Easement — Right of way – Constructive trust – Neighbour agreeing to allow respondent right of way over property – Respondent erecting metal stairway and balcony between properties – Respondent failing to register easement or include easement in written contract with neighbour – Appellant purchasing property from neighbour — Appellant removing stairway and balcony — Judge finding right of way established through actual occupation and protected by constructive trust – Whether actual occupation constituting overriding — Whether right of way binding by way of constructive trust – Appeal allowed
The appellant and the respondent owned neighbouring properties (numbers 35 and 37 respectively). On each site there was a building with commercial use on the ground floor and residential use above. The title to number 35 included an alleyway between the properties. Before the appellant purchased number 35, the respondent had constructed a metal stairway in the alleyway to provide access to the upper floors of both properties.
The contract of sale for number 35 incorporated the Standard Conditions of Sale, 4th ed, and was sold “subject to the encumbrances on the property”, which, by standard condition 3.1.2(b), included “those [encumbrances] discoverable by inspection of the property before the contract”. It was common ground that the metal staircase and balcony had been so discoverable. However, the respondent had not caused to be registered under section 34 of the Land Registration Act 2002 a unilateral notice in respect of his right of way, subject to which the appellant would have taken possession.
After the sale the appellant disconnected the stairway and removed the balcony along the side of number 37, making it impossible to gain access to or from the first floor of number 37. The respondent applied to the court for a declaration that he had a right of way over the stairway. The judge concluded that, since the metal structure was obvious upon inspection, it would be unconscionable for the appellant to obstruct the use of the structure by the respondent because of the terms of the contract under which he had purchased the property.
The appellant appealed contending that the judge had erred in law in finding that: (i) the respondent had been in actual occupation of part of number 35, so that he had a right of way which was an overriding interest; and (ii) even if that was incorrect, the right would have been binding by way of constructive trust.
Held: The appeal was allowed.
(1) If the respondent’s rights were to be binding under section 29 of the Land Registration Act 2002 as an overriding interest, it could only be by virtue of paragraph 2 of Schedule 3 to the Act. In the present case, there had been no actual occupation of any part of the metal structure by anyone which could give the respondent’s rights the status of an overriding interest. There was no indication that it had been used otherwise than for passing between the street and the relevant flats which not amount to actual occupation. Williams & Glyn’s Bank Ltd v Boland [1981] AC 487; Celsteel Ltd v Alton House Holdings Ltd [1985] 1 WLR 204; Ashburn Anstalt v Arnold [1989] Ch 1; Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355; Saeed v Plustrade Ltd [2002] EWCA Civ 2011; Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] Ch 216; and Sommer v Sweet [2005] EWCA Civ 227 considered.
(2) The fact that the standard terms of the contract had stipulated that it was subject to incumbrances did not satisfy the test laid down in Lloyd v Dugdale [2002] P & CR 13 for the imposition of a constructive trust since there was nothing in the contract which would allow the court to conclude that the purchaser had undertaken a new obligation, not otherwise existing, to give effect to the relevant encumbrance or prior interest: Lloyd applied; Lyus v Prowsa [1982] 1 WLR 1044 distinguished.
In the absence of any express reference in the contract to the rights asserted by the respondent and an express provision requiring the purchaser to take the property subject to those rights, it was not sufficient that the metal structure was apparent on inspection of the land to be bought, and that it would have been apparent that it served as an access for the upper floors of both properties. The appellant had not bought the property on the basis that no changes would be made. The contract was silent in that regard. The appellant became the owner of everything comprised in the title to number 35 and it was open to him to do whatever he chose with it, subject to any third party rights that were binding on him and restrictions such as planning restrictions. Unless there were third party rights over the metal structure that were binding on him, it was open to the appellant to remove all or any part of the structure.
Accordingly, the rights asserted by the respondent were not binding on the appellant and the judge’s order would be set aside.
David Brounger (instructed by Stuart Karatas) appeared for the appellant; Jonathan Gavaghan (instructed by Wiseman Lee LLP) appeared for the respondent.
Eileen O’Grady, barrister
