Air presumptive: can a lease be granted over airspace?

Section 205(1)(ix) of the Law of Property Act 1925 expressly provides that land is capable of both horizontal and vertical division – allowing, therefore, for a separation of estates between different strata both above and below the surface layer of the ground. Thus, for example, a landowner who owns the freehold estate in the surface may grant a lease of a cellar or the vacant space from which minerals have been worked out situated below his ground: see Grigsby v Melville [1974] 1 WLR 80, at 83, and Mitchell v Mosley [1914] 1 Ch 438, at 450. What remains controversial, however, is whether the definition of “land” may include a volume of airspace existing as an entirely independent unit of property separate and distinct from any adjacent soil or ground. Commonwealth authority There is certainly Commonwealth authority that recognises that airspace itself is capable of both freehold and leasehold ownership. In Macht v Department of Assessments of Baltimore City (1972) 296 A 2d 162, for example, the Court of Appeals of Maryland accepted that a lease of a volume of air above an altitude of 124ft over the landlord’s premises (in order to secure access to light and air to the tenant’s neighbouring property) was a valid transaction and, hence, liable to state and local taxes on real estate. The court accepted that: “…the modern trend is to recognise airspace as an ‘independent unit of real property’, the owner of which is entitled to all of the rights associated with land occupation… [allowing] airspace to be conveyed, leased, subdivided, and have interests created in it, and estates carved out of it in the same manner as land.” Similarly, in Re Trizec Manitoba Ltd & City Assessor for the City of Winnipeg (1986) 25 DLR (4th) 444, the Court of Queen’s Bench of Manitoba acknowledged airspace disconnected from the ground as land for the purpose of land tax. In this case, the tenant was granted the sole right to occupy the airspace above the land in question for the term of the lease. Again, in Tileska v Bevelon (1989) 4 BPR 9601, at 9606, Waddell CJ in the Equity Division of the Supreme Court of New South Wales stated: “It seems to me that, under the general law, it should be concluded that a grant of fee simple may be made of airspace, the dimensions of which are defined by length and breadth and height above the ground.” These judicial pronouncements from the US, Canadian and Australian courts suggest that airspace separated from any physical solum, if sufficiently defined, may be capable of freehold or leasehold ownership. English cases Under English law, the notion of so-called “flying” freeholds or leaseholds is also not controversial in so far as the airspace in question is a defined volume connected with a physical entity – namely, the rest of the building of which it forms part: see, for example, H Waites Ltd v Hambledon Court Ltd [2014] EWHC 651 (Ch). Equally, lesser rights over airspace (for example, rights of light or the right to overhang) have long been recognised in English law as the legal incidents of real property. What remains unclear is whether a volume of airspace as a self-standing unit disconnected from any physical structure or interest can form the subject of land ownership. Unfortunately, the weight of the English case law is currently against such a concept. In Rolfe v Wimpey Estate Management Ltd [1986] STC 329, at 356-357, Harman J said: “…it is quite plain that airspace is not something which even the most ingenious conveyancer of Lincoln’s Inn has ever dealt with as an item of property unrelated to the ground over which it lies.” In McLean Estates Ltd v Earl of Aylesford [2009] EWHC 697, JJ Judge Purle QC (sitting as a judge of the High Court) said, at [18]: “The space replacing the former Keuper Marl below the topsoil would remain, it is said, in the defendants’ ownership for the simple reason that that space represents what was formerly theirs. Therefore the defendants could do with the void exactly what they wanted with it and would have implied rights of access for that purpose. It is impossible to get any of that from the terms of the grant and exception itself and it strikes me as such a surprising result that I would not attribute that intention to any sensibly minded parties.” It is interesting to note that, apart from rejecting the notion of ownership in thin air, the learned judge also concluded that the express wording of the reservation of mines and minerals in the conveyance in that case did not contemplate, once the subject mine had been worked, that any further powers in relation to the resulting voids created by extraction would be appropriate. Such additional powers would, in his view, have to be implied, which would be a “difficult process” given that the draftsman had deliberately omitted express reference to any such rights in respect of the voids. Finally, in Stadium Capital Holdings v St Marylebone Properties Co plc [2009] EWHC 2942, Rattee J opined, at [26]: “It seems doubtful where the title to an area of airspace not contiguous to the land underneath it can exist as a matter of law as an interest in land. It seems to me that the owner[ship] of land in respect of the airspace above the land exist[s] as an incident of the ownership of the land. Ownership of airspace separate from ownership of the land underneath seems to be a very strange concept.” On this reasoning, a void created by the extraction of all the minerals from an opencast mine by the tenant would inevitably revert to the landlord as owner of the surface land. On extraction, the resulting void would become incapable of differentiation from the surrounding air belonging to the landlord. Such merger, therefore, would inevitably cause the mineral strata (which now formed an empty space unconnected with any physical structure or the soil itself) to lose their status as “land” in the sense currently recognised under English law. Voids and the frustration of leases In National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675, the House of Lords held that a lease was capable of being discharged by the occurrence of a frustrating event. In the earlier case of Cricklewood Property and Investment Trust Ltd v Leighton’s Investment Trust Ltd [1945] AC 221, it was suggested that “if some convulsion of nature” swallowed up the demised property altogether (or buried it in the sea), this would give rise to a frustrating event: ibid, at 229, per Viscount Simon LC. This was also recognised by Lord Russell (in his dissenting speech in Panalpina) where he opined that a physical destruction of a flying leasehold and the total disappearance of the site comprised in the lease into the sea (so that it no longer existed in the form of a piece of land and could not be the subject of re-entry or forfeiture) could amount to a frustrating event. In this latter circumstance, according to his Lordship (at 709): “…the term of years could not outlast the disappearance of its subject matter: the site would no longer have a freehold lessor, and the obligation to pay rent, which issues out of the land, could not survive its substitution by the waves of the North Sea.” Similar reasoning could, no doubt, be applied to the disappearance of the minerals forming the subject matter of a mining lease rendering the resulting void indistinguishable from the air surrounding it. Like the disappearance of a site into the sea, the void would no longer have a “freehold lessor” in any meaningful sense. The notion of re-entering (ie forfeiting) a floating volume of airspace (disassociated from the landlord’s own airspace which it surrounds) would be just as fanciful as attempting to re-enter the sea. In both cases, the leasehold estate is effectively discharged by the doctrine of frustration. Conclusion Under English law, it is doubtful whether airspace itself can exist as a self-standing unit of property severed from any interest in any physical structure or the ground itself. As we have seen, with the example of an opencast mining lease, it is difficult to see how such a lease could survive following extraction of all the mineral strata comprising the mine. Once the resultant void is merged with the surrounding air, the subject matter of the lease has effectively disappeared and, absent a freehold lessor, the inevitable consequence is that the lease has become discharged by frustration. Mark Pawlowski is a barrister and professor of property law at the School of Law, University of Greenwich The topic of surface voids created by opencast mining was the subject of the writer’s Question & Answer in (2014) 18 L&T Rev 155