Sale of land – Right of way – Actual occupation – Overreaching – Owners of land first selling land to defendant then granting right of way over it in favour of claimants – Claimants seeking declaration that right of way effective – Whether defendant being in actual occupation of land – Whether defendant’s interest being overreached – Declaration granted
The owners of Waterside Farm in Radstock, Somerset sold some of the land to the defendant. The sale was completed on 17 January 2012 and parts of the farm were transferred to the defendant for £100,000, including 18 acres of fields and barns with an adjacent yard. The defendant was also granted a right of way over a driveway leading from the yard. The transfer was first lodged for registration on 10 February but, as the access route was not shown on the plan annexed to the transfer, the plan had to be amended and initialled by the vendors. The vendors failed to meet the deadline. The application to register the transfer was cancelled and a fresh application submitted with an amended plan. The defendant was subsequently registered as the proprietor of the farm with effect from 16 May.
In the meantime, on 9 February 2012, the claimants contracted to sell the claimants both the farmhouse and a barn. The sales were completed on 20 February. The transfer relating to the barn purported to grant the claimants a right of way over the driveway, in respect of which the defendant had been granted a similar right, and across the yard that had been included in the transfer to the defendant. No-one appreciated that the transfer of the barn provided a right of way over land that had already been the subject of the sale to the defendant. The transfer of the barn was lodged with the Land Registry and the claimants were entered on the register as its proprietors from 14 March 2012, with the benefit of the rights granted by the 20 February transfer. The Land Registry, when registering the defendant as the proprietor of the farm in May 2012, recorded the property as subject to the rights granted in the transfer to the claimants of the barn. The claimants sought, among other things, a declaration that they had the benefit of a right of way over the yard at the farm.
Held: The declaration was granted.
(1) When the vendors transferred the land to the defendant on 17 January 2012, he became its beneficial owner but legal ownership did not pass until he was entered on the register as the proprietor. In the meantime, the vendors retained legal ownership as the registered proprietors. Since the defendant’s initial application for registration of the transfer had been cancelled, he had no more than an equitable interest when the claimants applied for the transfer of the barn, including the right of way over the yard, to be registered. Paragraph 2 of schedule 3 to the Land Registration Act 2002 identified as an “overriding interest” an interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he was in actual occupation, subject to certain exceptions. It followed that the defendant’s land was bound by the right of way granted to the claimants unless the defendant had been in “actual occupation” of the relevant land and his interest had not been overreached.
(2) “Actual occupation” required physical presence, not some entitlement in law. When determining whether a person was in actual occupation, the degree of permanence and continuity of presence of the person concerned, the intentions and wishes of that person, the length of absence from the property and the reason for it and the nature of the property and personal circumstances of the person were among the relevant factors. An interest belonging to a person in actual occupation would be protected only in so far as it related to land of which he was in actual occupation. It was evident from the wording of paragraph 2 of schedule 3 to the 2002 Act that an interest belonging to a person in actual occupation would be protected only if and so far as it related to land of which he was in actual occupation. The date on which a person must have been in “actual occupation” to rely on paragraph 2 of schedule 3 was the date of completion. On the facts of the present case, the defendant had been in actual occupation of the relevant land on 20 February 2012 and he would not be bound by the right of way granted to the claimants unless his interest had been overreached: Strand Securities Ltd v Caswell [1965] Ch 958, Williams & Glyn’s Bank Ltd v Boland [1981] AC 487, Kling v Keston Properties Ltd (1983) 49 P&CR 212, Kingsnorth Finance Co Ltd v Tizard [1986] 1 WLR 783, Lloyds Bank plc v Rosset [1989] Ch 350, Abbey National Building Society v Cann [1991] AC 56, Lloyd v Dugdale [2001] EWCA Civ 1754, [2001] PLSCS 2 P&CR 13, Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] EWCA Civ 151, [2002] Ch 216 and Link Lending Ltd v Hussein [2010] EWCA Civ 424 considered.
(3) Section 2 of the Law of Property Act 1925 provided that a conveyance to a purchaser of a legal estate in land should overreach any equitable interest or power affecting that estate. For the purposes of section 2, “legal estate” was defined to include an easement. Moreover, it was easy to envisage circumstances comparable to those of the present case in which common sense would suggest that overreaching should occur. Section 2(3)(iv) of the 1925 Act excepted from overreaching under section 2(2) the benefit of any contract to convey or create a legal estate, including a contract conferring either expressly or by statutory implication a valid option to purchase, a right of pre-emption, or any other like right. Where, as in the present case, a vendor sold with full title guarantee, the purchaser would gain the benefit of implied covenants pursuant to the Law of Property (Miscellaneous Provisions) Act 1994, but the original contract would generally be spent. The purchaser would no longer have the benefit of an “estate contract”. In the circumstances of the present case, the defendant no longer had the benefit of an estate contract by the time the claimants were granted the right of way over the farm. Section 2(3)(iv) was therefore inapplicable and the defendant’s rights had been overreached and subordinated to the easement. The farm was bound by the right of way.
Thomas Talbot-Ponsonby (instructed by DWF LLP) appeared for the claimants; Ewan Paton (instructed by John Hodge Solicitors) appeared for the defendant.
Eileen O’Grady, barrister
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