A couple of months ago, in the case of Pezaro and another v Bourne and another  EWHC 1964 (Ch), the High Court held that rights of way cannot be extinguished by oral agreement with a previous owner of the land with the benefit of a right of way.
The simple facts the case were that:
P owned 149 and 151 New Street, Andover. Both properties were subject to a right of way in favour of number 147 along a path to the rear of 149 and 151 and alongside 151 to the road. The right of way was noted on all three titles.
At the time P acquired their properties, 147 was owned by A.
A had never used the right of way and it had been blocked by fencing on 149.
P acquired part of A’s garden to create a development site across the rear of all three gardens which P then sold to a third party.
P later wanted to construct another house next to 151, which would involve building across the right of way.
A orally agreed to the removal of the right of way but P did not attempt to register this at Land Registry until planning permission had been obtained, by which time A had sold 147 to B.
B claimed the benefit of a legal easement over the right of way, which was still noted on the registered titles belonging to P.
P sought a determination that the right of way had been extinguished, on the grounds of proprietary estoppel.
What is Proprietary Estoppel?
Proprietary estoppel is the creation of an interest in land in the absence of following the correct formalities. The doctrine of proprietary estoppel can be used to create freehold ownership, a lease, a licence or an easement. Proprietary estoppel can be used to award an interest in land as a remedy where it would be unconscionable for the holder of the legal title to deny the claimant’s entitlement.
Proprietary estoppel requires the claimant to establish an equity. An equity arises where:
an owner of land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the owner’s property;
in reliance on this belief, the claimant acts to his detriment to the knowledge of the owner; and
the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.
The High Court found in B’s favour, acknowledging that whilst A may have been estopped from asserting the right of way as a result of their oral agreement with P, any estoppel was not enforceable against B.
P argued that it had an overriding interest, capable of binding successors as it was in actual occupation of the right of way and therefore had an equity by estoppel protected by section 116 of the Land Registration Act 2002 (LRA 2002). The court disagreed, holding that actual occupation required more than an obstruction and that a purchaser for valuable consideration was not bound by an interest unless it was protected under section 29(2) of the LRA 2002, which it was not.
The Court’s decision highlights the dangers of informal agreements between landowners, particularly in relation to registered land. As the court pointed out, if P had applied to register the agreement with A at the Land Registry, it would have been investigated and any purchaser made aware. It is also a good example of proprietary estoppel not binding persons who were not party to the original agreement, where the agreement was not recorded in writing.
If you are considering entering into an agreement or have already entered into an agreement concerning land, it is always best to check with a solicitor whether or not it needs to be registered at Land Registry in order to ensure it is binding on not just the other parties but third parties in the future.
Call Farleys’ residential property solicitors on 0845 287 0939 or submit your enquiry through our online contact form.