Duchess of Bedford House RTM Co Ltd and others v Campden Hill Gate Ltd

Landlord and tenant – Construction of lease – Parking rights – Appellants holding long leases of flats in mansion block – Appellants seeking declaration of right to park in private road – Respondent headlessee opposing claim – County court finding in favour of appellants – High Court allowing respondent’s appeal – Appellants appealing – Whether right to park excluded from demise – Appeal allowed The appellants owned long leases of flats in Duchess of Bedford House, Holland Park, London, a 1930s mansion block which faced onto a private road, Sheldrake Place East. There were three separate entrances to the property which was divided into three blocks of flats within the same building. Sheldrake Place East was part of a larger garden square, Sheldrake Place. In the middle of Sheldrake Place were two other mansion blocks known as Campden Hill Gate. The respondent was the headlessee of Campden Hill Gate and other parts of Sheldrake Place including the roads and central gardens, under a lease granted by the Phillimore Estate to the defendant’s predecessor-in-title. The appellants claimed the right to park in Sheldrake Place East. The county court judge ruled in favour of the appellants. The judge found that a right to park on Sheldrake Place East existed in a 1969 headlease. A subsequent 1974 headlease contained an express carve-out of rights and entitlements which were not to be passed on: (i) any ways, watercourses, sewers, drains, lights, liberties, privileges, easements, rights or advantages in through over or upon any land of the lessors except those now subsisting (the first limb); or (ii) which might restrict or prejudicially affect the future rebuilding alteration or development thereof or of adjoining or neighbouring property (the second limb). Further, there was a settled practice of parking on Sheldrake Place East by a substantial number of tenants. The High Court allowed the respondent’s appeal: [2022] EWHC 2489 (Ch); [2022] PLSCS 167. The appellants appealed. Held: The appeal was allowed. (1) The court had to ascertain the objective meaning of the language chosen by the parties in the context of the agreement as a whole and the relevant admissible background. Reliance on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language to be construed. Interpretation was a unitary exercise and the court could give weight to the implications of rival constructions by determining which construction was more consistent with business common sense: Arnold v Britton [2015] EGLR 53 and Wood v Capita Insurance Services Ltd [2017] AC 1173 considered. The process of interpretation began by considering the natural and ordinary meaning of the words used. The fact that the phrase “except those now subsisting” was in the middle of the clause had to be taken account. The fact that the clause in the 1969 headlease placed the reference to existing rights at the beginning militated against a similar construction here. The 1974 headlease was made between sophisticated, commercial parties advised by experienced professionals and presumably the carve-out clause was the product of negotiation. Furthermore, the two limbs of the clause were different in nature. Therefore, the reasonable reader would not conclude that the liberties, privileges, easements, rights or advantages then subsisting were excepted from both limbs of the clause. (2) The carve-out clause appeared to be a compromise between the competing interests of the freeholder and the headlessee. No new rights would be created by a combination of the 1974 headlease, the general law and section 62(2) of the Law of Property Act 1925 as a result of a contrary intention and clear words, and subsisting rights would be conveyed unless they might restrict or prejudicially affect any rebuilding or alteration, etc. The judge was wrong to place a broad interpretation of the carve-out clause and placed too much emphasis upon the use of the word “might” in the second limb which did not accord with its natural and ordinary meaning, considered in context and using commercial common sense. A restrictive interpretation was consistent with the general principle that clear words were required to exclude the operation of section 62(2) of the 1925 Act. Instead of taking “might” at its highest, a practical and realistic approach had to be adopted and the alteration or development against which the exclusion was tested for the purposes of the second limb of the clause had to be grounded in reality. It could not be a proposal which would be contrary to the express grant of the right of way. When determining whether to give consent, the Phillimore Estate would be entitled to take into account its own property interests and the interests of the appellants: Iqbal v Thakrar [2004] 3 EGLR 21 and Hicks v 89 Holland Part (Management) Ltd [2020] EWCA Civ 758; [2020] EGLR 28; [2021] Ch 105 considered. (3) Where there was a block of flats, and the tenants in general regularly parked their cars within the curtilage of the block, the liberty, privilege, easement, right or advantage of being allowed to do so would rapidly become regarded as something which appertained or was reputed to appertain to each of the flats in the block, and as being reputed appurtenant to each of those flats. Accordingly, on the grant of a lease of one of the flats, section 62(2) of the 1925 Act would operate to give the lessee an easement of car parking appurtenant to his leasehold. It did not matter whether the previous occupant of the flat did or did not park their car within the curtilage of the block, or whether they had any car. In all ordinary cases the reputation would be that of a right of parking which went with each of the flats, for there would be no reason for one lessee to have greater rights than another in that respect: Newman v Jones (22 March 1982, unreported) followed. There was little or no difference between saying that the right became appurtenant to “each” of the flats in a block and that it was appurtenant to the block as a whole. In order to establish a right belonging to or enjoyed by the appellants, it was unnecessary to establish that every leaseholder exercised that right. Therefore, a settled practice of parking by residents of a block in the surrounding area might be converted by operation of section 62 of the 1925 Act, or by a reservation of rights clause, into a legal easement which benefitted residents of the whole block. Edward Francis (instructed by Edwin Coe LLP) appeared for the appellants; David Holland KC and Camilla Lamont (instructed by Boodle Hatfield LLP) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of Duchess of Bedford House RTM Co Ltd and others v Campden Hill Gate Ltd