Land Registration & Insolvency: Whether land deemed bona vacantia loses the benefit of its easements (Pall Mall 3 Ltd v Network Rail – 2021)

Where the Crown disclaims freehold land and the property therefore vests in the Crown by escheat, do easements benefiting the land fall away as the title is terminated?

The background

In Pall Mall 3 Ltd v Network Rail [2021], the registered proprietor of freehold land near Hackney Wick Station, London, became insolvent. The liquidator disclaimed the freehold title in the land and the estate subsequently vested in the Crown as bona vacantia land. The Crown also disclaimed the freehold, which terminated the freehold estate entirely. The estate vested in the Crown allodially as feudal lord, with no estate or title.

The land was sold to Pall Mall 3 Limited. With the previous title terminated, the transfer comprised a conveyance of a new freehold estate. Drainage serving the Pall Mall land ran across land owned by Network Rail, and Pall Mall, in a claim against Network Rail for damage to the drains during the construction of Hackney Wick Station, claimed that an easement had been acquired by the former freehold owner over the drains. Network Rail stated that easements previously enjoyed by the freeholder had terminated when the freehold title terminated.

The decision

The High Court found that previous easements ran with the land, rather than the title. The benefit of easements was not terminated when the freehold title ended, and easements did not depend on the existence of the freehold estate.

Title entries relating to easements and rights benefiting freehold titles, as well as encumbrances to which the land is subject, which are terminated should be carried forward to new titles where land is conveyed.

Advice and action

This decision is helpful for developers seeking to invest in ‘ownerless land’. It can be assumed from the judgment that easements will run with the land and a new freeholder will continue to benefit from them, whilst also on the understanding that the land will be subject to any encumbrances in existence.