L5 - Numerus Clausus (rev notes)

Question 1

Numerus clausus

Answer 1

= principle that there is a fixed list of proprietary rights : parties can’t create (and the courts can’t recognise) new types of proprietary rights ; a right will only be proprietary if it fits within one of the existing categories – see Keppel v Bailey and Hill v Tupper

Question 2

Numerus Clausus (alternative explanation)

Answer 2

While in contract, parties are free to personally undertake any kind of obligation whatsoever, if the obligation is to be binding on third parties, it must meet the relevant criteria to fit into one of a fixed list of categories of proprietary rights recognised by English law

Question 3

Lord Brougham LC in Keppel v Bailey (quote nº1)

Answer 3

“it must not […] be supposed that incidents of a novel kind can be devised and attached to property at the fancy or caprice of any owner”

Question 4

Lord Brougham LC in Keppel v Bailey (quote nº2)

Answer 4

Ok to allow people to bind themselves in contract BUT “great detriment would arise and much confusion of rights if parties were allowed to invent new modes of holding and enjoying real property, and to impress upon their lands and tenements a peculiar character, which should follow them into all hands, however remote”

Question 5

Pollock CB in Hill v Tupper (quote)

Answer 5

“A new species of incorporeal hereditament cannot be created at the will and pleasure of the owner of the property”

Question 6

4 characteristics for a right to be admitted into the category of property rights

Answer 6

= Lord Wilberforce in Ainsworth :

“before a right or an interest can be admitted into the category of property […] it must be :
- definable,
- identifiable by third parties,
- capable in nature of assumption by third parties, and
- have some degree of permanence or stability”

Question 7

Justifications for NC (4)

Answer 7

• durability of property rights – sterilisation of land and threat to marketability
• reducing information costs
• absence of demand
• consenting to a restriction of freedom

Question 8

Durability of property rights - argument

Answer 8

Proprietary rights are tied to the land => run w/ it to successors in title, capable of enduring indefinitely
≠ personal oblº: extinguished upon performance + don’t pass to successor to an asset (unless security)

=> Risk of ‘sterilising’ land = hindering its dvp and usability by burdening it with too many ‘fancy’ complicated proprietary oblº that restrict what you can do on it

=> Not great for marketability of land : bcs ppl won’t want land which is overburdened w/ lots of oblº, which hinder use and increase transaction costs – also fragmentation of interests problem = too many people get a say in what happens on the land

Question 9

Durability of property rights - criticism (3)

Answer 9

• proprietary rights aren’t absolutely irrevocable either
• refusing to make covenants proprietary = nothing more than changing identity of person who has to initiate negotiations
• NC aims to restrict type of available property rights ≠ potential nº of right holders

Question 10

Durability of property rights - criticism #1 (irrevocability)

Answer 10

Proprietary rights aren’t absolutely irrevocable either:

• possible for parties to agree to extinguish them
• (for covenants) possible to apply to the court for modification or discharge under s84 LPA 1925 (where they have become obsolete, impede reasonable use, or their removal will not injure persons entitled to their benefit)

Question 11

Durability of property rights - criticism #2 (changing ID)

Answer 11

Refusing to make covenants proprietary = nothing more than changing identity of person who has to initiate negotiations (Rudden)

=> confining parties to contract means that oblº needs to be negotiated afresh every time the land changes hands, and thereby is reflected in the price vs in the case of proprietary right, up to acquirer to negotiate his way out of being bound if he wants to (also reflected in the price)

Question 12

Durability of property rights - criticism #3

Answer 12

Merril & Smith on the fragmentation / overburdening w/ too many proprietary oblº point : doesn’t really justify NC, bcs NC aims to restrict the type of available proprietary rights, not the potential number of right-holders

Question 13

Reducing information costs - the argument

Answer 13

Proprietary rights bind 3Ps, who therefore need to find out about them (their nature and extent) in order not to infringe them
=> much harder to do that if any kind of fancy complicated proprietary obligation can be created than if only a set list of them

Question 14

Reducing information costs - criticisms (2)

Answer 14

• functional registration system can solve the pb
• NC only makes it more costly to create ‘fancy’ proprietary oblº = doesn’t solve the pb at all

Question 15

Reducing information costs - criticism #1(registration)

Answer 15

Functional registration system can solve the problem just as effectively as NC : just impose requirement that ‘fancy’ proprietary right be registered in order for it to bind 3Ps (ag ntb put forth by Law Com in 2011 Report suggesting creation of new type of proprietary right = ‘Land Obligations’ ± proprietary covenants)

Question 16

Reducing information costs - criticism #2

Answer 16

NC only makes it more costly to create ‘fancy’ proprietary obligations : still possible for landowners w/ means to access creative lawyers to get around NC and create oblº which are effectively proprietary despite not fitting on the list (eg see various means of enforcing PFC : benefit & burden, rentcharges, leases, indemnity covenants…)

Question 17

Absence of demand - the argument

Answer 17

= idea that list of permitted property interests covers “all that one could conceivably want”

Question 18

Absence of demand - criticism (1)

Answer 18

Rudden : clearly not – or why would they be trying to work their way around restriction (eg w/ workarounds to enforce PFC above) – positive oblº on successor in title to contribute to cost of maintenance = smth ppl definitely want, and which seems quite legitimate to want

Question 19

Consenting to restriction of freedom - the argument

Answer 19

Personal oblº only restrict freedom of those party to their creation (= who consented and willed it) VS proprietary oblº restrict the freedom of 3Ps despite their not consenting to their creation => their creation must be limited = the types of proprietary rights which can be created must be limited to a list of categories w/ strict requirements

=> NC = a means to strike a balance btw freedom of ‘contract’ (= allowing people to pursue legitimate aims in creating different kinds of specific rights) and the autonomy of third parties not to be bound by all kinds rights the creation of which they never consented to

Ag ±put forth by McFarlane (explaining distinction btw + and – covenants)

Question 20

Consenting to a restriction of freedom - criticism

Answer 20

Doesn’t justify blanket ban on creation of new proprietary rights, ntb PFCs : freedom and personal autonomy are also relevant in allowing landowners to pursue legitimate aims through the use of PFCs

=> issue = striking a balance btw freedom of the acquirer of burdened land (successor to the covenantor) and the legitimate aim of the covenantee in imposing those duties – and balance does not seem adequately struck by the current application of the numerus clausus given the multiple manners developed in order to get around it