The Court of Appeal has ruled in a dispute over who should foot the bill for maintaining a road in a private estate. In the case of Goodman and others v Elwood, the court had to decide whether or not the successor to part of a title was required by a positive covenant to contribute to these costs. It was decided that in line with the benefit and burden principle, it should put a proportionate amount of money forward.
Estate owners who secure part of a title might therefore need to take a close look at what they might liable to pay in the future.
A partner at Winckworth Sherwood Solicitors specialising in enfranchisement and property matters, commented: “Private estates often suffer from legal difficulties when seeking to obtain contributions from users of the common parts as the houses change hands over time.
“The legal structure put in place when the houses were first sold off by a developer will often grant the house owners the benefit of a right to use common parts and create a corresponding obligation to contribute towards the cost of maintaining those common parts. Unfortunately an obligation to contribute may not survive the sale of houses. This leaves the owner of the estate with the obligation to repair but without the funds to do so. Consequently common parts may fall into disrepair and litigation may ensure.
“Over time additional legal structures have been put in place to support this obligation to pay and so newer developments may not experience this problem. Older estates contained to suffer and to meet this gap in obligations the court has applied the benefit and burden principle created in the High Court case of Halsall v Brizell [1957] Ch 169. This established that a party may not take a benefit without accepting the burden that goes with it and so for example house owners accessing via a private road could not free load.
“The Court of Appeal decision in this case has clarified the extent to which those benefiting from a right, such as a house owner accessing their property via a private road as above, can be required to contribute.
“It first set out the three conditions that must be satisfied for a subsequent owner to be bound by their predecessor’s obligations to do something i.e. contribute to shared costs; first the benefit and burden must be conferred in, or by, the same transaction; second the benefit must be conditional on, or reciprocal to, the burden; third the party subject to the burden must have had the opportunity to reject the benefit, not simply the right to receive the benefit.
“In this case the Court of Appeal determined, amongst other things, that there is no need to register at the Land Registry that land is burdened with an obligation to contribute for that obligation to be binding and that the obligation to contribute only applied to those parts the payer was entitled to use as of right by virtue of their title; they did not have to contribute in respect of parts they enjoyed pursuant to a licence that could be terminated.
“In conclusion, while this Court of Appeal authority upholds the application of the benefit and burden principle and affirms it can apply proportionately to successors of part of a title it is a reminder for estate owners and their managers that the title needs to be examined carefully before monies are laid out and demands for payment made.”
