Key points

  • On a transfer of land, it is easier to show that a right should be implied in favour of a buyer than it is to claim that a right should be reserved by implication in favour of the seller
  • Both buyers and sellers should take care to ensure that the transfer sets out expressly all the rights that each will need over the other's land

Background

In an ideal world, the parties to a sale would set out expressly exactly which rights are granted in favour of the buyer and reserved in favour of the seller. Unfortunately, for a variety of reasons, this is not always done. In this situation, one or both parties may subsequently argue that a right which was not set out in the transfer should, nonetheless, be implied.

The law applies different rules to determine whether a right should be implied in favour of a buyer from those used to decide whether a right should be reserved by implication in favour of the seller. This is because of the principle that a grantor of land should not derogate from his grant. The starting position is that if a seller wishes to reserve a right over the land sold, he should do so expressly.

However, there are a number of exceptions to this rule. These were considered by the High Court in Walby v Walby.

Facts of Walby v Walby

In Walby v Walby, a farmer transferred some of his land to his son. The boundary of the land transferred ran through the middle of some farm buildings. The father claimed that, as the seller under the transfer, he was entitled to an implied right to use drainage facilities on the land transferred.

The court noted that the transfer of part only of a building, where the part transferred did not follow any physical feature of the building, was unusual. Nonetheless, the transfer did not cause an immediate practical problem. This was because the building and surrounding land was subject to a pre-existing lease to the farmer and his wife. The farmer was therefore able to use the whole building pursuant to the lease and did not immediately need to rely on an implied reservation of an easement of drainage.

In the event that the tenancy came to an end, the farmer would only be entitled to use the part of the building which was on the retained land. In that situation it was doubtful whether the building could continue to be used for its current purpose (housing cattle).

Against this background, the court considered three different bases on which a reserved right of drainage could potentially be implied into the transfer in favour of the freehold of the retained land.

Basis 1: easements of necessity

A right may be implied where the land retained cannot be used at all without the easement claimed. The most common easement of necessity is a right of way where the retained land would otherwise be left landlocked.

The court ruled that, because the building had been severed in two by the transfer, it would have to be adapted before it could be put to beneficial use. The absence of a drainage easement would not have much impact on the use which could be made of the building in its present state. In other words, the absence of the easement would not by itself produce the situation where the retained part of the building could not be used at all. Accordingly, no right would be implied on the ground of necessity.

Basis 2: mutual grant and reservation of easements

A reservation in favour of the seller may be implied where it is reciprocal, or mutual, to a right which is conferred on the buyer.

The court therefore had to consider whether the land transferred had the benefit of an implied right of drainage over the retained land. On the facts of this case the court found that it did not. It noted that while both parcels of land were subject to the lease, there was no real need to consider the existence of reciprocal freehold easements. If the lease came to an end, it was not obvious that the buyer would need to use the particular drainage system which was currently in place.

As no drainage right was implied in favour of the buyer, there could be no reciprocal right implied in favour of the seller.

Basis 3: easements of intended use

A right may be implied in favour of the seller on this ground where it would give effect to the common intention of the parties that the land retained is to be used for a particular purpose.

The court ruled that if the part of the building on the retained land had been self-contained and usable for keeping cattle, and the drainage system would have been a significant advantage for that purpose, and if there had been no lease of the building at the time of the transfer, then it might have been able to imply a drainage right in favour of the seller on this ground. However, the fact was that a freehold drainage easement was not of practical importance for so long as the lease existed. In the event the lease was determined the retained land would not be self-contained and could not obviously be used for keeping cattle without adaptation. This meant that no drainage easement could be impliedly reserved on this ground either.

Conclusion

The farmer therefore lost in his claim to establish that he had an implied right to use the drainage systems on the land transferred.

However, the buyer under the transfer conceded that a right of support was implied under the transfer both in favour of the land sold and the land retained. An implied right of support for the building which straddled both parcels of land was therefore upheld.

Things to consider

The decision in this case rests on its very particular facts. However, Walby v Walby is a useful reminder of how important it is to set out expressly all of the rights which the parties need in a transfer of land.

The Law Commission, in its Report No. 327 "Making Land Work: Easements, Covenants and Profits à Prendre", recommended that, in determining whether an easement should be implied, it should not be material whether it would take effect by grant (in favour of the buyer) or by reservation (in favour of the seller). However, the recommendations in this Report are yet to be enacted. As the law currently stands, it is harder to establish the implication of a reservation than it is a grant. Sellers should therefore take particular care to consider what rights they will need post-transfer and instruct those preparing the conveyancing documentation accordingly.