Baker v Craggs [2018] EWCA Civ 112

Key point

  • Beneficial interest in land cannot be overreached from the sale of an easement or any interest other than the two types of estates (fee simple and lease) in land

Facts

  • Vendors sold a plot of land to D without reserving a right of way
  • Registration of D’s title to the land was delayed
  • During the period of delay, the vendors sold another plot of land to C and purported to grant to C a right of way over D’s plot
  • C’s title including the right of way was registered before D’s title was registered
  • C sought a declaration that it had a right of way over D’s land, on the ground that D’s equitable interest was overreached when C paid the two vendors, who were bare trustees of D while his title remained unregistered

Held (Court of Appeal)

  • C did not have a right of way over D’s land
  • Overreaching cannot apply to the conveyance of an easement as it is not an estate in land
  • In any case, D did not have an existing equitable easement in the land he purchased which could attach to the purchase money paid

Henderson LJ

Scope of overreaching

  • Under s2(1) LPA 1925, overreaching only applies to a conveyance of a “legal estate in land”
  • Pursuant to s1(1) LPA 1925, there are only two types of legal estates in land, the fee simple and lease: [27]
  • The conveyance of an easement, which is a legal interest in land but not an estate is land, is therefore not within the scope of s2(1) LPA 1925: [31]

Exception: legal mortgages

  • A legal mortgage overreaches equitable interests in land even though it is not a legal estate in land under s1(1) LPA 1925 as s87 LPA 1925 provides that a legal mortgagee shall have the same protection as if the mortgage was by way of demise or sub-demise: [29]

Commentary

  • Pursuant to s87 LPA 1925, legal mortgages are charges and not actually the conveyance of a lease or sub-lease in the property that is mortgaged, but they grant the protections that a lessee or sub-lessee has, mainly the right to possession and sale
  • Prior to the LPA 1925, mortgages were actually granted by the borrower (mortgagor) granting the lender (mortgagee) either the fee simple, lease or sub-lease over his property for the duration of the lease, although the mortgagee would allow the borrower to remain in occupation, and after the loan is discharged, the mortgage is said to be ‘redeemed’ as the fee simple, lease or sub-lease is returned to the borrower