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Baker v Craggs [2016] EWHC 3250 (Ch)

5 January 2017

Facts

Mr and Mrs Charlton (S) sold to Mr Craggs (C) part of their farm comprising fields, barns and an adjacent yard on 17 January 2012. However C’s application to register the transfer (lodged on 10 February 2012) was initially rejected by the Land Registry because the plan attached to the transfer was incomplete (an access route granted to C was missing). A new plan was not submitted in time and C’s application was cancelled (with the resulting loss of priority). C was not actually registered as owner of the farm until 16 May 2012.

On 20 February 2012, S transferred some land to Mr and Mrs Baker (B). This transfer purported to grant to B a right of way over the yard already sold to C. B claimed that the right of way bound C as S was still the legal owner of the yard at the time of the grant of the easement over it (C only holding a beneficial interest in the yard during the registration gap).

The parties agreed that C would be bound by the easement unless C was in actual occupation of the yard when the easement was granted to B (so that C’s beneficial interest constituted an overriding interest under Paragraph 2 of Schedule 3 of the Land Registration Act 2002) and C’s interest was not overreached by the grant of the easement to B.

Issues

  1. Was C in actual occupation of the yard when the easement was granted to B?
  2. If so, was C’s beneficial interest in the yard overreached by the grant of the easement to B?

Decision

  1. C was in actual occupation of the yard. Up until 19 February he carried out substantial works to a barn at the farm and visited the farm more or less daily. Although not sleeping at the property, his presence was neither fleeting nor preparatory to going into occupation. The barn in question was immediately adjacent to the yard and could only be reached through it. C had therefore been passing through the yard, parking on it and bringing materials and equipment onto it (the judge used the analogy of a house with a drive – a person can be said to be in actual occupation of the drive as well as the house, even though not spending much time on the drive itself). Moreover, C was in actual occupation of the yard on 20 February (the day of the grant of the easement to B) even though he had just finished work on the barn very recently and had not actually visited the farm that day.
  2. B had paid the purchase price for their land (which included the grant of the easement over the yard) to two trustees (S). C’s beneficial interest in the yard had therefore been overreached by this and converted into a share of the purchase money under section 2 of the Law of Property Act 1925 (LPA 25) (the grantee of an easement is a ‘purchaser’ for the purposes of overreaching, as the term includes under the LPA 25 any “person who for valuable consideration acquires an interest in property…”). Although section 2(3)(iv) of the LPA 25 exempts an estate contract from the effects of overreaching, the judge decided that C did not enjoy the benefit of an estate contract at the relevant time because the transfer of the yard from S to C had already been completed at that point (albeit not registered).

Points to note/consider

  1. This case is a further illustration of the problems caused by the registration gap (this time in a completely different context). It shows how crucial it is to make sure that any plans will be acceptable to the Land Registry and the importance of ensuring that Land Registry applications are not cancelled (had the application not been cancelled, C would have enjoyed the benefit of his priority period, meaning that his interest in the yard would have been registered free from any subsequent dealing in the yard by S).
  2. C was unfortunate that S constituted joint owners of their land. Had C and B instead dealt with a sole proprietor, overreaching would not have occurred (it requires the purchase money to be paid to two trustees) and C would have had an overriding interest in the yard (by virtue of being in actual occupation of it) which would have bound B’s subsequent interest in it (in other words, C would have owned the yard free of the right of way over it granted by S to B).

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

David Harris

David Harris

Professional Development Lawyer

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