Kettel & Ors v Bloomfold Ltd [2012] EWHC 1422 (Ch) (25 May 2012)

Kettel & Ors v Bloomfold Ltd [2012] EWHC 1422 (Ch) (25 May 2012)

Introduction
We welcome again solicitor Mr Anis Waiz who continues his critical review of recent case law. This case raises an interesting issue as to whether a party’s entitlement to use a car parking space amounted to a demise or an easement?  Certainly an issue that may not have occurred to any of the parties or indeed their solicitors upon the grant of the various leases.
The case also sets out with clarity the Courts discretion in granting damages in lieu of an injunction and is a very useful resume for all property lawyers.
Both parties accepted that a right to park was in principle capable of subsisting as an easement, depending on its terms.
Background
The claimants were leaseholders of flats in a development in London, the defendant the freehold owner. The flats had the benefit of the use of a designated parking space.  For brevity the reader is referred to the Judgment for the full background.
The claimants sought an injunction to prevent the defendant (who had obtained planning permission) building a further block of flats on the site which would cover their parking spaces. The defendant argued it had the right to require the claimants to use other car spaces in place of those originally allocated.
The defendant considered it was entitled to require the claimants to accept alternative car parking spaces. Accordingly, contractors acting on behalf of the defendant then entered the site and fenced off the area on which the new development was to be constructed, including the claimants’ car park spaces.
Proceedings were issued in October 2010 however; the claimants did not seek injunctive relief on the basis that both parties would await the outcome of the claim if they were unable to agree a settlement.
The issues
Did the claimants’ entitlement to use the car parking spaces amount to a  demise or an easement?  The   claimant argued it was a right which amounted to exclusive possession and thus a  demise rather than an easement.
Alternatively, the claimants argued it was a right which was so extensive that it deprived the freeholder of any reasonable use of the land for any other purpose and so was not capable of subsisting as an easement and therefore by implication a demise.
In support the claimants relied upon Batchelor v Marlow [2003] 1 WLR 764. In that case a party sought to rely on a right by prescription to park vehicles for 9.5 hours per working day on land. Tuckey LJ, with whom the other members of the court agreed, held
"[8] [The deputy judge] referred to the authorities and accepted that the question he had to answer was one of degree. This followed the approach adopted by Judge Paul Baker QC in London and Blenheim Estates v Ladbroke Retail Parks Ltd [1993] 1 All ER 307 at 317, who, after reviewing the earlier authorities on car parking, said:
‘The essential question is one of degree. If the right granted in relation to the area over which it is to be exercisable is such that it would leave the servient owner without any reasonable use of his land whether for parking or anything else, it could not be an easement, though it might be some larger or different grant.” 
In Moncrieff and another v Jamieson and others [2007] UKHL 42 the House of Lords so held in relation to the law of servitudes in Scotland, Lord Scott (expressing a view there was no difference between the English and Scottish law on this point) said:
“ I do not see why a landowner should not grant rights of a servitudal character over his land to any extent that he wishes. The claim in Batchelor v Marlow for an easement to park cars was a prescriptive claim based on over 20 years of that use of the strip of land. There is no difference between the characteristics of an easement that can be acquired by grant and the characteristics of an easement that can be acquired by prescription.”
“How could it be said that the law would recognise an easement allowing the dominant owner to park five cars or six or seven or eight but not nine? I would, for my part, reject the test that asks whether the servient owner is left with any reasonable use of his land, and substitute for it a test which asks whether the servient owner retains possession and, subject to the reasonable exercise of the right in question, control of the servient land”.
The Leases
Clearly the terms of the leases were germane to the issues. The court noted the following points;
1 Clause 2 contained the words of  a demise "… the Landlord as beneficial owner demises to the tenant the Premises TOGETHER with the rights specified in the Second Schedule TO HOLD the Premises to the Tenant for the Term subject to … all rights easements privileges restrictions covenants and stipulations of whatever nature affecting the Premises including matters reserved and set out in the Third Schedule.
2 The second schedule set out "the Rights Granted" and included  “the right on foot only (in common with… all others so entitled) of access to and egress from the Premises over the entrance halls landings lifts (if any) staircases and Open Areas in the Building for access and egress to and from the Premises Refuse Area and Car Parking Space”.   In addition  “The right of vehicular access to and egress from the Car Parking Space and the sole right to use the Car Parking Space for the purpose of parking a taxed car or motorbike”.
HHJ Cooke noted that the terms of the lease provided that the right to pass on foot over the Open Areas was only granted in respect of part of phase 1 of the development. Thus the key issue was whether the lease, as a matter of construction, provided a  demise for the car parking space?  HHJ Cooke noted the following;
1 The key rights were set out in the second schedule. Therefore it was necessary to construe that schedule, in the context of the lease as a whole, to determine the nature of those rights.
2 The Claimant’s argument that the grant of "sole use" at a rent was equivalent to exclusive occupation and thus the landlord could not do anything else with the car parking space was incorrect.  The tenant was not granted "sole use" of a car parking space, he was granted the sole right to use it for parking a car or motorbike. This was not the language of exclusive possession.
3 Bachelor v Marlow did not decide that the right to park a car on a piece of land which is only big enough to accommodate one car amounts to exclusive possession,  but only that the prescriptive right claimed in that case was so extensive, on the facts, that it could not subsist as an easement . It is question of fact in each case whether the right granted (or exercised, in the case of a claim by prescription) is such that it makes the freeholder’s ownership illusory.
4 Clause 2 provided that what the Tenant was "to hold" was "the Premises", not the other rights described.  The proviso for re-entry and covenant for quiet enjoyment applied only to the Premises, as did the express right of entry in Schedule 3 to carry out works. If the landlord had intended to a demise the car parking space he was obliged himself to maintain it (as part of the Services listed in the Fifth Schedule) but excluded himself from access to do so. Therefore, the rights granted to use the car parking space in each of the claimants’ leases could not be sensibly construed as a  demise.
An easement?
Having held that the rights could not amount to a  demise HHJ Cooke then went on to look at whether such rights could amount to an easement. Whilst the court recognised that an easement for parking can exist (notwithstanding the agreement between the parties) the issue was whether the decision in Batchelor v Marlow excluded the court from finding that an easement existed.
It was noted that in this case an easement was not of itself excluded given Virdi v Chana [2008] EWHC 2901 (applying Batchelor), an appeal from an adjudicator who held on the facts that where a parking space was adjacent to a domestic property, the residual ability of the servient owner to carry out acts such as maintaining the land and fencing round it, altering the surface or planting climbing plants adjacent to the fence could not be dismissed as insignificant or illusory.
In this case the defendant may do anything that a freeholder could normally do, except to the extent that it was excluded by the terms of the lease, i.e.  to pass on foot or by vehicle across the space freely if there is no vehicle parked . The question was whether the ability to undertake them could be said to be so negligible as to make ownership illusory.
The defendants sought to argue that under the lease, the defendants had the right to build on the car parking spaces notwithstanding the rights granted to the leaseholders.  The reader is referred to the judgment for the operative provisions of the lease.
The defendant’s construction of the operative parts of the lease was rejected. Again the reader is referred to the judgment. HHJ Cooke noting;
“Since an express right is conferred to use the car parking space, only clear language would indicate that the right may be overridden by general reservations such as that contained in paragraph 5 of the third schedule. The language used does not clearly have that effect, and in my view more naturally means only that the tenant may not object to the erection of new buildings on the grounds of interference with amenity of, or access to, the Premises (i.e. his own flat)”
Accordingly there was an express easement granted by the leases (see also below as to Remedies).
Was there a right to change the designated parking space?
The defendant submitted that such a right must be implied and that interference with the right to park on a particular space was inevitable over the term.  Further, the ability to specify a different space would not extinguish the right to park in a designated space, but only in the particular space identified in the lease.
The defendant also argued that the actual location of the designated space was immaterial to the leaseholders and the essence of the grant consisted of the right to park on a space within the estate, not the particular space originally specified.
The court rejected the defendant’s arguments noting;
1 In general, a servient landowner has no right unilaterally to extinguish an easement over one area of land on provision of an equivalent easement over another ( Greenwich NHS Trust v London & Quadrant Housing Association [1998] 1 WLR 1749).
2 In  Heslop v Bishton [2009] EWHC 607 (Ch)  obstruction of the easement originally granted did not cease to be actionable in principle because of the availability of an alternative easement, even if equally convenient.
3 An easement may be granted in terms which, expressly or by implication permit variation of the servient land, as recognised by Lightman J in the Greenwich case, and no doubt it may have been commercially sensible for the landlord if it had drafted the parking rights in such terms in this case.
4 A  right of temporary obstruction in order to carry out works may be implied as necessary in order that the landlord may fulfil his maintenance obligations, but that was a  far cry from the right sought to be established, which would permanently extinguish the easement over the land originally subject to it.
5 The right granted was to park in a particular space and could not  be construed as being only to park in any place from time to time designated by the landlord.
The Decision
HHJ Cooke held that there was a substantial interference with the express easement granted by the leases. In addition it was equally plain that a substantial interference has occurred through the fencing off of all or part of the car parking spaces such that vehicles could not be parked and further interference would occur if the defendant carried on its intention to build on those spaces.
Relief
The Claimants sought an injunction to restrain the actual and threatened interference with their parking rights. In the alternative, they sought damages based on a ‘release fee”, an amount to be paid in a hypothetical negotiation between reasonable parties for the right to do that which would otherwise be unlawful.  For the reasons set out fully in the judgment HHJ Cooke granted the injunction sought.
The Judgment fully sets out the relief sought and a helpful analysis of the relevant case law. By way of summary the Court noted the following;
1. The starting point and working rule was as per Smith  LJ  Shelfer v City of London Electric Lighting Company [1895] 1 Ch 287. The Court of Appeal considered the circumstances in which courts might exercise the power given by Lord Cairns’ Act to award damages in lieu of an injunction:
"In any instance in which a case for an injunction has been made out, if the plaintiff by his acts or laches has disentitled himself to an injunction the Court may award damages in its place. So again, whether the case be for a mandatory injunction or to restrain a continuing nuisance, the appropriate remedy may be damages in lieu of an injunction, assuming a case for an injunction to be made out.
In my opinion, it may be stated as a good working rule that:
(1.) If the injury to the plaintiff’s legal rights is small,  
(2.) And is one which is capable of being estimated in money,
(3.) And is one which can be adequately compensated by a small money payment,
(4.) And the case is one in which it would be oppressive to the defendant to grant an injunction:£¬then damages in substitution for an injunction may be give”
2. The right to an injunction to prevent the continuing infringement of a legal right was reasserted by the Court of Appeal in Regan v Paul Properties DPF Ltd [2006] EWCA Civ 1319, overturning the decision of the first instance judge and granting an injunction to prevent the completion of a development of a five-story block of flats that would infringe the rights to light of a cottage opposite. . Mummery LJ, reviewed the authorities and held that  Shelfer has, for over a century, been the leading case on the power of the court to award damages instead of an injunction. It is authority for the following propositions, (1) A claimant is prima facie entitled to an injunction against a person committing a wrongful act, such as continuing nuisance, which invades the claimant’s legal right. (2) The wrongdoer is not entitled to ask the court to sanction his wrongdoing by purchasing the claimant’s rights on payment of damages assessed by the court. (3) The court has jurisdiction to award damages instead of an injunction, even in cases of a continuing nuisance; but the jurisdiction does not mean that the court is "a tribunal for legalising wrongful acts" by a defendant, who is able and willing to pay damages.
Conclusion  
On first reading there are clearly difficult issues of construction and common law principles at play.  However, key to the decision was the fact that there was no right of variation expressly set out in the lease and no basis, for such a right to be implied. As to whether there could be a demise this is a  question of fact in each case as to  whether the right granted (or exercised, in the case of a claim by prescription) is such that it makes the freeholder’s ownership illusory.
As ever the devil is in the detail.
Kind regards

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