March 23, 2020

Failure to document removal of right of way scuppers proposed development

The High Court decision in Pezaro v Bourne highlights the importance of adhering to legal formalities as developers are thwarted, having sought to rely on an oral agreement made with the previous owner of the land which benefited from a right of way that the right of way would be extinguished.

Background

Mr and Mrs Pezaro owned two properties on New Street in Andover (149 and 151). A neighbouring property (147) benefitted from a right of way across a strip of land at the rear of the Pezaros’ properties and this right was noted on all three titles.

No 147 was owned by Mr Ayers at the time the Pezaros acquired their properties, who had never used the right of way.

The Pezaros purchased part of Mr Ayers garden to create a development site across the back of Nos 147, 149 and 151 which was then sold to a developer.

The Pezaros later decided to build another house next to No 151 and across the right of way. The Pezaros reached an oral agreement with Mr Ayers that the right of way be extinguished. However, no steps were taken to remove the right from the property titles.

Once the planning permission had been obtained the Pezaros sought to remove the right of way from the titles, by which time Mr Ayers had sold No 147 to a developer who had in turn sold to Mr and Mrs Bourne who refused to remove the right of way.

The Pezaros asked the court to confirm that the right of way had been extinguished on the basis of proprietary estoppel.

Proprietary estoppel

The Pezaros argued that they had acted in reliance on the representations of Mr Ayers as to the right of way being extinguished, such that the proprietary estoppel arose, and it would now be unconscionable to allow the right of way to be enforced by the Bournes.

The High Court acknowledged that Mr Ayers may have been estopped from asserting the right of way as a result of the oral agreement with the Pezaros but any estoppel was not enforceable against the Bournes.

Overriding interests

The Pezaros claimed an overriding interest, capable of binding successors in title irrespective of being noted on the title, because they were in actual occupation of the right of way and this occupation was obvious on a reasonably careful inspection of the land. They claimed that fences and two gates blocking the right of way amounted to actual occupation and that site notices and their planning application clearly showed their intention to build across the right of way.

The High Court disagreed and held that actual occupation required more than mere obstruction.

The court concluded that the Pezaros ‘exposed themselves to the risk that their unprotected and unimplemented agreement with Mr Ayres would cease to be enforceable’ by failing to remove the right of way from the title until after the planning permission had been granted.

Implications

This case acts as a clear warning to parties entering into agreements relating to land and highlights the importance of documenting and registering at the Land Registry any agreement relating to rights over land. It also serves as a reminder that the court protects the right of purchasers for value to rely on the registered title.

The article first appeared in our Real Estate Bulletin - March 2020.