Pezaro & Anor v Bourne & Anor

An unprotected equity by estoppel affecting registered land is subject to the priority rules governing registered dispositions. A successor in title for valuable consideration will generally take priority where the equity is neither protected on the register nor falls within an overriding-interest exception. Obstruction of an easement does not ordinarily amount to the servient owner’s actual occupation of it. Actual occupation requires a sufficiently permanent physical alteration or equivalent state of affairs. Planning applications, site notices and an intention to build do not themselves establish actual occupation. An informal and unimplemented agreement to release a right of way will not bind a later purchaser where the right remains registered and the statutory requirements for an overriding interest are not met.

The claimants owned Numbers 149 and 151 New Street. The defendants owned Number 147, which benefited from a registered right of way over the claimants’ properties. The claimants alleged that the right of way had been extinguished by proprietary estoppel or estoppel by acquiescence arising from discussions with the predecessor in title to Number 147, particularly in connection with the sale of rear garden land and later planning applications.

The predecessor had informally agreed in 2010 that the right of way could be removed if his legal costs were paid. The agreement was not implemented and the right of way remained registered when the defendants purchased Number 147. The central issues were whether the equity bound the defendants under the Land Registration Act 2002, whether the claimants were in actual occupation for the purposes of Schedule 3, paragraph 2, and whether the register should be altered.

1. The claim was dismissed. The right of way remained registered and enforceable unless the parties reached an agreement for its removal.
2. Section 116 of the Land Registration Act 2002 gives an equity by estoppel effect from the time it arises, but expressly subjects that effect to the priority rules governing registered dispositions. Under section 29, a registrable disposition for valuable consideration postpones an interest whose priority was not protected at registration, subject to the relevant exceptions.
3. The claimants’ agreement with the predecessor in title was executory and unimplemented. It was not noted on the register. The defendants therefore acquired Number 147 without being bound by that agreement unless the claimants could establish an overriding interest under Schedule 3, paragraph 2.
4. Actual occupation is a question of fact, but the court should be cautious before treating a servient owner as occupying an easement over the owner’s own land. Where the right of way has merely been obstructed, and the servient land has not been permanently altered or built over, the better description is obstruction rather than actual occupation. The fencing and gates did not establish actual occupation. The planning applications and site notices showed an intention to build, not present occupation.
5. Even if there had been occupation, the relevant exception in Schedule 3, paragraph 2(c), was not satisfied. The occupation would not have been obvious on a reasonably careful inspection of Number 147, and the defendants had no actual knowledge of the informal agreement or the pending second planning application.
6. The decision in Lester v Woodgate [2010] EWCA Civ 199 did not assist the claimants. That case concerned acquiescence in the destruction of a ramp and path and did not address the priority provisions applicable to registered land. The present case was materially different because the right of way remained protected by registration.
7. There was no basis for altering the register under Schedule 4. The right of way had been properly registered, and the failure to apply for its removal when the rear gardens were sold or when the agreement was reached did not constitute a registrable mistake. The later registered disposition for value changed the position.