The case of Pezaro v Bourne (2019 EWHC 1964 (Ch)) provides a warning to landowners to register all agreements to remove or modify rights over land as soon as possible, or risk such agreements being unenforceable.
The Claimants owned two properties, 149 and 151 New Street. The Defendants owned 147 New Street.
147 New Street benefitted from a right of way across both 149 and 151 New Street.
Having realised that there was an opportunity to obtain planning permission for a small block of flats at the rear of the gardens of 147, 149 and 151 if combined (Building Plot 1) the Claimants offered to buy part of the garden of 147 New Street, owned at the time by Mr Ayres.
Mr Ayres agreed to sell. There was no correspondence between the parties however on how to deal with the right of way. (The judge hearing the case found that Mr Ayres simply assumed that after the sale of the rear garden of 149 the right of way would simply be removed.)
Building Plot 1 was subsequently sold by the Claimants to a developer in 2006.
In 2010 the Claimants identified a site to the side of 151 New Street that would be suitable to build another property (Building Plot 2). Shortly after, the Claimants discovered that the right of way had not been removed from the titles of any of the properties after the sale of Building Plot 1.
The Claimants telephoned Mr Ayres to explain that the right of way was still noted against the properties and enquired whether Mr Ayres would agree to its removal, if they paid his legal costs for this. Mr Ayres said he would.
The Claimants failed to take any steps to have this right of way removed, instead waiting until planning permission had been granted for Building Plot 2.
Planning permission was granted for Building Plot 2 in 2011. The Claimants then contacted Mr Ayres with a view to having the right of way removed. However, it was discovered that Mr Ayres had sold 147 New Street to a property developer who subsequently sold it to Mr and Mrs Bourne, the Defendants in the case.
The Defendants were unwilling to agree to the removal of the right of way.
The Claimants sought to rely on the doctrine of proprietary estoppel, i.e. that as a result of Mr Ayres’ representation as to the removal of the right of way, it would now be unconscionable to allow the right of way to be enforced by the Defendants.
However, as the Claimants’ interest in the right of way being removed (allegedly created via ‘proprietary estoppel’) was not noted on the title of any of the properties and 147 New Street had subsequently been sold twice, the Claimants had to rely on the right being preserved as an ‘overriding interest’.
Overriding interest are interests to which registered land is subject, irrespective of them not being noted on the register.
In order to be successful in claiming an overriding interest, the Claimants had to show that:
- They were in ‘actual occupation’ of the right of way; AND
- This occupation was obvious on a reasonably careful inspection of the land.
The Claimants sought to argue that they were in ‘actual occupation’ of the right of way at all times and that this was obvious because:
- the right of way had been blocked by a fence and two gates;
- they had applied for planning permission to build over the right of way; and
- there were site notices showing their intention to build on the right of way.
The Court disagreed, holding that the Claimants were not in actual occupation of the right of way.
The Court noted that an inspection of the land benefitting from a right of way may show that the right of way has been blocked off, but unless there is some permanent feature (e.g. a building) it will not be clear that someone is in ‘actual occupation’ of it.
The Court found in the present case that the right of way had been ‘obstructed’ (by the fence and two gates) rather than the Claimants being in ‘actual occupation’ of it.
The Court concluded that ‘the Claimants by waiting until after they had been granted planning permission to take steps to have the right of way removed from the title exposed themselves to the risk that their unprotected and unimplemented agreement with Mr Ayres would cease to be enforceable’.
The Claimants also tried to rely on the doctrine of ‘mistake’ and asked the court to rectify the titles to reflect the agreement with Mr Ayres (i.e. by removing the right of way).
The Court noted its powers to rectify the register in the event of a ‘mistake’ in the register and in order to bring it ‘up to date’.
However, the Court concluded that they could ‘see no basis’ for rectifying the title, finding that the right of way was properly registered against all the properties and that there was no application to remove the right of way at the time of the agreement with Mr Ayres.
The case acts as a stark warning to parties entering into agreements relating to land. The key take-aways are:-
- All agreements relating to land should be documented in writing and signed by all appropriate people (in some cases other formalities will also be necessary); and
- Where appropriate, agreements should include an obligation on one party to ensure the agreement is registered at the Land Registry immediately following its completion.
If there is a dispute as to the validity or enforceability of an undocumented agreement, professional advice should be sought at the earliest possible opportunity.