Are easements lost when land escheats?
Escheat is a relatively rare process today. Nonetheless, the Law Commission has suggested that something like 500 freehold estates escheat every year.
Escheat occurs when a freehold is disclaimed by a trustee in bankruptcy or a liquidator or the Treasury Solicitor (who has the power to disclaim assets that become “bona vacantia”) in order to avoid onerous liabilities. In such cases, the land automatically “escheats” to the Crown, thereby ensuring that freehold land belongs to someone. But, upon escheat, the Crown does not hold the land as an estate because the Crown cannot hold a freehold estate from itself. So the freehold title ceases to exist.
Does this mean that dominant land, with the benefit of easements, loses those easements on escheat? The Land Registry’s practice guidance indicates that, following a sale by the Crown, the registers of the new title will record the incumbrances that previously affected the determined estate – thanks, no doubt, to Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793; [1995] EGCS 52, the leading modern authority on escheat. In that case, the judge, citing Duke of Bedford v Coke [1751] 2 Ves Sen 116, ruled that inferior interests in the land, such as tenancies, survive escheat. But anecdotal evidence suggests that, in the absence of clear law, the Land Registry generally chooses to include an entry in the new registers of title indicating that the land benefits from any rights claimed only if and in so far as they are capable of subsisting at law following the escheat of the former freehold estate.
Escheat is a relatively rare process today. Nonetheless, the Law Commission has suggested that something like 500 freehold estates escheat every year.
Escheat occurs when a freehold is disclaimed by a trustee in bankruptcy or a liquidator or the Treasury Solicitor (who has the power to disclaim assets that become “bona vacantia”) in order to avoid onerous liabilities. In such cases, the land automatically “escheats” to the Crown, thereby ensuring that freehold land belongs to someone. But, upon escheat, the Crown does not hold the land as an estate because the Crown cannot hold a freehold estate from itself. So the freehold title ceases to exist.
Does this mean that dominant land, with the benefit of easements, loses those easements on escheat? The Land Registry’s practice guidance indicates that, following a sale by the Crown, the registers of the new title will record the incumbrances that previously affected the determined estate – thanks, no doubt, to Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793; [1995] EGCS 52, the leading modern authority on escheat. In that case, the judge, citing Duke of Bedford v Coke [1751] 2 Ves Sen 116, ruled that inferior interests in the land, such as tenancies, survive escheat. But anecdotal evidence suggests that, in the absence of clear law, the Land Registry generally chooses to include an entry in the new registers of title indicating that the land benefits from any rights claimed only if and in so far as they are capable of subsisting at law following the escheat of the former freehold estate.
Pall Mall 3 Ltd v Network Rail [2021] EWHC 1835 (Ch) suggests that this should no longer be necessary. The litigation concerned land owned by a company that was dissolved under section 1012 of the Companies Act 2006. The land vested in the Treasury Solicitor as “bona vacantia”, was disclaimed and escheated to the Crown. The Crown Estate Commissioners then transferred the land to Pall Mall in return for a payment of £5,000, and the land was registered under a new title number.
Pall Mall subsequently sought a declaration that the land still enjoyed the benefit of a prescriptive right of drainage through a drain that crossed land belonging to Network Rail and fed into the public sewer. The drain had been damaged by the demolition of a building and was inoperable – and Pall Mall sought to have it reinstated and claimed damages for interference with its easement. But Network Rail took a preliminary point, arguing that Pall Mall was not a successor in title to the land that had escheated to the Crown and could not have acquired the prescriptive rights previously held under that title.
It would seem logical to argue that, if burdens survive, then so too must benefits. And the judge was able to decide that they did – by ruling that escheated land automatically vests in the Crown, as if by conveyance. And transfers are deemed to include easements (thanks to section 62 of the Law of Property Act 1962), which attach to the land, and not to the estate in that land: Wall v Collins [2007] EWCA Civ 444; [2007] PLSCS 104.
Although the registered fee simple estate had ended on escheat, the land registered under the relevant title number still existed. And so did the derivative interests. The easement of drainage was attached to the land and its benefit was transferred to Pall Mall when it acquired the land from the Crown Commissioners.
Allyson Colby is a property law consultant
