Court of Appeal confirms that you can’t have your cake and eat it
The recent Court of Appeal decision of Elwood v Goodman and others provides a useful reminder that the Courts will do their best to ensure that a person who exercises the benefit of rights over land meets any associated obligations. In Elwood the Court took a couple of approaches to achieve that goal.
Mr Goodman, and a number of others, owned industrial units on an estate and enjoyed a right of way over the estate to access their individual units. The transfers which originally passed on the seller’s right of way also contained an obligation to contribute to the cost of maintaining the access road incurred by the seller or his successors in title. The owners of the units refused to pay. They argued that Mr Elwood was not entitled to enforce the obligation because, at the date of the transfers, he had already acquired the access road from the seller and so was not a true successor in title. The Court said that whilst a reference to successors in title normally meant subsequent owners, it was the meaning in its particular context which was important, and in this case ‘successors’ had to include the owner for the time being of the access road.
Two of the unit owners also argued that the obligation didn’t apply to them because they were successors in title to the original purchasers; the general rule being that positive obligations don’t bind successors in title. However, the Court applied the ‘benefit and burden’ principle set out in the case of Halsall v Brizell. Where a deed contains rights benefiting land together with obligations that are linked to that right, a person exercising the benefit of the right must also meet the obligations, regardless of whether they were a party to the original deed. For this principle to apply:
(i) the benefit and burden must be contained in the same deed,
(ii) the enjoyment of the benefit must be linked to the burden of the obligation, and
(iii) the person subject to the benefit and burden must have the opportunity to reject them.
To meet these conditions the Court actually looked back to the previous transfer of the access road from the seller to Mr Elwood, which had reserved the right of way originally (that had then passed to the unit owners) and which contained an obligation to contribute to the maintenance costs.
In reaching its decision the Court said that the obligation did not need to be registered against the unit owners’ titles to bind successors in title. This raises the question: how will you know if the property you are purchasing is subject to similar obligations? Well, it appears that you may not be able to simply rely on what the registered title says and there is no substitute for making thorough enquiries of the seller before you buy.
The full text of the Elwood decision can be found at: https://cases.iclr.co.uk/Subscr/search.aspx?path=WLR+Dailies%2FWLRD+2011%2Fwlrd2013-342