Pall Mall 3 Ltd v Network Rail

JurisdictionEngland & Wales
CourtChancery Division
JudgeBriggs
Judgment Date05 July 2021
Neutral Citation[2021] EWHC 1835 (Ch)
Docket NumberCase No: BL-2020-000309

[2021] EWHC 1835 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST

Rolls Building

London

EC4A 1NL

Before:

CHIEF INSOLVENCY AND COMPANIES COURT JUDGE Briggs

(sitting as a Deputy High Court Judge of the Chancery Division)

Case No: BL-2020-000309

Between:
Pall Mall 3 Limited
Claimant
and
(1) Network Rail
(2) Volkerfitzpatrick Limited
Defendants

Timothy Morshead QC (instructed by Claire Mairs LLP) for the Claimant

Ian Clarke QC (instructed by Addleshaw Goddard LLP) for the First Defendant

Tim Calland (instructed by Birketts LLP) for the Second Defendant

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Hearing dates: 24 June 2021

Approved Judgment

CHIEF INSOLVENCY AND COMPANIES COURT JUDGE Briggs

Briggs Briggs

Chief ICC Judge

Introduction

1

The question before the court is deceptively easy to articulate: does dominant land with the benefit of an established easement of drainage lose the easement upon escheat occurring on disclaimer of the freehold title.

2

This is the trial of a preliminary issue ordered by Master Shuman on 18 November 2020.

The easement of drainage

3

The background facts are not in dispute. A railway line runs through Hackney Wick from East to West. Network Rail owns the land just North of the line. On the Eastern boundary lies freehold land that was registered under title number EGL416269. This land (“EGL416269”) was owned by a company known as NCNA Properties Limited (“NCNA”), previously known as CNC Properties Limited. Adjacent to EG416269, but also North of the line, lies a narrow strip of land (the “Adjacent Land”). Pall Mall 3 Limited (“Pall Mall”) holds the Adjacent Land with possessory title.

4

NCNA entered creditors' voluntary liquidation and was dissolved on 20 October 2016. Upon dissolution EGL461269 vested in the Crown pursuant to section 1012 of the Companies Act 2006 (“CA 2006”).

5

On 17 December 2018, a notice of disclaimer was tendered by the Treasury Solicitor. The notice is expressed to take effect as a disclaimer of the Crown's title to EGL416269.

6

Upon this disclaimer, EGL416269 escheated to the Crown.

7

By transfer dated 29 January 2019 (the “2019 Transfer”) the Queen's Most Excellent Majesty and the Crown Estate Commissioners transferred EGL416269 to Pall Mall for the sum of £5,000.

8

The 2019 Transfer includes the following recitals:

“(1) Immediately before its dissolution as mentioned below NCNA Properties Limited (“the Company”) was the Registered Proprietor with freehold title absolute of the premises comprised in the registered title (“the Former Title”) registered under the Former Title Number and shortly known as Land and buildings on the south side of Wallis Road

(2)(a) Upon the dissolution of the Company the freehold estate of the Company in the said premises vested in the Crown under 5.1012 of the Companies Act 2006

(2)(b) On 17 December 2018 notice of disclaimer was given by the Crown's representative that is to say the Treasury Solicitor, which was expressed to take effect as a disclaimer of the Crown's title to the said premises

(3) It is apprehended that the said premises there upon became subject to escheat to Her Majesty

(4) The Commissioners have agreed with the Purchaser for the sale to the Purchaser in manner hereinafter appearing of such fee simple estate in respect of the said premises subject to escheat as Her Majesty may now be able to grant (“the Property”) for the sum mentioned below

(5) The Commissioners have at no time prior to the date of this Transfer taken possession or control of the said premises or entered into occupation thereof or effected any actual or presumed acts of ownership or management in regard thereto.”

9

Without guarantee of title the Commissioners transferred, to the extent they were able, the “Property”:

“subject to (so far as affecting the Property or any part thereof and so far as now subsisting and capable of being enforced and whether legal or equitable and whether or not subsisting at the date of the said disclaimer above referred to or arising thereafter) all (if any):

Estates and interests…

(e) easements rights quasi-easements rights of common public or other rights…

(g) prescriptive rights or rights or interests which may arise by reason of any enactment relating to the limitation of actions.”

10

This included “the Lease referred to in the Charges Register of the Former Title [defined in the 2019 Transfer] a Lease dated 15 April 1988 between (1) NCNA Properties Limited (previously known as C.N.C Properties Limited) and (2) SAK investments Limited” and “the covenants conditions stipulations or other provisions contained or referred to in the Property and Charges Registers of the Former.”

11

The new title for the same land is registered at HM Land Registry under title number AGL467420 (“AGL467420”). AGL467420 comprises land and various buildings that have been on the land for about 60 years.

12

The lease “referred to in the Charges Register of the Former Title a Lease dated 15 April 1988” was in favour of Pall Mall. It was for a term of 999 years and was registered under title number EGL220091 (“EGL220091”).

13

Network Rail owns the railway and embankment adjoining Hackney Wick Railway Station. It is agreed between the parties that the railway and embankment may be, for the purposes of this issue, classified as the servient land (the “Servient Land”) whereas AGL467420 and the Adjacent Land classified as the dominant land (the “Dominant Land”).

14

A drain, within the curtilage of Unit 86 on the Dominant Land, and containing six manholes, runs downhill from East (the “East Drain”) to the West. When the drain leaves the Dominant Land, (and become the “West Drain”) it continues West within the Adjacent Land and beyond the curtilage of Unit 86, through the Servient Land. The drain takes surface water and foul waste to a public sewer under Wallis Road. This is the easement of drainage that benefits the Dominant Land.

15

In 2017, Network Rail, through its contractors, carried out substantial works to extend Hackney Wick Railway Station. These works involved, amongst other things, the demolition of a building immediately to the west of Unit 86 on the Western part of AGL467420. During the works the drain was rendered inoperable.

16

The relief sought by Pall Mall is for a declaration that the Dominant Land retains the easement of drainage notwithstanding the dissolution of NCNA, escheat and disclaimer. It seeks the broken drain to be reinstated and damages for interference.

The case for Network Rail in summary

17

The pleaded case of Network Rail, relevant to the issue before the court today, is that Pall Mall does not have the benefit of the easement of drainage. It contends the relief sought is not available.

18

It is said that Pall Mall cannot maintain its case for prescription under section 2 of the Prescription Act 1832, alternatively under the doctrine of lost modern grant, because until 4 February 2019 it only possessed a leasehold interest in the premises. In argument Mr Clarke says that tenure is relevant for determining rights over land because the freehold EGL416269 estate came to an end upon escheat to the Crown. Escheat is not a disposition, transfer or conveyance.

19

A right obtained by prescription may only be obtained as appurtenant to the freehold estate of a dominant tenement. This was expanded upon to the effect that an easement has no independent existence. An easement cannot be severed from the freehold interest, assigned or transferred to a third party.

20

Mr Clarke argues that the Crown cannot transfer an easement of drainage from land that was escheat. The new title will not have had the benefit of the easement that had been appurtenant to EGL416269. It would be independent of the AGL467420 title and represent “a transfer in gross”.

21

As AGL467420 has no ancillary easement Network Rail was entitled to destroy the drain in question without recourse. Put simply, Pall Mall is not the successor in title to EGL416269. As it is not the successor it does not take the prescriptive rights previously held under that title.

The case for Pall Mall in summary

22

Mr Morshead argues that modern land law is born from the ancient laws of the land, but the law has not stood still and the policy considerations that applied in medieval times do not necessarily apply today. With that said the legislative policy behind escheat is to reduce the exposure of risk (burdens) to the Crown, but not affect benefits. The escheat is to ensure that the land belongs to a legal person.

23

The case for Pall Mall, then, has the advantage of simplicity. Escheat does not extinguish an easement and did not extinguish the easement of drainage enjoyed by EGL416269.

24

The starting point is the Crown Estate Act 1961 (the “CEA”). This provides that where land escheats it vests in the Crown and any proceedings may be taken in respect of it.

25

The term “land” includes easements.

26

The Law of Property Act 1925 (the “ LPA”) provides that a transfer will include easements.

27

The 2019 Transfer for the fee simple absolute included the easement of drainage.

Easements- a brief overview

28

Although time was taken at trial on the issue of establishing an express or implied easement (easements by prescription or the fiction of a lost modern grant) I intend to say little about it here. This is simply because it is conceded for the purposes of the preliminary issue that NCNA as freeholder had the...

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