Law of Property (Miscellaneous Provisions Act) 1994 – Sale of land including strip abutting trunk road – Parties unaware that surface of strip vested in Secretary of State as part of highway – Whether seller in breach of statutorily implied covenants for title – Whether seller in breach of express obligation to give vacant possession
In December 1997 the defendant (Bennett) conveyed an area of registered land near Tewkesbury, lying to the north of the A46 (the highway), to the claimant, pursuant to a contract.The contract incorporated the standard conditions of sale (3rd ed). Clause 4 of the transfer gave a full title guarantee.
At some time in 1998 the parties were informed that the surface of a strip of land at the southern boundary was vested in the Secretary of State for the Environment, Transport and the Regions as part of the highway, and that it had been so vested in the relevant highway authority since 1964. Baylis brought proceedings for breach of contract. Shortly before the hearing, the Secretary of State was made a party to those proceedings in order to obtain a ruling on the status of the strip. It was held that the claim by the Secretary of State was fully made out. *
Having so ruled, the judge went on to consider the claim by Baylis that Bennett was in breach of: (i) the covenant implied by section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1994; (ii) the covenant implied by section 3(1) of that Act; and (iii) an express obligation to give vacant possession on completion. It was common ground that the two implied covenants had been imported by the full guarantee given in clause 4.
Held: Baylis succeeded on (iii), but failed on (i) and (ii).
1. By section 2(1) of the 1994 Act, Bennett had impliedly covenanted that it had the right to dispose of the property as it purported to. The argument of Baylis, that the covenant had been breached because the plan attached to the transfer included part of the strip, was rejected. The property was expressed to be transferred by reference to Bennett’s registered title (which included the strip), and the right of Bennett to dispose of what it purported to transfer could not be called into question; see Meek v Clarke (unreported) 7 July 1982 (CA). Nor could it be contended that the vesting of the surface of the strip in the Secretary of State was inconsistent with the registered title.
2. By section 3(1), Bennett had impliedly covenanted to convey free from all third party rights (not being matters to which the transfer was expressly made subject) other than those of which he did not, and could not have reasonably be expected to, have knowledge. It was accepted that Bennet had no actual knowledge of the right in question. Nor was there any evidence, in the shape of physical features on the strip, to show that there were reasonable inquiries that Bennett could have made but did not. It was significant, though not conclusive, that two previous buyers had also failed to discover the existence of the right despite carrying out the usual searches and inquiries.
3. The obligation under the contract (which did not merge on completion) to give vacant possession was a special condition that, accordingly, overrode any general condition that might otherwise have protected the seller. The property contracted to be sold was described by reference to a plan that included part of the strip. Although that part was not actually occupied by anyone, the severe constraints on the use of the surface meant that Baylis could not use the property at all. In those circumstances, Baylis did not obtain the vacant possession of the whole of the property contracted to be sold; see Topfell Ltd v Galley Properties Ltd [1979] 1 WLR 446. It was immaterial that Baylis, being owner of the subsoil, could bring an action in trespass against a person misusing the highway; Hickman v Maisey [1900] 1 QB 752 and Wiltshire County Council v Frazer [1983] 82 LGR 313 considered.
Tom Jefferies (instructed by Geisler & Laws) appeared for the claimant; Gwilym Harbottle (instructed by Penleys, of Dursley) appeared for the defendant.
* Editor’s note: See the separate summary of Secretary of State for the Environment, Transport and the Regions v Baylis (Gloucester) Ltd and another [2000] PLSCS 92.
