The importance of dotting the 'i's' and crossing the 't's' in property transactions

28th August 2019 Commercial Litigation

The High Court has held that a right of way was not extinguished where a landowner had relied on an oral agreement made with the previous owner of the land which benefited from the right of way that the right of way would be extinguished.

Mr & Mrs Pezaro owned two properties on New Street in Andover, numbers 149 and 151. The adjacent property (number 147) had a right of way registered over a path across numbers 149 and 151. The right of way had not been used for some time and had in fact been blocked up by fencing. The Pezaros subsequently moved to New Zealand.

In 2009 Mr and Mrs Pezaro approached the owner of number 147, Mr Ayers in relation to a proposal to obtain planning permission to build a 4th house next to number 151. In 2010 Mr Ayres agreed verbally to the removal of the right of way so that it could be built over by the Pezaros. However, the Pezaros focussed their attention on obtaining planning permission for the development and took no steps at that point to remove the right from the titles at Land Registry.

In June 2011 full planning permission was granted. Mr and Mrs Pezaro then sought to contact Mr Ayers to have the right of way removed from the titles. By that point, the property had been sold on 2 occasions and was owned by Mr and Mrs Bourne. Mrs Pezaro contacted Mrs Bourne and in evidence, indicated that she did not get the response she was hoping for. Rather than Mrs Bourne laughing at the ‘cock up’ as Mrs Pezaro had expected, sharing a glass of bubbly with her and accepting her offer to pay her legal fees in order to regularise matters, Mrs Bourne instead questioned how Mrs Pezaro ‘had got her number’. It transpired that the Bournes were unwilling to agree to the removal of the right.

The Pezaros issued a claim for a declaration to the effect that the right of way had been extinguished by virtue of the agreement reached between them and Mr Ayers. They argued that they had acted in reliance on the agreement with Mr Ayers such that a proprietary estoppel based upon the representations made by Mr Ayers had arisen and the Bournes were now unable to enforce the right of way as a result of Mr Ayers’ representation.

The Court acknowledged that Mr Ayers may have been estopped from relying on the right of way and that such an estoppel was potentially capable of being binding on successors in title pursuant to section 116 of the Land Registration Act 2002. However, as the right of way remained registered at the Land Registry and no notice of the Pezaros’ agreement with Mr Ayers was visible on the title, the Pezaros had to demonstrate that they were in actual occupation of the right of way at all times and in order to succeed with their claim, had to show that the Bournes had notice of this pursuant to section 29 and Schedule 3 of the Land Registration Act 2002. The court held that the right of way had merely been obstructed notwithstanding the Pezaros placing notices of their intention to build on site and that the Pezaros were not in actual occupation. The claim therefore failed.

The court concluded that had the agreement between the Pezaros and Mr Ayers been formalised in 2010 and the right of way removed from the register, the claim would never have arisen. By waiting until planning permission had been granted, the Pezaros exposed themselves to the risk that their agreement was both unimplemented and unprotected and therefore potentially unenforceable. Any agreement in relation to land rights should be properly implemented to ensure that it can be enforced.

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Peter Barnard is a Partner located in Manchesterin our Commercial Litigation department

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