Yeates & Anor v Line & Anor

Introduction

This is an appeal under section 111 of the Land Registration Act 2002 against a decision dated 1^st March 2012 of Miss Stephanie Tozer, sitting as Deputy Adjudicator to HM Land Registry (“the Adjudicator”). The appellants, Mr and Mrs Yeates, were represented by counsel, Mr Laughton (who did not appear below), and the respondents, Ms Line and Mr Field, appeared in person.

In January 2011 the appellants applied to the Chief Land Registrar to alter the register of title pursuant to the power conferred by schedule 4 to the 2002 Act, by registering them as proprietors of a triangular parcel of land measuring about 34 metres by 24 metres at its widest point (“the Blue Land”), on the ground that the appellants had acquired title to the Blue Land by adverse possession. The respondents, who were the registered proprietors of the Blue Land and also the owners of the adjoining land to the north, objected to the application. The dispute was referred to the Adjudicator.

The Adjudicator decided that the appellants had indeed acquired title to the Blue Land by adverse possession, but she decided not to direct alteration of the register, because she found that the parties had reached an oral agreement to compromise their dispute, and she held that this agreement was a legally binding contract amounting to exceptional circumstances which justified not altering the register (see paragraph 3(3) of Schedule 4 to the 2002 Act). Instead, the Adjudicator directed the registrar to cancel the application.

The appellants appeal against the Adjudicator’s decision on the ground that the oral compromise agreement was void because it fell foul of section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 which provides as follows: “2 (1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.”

The section 2(1) point was not raised before the Adjudicator. Peter Smith J granted permission to appeal, subject to the question whether the appellants should be permitted to take the section 2(1) point for the first time on appeal. I will consider that question after setting out the facts.

Facts

At paragraphs 18 and 44-50 of the decision, the Adjudicator made the following findings about the compromise agreement.

The parties met over the Easter 2011 weekend, without solicitors present, to discuss the Blue Land, exchange information and negotiate. They walked to the Blue Land together and looked at various plans. Mr Field, the second respondent, explained that he wanted to erect a fence across the Blue Land (between points A and B1 on the plan annexed to the decision). Mrs Yeates, the second appellant, indicated that she accepted that it did look from the plans as though the Blue Land could be the respondents’, and also said that the Blue Land was of little significance to the appellants. Mr Field said to her: “So, we are agreed then?” She replied “Yes”. Then they shook hands on the deal.

The Adjudicator said that the appellants may well have simply wanted to bring the dispute to an end once it appeared that the respondents had paper title to the Blue Land. She held that the parties thereby reached a final agreement to compromise the dispute on the basis that the application would be withdrawn, and the respondents would be at liberty to erect the fence, but they would leave the appellants in possession of a small part of the Blue Land falling to the south of the proposed fence.

As I see it, by agreeing that the respondents were at liberty to erect the fence, the parties were agreeing to treat the respondents as the owners of the Blue Land to the north of the fence, which I will refer to as the Relevant Blue Land. The Adjudicator held that the Blue Land actually belonged to the appellants. Thus, the parties in fact agreed that land belonging to the appellants should in future belong to the respondents.

It follows in my view that the effect of the compromise agreement was to require the appellants to dispose of an interest in the Relevant Blue Land to the respondents.

The appellants submit that because the compromise agreement had this disposing effect it fell foul of section 2(1) of the 1989 Act.

However, in case it might be held that in order for section 2(1) to apply to an agreement this disposing effect must also be part of the parties’ purposes in entering into the agreement, the appellants sought to argue that the parties did indeed have this disposing purpose in the present case. That is, the parties were uncertain who owned the Blue Land, and foresaw that some or all of it might belong to the appellants; given that they agreed that the respondents should in future be treated as the owners of the Relevant Blue Land, they must have intended that the appellants should dispose of so much of the Relevant Blue Land as actually belonged to them.

The Adjudicator made no findings as to the parties’ purposes in entering into the compromise agreement, or as to whether they were uncertain as to who owned the Blue Land and whether they foresaw that some or all of it might belong to the appellants. This is hardly surprising given that the appellants, who were represented by counsel, did not address the Adjudicator on section 2(1) or invite her to make any relevant findings of fact.

Nevertheless, the appellants now invite me to infer that in entering into the compromise agreement the parties did have a disposing purpose, in particular from the evidence given by Mrs Yeates (recorded at page 17 of the transcript of proceedings before the adjudicator) that “I said [to Mr Field] that it looked like it could be your land, but we have always assumed it was ours”.

However, the adjudicator did not accept Mrs Yeates’ version of what was said at the meeting. Instead, as I have explained, the Adjudicator found that Mrs Yeates indicated to Mr Field that it looked from the plans as though the Blue Land could be the respondents’, and the Adjudicator also said that the appellants may well have simply wanted to bring the dispute to an end once it appeared that the respondents had paper title to the Blue Land. In my view, considering the matter objectively in the light of the facts found by the Adjudicator, it may well be that the parties entered into the compromise agreement in the belief that the Blue Land belonged to the respondents and not to the appellants, and that their purpose was to acknowledge this. Therefore I am not prepared to draw any such inference.

New point

In considering whether I should give permission for the section 2(1) point to be taken for the first time on appeal, I adopt the stance recommended in Pittalis v Grant [1989] QB 605 per Nourse LJ at p.611, and so I should not give permission unless I am satisfied that the respondents have not been prejudiced by the earlier omission to raise it, and in particular that the point is being raised as a pure point of law, and no evidence could have been adduced before the Adjudicator which by any possibility would prevent it from succeeding, and that the respondents have not acted to their detriment on the faith of the earlier omission to raise it, and have had adequate opportunity to meet it.

In my view the appellants’ argument that section 2(1) applies merely because the compromise agreement had a disposing effect is a pure point of law, and all the other conditions mentioned above are satisfied. Therefore I give permission for the section 2(1) point to be raised in those terms.

By contrast, the appellants’ alternative argument that section 2(1) applies because the compromise agreement had a disposing purpose is not a pure point of law. It depends on an inference being drawn as to the parties’ purposes, but as mentioned above I am not prepared to draw any such inference. Even if it must be inferred from the facts found by the Adjudicator that the parties had a disposing purpose, it seems to me that, if the appellants had raised the section 2(1) point below, the respondents might well have invited the Adjudicator to make, and she might well have made, additional findings, which could not have been disturbed on appeal, to the effect that the parties did not have a disposing purpose. For example, the Adjudicator might have found, as indeed she indicated when she refused permission to appeal, that the respondents were consistently objecting to the appellants’ claim to the Blue Land, and also that the better interpretation of what happened at the Easter 2011 meeting was that the appellants were accepting that, absent paper title, they did not have any valid claim to the Blue Land. In other words, the Adjudicator might have found that the parties entered into the compromise agreement in the belief that the Blue Land belonged to the respondents and not to the appellants and with the purpose of acknowledging this. In the light of this possibility, I cannot be satisfied that the respondents have not been prejudiced, and in particular have not acted to their detriment, by the earlier omission to raise this alternative argument. For this reason, I do not give permission for the section 2(1) point to be raised in those terms.

Therefore, the question for me to decide is whether the compromise agreement fell foul of section 2(1) merely because it had a disposing effect.

For completeness, I should mention, first, that I agree with the appellants that the size of the relevant Blue Land is such that considerably more than a trivial amount of land was disposed of; and secondly, that the appellants do not contend that the compromise agreement fell foul of section 2(1) because it was part of the parties’ purposes that the respondents should dispose of a very small part of the Blue Land to the appellants.

Interpretation of section 2(1)

In Neilson v Poole (1969) 20 P&CR 909, Megarry J considered whether a boundary agreement is a “contract to convey a legal estate” within the meaning of section 10(1) of the Land Charges Act 1925. He said that it all depends on the nature of the agreement. I will set out two passages from his judgment.

The first passage is at page 918 of the report, where he said: “Now a boundary agreement may constitute a contract to convey land. The parties may agree that in return for a concession by A in one place, straightening the line of division, B will make a concession in another place; the contract may thus be one for the conveyance of land. But there is another type of boundary agreement. This does no more than identify on the ground what the documents describe in words or delineate on plans. Nothing is transferred, at any rate consciously; the agreement is to identify and not to convey. In such a case, I do not see how the agreement can be said to constitute a contract to convey land”.

The second passage is at pages 919 of the report, where he said:

“If the two boundaries [that is, the agreed boundary and the boundary on the conveyance] had not coincided, because, for example, the true construction of the conveyance yields a different boundary, then the agreement would have been an agreement whereby in fact it is agreed that land belonging to one should thenceforward belong to the other. Nevertheless, even in these circumstances, I should not hold that the agreement was registrable: for, in my judgment, it is not a “contract to convey” within [the 1925 Act]. A contract merely to demarcate and confirm is not a contract to convey. No doubt the parties cannot go back on this agreement, and each in time will acquire a title by limitation to the land of the other which falls on his side of the agreed boundary. Even if each were to be entitled to demand a conveyance of that land from the other, I doubt whether the agreement would be registrable: for although the obligation to convey would no doubt arise out of their agreement to demarcate, the contract was merely a contract to demarcate and not a contract to convey.

I must, too, bear in mind that a boundary agreement is, in its nature, an act of peace, quieting strife and averting litigation, and so is to be favoured in the law. I also bear in mind that boundary agreements are of the most informal nature, and that the penalty of failure to register an estate contract is that the agreement will be void against a purchaser. These more general conditions, I think, support me in the view that I have expressed. In my judgment, no boundary agreement should be held to be registrable unless it can be seen with reasonable clarity to be an agreement to convey.”

In Joyce v Rigolli [2004] EWCA Civ 79, which concerned an oral boundary agreement whereby both parties in fact gave up some land (indeed, one of the parties, Mr Rigolli, consciously did so), the Court of Appeal held that Megarry J’s reasoning in regard to the interpretation of “contract to convey” in section 10(1) of the Land Charges Act 1925 applies equally to the interpretation of “contract for the sale or other disposition” in section 2(1) of the 1989 Act.

Arden LJ said:

“31.

We are informed that there is as yet no reported authority on the question whether section 2(1) of the 1989 Act applies to a boundary agreement which “demarcates” the boundary rather than conveys land for the purposes of the classification of boundary agreements enunciated by Megarry J in Neilson v Poole. Megarry J’s approach to the words “contract to convey” in section 10(1) of the Land Charges Act 1925 was essentially that, for a contract to be a contract to do something, the parties had to have as one of their purposes the intention to do that thing. Similar reasoning in my judgment applies to the words “contract for the sale or other disposition of an interest in land” in section 2 of the 1989 Act. As a matter of ordinary English usage, for a contract to be one “for” selling or disposing of land, it must have been part of the parties’ purposes, or the purposes to be attributed to them, in entering into such a contract, that the contract should achieve a sale or other disposition of land. The fact that the effect of their contract is that land or an interest in land is actually conveyed, when that effect was neither foreseen nor intended nor was it something which ought to have been foreseen or intended, is not the acid test. Indeed, it would be a surprising result if section 2 applied merely because the effect of the contract was that an interest in land was transferred even if the parties had no intention to make any such transfer and could not have foreseen or intended that that would be the effect."

Arden LJ then went on to consider the significance or otherwise of the fact that both parties in fact gave up some land, and that Mr Rigolli consciously did so. She said:

“32.

Even so, the area of land disposed of by both parties was of a very small amount. It would be unrealistic to require the parties to execute a transfer of the land given up by Mr Rigolli (still less of that unconsciously given up by Mrs Joyce). In both cases the land would also be quite difficult to define without the disproportionate expense of a survey. Further, to make the validity of a boundary agreement dependent on the preparation and execution of a written contract would be contrary to the important public policy in upholding boundary agreements so powerfully identified by Megarry J in Neilson v Poole. In those circumstances, I do not consider that Parliament, which after all enacted section 2 against the background of Neilson v Poole, could have intended section 2 to apply to transfers of land pursuant to boundary agreements of Megarry J’s latter type (“demarcating agreements”) simply because a trivial transfer or transfers of land were consciously involved.”

Sir Martin Nourse agreed with the reasoning of Arden LJ and said:

“43.

In my judgment, the reasoning of Megarry J in regard to section 2(4)(iv) of the 1972 Act applies equally to section 2(1) of the 1989 Act. A demarcation agreement as described by him is no more a “contract for the disposition of an interest in land” than it is a “contract to convey land”.

44.

The boundary agreement found to have been made in the present case was in the classical mould of Megarry J’s demarcation agreement, subject possibly to these points: first, a very small part of the land in Mrs Joyce’s paper title had been taken by Mr Rigolli; second, Mr Rigolli had given up a small triangle of land beside the cherry tree. These discrepancies did not trouble [the trial judge]. He evidently thought that the case was nevertheless covered by Neilson v Poole.

45.

I agree with the judge. There are two ways of looking at it. Either the agreement was one “whereby in fact it was agreed that land belonging to one should thenceforward belong to the other” within [the passage from Megarry J’s judgment quoted at paragraph 23 above] or the de minimis principle applies. Either way the agreement was outside section 2(1) of the 1989 Act”.

Thorpe LJ agreed with both judgments.

In my view, Joyce v Rigolli is binding authority for the proposition that an oral demarcation agreement, that is an agreement to demarcate an unclear boundary described in title documents or delineated on a plan, is not void by virtue of section 2(1) of the 1989 Act even though the agreement has a disposing effect, because the words “a contract for…” in section 2(1) refer to an agreement which has a disposing purpose.

The appellants submit that this interpretation of section 2(1) does not apply where more than a trivial amount of land is disposed of. I do not agree. As we have seen, the Court of Appeal in Joyce v Rigolli applied the reasoning of Megarry J in Neilson v Poole, and it was no part of Megarry J’s reasoning that a contract to demarcate which has a disposing effect is a contract to convey where more than a trivial amount of land is disposed of. Moreover, Arden LJ’s interpretation of section 2(1), at paragraph 31 of her judgment, was not dependent upon the fact that only a trivial amount of land was disposed of; indeed, she only mentioned this, at paragraph 32 of her judgment, in connection with the fact that there was a conscious transfer of land. In my view, therefore, Arden LJ was of the opinion that a demarcation agreement which has a disposing effect does not fall foul of section 2(1) unless it has a disposing purpose and more than a trivial amount of land is disposed of. It is clear that Sir Martin Nourse was of the same opinion: he not only agreed with Arden LJ’s reasoning but also said that there were two ways of looking at the boundary agreement in that case, one being that it only had a disposing effect, the other being that the de minimis principle applied.

The appellants also submit that this interpretation of section 2(1) applies only to boundary agreements, and in relation to any other type of agreement, such as the compromise agreement in the present case, the correct interpretation of section 2(1) is that it applies if the agreement has a disposing effect even if not a disposing purpose.

In this connection the appellants referred me to the later decision of the Court of Appeal in Melluish v Fishburn [2008] EWCA Civ 1382. There, the defendant relied on an oral agreement fixing the boundary subject to the making of an equalisation payment insofar as the agreed boundary differed from that delineated on the Land Registry filed plan, for which purpose a plan (referred to as the Marvin plan) would be drawn up to compare the two. The claimant argued that the agreement fell foul of section 2 of the 1989 Act. The judge rejected this argument, holding that “the agreement was truly an agreement regulating the boundary and that in so far as land is transferred one way or the other, and indeed upon the Marvin [plan] it is clear that land goes each way, it can indeed properly be said that the differences are trivial and therefore it cannot be suggested that the agreement falls foul of section 2 ”. The claimant appealed unsuccessfully to the Court of Appeal. Tuckey LJ, with whom the other members of the court agreed, said this:

“21.

The judge’s reference to triviality is to the decision in Joyce v Rigolli. In that case, building on the decision of Megarry J in Neilson v Poole, this court held that, where an agreement is made merely to demarcate a boundary, it is not a contract for the sale or other disposition of an interest in land for the purposes of section 2 of the 1989 Act, simply because a trivial transfer or transfers of land were consciously involved…

22.

[Counsel for the claimant] argues that the present case does not fall within this principle at all because there was never any boundary dispute as such. The Marvin plan showed precisely where the boundary was originally intended to be and how it was to be altered. The agreed alteration involved transfers both ways at a price to be agreed or determined and therefore fell fairly and squarely within section 2. I cannot accept this argument, because it looks at the matter with the benefit of hindsight. Rule 278 of the Land Registry Rules applied to the boundaries shown on the file plan so that it was “deemed to indicate the general boundaries only” and “the exact line was left undetermined”. This was the position at the time when the agreement relied on by the defendant was made. The Marvin plan came later. This was therefore a boundary agreement to which the principles in Joyce v Rigolli applied and the judge was right to find as a fact, which he did, that it was such an agreement.”

The appellants rely on paragraph 22 as indicating that the principles in Joyce v Rigolli apply to, but only to, boundary agreements. However, it seems to me that the Court of Appeal was simply agreeing with the judge that the agreement in that case was a demarcation agreement, and therefore the principles in Joyce v Rigolli applied. The Court of Appeal did not need to, and did not, address let alone answer the question whether section 2(1) applies to any other kind of agreement merely because it has a disposing effect.

Mr Laughton informed me that he is not aware of any other case where the question, whether section 2(1) applies to an agreement other than a demarcation agreement merely because it has a disposing effect, has been judicially discussed let alone answered.

As a matter of interpretation, I reject the appellants’ submission that section 2(1) distinguishes between demarcation agreements and other types of agreement. Parliament has not impliedly enacted that a demarcation agreement need not comply with section 2(1): section 2(5) expressly excepts certain types of contract from the scope of the section, but demarcation agreements are not mentioned, and I do not think it is possible to imply a further exception. The reason why a demarcation agreement does not have to be in writing is simply because, as the Court of Appeal held in Joyce v Rigolli, the words “a contract for…” in section 2(1) refer to an agreement which has a disposing purpose, whereas a demarcation agreement does not have a disposing purpose. It may have a disposing effect, but this is “not the acid test”, as Arden LJ put it. But if a disposing effect is not the acid test in relation to a boundary agreement, I do not see how it can be the acid test in relation to other agreements. After all, section 2(1) refers generally to “a contract” and “land”, without distinguishing between boundary agreements and other agreements, or between a boundary and any other land, and I do not see how, even on a purposive interpretation, one can give the word “for” one meaning in relation to boundary agreements and a different meaning in relation to other agreements.

It may be objected that this interpretation of section 2(1) conflicts with the aims of certainty, prevention of fraud, consumer protection, and so on, which are identified in the Law Commission Report, Formalities for Contracts for Sale Etc. of Land, and on which this legislation is based; and that in order to give effect to those aims I ought not to expand the categories of agreements which in fact dispose of land and which do not have to be in writing, beyond those contracts expressly mentioned in section 2(5) and demarcation agreements. But my task is to interpret section 2(1), and to do so in the light of the reasoning of the Court of Appeal in Joyce v Rigolli, and I consider that I am therefore required to decide that a demarcation agreement is no more than an example of an agreement which does not fall foul of section 2(1), because it does not have a disposing purpose even if it has a disposing effect. The compromise agreement in the present case is another example.

Conclusion

I conclude that the compromise agreement is not an agreement “for the sale or other disposition of an interest in land” within the meaning of section 2(1) of the 1989 Act, so that despite being oral it is a valid contract.

I therefore dismiss the appeal.