The Court of Appeal (CoA) was faced with the question of whether a boundary agreement binds successors in title and, if so, only if they have knowledge of the agreement.
Background:
Mr. White and Mr. and Mrs. Alder are neighbours. Mr. White is the registered freehold proprietor of "Willow Cottage" while the Alders are the registered freehold proprietors of the adjacent property "The Old Stores". The Alders purchased The Old Stores on 2 November 2005, while Mr. White purchased Willow Cottage shortly after on 11 November 2005.
On or about 18 October 2005 and no later than 22 October 2005, Mr. White's predecessors in title, the Hobsons, and the Alders' predecessors in title, the Joneses, had orally agreed on the location of the boundary between their respective properties. They also agreed that The Old Stores' owner owned the physical boundary features, which was later recorded in written form within the boundary agreement.
At some point in April or May 2016, Mr. White, or others on his behalf, demolished a part of the boundary wall between the two properties and began to construct an extension to Willow Cottage. It was alleged that the wall and foundations of the extension and the temporary scaffolding for its construction trespassed on land forming part of The Old Stores.
The Alders commenced proceedings in September 2020 seeking damages not exceeding £15,000 plus interest, an injunction requiring Mr. White to remove goods trespassing and a further injunction restraining Mr. White from further trespassing concomitant with declarations as to the position of the extant boundary between The Old Stores and Willow Cottage – specifically that the boundary features belonged to the Alders. The District Court ruled that Hobsons and the Joneses had reached a boundary agreement before the sale of Willow Cottage and The Old Stores to Mr. White and the Alders, respectively, wherein the boundary agreement was an agreement that sought to clarify an uncertain boundary and not a contract to convey land. It was argued that such a boundary agreement bound Mr. White and the Alders as successors in title. Mr. White appealed.
Decision:
The CoA dismissed the appeal. The Court agreed with the District Court that there are two types of boundary agreement. The first is an agreement, the purpose of which is to move a boundary to transfer land from one neighbour to another, subject to the formalities necessary for the transfer of land. The second type is an agreement, the purpose of which is to define a previously unclear or uncertain boundary, even if it includes the conscious or unconscious transfer of a trivial amount of land. Such a boundary demarcation agreement binds the parties to it for the reasons explained by Briggs LJ in Nata Lee Ltd. as it avoids the risk of future disputes. Such an agreement has proprietary effect and, as a result, also binds successors in title, and there is no need for the successor in title to have knowledge about it.
The Court noted that “although in many cases, the parties will act upon the agreement, for example, by building a wall or erecting a fence, there is no need for anything more in order to render it binding … That is clear, not only from Neilson v Poole itself, which has been consistently endorsed in the CoA, but also from Stephenson, where it was stated that it was unnecessary to consider the estoppel argument in addition to the implied boundary demarcation agreement.”
The reason it is binding on the successor is due to its very nature, whereupon “a boundary demarcation agreement establishes on the ground the physical extent of the respective legal estates created by the conveyance or transfer. The boundary is presumed always to have been in that location.” This is especially true because the general boundary of a registered land does not determine the exact line of the boundary, and the demarcation agreement may, therefore, establish such an exact boundary.
Implications:
This case reaffirms that there are two types of boundary agreements, one of which is subject to the formalities necessary for the transfer of land and another which aims at clarifying an uncertain boundary. The latter has proprietary effect and, as a result, also binds successors in title due to its very nature. Knowledge of it is not relevant due to the very nature of the boundary demarcation agreement.
It is, therefore, advised for potential buyers to clearly ask the question of whether such an agreement is in place. Neighbours might also consider entering into such an agreement to avoid future disputes where a boundary is not clearly established.