 esp. per Nourse L.J. at 831: “[W]e must recognise that the remedial constructive trust gives the court a discretion to vary property rights. You cannot grant a proprietary right to A, who has not had one beforehand, without taking some proprietary right away from B. No English court has ever had the power to do that, except with the authority of Parliament; cf. Chapman v. Chapman [1954] A.C. 429”.

132 Law Com. No. 271 at [5.30].

133 Land Registration Act 2002, Sch 3, para. 2.

134 Law Com. No. 271 at [5.30].

135 [1972] 1 W.L.R. 775.

136 In any case, it was decided that the occupier could not make out an estoppel claim, as he had not suffered any detriment.

137 Unless the court decides that B had an equitable lien over the land for the value of the work done, as in Unity Joint Stock Mutual Banking Association v. King (1858) 25 Beav. 72. As such a lien is an established proprietary right, C could be bound by it. It is questionable whether, given this consequence, enough thought was given in King to whether a lien should arise as a result of the estoppel. Compare the more careful consideration of the merits of a lien in Napier and Ettrick (Lord) v. Hunter [1993] A.C. 713.

138 It is interesting to note that this is the same elision as made by Lord Denning in Errington v. Errington and Woods and NPB v. Hastings Car Mart, see text above at n. 81-82.

139 Note that s. 116(a) does not indicate whether A would also remain liable. It might be argued, by analogy to the scheme under the Landlord and Tenant (Covenants) Act 1995 and due to the proprietary nature of the equity, that A's liabilty ends when the property is sold.

140 See P. Critchley [1998] Conv. 502, 507.

141 Equally, both estoppels and contracts can bind purchasers if they result in a variation of property rights, such as the covenants in a lease: see Brikom v. Carr [1979] Q.B. 467 where the variation was analysed either as resulting from estoppel (per Lord Denning M.R.) or from contract (per Roskill L.J.).

142 Consistency could be re-gained by arguing that contractual licences also have proprietary effect: perhaps by re-analysing them as estoppel licences; perhaps even by invoking s. 116(b). However, there is no suggestion that this was intended by the Law Commission and this would bring yet further change to the law by reversing Ashburn Anstalt v. Arnold in registered land.

143 This use of an “equity” to disguise the true nature of a personal right to which estoppel gives rise seems to give statutory force to Lord Denning M.R.'s sleight of hand in NPB v. Hastings Car Mart, see text at n. 79-80 above.

144 See e.g. Smith, “How Proprietary is Proprietary Estoppel?”, in Rose (ed.) Consensus ad Idem', Battersby [1991] Conv 36, [1995] M.L.R. 637; Gray and Gray, pp. 1020-1023; Megarry and Wade, pp. 746-748.

145 Smith, n. 144 above at p. 24.

146 But which is then presumably extinguished by a court order awarding the rights necessary to respond to that estoppel claim.

147 It must also be queried whether a section enacted for the avoidance of doubt could be taken to override the Law of Property Act 1925, s. 4(1) by permitting the creation of a new equitable interest in land.

148 [1988] 2 F.L.R. 328.

149 Indeed, if C, in words or action, were expressly to confirm B's belief, then an independent estoppel claim may arise directly against C. In that situation, there is no need for B to argue that C is bound by an earlier estoppel arising against A.

150 Compare P. Birks, Book Review of Proprietary Remedies in Context (2003) 119 L.Q.R. 156, 160.

151 Of course, if B has a right directly against C (be it proprietary or personal), arising as a result of C's conduct, then B need not rely on an earlier property right as a means to bind C.

152 The possibility of this intepretation is also noted by Smith, Property Law, p. 189.

153 See Law Com. No. 271 at [5.30].

154 This is not a decisive objection. Compare Robert Walker L.J. in Yaxley v. Gotts [2000] Ch. 162, 176 when considering the interpretation of the Law of Property (Miscellaneous Provisions) Act 1989, s. 2: “Nor can anything in the Law Commission's report (or its earlier working paper) be decisive. The report and the working paper are invaluable guides to the old law and to the problems which constituted the ‘mischief’ at which section 2 of the Act of 1989 is directed, but they cannot be conclusive as to how section 2, as enacted, is to be construed and applied”. Note also Burrows’ view that the Contracts (Rights of Third Parties) Act 1999, s. 2(3)(b) has a consequence which is the exact opposite of that intended by the Law Commission at [9.45-9.47] of Law Com. No. 242: see “The Contract (Rights of Third Parties) Act 1999 and its Implications for Commercial Contracts’‘[2000] L.M.C.L.Q 540, 547.

155 This is also the only means by which to make sense of Lord Denning M.R.'s view in NPB v. Hastings Car Mart [1964] Ch. 665 and Inwards v. Baker [1965] 2 Q.B. 29 that a “licence coupled with an equity” can bind a successor in title: see text above from n. 74-80.

156 Law Com. No. 271 at [5.30] refers to the cases given in Megarry & Wade, at [13-028-13032]. However, all these cases can be explained either as examples of third parties being bound by recognised property rights, arising in response to an estoppel (see e.g. the discussion of Singh v. Sandhu in the text above from n. 19 and that of Inwards v. Baker in the text above from n. 90-92) or as instances of the third party being bound by an independent right arising as a result of his own conduct (see Battersby's analysis of E.R. Investments Ltd. v. High: [1995] M.L.R. 637).

157 See Smith, Property Law, pp. 29-31.