Licences and proprietary estoppel

This week concerns two doctrines which sit at the margin between personal rights and proprietary rights. A licence is, in its ordinary form, a permission to do something on another's land which would otherwise be a trespass. It does not, merely because it is contractual, create an estate or interest in land. Proprietary estoppel, by contrast, is an equitable doctrine by which an owner may be prevented from insisting on strict legal title where the claimant has relied, to their detriment, on an assurance relating to land. The contrast matters because Land Law is centrally concerned with the enforceability of rights against third parties. A permission binding only the grantor is conceptually and practically different from an equity capable of binding successors.

The topic therefore gathers together several strands from the Durham Year 2 Land Law course. Week 1's distinction between estates, interests and merely personal rights is essential. Week 2's registered-title framework explains why the question is not simply whether A has a right against B, but whether that right survives B's transfer to C. Weeks 3 and 4 then supply the language of priorities, overreaching and overriding interests. Weeks 8 and 9 provide the adjacent leasehold doctrines: many licence cases are, in substance, disputes about whether an arrangement is really a lease, a contractual licence, or an equity arising from informal dealing.

The first organising proposition is that the common law has resisted the idea of a free-standing proprietary licence. A licence may be coupled with a proprietary interest, as where a profit or easement is accompanied by permission to enter. A contractual licence may also give contractual rights and remedies. But a bare or contractual licence does not usually bind a purchaser of the land. Attempts to make licences proprietary by contract, notice, or judicial sympathy have largely failed. The leading modern authority is Ashburn Anstalt v Arnold, rejecting the broad reading of Errington and Binions under which contractual licences might routinely bind successors.

The second organising proposition is that proprietary estoppel is different. It is not a licence made proprietary by judicial magic. It is an equity arising from unconscionable departure from an assurance on which the claimant has relied to their detriment. Since section 116 of the Land Registration Act 2002, an equity by estoppel in registered land is expressly capable of binding successors, subject to the priority rules. That does not mean every family expectation, neighbourly accommodation, or disappointed commercial negotiation becomes property. It means that once the elements of proprietary estoppel are established, the claimant has an equity whose priority must be analysed within the registered-title system.

For examination purposes, the topic is high-yield because it tests method. Students often write impressionistic answers about fairness. The better Durham answer proceeds in stages: classify the right; ask whether formalities have been complied with; if not, ask whether equity intervenes; identify the appropriate remedy; then address priority against third parties. The facts will often tempt a premature conclusion: a son working on a farm; a partner improving a house; a purchaser allowing an occupier to remain; an informal right of way; or commercial negotiations conducted without a written contract. The best answers resist that temptation and show how Land Law disciplines conscience through doctrine.

The history of licences is a history of the law's suspicion of informal property rights. At common law, a licence was permission. It rendered lawful what would otherwise be unlawful, but it did not confer possession, title, or an estate in the land. This remains the basic position. A cinema ticket, an invitation to enter a shop, or permission to cross a field may prevent an action in trespass while it subsists; it does not carve a proprietary estate out of the licensor's land.

Equity complicated that picture. Where a licence was supported by a contract, equity sometimes restrained the licensor from revoking it in breach of contract. That did not necessarily make the licence proprietary. It meant that the licensor, personally bound by contract, could be compelled not to act inconsistently with it. The difficulty arose when land was sold. If A granted B a contractual permission to occupy or use land, and then sold to C, could B insist that C respect the permission? Nineteenth- and early twentieth-century property orthodoxy said no, unless the permission was attached to a recognised proprietary interest or protected by some other equitable mechanism.

Twentieth-century cases blurred the line. In Errington v Errington and Woods, Denning LJ treated a father's promise to his son and daughter-in-law, allowing them to remain in a house so long as they paid mortgage instalments, as an irrevocable contractual licence binding the father's personal representatives. The case was sympathetic and domestic. It was not, however, a general foundation for proprietary licences. Binions v Evans went further in appearance. Purchasers had acquired a cottage at a reduced price knowing that an elderly occupier was to remain rent-free for life. The Court of Appeal enforced the arrangement against them by treating them as constructive trustees. For a period, these cases encouraged arguments that a licence could bind a successor where the successor had notice of it.

That development was checked. The House of Lords in National Provincial Bank v Ainsworth supplied a canonical test for proprietary quality: the claimed right must be definable, identifiable by third parties, capable of assumption by third parties, and have permanence or stability. A deserted wife's right to occupy did not satisfy that test. Later, Ashburn Anstalt v Arnold restored doctrinal discipline. Fox LJ held that a contractual licence is not binding on successors merely because they take with notice. Binions could be explained, if at all, by constructive trust: the purchaser had undertaken a specific obligation affecting conscience. Notice alone was not enough.

Proprietary estoppel has a different lineage. Its roots lie in equity's response to informal assurances about land, particularly where one person builds, improves, works, or otherwise acts in reliance on an expectation encouraged by the legal owner. The older language was often that of acquiescence: if O stood by while C spent money on O's land in the belief that C would have some right, O might be prevented from asserting strict title. Inwards v Baker, Crabb v Arun District Council and Pascoe v Turner are familiar mid-century examples. The modern law has moved beyond passive acquiescence and recognises positive assurances, family expectations, and informal arrangements.

The modern cases also reveal tension. In domestic and farming contexts, the courts are willing to find assurance from conduct and family language understood over time: Thorner v Major and Davies v Davies are leading examples. In commercial contexts, especially where parties know that formal contracts are required, the courts are markedly stricter: Cobbe v Yeoman's Row Management Ltd is the leading warning. The law thus maintains two controls. First, proprietary estoppel requires assurance, reliance, detriment and unconscionability. Secondly, the remedy is discretionary, though not unprincipled: it must respond proportionately to the equity established. Guest v Guest has recently re-emphasised that the normal aim is to satisfy the claimant's expectation where that is the minimum necessary to do justice, but the court must avoid overcompensation.

1. A licence is permission, not possession. The starting point is simple. A licence authorises entry or use of land. It prevents the licensee being a trespasser while the permission continues. It is not, without more, an estate or interest in land. This distinguishes a licence from a lease. A lease confers exclusive possession for a term certain, subject to recognised exceptions; a licence does not. The label used by the parties is relevant but not conclusive. After Street v Mountford, the court looks at substance: exclusive possession for a term at a rent usually indicates a lease, unless the arrangement falls within an exceptional category such as service occupancy, family arrangement, or genuine sharing.

1. Licences may be bare, contractual, coupled with an interest, or arising by estoppel. A bare licence is gratuitous permission, normally revocable on reasonable notice. A contractual licence is supported by contract: revocation in breach of contract may expose the licensor to damages or injunction, but the licence remains personal. A licence coupled with an interest is ancillary to a proprietary right, for example permission to enter land to exercise a profit. Its durability depends on the underlying interest. A so-called licence by estoppel is better analysed as the practical manifestation of an equity: equity may compel the landowner to permit occupation or use because it would be unconscionable to do otherwise.

1. Contractual licences are not generally proprietary. This is the central examination point. A contractual licence may be enforceable between licensor and licensee. It is not normally enforceable against a purchaser of the land. Notice of the licence does not transform it into an interest in land. This follows from Ainsworth and Ashburn. The registered land system would be undermined if personal contracts concerning land automatically bound purchasers merely because they knew of them. Registration is designed to identify estates, charges, notices, restrictions, overriding interests and other recognised property rights, not every personal arrangement made by the former owner.

1. The exceptional cases are not a new category of proprietary licence. Binions v Evans is best understood as constructive trust or conscience-based enforcement of an undertaking. If C purchases land on terms which require C to honour B's occupation, especially where the purchase price reflects that burden, C may be personally bound in equity. But this is not because B's contractual licence has become proprietary. It is because C's conscience is affected by the terms on which C acquired the land. The distinction is not semantic. A constructive trust has its own requirements and priority consequences; a contractual licence does not become a registrable interest simply by being important to the licensee.

The cases fall into two groups: licence cases concerned with the boundary between personal permission and property, and proprietary estoppel cases concerned with equity's response to detrimental reliance.

National Provincial Bank v Ainsworth supplies the orthodox property-law starting point. The House of Lords rejected the deserted wife's personal right of occupation as a property right binding the bank. Lord Wilberforce's criteria remain foundational: a proprietary right must be definable, externally identifiable, transmissible or assumable by third parties, and sufficiently stable. The case is often cited outside its family-law setting because it polices the boundary between personal claims and property.

Errington v Errington and Woods is the sympathetic licence case which causes most student errors. A father bought a house for his son and daughter-in-law, promising that it would become theirs if they paid the mortgage instalments. The Court of Appeal protected their position. The case is best treated as either contractual licence irrevocable so long as the couple performed the condition, or an early estoppel-like response to reliance. It should not be cited for a general principle that contractual licences bind purchasers of land.

Binions v Evans is similarly dangerous. The purchasers bought land on terms recognising the occupier's right to remain for life and paid a reduced price accordingly. The Court of Appeal enforced the occupation against them. The strongest modern explanation is constructive trust: the purchasers acquired the land subject to an undertaking which affected their conscience. It is not authority that notice of a licence is enough to bind a purchaser.

Ashburn Anstalt v Arnold is the corrective authority. The Court of Appeal rejected the argument that a contractual licence can bind successors simply because they have notice. Fox LJ reasserted that licences are personal rights unless supported by an established proprietary doctrine. The case is indispensable in any answer on licences and third parties.

Inwards v Baker and Crabb v Arun District Council are classic proprietary estoppel authorities. Inwards involved a son encouraged by his father to build a bungalow on the father's land; equity protected the son's occupation. Crabb involved a landowner who sold part of his land after the council had led him to believe he would have access across the council's land. The Court of Appeal granted an easement without payment. Both cases show equity responding to reliance on land-related assurances.

Thorner v Major is the leading modern case on assurance. The House of Lords held that indirect statements and conduct may be sufficiently clear when understood in context. The farmer's oblique statements about insurance policies and inheritance were intelligible within the family and farming background. The case is crucial for domestic and agricultural problems.

Cobbe v Yeoman's Row is the limiting commercial authority. A developer negotiated for planning permission and purchase terms, but no binding contract existed. The House of Lords refused proprietary estoppel. Both parties understood that any binding arrangement required formal contract. The case prevents estoppel from becoming a device for enforcing incomplete commercial negotiations.

Guest v Guest is now the leading remedial case. The Supreme Court confirmed that proprietary estoppel relief aims to satisfy the equity and prevent unconscionability. Expectation is often the appropriate starting point where the assurance is clear, but relief must not be out of proportion. The remedy may involve accelerated monetary relief rather than transfer of the promised land where immediate transfer would be inappropriate.

See practice questions section below.

See further reading section below.