The Court of Appeal has delivered its eagerly awaited judgment in the case of Kernott v Jones [2010] EWCA Civ 578. I wrote about the decision of the lower courts here, having been left with a distinctly uneasy feeling about the way in which the authorities were being applied. Put simply, this case concerned the proper division of shares in a house which was jointly owned by the parties. The parties had separated some years before this case came before the court and each of the parties accepted that, at the time of their separation, they owned the property in equal shares.

The first issue which arises for determination in a case such as this is clearly articulated in Stack v Dowden [2007] UKHL 17 – where property is jointly owned at law, from which it follows that there is a presumption that the beneficial interests in that property are equal, can that presumption of equal beneficial ownership be rebutted? It is, quite logically, only necessary to address the question of the amount of the parties’ shares if this presumption is first rebutted. However, this is a high threshold to meet as was made clear in Stack – only exceptionally will it be possible to establish that the property is intended to be owned in anything but equal shares. In the present case the Court of Appeal, reversing the decision of the lower courts, concluded that there was no evidence from which it could be determined that the parties had, at some time after their separation, intended that their beneficial shares should be held other than equally. Lord Wall said this:

55. …This is not a case under the Matrimonial Causes Act 1973, and the government has not implemented the Law Commission’s proposals relating to unmarried couples. This court must resolve this appeal under the law relation to trusts as explained in Oxley v Hiscock and Stack v Dowden.

57. The critical question is whether or not I can properly infer from the parties’ conduct since separation a joint intention that, over time, the 50-50 split would be varied so that the property is currently held 90% by the respondent and 10% by the appellant…

58. …I simply cannot infer such an intention from the parties’ conduct. In my judgment, the conveyance into joint names, following Stack v Dowden created joint beneficial interests, and the parties agreed that when they separated they had equal interests. There has to be something to displace those interests, and I have come to the conclusion that the passage of time is insufficient to do so, even if, in the meantime, the appellant has acquired alternative accommodation, and the respondent has paid all the outgoings. In my judgment, the appellant has a 50% interest in the property, and both the judge and the deputy judge were wrong to conclude otherwise.

Not surprisingly the relevant authorities were examined at length. This was, it should be noted, a majority decision, Lord Justice Jacob dissenting. The judgments highlight, once again, the folly of unmarried couples purchasing property jointly and failing to contemplate the possibility of their later separation and the proper division of their property interests should such an event occur. In close personal relationships such discussions seem particularly unpalatable. However, they would probably have been more palatable than the three hearings to which Mr Kernott and Ms Jones have subjected themselves, together with all of the associated costs. From the perspective of the lawyer who has to advise parties who now find themselves in this position, it should make the likely outcome a little more predictable, thankfully…

For a more extensive discussion of this decision see Nearly Legal’s post here.

Section 15 of the Commons Act 2006 provides that:

Any person may apply to the commons registration authority to register land to which this Part applies as a town or village green in a case where …

… a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, have indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years …

The proper interpretation of the component parts of this provision (and, more particularly, its predecessor provision in the Commons Registration Act 1965) has consumed what might be regarded by some as a disproportionate amount of judicial time over the last decade or so. Many issues of interpretation have now been resolved at the highest judicial level. However, one aspect of the statutory test which has undergone less close scrutiny has recently been considered by the High Court in the case of R (Oxfordshire & Buckinghamshire Mental Health NHS Foundation Trust and Oxford Radcliffe Hospitals NHS Trust) v Oxfordshire County Council & Others [2010] EWHC 530 (Admin): that is how one determines whether the user requirement is met? In this case the applicant was relying upon a “neighbourhood within a locality”. It should be noted that the application for registration in this case was actually made under the predecessor provision to section 15 of the Commons Act 2006; that is section 22(1A) of the Commons Registration Act 1965. However, the following discussion will be relevant to the proper interpretation of the current provision given that the statutory wording is reproduced therein.

The application in this case concerned a meadow, known locally as Warneford Meadow, of approximately 20 acres. The meadow is owned by an NHS Trust and is situated in a central location within the City of Oxford, surrounded by hospital sites and residential areas. The difficulty which faced the applicant in this case is one which many applicants may face when seeking to have land registered as a new green which is situated within a large urban area as distinct from an easily definable parish (say, a village), for example. How does one define a “neighbourhood within a locality” and what use is required in order to satisfy the “significant number of the inhabitants of … any neighbourhood within a locality” requirement?

At the public inquiry stage the meaning of  “neighbourhood within a locality” was a point of real contention. The applicant did not rely upon any recognised administrative ward or ecclesiastical parish or the like. The applicant had constructed its own neighbourhood for the purposes of making this application. The neighbourhood was given a name by the applicant (the Divinity Road Neighbourhood) but was made up of a number of predominantly residential roads. The Inspector who chaired the public inquiry rejected the Divinity Road Neighbourhood as being a neighbourhood for the purposes of the Act as it was an “artificial construct”. He did, however, find that Hill Top Road (which was one of the roads included in the “artificial” Divinity Road Neighbourhood) was a neighbourhood for the purposes of the Act and, therefore, the application could succeed on the basis that a significant number of its residents had made qualifying use of the meadow. Hill Top Road was substituted for the Divinity Road Neighbourhood and the application succeeded on that basis.

The Claimant in this case argued that the applicant could not succeed on the basis of this (smaller) neighbourhood because only about a third of the users actually came from Hill Top Road. Therefore, they said, the application must fail because the users did not come predominantly from the neighbourhood identified.

In order to understand the basis for this argument it is necessary to briefly look back at the original statutory provision which facilitated the registration of new greens, section 22 of the Commons Registration Act 1965, and the court’s interpretation of its proper application. This provision only referred to the need for “the inhabitants of any locality” to have indulged in lawful sports and pastimes (note that there was no reference to a “neighbourhood within a locality” – this was introduced by a subsequent amendment, discussed below). In R v Oxfordshire County Council, ex p Sunningwell Parish Council [2000] 1 AC 335 Lord Hoffmann considered the effect of people from outside the locality also using the land with which the application was concerned. He said that whilst the statutory wording “merely requires proof of user by the inhabitants of any locality it does not say user only by the inhabitants of the locality”. Having then gone on to consider the evidence which had been put before the public inquiry Lord Hoffmann concluded that “it is sufficient that the land is used predominantly by inhabitants of the village [ie the locality in the Sunningwell case]”. The judge in the present case, HHJ Waksman QC, sitting as a judge of the High Court, noted that it was not clear whether the “Predominant User” test was part of the ratio of Sunningwell or not. However, on the assumption that it was at that time, he then went on to consider the amendment which replaced the old section 22 of the 1965 Act withe the new section 22(1A) (this amendment was introduced by section 98 of the Countryside and Rights of Way Act 2000). The material alterations to the original section 22 were to include a “neighbourhood” as an alternative to a “locality” and to alter the user requirement from “the inhabitants of any locality” to one requiring “a significant number of the inhabitants of any locality”. This, it was noted by Carnwath LJ in Oxfordshire County Council v Oxford City Council [2006] Ch 43, introduced “the new concept of ‘neighbourhood within a locality’, and required no more than a ‘significant’ number of local users”. The effect of that, said HHJ Waksman QC in the present case, is that the Predominant User test (arguably introduced by Lord Hoffmann in Sunningwell) was not carried forward into the new section 22(1A) of the 1965 Act. So as to leave no room for doubt he also reviewed the Parliamentary materials which were relevant to that statutory amendment which he concluded could not have been clearer; predominant user was not a requirement. This had also been expressly recognised by Lord Hoffmann in Oxfordshire County Council v Oxford City Council [2006] UKHL 25.

What impact does this decision have? Applicants seeking to have land registered as a new green can rely upon very limited areas (a single residential road, it seems) as a neighbourhood within a locality for the purposes of meeting the statutory test; what they cannot do is artificially construct a neighbourhood for the purposes of making an application. If a neighbourhood can be identified then it is enough that a significant number of inhabitants of that neighbourhood have made qualifying use of the application land. The fact that other people from outside the neighbourhood may also have used the land in a qualifying manner will not cause the application to fail because it is not necessary for the qualifying users to come predominantly from within the neighbourhood.

Posted by: RM | March 20, 2010

A Triumph for Village Green Enthusiasts

On 3 March 2010 the UK Supreme Court handed down its decision in R (on the application of Kevin Lewis) v Redcar & Cleveland Borough Council & Anor [2010] UKSC 11. This decision represents a (welcome) U turn in the law on the question whether deference by the recreational users of a claimed green to the use being made of the land by its owner has any relevance to whether or not the user “as of right” test is met. The Court of Appeal, whose decision in this case was reversed by the Supreme Court, had previously upheld the “judge-made law” (as acknowledged by Sullivan J who granted leave to appeal from his own decision in this case) which determined that where recreational users had deferred to use made by the landowner of his own land, that deference was sufficient to render the user relied upon not as of right (which is a prerequisite for a prescriptive claim).

The Supreme Court was having none of it, and rightly so. The introduction of this qualification had overcomplicated the as of right test which is at the heart of any claim based upon the doctrine of prescription. Not only was it creating a chasm between the user as of right test in the context of new green registration applications and the other contexts in which the as of right test is applicable (ie the prescriptive acquisition of easements, public rights of way and profits a prendre), it was also defeating the purpose of the Commons Act 2006 which exists to facilitate the registration of new greens when the particular statutory requirements are met.

It is no doubt as a result of the increased number of new green registration applications that the Inspectors (who chair public inquiries into the registration of new greens) and the courts have become a little sceptical about the validity and purpose of such applications. However, on this subject Lord Walker had this to say at paragraph [48] of his speech:

Disparaging references are sometimes made to the “village green industry” and to applications for registration being used as a weapon of guerrilla warfare against development of open land. The House of Lords has (both in Beresford and Oxfordshire) expressed some doubt about the extension of town or village green protection to land very different (both in size and appearance) from a traditional village green. However, in the Commons Act 2006 Parliament has made it easier, rather than more difficult, to register a green…

It is the suspicious approach to the proliferation (and likely continued proliferation) of new green registration applications that had no doubt given rise to the court’s acceptance that the user as of right test could and should be qualified by the concept of deference, not least because it would be a way of curtailing the number of applications which might otherwise succeed. However, qualifications to well established legal tests should only be acknowledged when they have some genuine legal basis, which deference did not.

The decision of the Supreme Court is to be welcomed. It was acknowledged that where two uses (the use of the landowner and the use of the recreational users) coincide there may be occasions when the two rights of user cannot be enjoyed simultaneously; the deference of one party to the other’s use simply being a matter of courtesy. Nothing more than that. Even more pleasing is the fact that Lord Hope, at paragraph [76] of his speech, referred to my article in which I had criticised the Court of Appeal’s decision in this case!

The Court of Appeal has delivered its eagerly awaited judgment in The Port of London Authority v Ashmore [2010] EWCA Civ 30.  The facts are, briefly, as follows:

Mr Ashmore owns a boat, “Atrato”, which he has moored at Albion Wharf, Battersea, for twenty five years or more. The Port of London Authority (“the Authority”) sought to register title to the bed and foreshore of the river, to include that part of the river on which the Atrato was moored. Mr Ashmore objected to the Authority’s application for first registration on the ground that he had acquired title to, at least, that part of the bed and foreshore of the river on which the Atrato rests at low tide by virtue of his adverse possession of the same. Following his objection to registration the Authority commenced proceedings against Mr Ashmore seeking, amongst other things, an order requiring the removal of the Atrato and an injunction preventing its return without the Authority’s licence. Mr Ashmore responded to the issue of proceedings by saying that, in his view, the outcome of the case would depend upon the answer to the following question: whether it is possible to acquire land by adverse possession of the foreshore and / or the sea or river bed by reason of mooring. The Authority seemed to have agreed that this issue was central to the eventual determination of the dispute and so it was ordered, by consent, that the following should be tried as a preliminary issue:

Whether it is possible for the owner of a vessel that is moored in a particular place on a tidal river or other area of tidal water to acquire title by adverse possession to the sea or river bed or the foreshore for the footprint of that vessel where:

(a) the title to the sea or river bed or the foreshore has not been registered; and

(b) the vessel rests on the bed or the foreshore at low tide.

For the purposes of determining the preliminary issue the Authority was required to prepare and serve on Mr Ashmore a statement of assumed facts. It was on the basis of those assumed facts that the Deputy Judge of the High Court in the Chancery Division, Mr Stephen Smith QC, was to make his determination on the preliminary issue of law. During the course of the proceedings counsel for the Authority made what the Deputy Judge described as “two important concessions of law”: (i) that, in principle, title to the bed of a tidal river can be acquired by adverse possession; and (ii) that the fact that the River Thames where Atrato is moored is subject to the public right of navigation would not, of itself, prevent title to the bed or foreshore being acquired by adverse possession. This point will be returned to later.

Stephen Smith QC, in his judgment, reviewed some of the well known authorities such as Roberts v Swangrove Estates Ltd [2007] EWHC 513 (Ch), J A Pye (Oxford) Ltd and another v Graham and another [2003] UKHL 30, Powell v McFarlane and another (1977) 38 P & CR 452, Buckinghamshire County Council v Moran [1990] Ch 623 and Red House Farms (Thorndon) Ltd v Catchpole [1977] 2 EGLR 125, all of which dealt with the acquisition of title to unregistered land by adverse possession.  It was acknowledged that in order to succeed in a claim of adverse possession it is necessary to establish both factual possession and the intention to possess (the animus possidendi). At the risk of oversimplifying the decision of the lower court (by my omitting to set out in any detail the analysis which was undertaken by the judge), Stephen Smith QC determined that:

… it is possible for the owner of a vessel that is moored in a particular place on a tidal river to acquire title by adverse possession to a part of the river bed where the title to the river bed has not yet been registered and the vessel rests on the bed at low tide. Indeed, since I have heard full argument on the point, I would go further and find that in this case Mr Ashmore has established the necessary fact of possession and the intention to possess, to have acquired title to the relevant part of the bed of the Thames adjacent to Albion Riverside.

The problem in this case is that what was to be determined in the original proceedings was based upon the assumed facts which had been prepared purely for the purpose of adjudicating upon the preliminary issue. Sir John Chadwick, giving the judgment of the Court of Appeal, stated:

The task of the courts, as it seems to me, is to decide cases on their facts in accordance with principle. The principles applicable to the acquisition of title to unregistered land by adverse possession are well established. The proper course, in the present case, is to determine what the facts are – a task which should not be unduly difficult – and then to apply those principles to the facts as determined (para [21]).

The statement of assumed facts does not have the status of a pleaded case … it was produced only for the purposes of the trial of the preliminary issue “and without prejudice to the parties’ respective pleaded cases”. It cannot be treated as a definitive or exhaustive statement of facts which either party would wish to advance at a trial … A decision on assumed facts which are neither definitive or exhaustive could not be determinative of the outcome at a trial (para [24]).

The upshot being that the parties have now found themselves, to all intents and purposes, back at square one in respect of this issue. Stephen Smith QC’s declaration in response to the question whether it is possible to acquire title by adverse possession to the sea or river bed in the circumstances posed by the parties was set aside by the Court of Appeal. This was because he had made a declaration in response to the hypothetical question  (hypothetical because it was predicated upon assumed facts) but had, in his judgment, said that he found that Mr Ashmore had, in fact, established the necessary fact of possession and intention to possess to have acquired title to the relevant part of the bed of the Thames. Therefore, the Court of Appeal concluded that “the declaration … is in terms which do not properly reflect the judge’s conclusion”.

Given that the judge recorded in his judgment  that counsel for the Authority had made two important concessions of law, the first being that, in principle, title to the bed of a tidal river can be acquired by adverse possession, it is highly questionable whether it was ever actually necessary to then adjudicate upon the preliminary question. The Court of Appeal’s judgment concluded:

…The issue raised in general terms [by Mr Ashmore] … is no longer contentious (if it ever was). It is accepted by the Authority that it is possible, in appropriate circumstances, to acquire title by adverse possession of the foreshore and river bed by reason of mooring. The question in this case has been, and remains, whether – on the facts as established (not on assumed facts) – Mr Ashmore has done so. That question needs to be tried. If I may say so, delay and expense would have been saved if it had been appreciated that (given the Authority’s decision to accept, in principle, that the title to the foreshore and river bed could be acquired by reason of mooring) this was not a suitable case for a preliminary issue.

Back to the High Court for the Authority and Mr Ashmore then. Watch this space…

Posted by: RM | December 30, 2009

2010: The Year of the New Town or Village Green?

It looks as though 2010 could well be another very significant year for the development of the law on the registration of new town and village greens (now governed by the Commons Act 2006, previously the Commons Registration Act 1965). In January the Supreme Court of the United Kingdom will hear the appeal in R (on the application of Kevin Lewis) v Redcar & Cleveland Borough Council & Persimmon Homes (Teeside) Limited [2009] EWCA Civ 3. This will be the fourth appeal in the context of the law on the registration of new town and village greens to come before the UK’s highest court in a little over a decade, the forerunners being Oxfordshire County Council v Oxford City Council [2006] UKHL 25,  R (Beresford) v Sunderland City Council [2003] UKHL 60 and R v Oxfordshire County Council Ex parte Sunningwell Parish Council [1999] UKHL 28. The decision will hopefully provide some welcome clarity on the question of the relevance of deference by the qualifying user to the landowner’s use of his own land and the relationship between such deference and the user as of right test which test is central to any prescriptive claim. Update: the decision in Redcar was handed down on 3 March 2010 – for a post on that decision see here.

The following month the High Court will judicially review the correctness of a registration authority’s decision to register land as a new green. One of the issues likely to be determined in that case is what constitutes a “neighbourhood” for the purposes of the statutory test. Section 15 of the Commons Act 2006 provides that any person may apply to the registration authority to have land registered as a new green where it can be demonstrated that a significant number of the inhabitants of any locality, or a neighbourhood within a locality, have indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years.

The question what constitutes a neighbourhood has caused considerable confusion, particularly in the context of new green registration applications concerning land within a densely populated environment (usually a city or very large town). Unlike in rural settings where one might normally rely upon a parish as being the relevant locality, within large towns and cities, unless one can point to a specific administrative area as being the relevant neighbourhood, it can be quite difficult to coherently define one’s neighbourhood within a locality. There has been a limited amount of judicial guidance on what constitutes a neighbourhood for these purposes. In R (Cheltenham Builders) v South Gloucestershire Council [2003] EWHC 2803 (Admin) Sullivan J said that a neighbourhood cannot be any area drawn on a map, it must have some degree of cohesiveness. In Oxfordshire County Council v Oxford City Council [2006] UKHL 25, however, Lord Hoffmann said the phrase “any neighbourhood within a locality” (the wording of the relevant provision in the Commons Registration Act 1965 which is replicated in the 2006 Act) was obviously drafted with deliberate imprecision.

These cases promise to provide an interesting start to 2010 as far as the development of the law of new town and village greens is concerned.

The Court of Appeal delivered its judgment in Wild v (1) Secretary of State for Environment, Food and Rural Affairs & (2) Dorset County Council [2009] EWCA Civ 1406 just before Christmas. The case concerned a claimed public right of way over land in Dorset. The ownership of the land was never determined in the proceedings although the Appellant, Mr Wild, claimed that he owned the land over which the right was claimed as manorial waste.  There had been previous unsuccessful applications in respect of the claimed way but in 2003 Dorset County Council, the surveying authority, made an order under section 53(2)(b) of the Wildlife and Countryside Act 1981 that the path the subject of this litigation be added to the Definitive Map and Statement. This decision was confirmed by an inspector who held a public inquiry into the same. The decision was the subject of judicial review proceedings in the High Court where Keith J refused to quash the order. However, the Court of Appeal reversed the decision of Keith J.

There are two methods by which a new public right of way can come into existence. First, section 31 of the Highways Act 1980 provides for the presumption of dedication of a highway after 20 years use. That provision was held not to apply in this case. In the alternative the common law rules still apply, the statutory rules having been introduced to supplement rather than replace the common law. The main difference being that at common law it is not necessary to prove 20 years use which is a pre-requisite for the operation of the statute. This case was concerned with the application of the common law rules.

Ultimately the Court of Appeal determined that the order for the modification of the Definitive Map and Statement be quashed, the requisite test having not been met. Crucial to this decision was the fact that at a previous public inquiry in 1978 there had been objections to the registration of a bridleway along the same route as the claimed footpath. It is not clear whether either of the parties who made the objections were the owners of the land over which the way passed. However, Scott Baker LJ, giving the judgment of the Court of Appeal in this case, concluded that it was possible they could have been the landowner. If that was the case then the objections would have been sufficient to demonstrate that the landowner had no intention to dedicate the way as a public right of way. Unlike in other contexts in which the rules of prescription operate, in the context of public rights of way (as distinct from say easements or new town or village greens) if the landowner does something which amounts to evidence that he did not intend to dedicate a right of way, that will prove fatal to the claim, even where use is otherwise use ‘as of right’.

The end result is that whilst the possibility that one of the 1978 objections was made by the landowner remains alive, there can be no prospect of a public right of way being established. Of course, if the ownership of the land is determined and it becomes apparent that none of the objections came from the then landowner, the door will be open for modification of the Definitive Map and Statement at some later date.

One interesting aspect of the judgment concerned Scott Baker LJ’s criticism of the reasoning of Keith J at first instance. Keith J had concluded that whilst there had been objections in 1978, one of which may have been an objection by the landowner, any failure thereafter to continue to object to the public’s use of the way “neutralised” the effect of the objection made at the 1978 inquiry as far as any inference of dedication was concerned. Such failure to take active steps to prevent continuing user might well be insufficient to render user vi and, therefore, no longer use as of right, which would be insufficient to prevent a prescriptive claim succeeding in the context of a private right of way or new green claim. However, it is the need to infer dedication of the public right of way which enables any expression of contrary intention to have such a dramatic effect on the potential success of a prescriptive claim where public rights of way are concerned.

Posted by: RM | November 25, 2009

Mortgage Lenders Still Exercise Insufficient Caution

The recent decision of the High Court in HSBC Bank plc v Dyche & Collelldevall [2009] EWHC 2954 (Ch) illustrates that mortgage lenders are, despite cases such as Williams & Glyn’s Bank Ltd v Boland [1981] AC 487 in which it was established that a failure by lenders to make proper enquiries of those in actual occupation rendered those lenders exposed to interests which might potentially override their own interests, still not always sufficiently careful so as to avoid the ramifications of overriding interests and issues of priority which arise out of such interests being established.

In HSBC v Dyche property was conveyed to Mr and Mrs Dyche in 1994. The property had belonged to Mrs Dyche’s parents, Mr and Mrs Collelldevall, who had lived there since 1976. In 1988 Mr Collelldevall was made bankrupt. At that time he and his wife owned the property as beneficial joint tenants. The bankruptcy had the effect of severing that beneficial joint tenancy. Following Mr Collelldevall’s bankruptcy his Trustee in Bankruptcy obtained, in 1992, an order for sale of the property which order was not enforced. The then mortgagee subsequently obtained a possession order in 1993. That order was also not enforced. Mr Collelldevall was discharged from his bankruptcy at some time in early 1994.

In January 1994 the property was transferred by Mr and Mrs Collelldevall to Mr and Mrs Dyche with the agreement of Mr Collelldevall’s Trustee in Bankruptcy (“the 1994 Transfer”). The mortgage outstanding at the time was discharged upon completion of the transfer. A sum was also paid the Mr Collelldevall’s Trustee in Bankruptcy, thereby increasing the dividend in the bankruptcy. The purchase price was set to meet the Collelldevall’s immediate financial needs and commitments and bore no relation to the actual value of the property which was, at that time, much more than the £25,000 apparently paid by Mr and Mrs Dyche.

At the time of the transaction Mr and Mrs Collelldevall were unable to secure a mortgage against the property in their own names as a result of his bankruptcy. Hence, it was argued, and accepted, that the Dyche’s acquired the property on their behalf. The Dyche’s obtained a mortgage of £17,000 from Lloyds Bank and Mr Dyche was said to have borrowed the balance of £8,000 from a friend. However, the judge accepted Mr Collelldevall’s evidence that it was he who had borrowed the £8,000 from a friend. There was an agreement that Mr and Mrs Collelldevall would pay Mr and Mrs Dyche in monthly installments amounts which corresponded with the amounts due under the Lloyds mortgage. The judge accepted that following the 1994 Transfer the property was held on constructive trust for the Collelldevalls.

Later in 1994 Mrs Collelldeval died and the judge accepted that her interest in the property passed to Mr Collelldeval under the right of survivorship. Whilst the bankruptcy had had the effect of severing the joint tenancy the judge concluded that the effect of the 1994 Transfer was to put the Collelldevalls, as far as possible, back into their pre-bankruptcy position. Thus it was concluded that the Dyches held the property on trust for the Collelldevalls as beneficial joint tenants.

In 1995 Lloyds Bank advanced more monies to the Dyches which sum was repaid with later borrowings from HSBC. Lloyds did not take a further charge against the property in respect of this advance. In 2002 the property was transferred into the sole name of Mrs Dyche by herself and her husband in connection with divorce proceedings (“the 2002 Transfer”). This was said to be pursuant to a court order under which Mrs Dyche had paid to her husband the sum of £5,000 (the only consideration which passed in relation to the 2002 Transfer). On the same date as the 2002 Transfer Mrs Dyche gave HSBC a first legal charge over the property in order to secure an advance against that property. In order to obtain the mortgage Mrs Dyche had provided HSBC with what purported to be an assured shorthold tenancy agreement naming herself as landlord and Mr Collelldevall as tenant. The judge accepted that Mr Collelldevall’s signature was a forgery. Mr Collelldevall knew nothing of this mortgage and had not authorised it. A further advance was acquired by Mrs Dyche under a second mortgage from HSBC in 2003.

Mr Collelldevall gave evidence that he knew the property was going to be transferred into Mrs Dyche’s sole name but that she had promised to transfer the property to him thereafter. The judge found that Mrs Dyche had clearly perpetrated a deception upon her father; she was unable to transfer the property so long as monies remained outstanding in respect of the HSBC mortgages. Mrs Dyche had, it was concluded, acted in breach of trust. Whilst it was not established that Mr Dyche had anything to do with the forgery of Mr Collelldevall’s signature on the tenancy agreement the judge concluded that he must have known that he too was acting in breach of trust in transferring the property to his wife in return for £5,000 given that the property was beneficially owned by Mr Collelldevall, pursuant to the agreement at the time of the 1994 transfer.

The question for the court, therefore, was whether Mr Collelldevall’s beneficial interest in the property was overreached by HSBC’s interest under the terms of the mortgage(s). The judge reviewed the relevant provisions of the Law of Property Act 1925 (section 2(1)(ii) regarding the effect of a conveyance of land by trustees; section 205(1)(xxi) regarding the definition of a purchaser in good faith; and sections 2(1)(ii), 2(2) and 27, which require the conveyance to be made by at least two trustees) and, applying the law to the facts of the case, determined that the doctrine of overreaching did not here apply (for detailed analysis and reasoning see the judgment, paras [37] – [46]). It was held that Mr Collelldevall had a beneficial interest which overrode the registration of the HSBC mortgages pursuant to Paragraph 2, Schedule 3 to the Land Registration Act 2002.

The judge concluded that “HSBC could have avoided the present position by making inquiries of Mr Collelldevall, but, though a Letter of Consent was considered, they chose not to proceed down that route, as the documents appeared to be in order … By not making inquiries of Mr Collelldevall direct, they assumed the risk of the tenancy agreement turning out to be a forgery. The risk may have seemed remote, but has now come to pass, and HSBC misses out because of it”.

Once again, this is a clear reminder of the consequences of mortgage companies not making sufficient inquiries of propsective mortgagors where there is evidence that there is someone else occupying the property concerned. However, there is nothing in the facts to suggest that HSBC was or could have been aware that Mr Collelldevall and Mrs Dyche were related. On the face of it he was no more than a tenant with the benefit of an assured shorthold tenancy. It would have been plain from the nature of the tenancy agreement what rights Mr Collelldevall would or would not have had as a consequence of his shorthold tenancy. Without any reason to suspect that there was a familial relationship between Mrs Dyche and Mr Collelldevall this decision seems to suggest that any potential lender should make inquiries of shorthold tenants in order for their lending to be secure. This does, on the face of it, seem to be a particularly onerous obligation to impose upon all lenders, particularly given the recent increase in the acquisition of  ‘buy to let’ properties together with a tendency for property owners to switch their mortgages much more frequently, reflecting an inclination to always be in pursuit of the best deals on offer.

Postscript: For another view on this decision see here.

Posted by: RM | November 24, 2009

Intestacy & Family Provision Claims on Death

The Law Commission has recently published its Consultation Paper on this topic: Consultation Paper 191. It can be viewed here. It runs to 190 pages so any kind of comment upon or assessment of its contents is beyond the scope of this blog. However, it is perhaps worth reiterating the importance of the issues which this consultation paper addresses. It considers the intestacy rules which are currently governed predominantly by the Administration of Estates Act 1925. It also addresses provision (or alleged lack thereof) for family members and dependants and the court’s jurisdiction to modify the distribution of a deceased’s estate under the Inheritance (Provision for Family and Dependants) Act 1975. The Consultation Paper invites views on possible reform of the law governing these issues.

The Court of Appeal has recently delivered its judgment in Thompson v Bee & Anor [2009] EWCA Civ 1212. The case concerns a right of way which is annexed to a property devised by the will of Mrs Edith Thompson, which was executed in September 1974 (the testatrix died in 1975). By her will Mrs Thompson left her house, Pear Tree House, to her grand-daughter (who became Mrs Bee), the respondent, “subject … to a right of way as existing at the date of [her] death to the Garth at the rear thereof…”. Mrs Thompson left the Garth (about an acre of “back land”, situated to the rear of Pear Tree House, on which stood a rather dilapidated old slaughterhouse – unused – and piggery – occasionally used, primarily for storage), which she also owned, to her son, Mr George Thompson, which he later transferred in 1989 by Deed of Gift to Mr Stephen Thompson, the appellant. The Garth is accessed by way of a rough hard core track which is situated on the land of Pear Tree House and which also gives access to the garage of that property. At the end of the track there is a steep drop over rough land with a gate leading into the Garth.

At the time Mrs Thompson wrote her will Pear Tree House and the Garth were in her common ownership. Whilst the track was clearly visible on the ground it cannot be said that an easement (right of way) existed over the track because it is trite law that “an easement is some right which a person has over land which is not his own … you cannot have an easement over your own land…” (per Lord Esher MR, Metropolitan Railway Co v Fowler [1982] 1 QB 165, 171). In her will she gave Pear Tree House to her grand-daughter subject to the right of way detailed above. She also bequeathed the Garth to Mr George Thompson “… together with the right of way … across the rear of Pear Tree House at all times and for all purposes connected with the said garth …” (ie over the track).

Of course, the will simply passed the title of the properties to the executors. There were two assents made by the executors in 1977 which gave effect to the terms of the will. Hence, it is the assents and not the will which had the effect of passing title to the respondent and the appellant’s predecessor in title. The trial judge held that the clauses referred to in the will which granted / reserved the right of way across the track for the benefit of the Garth were to be read into the later assents, thereby recognising that this was all part of one transaction. In contrast, the respondent’s contention, which was, according to Mummery LJ, a “contention  … rooted in the remorseless logic of conveyancing law and practice”, was that the will caused the title of the properties to pass to the executors; this was one transaction. The assents, which vested the title of the properties in the beneficiaries, were, according to the respondent, a second and separate transcation. The assent of Pear Tree House took place a few days before the assent of the Garth. The significance of this distinction is concerned with the fact that no express right of way for the benefit of the Garth as retained land (by the executors, at the time the assent of the title to Pear Tree House was made) was reserved in the assent of Pear Tree House to the respondent. The absence of an express reservation was, it was argued, fatal to the claim that an easement of the character referred to in the will of Mrs Thompson had been created for the benefit of the Garth over the track. Thus, the only right of way which could have been impliedly reserved by law was one of necessity (which would be interpreted very narrowly).

The Court of Appeal rejected the approach advocated by the respondent because “without any legal justification, it requires the court to ignore totally the relevant intentions expressed by the testatrix in her will on the very matter of a right of way over the track for the benefit of the Garth. The fact that the assent is the document of title to Pear Tree House does not consign the will to the scrap heap when ascertaining the intentions of [the testatrix]”. By reference to both statute (section 36(2) of the Administration of Estates Act 1925) and common law (Phillips v Low [1892] 1 Ch 47; George Attenborough & Son v Solomon [1913] AC 76) the Court of Appeal held that the will and the subsequent assents, giving effect to the terms of the will, were to be treated as a single transaction. Thus, the respondent’s highly technical approach to this question was rejected.

Having determined that the right of way over the track for the benefit of the Garth was to be treated as having been created by the will and the subsequent assent, it was then necessary to determine the nature and extent of that easement. At the time of the transfer of the Garth to the appellant’s predecessor in title, the property was little used except for occasional grazing and for storage in the dilapidated buildings. At the time of this litigation the appellant had secured planning permission to develop part of the Garth by erecting one detached dwelling and two semi-detached dwellings. At first instance the judge had held that the right of way along the track was limited to use connected to agricultural purposes (and he granted an injunction forbidding use of the right of way for purposes other than agricultural purposes). The judge had made this finding because reference to the right of way being “for all purposes connected with the said Garth” he had interpreted as meaning circumstances existing at the time of the death of the testatrix. At the time of her death the Garth was identified as being subject to agricultural use which would have necessitated access by the odd car, van, tractor or agricultural vehicle. The track was also used, of course, for access to the garage of Pear Tree House. The judge concluded that recognising the right of way as permitting access to and from a residential development of the sort proposed by the appellant would seem to be excessive and more than likely to cause a nuisance to the owners of Pear Tree House and other owners and occupiers of the houses on the Garth trying to exit or enter their properties.

In the appeal, whilst the court thought that the judge was not justified in interpreting “all purposes connected with the said Garth” as being restricted to agricultural purposes, it was held that a right of way for the purposes intended was too excessive. In conclusion, the Court of Appeal substituted the judge’s declaration for a declaration to the effect that the appellant’s right of way does not permit user for the three residences proposed to be erected on the Garth. The injunction was varied to reflect the substituted declaration.

This case presents an interesting illustration of the difficulties which can arise where relatively aged and imprecisely determined rights are relied upon to facilitate new uses of land; in particular uses which reflect the current trend for developing pockets of unused agricultural land (where planning permission can be obtained) with a tendency for relatively high density schemes. Mummery LJ concluded by saying that “in light of the judgments … the parties will have to reconsider their positions. They should seriously consider settling any further differences about the right of way without yet more litigation. As this case shows litigation of the neighbour kind is sometimes uncertain in outcome, often punishing in costs and, win or lose, is always, for those who are still neighbours (in this case relatives), far from the Swiftean ideal of “sweetness and light”.” Sobering stuff.

From a purely legal perspective, this decision confirms that the terms contained in the will and the assents which facilitate the testamentary bequests should be read together, as one transaction, rejecting the idea that the testamentary provision and the subsequent assent should be viewed as two distinct transactions, each being independent of the other.

Posted by: RM | October 20, 2009

Trespass, Adverse Possession & Section 62 LPA 1925

I recently came across a case on my Lawtel updates which is unreported and, to date, I have been unable to obtain a copy of the full transcript (if anyone can assist, I’d be grateful!). The case concerned is Stadium Capital Holdings (No 2) Ltd v St Marylebone Property Company Plc (2009) which was heard before Sir Donald Rattee in the Chancery Division on 15 October 2009. From the little information available it appears to raise a couple of interesting issues. The limited background facts follow.

The claimant (“C”) claimed damages for trespass against the first defendant (“D1”) in relation to a hoarding which had been erected on a shared boundary wall between C and D1’s properties (D1 was a long leaseholder who subsequently appears to have acquired the reversionary interest in the freehold). The C’s land had originally been owned by the Railway Executive which had granted D1’s predecessors in title consent to erect such a hoarding. The second defendant third party (D2) had obtained planning permission to erect the hoarding (which permission had previously been refused by the planning authority) and D1 had granted D2 an exclusive licence for D2 to do so. D2 removed the hoarding when requested to do so by the C’s predecessor in title and played no part in the proceedings.

D1 defended the claim on the basis that (1) the Railway Executive’s original consent had lapsed and D1 had, by operation of the doctrine of adverse possession, acquired possession of what was otherwise C’s airspace; and (2) in the alternative, D1’s right to maintain a hoarding on the boundary wall had passed to D1 by operation of section 62 of the Law of Property Act 1925 upon conveyance of the reversionary interest in the freehold to D1.

Both defences were rejected by the court. In response to (1) it was held that the consent originally granted by the Railway Executive (a previous owner of C’s land) was not limited in its terms and subsisted until such time as it was expressly revoked by C’s immediate predecessor in title (who had assigned any right to damages arising from an action in trespass to C). Therefore, even if possession of airspace was theoretically possible, in this case such possession was by consent and, therefore, not adverse to the owner. The limited analysis which I have been able to find (Lawtel and Westlaw) says that there was obiter to the effect that it was doubtful whether title to an area of airspace not contiguous to land under it could exist at law; the right to airspace was contingent on the right to own the land under it. These responses by the court raise a couple of interesting questions (the absence of a full transcript of the judgment makes it impossible to determine whether these issues were fully explored by the court). Firstly, can the consent which was given by the Railway Executive really be said to have endured (at least) two subsequent changes in ownership, unless expressly renewed? And secondly, why would there be doubt that is it theoretically possible to be in possession of airspace?

In answer to the first point, clearly it would be necessary to know the full facts but it seems unlikely that a permission which is personal and revocable could survive a change of ownership without something more (say, the operation of section 62 which I will come to shortly). Regarding the second point, if real property is capable of ownership, it is surely capable of being adversely possessed, subject to the test for actual possession which is adverse to the paper owner and the requisite animus possidendi being met. Whilst they are rare in practice, flying freeholds demonstrate that it is not necessary, in order to own property, to own the actual soil over which the property concerned is situated.

In respect of (2) the court held that section 62 could not be established to have applied because the conveyance concerned (ie the conveyance of the reversionary interest in the freehold) had not been put in evidence and it was, therefore, impossible to determine whether there was anything in the conveyance to expressly exclude the operation of section 62 as required by section 62(4). It was also said that, in any event, even if the section did apply (which it had been held not to), the enjoyment of the right would not have afforded itself to D1 as lessee (which it was prior to acquiring the reversionary interest in the freehold) but would have been for the benefit of the freehold owner.

It is very difficult to make any further comment on this case given the woeful lack of information available. However, it does appear that it may well raise some extremely interesting points which might warrant further consideration if the transcript of the judgment ever becomes widely available. If anyone out there finds it before I do, please pass it on!

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