Baker v Craggs [2018] EWCA Civ 1126

A recent Court of Appeal case confirmed that the grant of an easement will not be sufficient to overreach pre-existing equitable interests, because it does not constitute the grant of a legal estate in land within the meaning of the Land Registration Act 2002.

In January 2012, Mr Craggs purchased land (“Craggs’ land”) from Mr and Mrs Charlton, and his solicitor applied to register the purchase at HM Land Registry. Unfortunately, Mr Craggs’ purchase was not registered immediately due to the plan attached to the transfer document being incomplete; HM Land Registry cancelled the application when the error with the plan was not corrected within the specified timeframe. As a result, a new application had to be submitted. Mr Craggs’ purchase was ultimately registered in May 2012.

In between Mr Craggs’ purchase and its registration in May 2012, Mr and Mrs Charlton sold another part of their property, adjacent to Craggs’ land, to Mr and Mrs Baker. That sale incorrectly granted a right of way over Craggs’ land, in favour of the land bought by Mr and Mrs Baker. At the time of Mr and Mrs Baker’s purchase, Mr and Mrs Charlton were the legal owners of Craggs’ land (due to the problems with Mr Craggs’ application to register his purchase) and were therefore capable of granting the right of way over Craggs’ land. The benefit of the right of way was registered to Mr and Mrs Baker’s land with their purchase. The burden of the right of way was then registered against Mr Craggs’ title when his purchase of Craggs’ land was finally registered.

The court was subsequently asked to decide whether Mr Craggs’ land should remain subject to the right of way granted to Mr and Mrs Baker.

The Law

Under the Land Registration Act 2002, a registerable disposition of a legal interest, for value, will take priority over any pre-existing interest in the land that is not protected at the time of the registration of the disposition in question. So, in this case, Mr Craggs’ interest in his land from his purchase alone could not take priority over Mr and Mrs Baker’s purchase unless it was an overriding interest, because Mr Craggs’ purchase was not protected by registration at HM Land Registry.

An overriding interest

During the period between completion of a sale and purchase, and its registration at HM Land Registry (the “registration gap”), the purchaser of the relevant land (in this case, Mr Craggs) has only an equitable (as opposed to legal) interest. However, where a person is in actual occupation of the relevant land, their interest will override a registered disposition.

“Overreaching” occurs where at least two trustees convey land to a purchaser and provide receipt for money. In those circumstances, the purchase of a legal interest in land (the purchaser generally having paid money to at least two people or entities for the purchase) can “overreach” whatever trusts the land may be subject to and take the relevant land free of them.

High Court decision

At the time of Mr and Mrs Baker’s purchase and the grant of the right of way to them, during the registration gap arising from Mr Craggs;’ purchase, Mr Craggs:

  1. Had only a beneficial (equitable) interest in the title to Craggs’ land – meaning Mr and Mrs Charlton held legal title to Craggs’ land on trust for him; and
  2. Was in actual occupation of the land.

The easement that was granted to Mr and Mrs Baker was a legal easement.

The High Court held that Mr Craggs’ equitable interest in the land was an “overriding interest” that could be “overreached” by the grant of the right of way to Mr and Mrs Baker (which the High Court considered qualified as a grant of a legal interest to Mr and Mrs Baker) due to their purchase from two trustees (i.e. the sellers, Mr and Mrs Charlton).

Accordingly, the High Court held that Craggs’ land was subject to the right of way.

Mr Craggs appealed.

Court of Appeal decision

The Court of Appeal concluded that the High Court had been wrong to determine that the grant of the right of way to Mr and Mrs Baker was a disposition of a legal estate in land that would be capable of “overreaching” Mr Craggs’ equitable (pending registration) interest in Craggs’ land.

Ultimately, the Court of Appeal decision came down to which interest had priority under the Land Registration regime. In the event, Mr Craggs was in actual physical occupation of the land at time of Mr and Mrs Baker’s purchase, which meant that his equitable interest in Craggs’ land was protected and could not be overcome by the subsequent grant of the right of way to Mr and Mrs Baker. Accordingly, Mr Craggs’ interest took priority over the Bakers’ legal easement, and Mr Craggs’ land was free of the burden of the easement.

Practice points

The Court of Appeal’s conclusion that an easement is not the grant of a legal estate for the purposes of overreaching is a reminder of existing law. Mr Craggs was saved in this instance by the fact that he had already taken up occupation of his land.

The circumstances in this matter were unusual, as Mr Craggs’ solicitors had allowed the original application to register his purchase to lapse. The case is an example of the importance of properly registering transactions and dealing promptly with any issues that arise at HM Land Registry.