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Boundary agreements

Introduction

If parties to a boundary dispute enter into a compromise the agreement settling the dispute will not be binding if it falls foul of the provisions of s2 of the Law of Property (Miscellaneous Provisions) Act 1989, which sets out the legal requirements in relation to dispositions of land. That section is in the following terms:
    (1) A contract for the sale or other disposition of an interest in land can only be made in writing and only be incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.
    (2) The terms may be incorporated in a document either by being set out in it or by reference to some other document.
    (3) The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract.
    ….
    (5) … nothing in this section affects the creation or operation of resulting, implied or constructive trusts.
On this page we discuss when a boundary agreement will be binding; and how to make sure that it is so binding.


Two types of boundary agreement

The general understanding in relation to boundary agreements has been that if the parties are merely seeking to define a boundary that is not clear no specific formalities are required to make the agreement binding. On the other hand, if the parties are exchanging land then it is necessary to comply with the requirements of s2 of the 1989 Act; i.e. be in writing etc. This is based on the decision in Neilson v Poole (1969) 20 P&CR 909 decided in relation to formalities under the Law of Property Act 1925. In that case Megarry J said this:
    "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; and the agreement 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. In general, I think that a boundary agreement will be presumed to fall into this latter category. There may of course be cases in which it is uncertain or doubtful whether a boundary agreement will convey any land. Thus, the configuration of the boundary may suggest that land will be conveyed, without demonstrating this beyond doubt. In such a case I would hold the agreement not registrable A contract merely to demarcate and confirm is not a contract to convey." (Our emphasis)
Thus, there is a clear distinction between the two types of agreement. Or at least there was until Joyce v Rigolli [2004] EWCA Civ 79 where the CA held that the principle in Neilson v Poole case applies to the conscious exchange of very small pieces of land. Arden LJ:
    "In this case .. Mr Rigolli consciously thought that he was giving up a small triangle of land round the cherry tree ... 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. 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 of upholding boundary agreements so powerfully identified by Megarry J 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 the section to apply to transfers of land pursuant to boundary agreements of Megarry Js latter type (demarcating agreements) simply because a trivial transfer or transfers of land were consciously involved. (para 32). As Megarry J put it, a boundary agreement is an act of peace, quieting strife and averting litigation. If section 2(1) applies where trivial transfers of land are consciously involved, the expense to the parties will also be disproportionate to the value of the land involved, the expense to the parties will also be disproportionate to the value of the land involved. Accordingly, in my judgment, it can in this case be properly concluded that s2 does not apply to trivial dispositions of land consciously made pursuant to an informal boundary agreement of the demarcating kind". (Again, our emphasis)
In the alternative Arden LJ held that there was an estoppel giving rise to a constructive trust, which disapplies s2 by virtue of s2(5) – see Yaxley v Gotts [1999] EWCA Civ 3006 ie the agreement gives rise to an estoppel preventing either party from denying the ownership of the land. For another recent example of a boundary agreement see Acco Properties Limited v Severn [2011] EWHC 1362 (Ch).

Joyce v Rigolli would seem to be wrong and inconsistent with the passages in Neilson v Poole that the court sought to apply. If two parties are consciously exchanging land it is surely quite clear that s2 of the 1989 Act applies however small the area of land transferred. In Yeates v Line [2012] EWHC 3085 a judge sitting in the High Court held, applying Joyce v Rigolli, that it is not the nature of the transaction that matters but whether there was a disposing intention. It did not matter whether the area of land involved was large or small, although in some circumstances the rule would not be relevant if the de minimis principle could be applied (para 30). However, the judge also expressed the view that "it may be objected that this interpretation of section 2(1) conflicts with the aims of certainty, prevention of fraud, consumer protection ..." and only seems to have applied the case because it was binding on him. (See also Melluish v Fishburn [2008] EWCA Civ 1382 where Joyce v Rigolli was briefly alluded to).

Comment

We suggest that parties settling boundary disputes continue to ensure that the agreement is in writing, in full compliance with s2, and that notice of it is registered with the Land Registry. We may one day find that this case is overruled. See further below in relation to making agreements binding on purchasers of the land.


Giving effect to the order on the ground

Scammell v Dicker
[2005] EWCA CIV 405.

Facts

The parties compromised a boundary dispute and the agreement was embodied in a consent order. A plan was annexed to the order. Unfortunately, when the surveyors sought to give practical effect to the agreement on the ground there was a disagreement in relation to one point on the boundary. One of the parties argued that this made the agreement void and her contention was upheld by the judge.

Decision on appeal

The argument was rejected in the CA.
    28. Mr Laurence was asked in the course of his submissions if he could cite any case in which a consent order of the court had ever been declared to have been void on the ground of uncertainty: but he was unable to say that that had ever happened. In theory it is, I suppose, possible, just as a consent order may be set aside for misrepresentation or fraud or for mistake. However, given that the court is always on hand to lend its assistance in the working out of its orders or in their clarification, it cannot be a mere difficulty in interpretation or execution that can undo what with due formality has been entered as an order of the court in settlement of litigation before it.

    30. Parties are always disagreeing about the contracts which they make. They take those arguments, if necessary, to the courts, or to arbitration, for their resolution: and sometimes the resolution is very difficult indeed to arrive at. That is equally true of disputes as to the meaning of contracts and of disputes as to the application of contracts to the facts and of disputes as to the proper understanding of the facts. None of that makes a contract uncertain. For that to occur and it very rarely occurs it has to be legally or practically impossible to give to the parties' agreement any sensible content.

    39. The applicable legal motto is: that is certain which can be rendered certain (id certum est quod certum reddi potest). What would to my mind be a complete injustice would be, just because of the difficulty about the precise position of the boundary line in immediate juxtaposition with the telegraph pole, to conclude that the parties had completely failed on the grounds of uncertainty to settle their litigation at all, although that is what they plainly intended to do and what they did in fact do with the aid of a detailed consent order and plan.

    40. As for Mr Justice McCombe's conclusion that the consent order was uncertain because it needed further agreement in order to be implemented, I respectfully disagree. The most that could be said is that its implementation, in this matter of the telegraph pole, threw up a relatively small practical problem of detail which in turn involved a problem of interpretation. . it is only in the absence of agreement as to essential terms that a contract is in danger of failing for uncertainty because further agreement is required. The world is otherwise full of perfectly sound contracts which require further agreement for the purpose of their implementation. Furthermore, if problems of interpreting plans for the purpose of identifying boundaries were to lead to the failure of contracts, then plans would have to be as large as the area of land in issue.
Comment: The consent order was upheld but the case shows the importance of ensuring that any agreement that is made is workable on the ground.


Binding purchasers

In any particular case there might well be an estoppel arising out of a boundary agreement but this will not necessarily bind purchasers. It is suggested that parties settling boundary disputes where there is an exchange of land continue to ensure that the agreement is in writing, in full compliance with s2 of the 1989 Act, and that the transfer is registered with the Land Registry, or at the very least that notice of it is entered on the register (see immediately below). We may one day find that Joyce v Rigolli is overruled.

A boundary agreement or other set of circumstances giving rise to an estoppel “has effect from the time the equity arises as an interest capable of binding successors in title” (s116 of LRA 2002; Megarry & Wade 6ed, para. 13.030; see also Stephenson v Johnson [2000] EGCS 92; Bhullar v McArdle [2001] EWCA Civ 510). Such an interest may be protected by a unilateral notice under s35 of the 2002 Act; or even an “agreed notice” under s34(3)(c) if “the registrar is satisfied as to the validity of the applicant’s claim”. An agreed notice is more difficult to remove. Or it may be protected as an overriding interest when the person with the benefit of the equity is in occupation (see further Schedules 1 and 3 of the 2002 Act, para 2 in each case). Another method of ensuring that the agreement is binding on purchasers is to use the procedure for determining boundaries set out in s60(3) of the 2002 Act and Land Registration Rules 2003, rules 117 to 122 (as amended).

Remember; even if it is in writing the boundary agreement must also be protected by one of these methods to be binding on purchasers.


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