Real property – Easement – Escheat – Escheated land transferred to claimant by Crown – Claimant seeking declaration that land retaining prescriptive right of drainage through drain crossing land owned by first defendant – Preliminary issue arising – Whether dominant land with benefit of easement of drainage losing easement upon escheat following disclaimer of freehold title – Preliminary issue determined accordingly
A railway line ran through Hackney Wick from east to west. The first defendant owned the land just north of the line. On the eastern boundary lay freehold land owned by N Ltd. Adjacent to that land, but also north of the line, lay a narrow strip of land. The claimant held the adjacent land with possessory title.
N Ltd entered creditors’ voluntary liquidation and was dissolved in October 2016 and ceased to exist. Upon dissolution, its land vested in the Crown pursuant to section 1012 of the Companies Act 2006. The title to the land was vested in the Crown as bona vacantia.
On 17 December 2018, a notice of disclaimer was tendered by the Treasury Solicitor. Upon disclaimer, the land escheated to the Crown. By transfer dated 29 January 2019, the Crown Estate Commissioners transferred the land to the claimant in return for a payment of £5,000, and the land was registered under a new title number.
The claimant subsequently sought a declaration that the dominant land still retained the benefit of a prescriptive right of drainage through a drain that crossed land belonging to the first defendant and fed into the public sewer notwithstanding the dissolution of N Ltd, escheat and disclaimer. The drain had been damaged and was inoperable. The claimant sought the broken drain to be reinstated and damages for interference.
A preliminary issue arose whether dominant land with the benefit of an established easement of drainage lost the easement upon escheat occurring on disclaimer of the freehold.
Held: The preliminary issue was determined accordingly.
(1) There had to be a dominant and a servient tenement and an easement had to accommodate the dominant tenement. The dominant and servient owners had to be different persons and a right over land could not amount to an easement unless it was capable of forming the subject matter of a grant: Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] UKSC 57; [2019] EGLR 1 applied.
Other than form, it was a matter of indifference to the user of an easement whether its origin was express or by lapse of time. A tenant could not obtain an easement by prescription against another tenant holding under the same landlord and prescription was not available either at common law or under the Prescription Act 1832 by or to owners of a lesser estate than an estate in fee simple.
An easement had to be asserted as appurtenant to land. It could not exist in gross. An easement, right or privilege had to be for an interest equivalent to an estate in fee simple absolute in possession or a term of years absolute.
(2) The land did not disappear on vesting. The title was capable of revesting in N Ltd if it were restored to the register. Generally, a company might be restored at any time in a six-year period from dissolution: section 1030(4) of the Companies Act 2006. The general effect of an order by the court for restoration to the register was that the company was deemed to have continued in existence as if it had not been dissolved or struck off the register: section 1032(1). Vesting bona vacantia was reversed.
On the facts of this case, the notice of disclaimer triggered the operation of section 1014 of the 2006 Act, so that the title was deemed not to have “vested in the Crown under section 1012”. The effect of sections 1012 -1014 of the 2006 Act was that the land under the title became escheat to the Crown.
(3) Upon escheat, the Crown did not hold the land as an estate. In this case the freehold title was extinguished. The extinction of the freehold estate might be rationalised on the basis that the Crown would not hold the freehold estate from itself. On escheat, the Crown took the land without conveyance. The vesting was of allodial land. The loss of an estate on escheat did not of itself bring an end to derivative interests in the land. The Crown, as direct owner, might take an active role and bring an end to any derivative interests.
The recitals to 2019 transfer provided incontrovertible evidence that the Crown at no time took possession or control or effected any actual or presumed acts of ownership or management in regard thereto. The common law deemed vesting automatic as, in the circumstances, it would be very unlikely for there to be a counterparty to a conveyance. Without a counterparty, the purpose of escheat, to maintain ownership, was frustrated. Vesting conferred escheat land to the Crown by way of transfer. It was only by transfer that the Crown took the land directly and the freehold title was extinguished: Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793; [1995] EGCS 52 followed.
The automatic vesting in the Crown was made as if by conveyance. If the land was later transferred to a third party, the Crown Estate Commissioners were required to transfer the land using the usual formalities with reference to the former estate. By reason of section 62 of the Law of Property Act 1825, the transfer was deemed to include the easement of drainage: Wall v Collins [2007] EWCA Civ 444; [2007] PLSCS 104 considered.
(4) That the easement of drainage endured escheat was consistent with the 2019 transfer which expressly provided for the transfer of derivative interests in the land where they existed. There was no investigation into propriety rights under the former title and so the commissioners provided no guarantee.
It followed that easements enjoyed by the land were not destroyed. The fee simple estate in the land had come to an end on escheat but the land registered under that title did not and neither did the derivative interests. The easement of drainage remained attached to the land. The easement was transferred for the benefit of the claimant by the 2019 transfer.
Timothy Morshead QC (instructed by Clarke Mairs LLP) appeared for the claimant; Ian Clarke QC (instructed by Addleshaw Goddard LLP) appeared for the first defendant; Tim Calland (instructed by Birketts LLP) appeared for the second defendant.
Eileen O’Grady, barrister
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