Property Law Newsletter – December 2014

I hope that the studies in Property Law have begun well,

welcome to an exciting and challenging subject. Having
studied and taught Property Law for nearly two decades in
one form or another I am more than familiar with the
apprehension students feel as they embark on this topic.
One apprehension may be the name change from Land Law
to Property Law.

The change is to help us focus on the concept of ‘property’

as central to our understanding of ownership, of land and
personalty (personal property that is not land). Any study of
Land Law requires an understanding of property as a concept; land ownership will engage an understanding
of trusts, shared ownership and transmissibility of property rights in land. Most Land Law students will
quickly recite that a property right is a right against the world (in rem) as opposed to a personal right (in
personam) such as in contract, but fail to grasp what this really means. The change of name, with some
changes in content to follow later, is to enable us to explore this conceptual basis.

Property Law requires us to understand that ‘property’ is a series of relationships between people over a
thing, rather than the thing itself. Property is a creation of the law, it is the rights recognised by our legal
system in relation to a thing we claim to own. Even after these years of studying and teaching Property
Law, when I say the word ‘Property’ the instant image I see in my head is of a house, much like I would
draw as a child, but I can quickly dispel this instinctive image to realise that the ‘property’ is the interests I
may have in the house, not the house itself. This then enables me to easier understand how a contract over
land (perhaps a lease or covenant) can become property and attach to the land. The personal right (the
contract) has become property because of a system of law which has enabled this.

Students who have reached Chapter 5 on Co-ownership or considered the issue of over-reaching in
Chapters 2 and 3 may be helped in understanding their studies by looking at this conceptual distinction. If
we consider the case of City of London v Flegg we can see how this understanding may help. When I teach
this topic to students they often tell me how sorry they feel for Mr & Mrs Flegg, who have lost their
property by overreaching. However, I point out to them that it was not the overreaching that has taken
their property. In the process of overreaching they have not lost it, it has merely transferred from the
house to the money. Let’s remember the facts of the case.

Mr & Mrs Flegg sold their family home and then with their daughter and son-in law (the Maxwell-Browns)
used the proceeds of sale and a mortgage obtained by the Maxwell-Browns bought ‘Bleak House’. As in
many family situations Mr & Mrs Flegg trusted their family and despite the advice of their solicitor were not
registered as the legal owners of Bleak House. Bleak House was registered to the Maxwell-Browns as legal
owners, with the four of them having a beneficial interest. This is the first conceptual obstacle we are faced
with; the difference between legal ownership and equitable ownership.
This requires us to remember that the English Legal System has two complimentary (or contradictory)
systems of law. The Common Law; law which was developed through the King’s (now Queen’s) Courts, and
the legal system which developed in the Chancery Courts, Equity. You will remember in Contract Law where
you looked for consideration in contract, without which a promise is unenforceable ‘at law’. Then you
would have considered if Equity would assist the promisee in the form of estoppel. In Property Law these
two systems are ever present. So to summarise this is how Bleak House was owned (or at least how it looks
to a property lawyer, which we are).

At law (on the Land Registry) the ownership was Mr & Mrs Maxwell-Brown

In Equity the ownership was Mr & Mrs Maxwell-Brown; Mr & Mrs Flegg

Bleak House is owned on trust. A trust interest is purely a construct of law; it exists because our legal
system says it does. It is, however, property as much as the legal ownership of the Maxwell-Brown’s. There
are mechanisms to protect the beneficiaries of a trust (here, the four people below the line) from any
breach of the trustees (here, the two people above the line) which are included in legislation (see Trusts of
Land & Appointment of Trustees Act 1996 for example) and common law.

A balance always needs to be struck in Property Law between the persons with ‘property interests’ and
purchasers. One such ‘balance’ is overreaching. A purchaser should be sufficiently secure in the validity of
their transaction, on purchasing property rights. Land, as a valuable commodity should be easily
transferrable whilst protecting existing property rights. All of this makes sense, but perhaps not understood
by Mr & Mrs Flegg.

Overreaching allows a purchaser to ‘disengage’ the property interests of a

beneficiary from the land and transfer that property interest to the money.
I tend to imagine it in my mind as a bird, sitting on its nest, which contains a
house. The ‘purchaser’ lifts the bird, takes the house from the nest and
replaces it with money. The bird has not lost anything, merely transferred
their interest from the house to the money.

It is the same with Mr & Mrs Flegg, their property rights had transferred
from Bleak House to the ‘purchase money’. The fact that their trustees, the
Maxwell-Brown’s had spent that money means there is a breach of trust, and they have eventually lost out
but it is the action of their trustees which destroys their property rights not the overreaching by the
purchaser. When the purchase money was spent by the Maxwell-Browns there was no property on which
to attach their interest. Had the trustees not breached their duty then Mr & Mrs Flegg would have had their
share in the proceeds of sale. All would have been well.

By seeing their ‘property’ not as the house but as their rights, which happen at the time, to be attached to
the house helps to understand how overreaching works. It also helps to establish what their beneficial
interest in the house may be, as in Chapter 5. When Mr & Mrs Flegg gave their money to their daughter
and son-in-law (the Maxwell-Browns) they gave over legal title to the money to the Maxwell-Browns and at
that point their property rights existed in equity only. As you will study in Equity & Trusts, this can create a
resulting trust over the money. Again, the conceptual idea of ‘property’ is evident. There was a separation
of interests, the legal interest going to the Maxwell-Browns, in law and Mr & Mrs Flegg ‘retaining’ the
beneficial interest, in equity. When the money was used to buy the house, the beneficial interest
disengaged from the money and then attached to the land.
 Mr & Mrs Maxwell-Brown - Legal Title to £

Mr & Mrs Flegg

Absolute owner of £
Mr & Mrs Flegg – Beneficial Interest in £

Position I Position II

I know from my students that these ideas can be difficult to come to grips with, but it is worth taking the
time to get to grips with these concepts. It will enable you to really grasp Property Law, tackle the learning
with more clarity and hopefully fall in love with the topic. Enjoy your studies

Anne Street
December 2014