Don’t fence me in: can an agreement with a former neighbour be enforced on a new owner?

Agreements such as water agreements, agistment agreements and fencing agreements are common between neighbouring landowners. The question is, just how enforceable are these agreements when one neighbour sells?

This question was recently considered by the Queensland Court of Appeal in Bellevue Station Pty Ltd v Consolidated Pastoral Company Pty Ltd.

The Facts
“Wrotham Park” and “Bellevue Station” are adjoining cattle stations in Northern Queensland. Due to the physical attributes of the properties, fencing on the legal boundary is difficult. To overcome this, the owners of the properties signed a ‘give and take’ agreement under which each party was permitted to access part of the other party’s property that fell either side of the natural boundary.

A clause of the agreement provided that if either party sold their property, the incoming purchaser must enter into a similar agreement with the continuing property owner.

When the owner of “Bellevue Station” sold the property, the owner of “Wrotham Park” refused to enter into an agreement with the incoming owner and sought instead to construct a fence along the legal boundary between the properties.

The question for the court was whether the new owner of “Bellevue Station” could force the continuing owner of “Wrotham Park” to sign a replacement give and take agreement.

The Queensland Court of Appeal found that the owner of “Wrotham Park” could refuse to enter into a replacement agreement as there was no implied obligation on it to continue the arrangement with the incoming owner of “Bellevue Station”. The Court went on to say that even if there was an implied obligation, the phrase “enter into a similar arrangement” was too uncertain to be enforceable.

Implications

The decision highlights the importance of the language used in these types of agreements. Neighbours making such agreements should carefully consider who is to be bound to continue the arrangement if either or both properties are sold.

Prospective purchasers of properties the subject of agreements with neighbours should also be careful to understand their rights and obligations.