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The Court of Appeal confirmed that, on the proper interpretation of a reservation of rights clause, residential tenants had obtained a right to park on a private road outside their flats.

In the recent case of Duchess of Bedford House RTM Co Ltd v Campden Hill Gate Ltd [2023] EWCA Civ 1470, the Court of Appeal has confirmed that, on the proper interpretation of a reservation of rights clause, residential tenants had obtained a right to park on a private road outside their flats.

Background

The appellant tenants lived in flats in a mansion block in Holland Park, central London, known as Duchess of Bedford House.

The block, and two others, faced onto private roads surrounding a garden square, and residents often parked on those private roads.

In 1969, the freeholder granted a long headlease to the respondent’s predecessor in title, of land including the roads and the neighbouring block. The headlease reserved back to the freeholder "... easements, quasi-easements and rights belonging to or enjoyed by any adjoining or neighbouring premises".

The appellant tenants sought a declaration that they were entitled to park on any part of the private road, on the basis that when the 1969 headlease was granted, s.62(2) of the Law of Property Act 1925 had converted their settled practice of parking on the roads into a legal easement in favour of the freeholder, which could therefore also be exercised by the tenants.

However, in 1974, a second headlease - this time of Duchess of Bedford House - was granted to a third party.

That headlease carved out "liberties, privileges, easements, rights or advantages...over land forming part of the freeholder's estate...except those now subsisting or which might restrict or prejudicially affect the future rebuilding alteration or development or redevelopment thereof or of any other adjoining or neighbouring property."

Legal landscape

S.62(2) acts to imply words into a conveyance, such as the grant of a lease, so that any rights or easements that exist at the time of grant are included in the conveyance.

However, this only applies where a contrary intention is not expressed in the conveyance/lease in clear words, and has effect subject to the express terms of that document.

The question then was whether the carve-out in the 1974 headlease had expressly excluded the right to park, meaning that the right had not been passed down to the third party, or to the tenants.

Court decisions

At first instance, the judge agreed with the tenants - finding that they were entitled to park on the road. The High Court reversed the decision, with the Court of Appeal then allowing the tenants’ appeal.

The carve-out clause in the 1974 headlease was “inelegantly expressed”, but was clearly a compromise between sophisticated, commercial parties that were, no doubt, advised by professionals.

The intention of the headlease was that subsisting rights would be conveyed to the headlessee, unless those rights might restrict or prejudicially affect any future development, but an express right of way had already been granted in 1938, over the whole of the estate, which meant that it could not be materially developed in any event.

A realistic approach had to be taken when interpreting the clause. Because the clause was to be construed restrictively - as clear words are required to rebut the effect of s.62(2) - the right had to be tested by reference to whether the car parking restricted or prejudicially affected the future rebuilding, alternation or development of the estate. In fact, the subsisting right of way already prevented development, meaning that the additional right to park did not add anything.

The judge also confirmed that the reservation in the 1969 headlease was sufficiently wide to include a de facto right i.e. the settled practice by the tenants in parking on the private road.

The right was communal and related to the block as a whole, so it was enough that a substantial number of tenants that owned cars were exercising that right, even if not all of them, nor even a vast majority, did so.

The case is useful when considering the conversion of rights into easements when a new right is granted, under.s.62 Law of Property Act 1925.

The court’s restrictive reading of the clause may make it more difficult to craft wording, which seeks to exclude any inadvertent transmission or creation of proprietary rights that might impact on development where a settled practice can be established.

 

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