Court of Appeal delivers important judgment in Holland Park dispute as to parking rights

On Friday 8 December 2023 the Court of Appeal (King LJ, Asplin LJ, Birss LJ) handed down judgment in the second appeal in Duchess of Bedford House RTM Company Ltd & ors v Campden Hill Gate Limited [2023] EWCA Civ 1470.

Key Points

The decision is important in two respects:

• Firstly, in confirming that, as previously decided in the unreported decision in Newman v Jones, a right to park appurtenant to the whole of a block of flats exercisable by all of the occupiers of the flats and their visitors can arise under s.62(2) of the Law of Property Act 1925 where there has been a prior settled practice of parking by occupiers, even if not all of them did so; and
• Secondly, in holding that a clause excluding the transmission or creation of rights that “might” impact development falls to be construed restrictively, such that any development said to engage the provision must itself be “grounded in reality”. The decision will make it more difficult to exclude the inadvertent transmission and or creation of proprietary rights that might impact future development of retained land holdings

Summary

The dispute between the parties was as to whether the Appellants, as long leaseholders of flats of a mansion block on the Phillimore Estate (“the Estate”) in Holland Park known as Duchess of Bedford House (“DoBH”), had the benefit (as an easement) of the right to park cars in an adjoining private road known as Sheldrake Place East which was held, together with two adjacent blocks of flats known as Camden Hill Gate (“CHG”), by the Respondent under a headlease granted by the Estate in 1969 (“the 1969 Headlease”).

First Key Issue

The first question was whether a right to park over Sheldrake Place East in favour of DoBH had been reserved to the Estate in favour of DoBH on the grant of the 1969 Headlease under a general reservation of “all other easements quasi easements and rights belonging to or enjoyed by any adjoining or neighbouring premises” by reason of the fact that, at that time, there was then a de facto settled practice of parking on Sheldrake Place East by some, but not all, of the residents of DoBH.

In relation to that first issue, which had been raised by the Respondent’s Notice, the Court of Appeal held that the right to park had been reserved in 1969 on a true construction of the general words referred to above, upholding the decisions of both HHJ Gerald (at first instance) and Adam Johnson J (on the first appeal) on this point.

Importantly, in doing so, the Court of Appeal has confirmed that the unreported decision of Newman v Jones (1982) applies, such that a right to park appurtenant to a block of flats as a whole can arise by operation of section 62(2) of the Law of Property Act 1925 merely by reason of a de facto settled practice of parking by some of the tenants. It was not fatal that the evidence did not establish that all (or even the vast majority) of them did so. HHJ Gerald’s finding of fact to the effect that there was at the material time a settled practice by a substantial number of tenants was sufficient.

Second Key Issue

The second issue was whether the right to park (so far as reserved in 1969) had then been excluded on the Estate’s subsequent grant of a Headlease of DoBH in 1974 by reason of a carve out clause in terms which operated to exclude the creation or transmission of rights which “might restrict or prejudicially affect the future rebuilding alteration or development” of defined land, which included Sheldrake Place East and the adjoining blocks of flat at CHG.

As to that issue the Court of Appeal allowed the appeal against Adam Johnson J’s decision and restored the decision of HHJ Gerald. In doing so the Court of Appeal held that the word “might” fell to be construed restrictively, and that a practical and realistic approach must be adopted, such that the development or alteration against which the exclusion is tested must be “grounded in reality”. The Court of Appeal restored HHJ Gerald’s decision to the effect that, as an express right of way had been granted over the whole of Sheldrake Place East, it could not for all practical purposes be materially altered or developed. Mr. Justice Adam Johnson had accordingly been wrong, in determining the first appeal, both in construing the carve out clause more widely and in interfering with HHJ Gerald’s application of it.

This aspect of the decision is also of wider significance because the carve out was a boiler plate provision which is repeated in numerous leases across the Phillimore Estate, and also because it is common for commercial and residential leases to contain exclusion clauses in similar terms for the purpose of preserving the development value of adjoining and neighbouring land. The Court of Appeal’s decision is likely to mean that such clauses will in future fall to be construed restrictively, making it more difficult to exclude the inadvertent transmission and or creation of rights that might impact future development.

Rejection of the first ground of appeal

The Court of Appeal also dismissed the Appellants’ first ground of appeal, which concerned the construction of the first limb of the carve out provision, preferring the decisions of the courts below, and the Respondent’s arguments to the effect that the placement of the words “except as now subsisting” in the midst of the clause must be taken to have been deliberate and that the natural and ordinary meaning of the first limb of the carve out did not have the effect that all subsisting rights would pass to the lessee of the 1974 Lease whether or not they might impact or restrict development.

David Holland KC and Camilla Lamont acted for the Respondent, Camden Hill Gate Limited, instructed by Kellie Jones and Rosie Adcock at Boodle Hatfield.