Right of way — Proprietary estoppel — Whether equity arising from proprietary estoppel binding on successors in title as overriding interest — Whether equitable right wrongly noted on Land Register could be overriding interest — Rule 258 of Land Registration Rules 1925 — Section 2 of Law of Property Act 1925 and section 3(xvi) of Land Registration Act 1925 — Appeal dismissed
The respondents owned two properties, to which they gained access by crossing the first appellant’s adjoining premises. The respondents asserted a vehicular right of way in respect of each of their properties, arising from, respectively: (i) a 1988 transfer, made in favour of Mr and Mrs M by a predecessor in title of both parties, which expressly granted a vehicular right of way; and (ii) a 1983 assent, noted on the title to the first appellant’s property. It emerged that the 1988 transfer had been made by only one of two joint owners, and that the 1983 assent, although signed, had not been made under seal.
The respondents brought proceedings to establish their rights of way. The first appellant relied upon the invalidity of the 1988 transfer and the 1983 assent. Finding in favour of the respondents, the judge held, in respect of the first property, that a way of necessity was to be implied and that a right of way also arose by proprietary estoppel. He based the estoppel upon a representation that a right of way existed, made by the 1988 transfer and acted upon by the Ms to their detriment in purchasing the property and building a house upon it. The judge held that the equity thereby raised was binding on successors in title as an overriding interest, being a right openly exercised and enjoyed with the land and therefore “reputed to appertain to land” within the meaning of r 258 of the Land Registration Rules 1925. With regard to the 1983 assent, he held that the absence of a seal meant that it could operate only to create a right of way in equity, but that this right also became an overriding interest by virtue of r 258. He ordered rectification of the first appellant’s title to include a note of the overriding interests in respect of the rights of way.
On appeal, the appellants contended, inter alia, that: (i) the equity arising from proprietary estoppel was, by definition, a minor interest that had not been protected by notice and had, in any event, been overreached on the transfer to the first appellant by virtue of section 2 of the Law of Property Act 1925 (LPA); and (ii) the right created by the 1983 assent could not be an overriding interest because, at the date of the first appellant’s purchase, it had been entered on the register. Section 3(xvi) of the Land Registration Act 1925 defined “overriding interest” to include all interests and right “not entered on the register”, but with the proviso “unless the context otherwise requires”.
Held: The appeal was dismissed.
There was no reason to interfere with the judge’s conclusion that the right of access in fact enjoyed by the Ms came within r 258 so as to constitute an overriding interest: Celsteel Ltd v Alton House Holdings Ltd (No 1) [1985] 1 WLR 204 applied. The provisions of section 2 of the LPA did not operate to overreach the equity onto the proceeds of sale. The equity arising from a proprietary estoppel was not an “equitable interest” capable of being overreached pursuant to section 2(1); rights of an equitable character could exist outside both the provisions for registration of charges and overreaching of interests: ER Ives Investment Ltd v High [1967] 2 QB 379, Shiloh Spinners v Harding [1973] AC 691 and Birmingham Midshires Mortgage Services Ltd v Sabherwal (2000) 80 P&CR 256 applied. That conclusion avoided conflict with section 20 of the Land Registration Act 1925, which specifically provided that a registered disposition was effective to transfer the freehold estate in the land subject to the overriding interests affecting it. Since the right of access was an overriding interest, in accordance with r 258, the first appellant took subject to it. Accordingly, the first appellant was bound by the equity arising between her predecessor in title and the Ms.
The entry on the register of title to the first appellant’s property did not preclude the right of way in the assent from being an overriding interest. The judge had correctly considered that it would be absurd if an interest that had been wrongly entered on the register, but that, in all other respects, answered the description of an overriding interest, should be disqualified as such by reason of its mistaken appearance on the register.
The judge had been entitled to rectify the register. There was no prohibition on noting an overriding interest on the register: see sections 82(3) and 70(3) of the Land Registration Act 1925. The first appellant’s title had contained such a notice on first registration, and the history of the present dispute showed the wisdom of restoring it.
The appellants appeared in person; Jeffrey James Littman (instructed by Mr and Mrs Sweet) appeared for the respondents.
Sally Dobson, barrister
