On a transfer of part of a site, complications can arise if the rights which are to benefit the land sold are not adequately addressed. This can be particularly impactive in the case of rights of way.
If rights have not been expressly granted, they could be implied under section 62 of the Law of Property Act 1925. The effect of this section is to read certain words into a transfer so that it is deemed to include:
'all ways, watercourses, privileges, easements, rights and advantages whatsoever which either appertain or are reputed to appertain to the land or any part of it or at the time of the conveyance are occupied or enjoyed with the land or any part of it'.
This provision will apply where there is diversity of occupation before a property is transferred, unless the parties exclude its operation. So, it can apply to grant rights to a tenant over its landlord's adjacent property where the leased area is purchased by the tenant.
Where there is no diversity of occupation before a sale of a part, there is conflicting opinion on whether section 62 can apply to grant a right of way. The difficulty lies in trying to determine whether the enjoyment of an advantage is part of the usual course of owning the property in question or whether that advantage is enjoyed with the property.
One school of thought is that section 62 does not operate at all. Another suggests that section 62 could operate so long as the right claimed (after sale) was continuous and apparent beforehand.
This issue was considered in the recent case of Wood v Waddington.
Manor Farm was an estate carved into a number of plots in 1988, most notably to two adjacent owners. The transfers to each party were broadly similar and each included a general provision that the property was sold, 'subject to and with the benefit of all liberties privileges and advantages of a continuous nature now used or enjoyed by or over the property'.
The claimants became the owners of one part of the estate and ran a horse livery business from their property. They wanted their customers to be able to ride out over the bridleways which crossed neighbouring property which had been sold to the defendant's predecessors in title. No specific rights of way had been granted over these bridleways.
The claimants argued that their property had the benefit of a right of way over the bridleways on the following grounds:
- the rights had been expressly granted by means of the general grant contained in the 1988 transfer
- the rights were advantages enjoyed with the land and so had become easements benefitting that land under section 62; and
- the rights had been implied as easements
The High Court decided that no easement had been granted over the tracks by any of these means.
With regard to the section 62 argument, the court had to consider the lack of diversity of occupation of Manor Farm before the 1988 transfer. It concluded that there was no absolute rule that a right of way cannot be claimed under section 62 where there has been no diversity of occupation before the transfer. Coming to this decision, its approach was to look at the wording of section 62 to see if the advantage claimed - in this case the private right of way- was 'enjoyed with' the land.
So, it broke down the terminology of section 62 to ask:
- Was the advantage 'enjoyed' in the period before the transfer?; and
- Was the advantage enjoyed 'with' the land so that after the transfer it would be appurtenant to the land conveyed?
The court found that the irregular use of the tracks by the previous landowner was consistent with that of a property owner simply using the land as he wished. No evidence suggested that his use of the property was designed to, "make one part of the land subject to a potential burden for the benefit of another part of the land". Therefore the advantage of using the track ways which crossed the retained land had not passed on the transfer so as to benefit the land bought by the claimants.
Accordingly, this case is a reminder of the need for both parties to a transfer to consider all relevant rights that need to be excepted and reserved on a sale of part and to provide for them expressly.