U Po Chu v Tsang Pui Ling [2016] HKEC 2673, CA, concerned a two storey stone house in Tsuen Wan. P brought possession proceedings against D1, a former tenant of part of the ground floor, amongst others. D1 relied on adverse possession; she stopped paying rent in 1985 but remained in possession. Other people occupied other parts of the building. D1 claimed to have been in adverse possession of the whole building jointly with the occupiers of the other parts.This claim was rejected at first instance and in the current proceedings the Court of Appeal (Cheung JA giving the judgment) refused leave to appeal. The judge at first instance had been quite right to hold that there was no evidence that the squatters were in joint possession of the whole building; on the facts of this case, each was in possession of its own part. While a successful claim by D1 to the part of the house that she had occupied was a possibility, it had not been pleaded and it was too late to introduce such a claim.

Michael Lower

In Li (or Lei) Ting Kit Tso v Cheung Tin Wah ([2016] HKEC 2720) the managers of a Tso entered into an oral agreement with D1. Under the terms of the agreement, the Tso would transfer land to D1 or a party nominated by him. Thirteen houses would be built on the land and the Tso would receive three of these and a cash payment.

D1 had one year from the date of the agreement (in October 1996) to obtain the necessary approval for the development from the Lands Department in accordance with the Small House Policy; otherwise, P could call for the re-assignment of the land to it. D1 agreed that he would not transfer the land to third parties nor allow any nominee of his to do so.

D1 nominated a company, D2, as the party that would enter into the written agreement in line with the oral agreement with D1. The Tso entered into the written agreement with D2 and transferred the land to it. No consideration was paid by D2 to the Tso (although the assignment to D2 stated that D2 had provided consideration).

No development had taken place by 2011 and the Tso wrote to D2 purporting to accept its repudiatory breach in delaying the carrying out of the development and calling on D2 to transfer the land back to it.

D2 had already divided the legal title to the land into thirteen sections and assigned some of them to third parties. After receiving D2’s letter it assigned the remaining sections to third parties.

It was accepted by the Tso that its agreement with D2 was unlawful since it would inevitably involve indigenous villagers making false declarations to the Lands Department. As a result, the Tso could not sue for breach of the agreement.

The Tso was able to rely on the presumption of resulting trust as against D2. The unlawful agreement was not consideration for the assignment to D2. Nor was the Tso estopped by the deed from showing that no consideration had been paid to it.

The problem was that D2 no longer had the land, title to which was in the hands of the various assignees. Since there was nothing to show that the assignees were anything other than good faith purchasers, the Tso had no claim against them.

Instead, D2 was ordered to pay equitable compensation to the Tso (the market value of the land as at the date of the writ).

Michael Lower

In Leeds City Council v Broadley ([2016] EWCA Civ 1212, CA (Eng)) a landlord granted a lease for an initial fixed term of six months  and thereafter continuing on a monthly basis until either party brought it to an end by one month’s notice to quit. For Council tax purposes, it made a difference whether the agreement gave rise to a single term or gave rise to two separate leases (a fixed term tenancy followed by a periodic tenancy).

The local authority argued that a single hybrid fixed / periodic tenancy was a legal impossibility since it would lack certainty of term.

This argument failed. Authorities going back to the seventeenth century showed that this kind of arrangement has long been regarded by the common law as a valid lease. The Law of Property Act 1925 (ss. 1(1) and 205(1)(xxvii)) took over the common law position (Lord Templeman in Prudential Assurance v London Residuary Body and Lord Neuberger in Mexfield Housing Co-operative v Berrisford).

According to their terms, these arrangements created a single tenancy and authority showed that this was to be regarded as a valid arrangement.

Michael Lower

In Southwell v Blackburn ([2014] EWCA Civ 1347, CA (Eng)) B and S began to co-habit in 2002. S bought a house in his name and he alone made the mortgage payments. He did not envisage marriage precisely because he knew that B might then have a claim against the house. Several years later, the relationship came to an end and S excluded B from the house. B’s claim that they had a common intention to be equal beneficial owners failed. In the alternative she relied on proprietary estoppel.

There was no specific assurance that B would have any right to the home. S did, however, assure B that he was making a long term commitment to provide B with a secure home. S’s assurance was that B would ‘have the sort of security that a wife would have, in terms of accommodation at the house, and income.’ ([16])

Before moving in with S, B had accommodation rented from a housing association. She spent GBP20,000 fitting and furnishing the house. Relying on S’s assurances, B left that accommodation. Although her income was much less than S’s, B did contribute to the couple’s joint expenses.

The first issue was whether the assurances were enough for proprietary estoppel purposes. It is clear that the assurance must be clear and unequivocal and relate to the property. An assurance that B would be provided with a secure home was sufficient to give rise to an equity (Greasley v Cooke). S’s assurance was not, in substance, conditional on the continuation of the relationship ([7]).

The fact that the common intention constructive trust claim to an equal beneficial share had failed did not mean that there could not be an assurance as to the security of B’s right to accommodation ([10]).

Then there was the question of detriment. B had enjoyed rent-free accommodation and had been able to take a degree that enhanced her earning capacity. Did this mean that the detriment had been dissipated over the course of the relationship?

First, it is true that ‘detriment has to be assessed over the course of the relationship’ ([13]). It was right to have regard to the benefits that had accrued to B as a result of the relationship ([14]). But S had also benefited from B’s contributions ([15]).

There are cases where, looking at the course of the relationship from the point at which the promisor reneges on his promise, the benefit has been dissipated. That said, ‘cases involving couples living together lend themselves .. less readily to an arithmetical accounting exercise’ ([17]). Benefits flowed both ways and were incidents of the relationship ([18]).

As for unconscionability, S contended that the relationship was not a marriage and was not expected to be permanent. Thus, there was no unconscionability about withdrawing the security of accommodation. This failed. The point was that B had incurred detriment in reliance on the assurances:

‘It is the detrimental reliance which makes the promise irrevocable and leads to the conclusion, at the end of a broad inquiry, that repudiation of the assurance is unconscionable.’ ([20]).

The relief that was awarded was a payment to reimburse her for the money that she had spent on the home that she had left and on S’s property.

Michael Lower

In Primecredit Ltd v Yeung Chun Pang Barry ([2016] HKEC 2667) title to the family home was in the name of a father and his son as joint tenants. The father died and the son became sole owner by virtue of the right of survivorship. Primecredit was a judgment creditor of the son. It obtained a charging order in respect of the debt. The defendant’s mother claimed that she had a beneficial interest in the property under a common intention constructive trust or a presumed resulting trust.

The mother had the burden of proof to show that the beneficial ownership was different from the legal ownership. She had undoubtedly contributed to the purchase price. On the facts, however, the court did not believe that a trust in her favour should be inferred from these payments. She had intended to make a gift of the contributions to her son.

Michael Lower

In Chan Yuk Pui v Chan Yui Chi ([2016] HKEC 1891) the plaintiff (‘P’) was an elderly man who owned four properties as joint tenant with one of his sons. The complaints of the defendants  (P’s other children) led him to sever the joint tenancies. They promised him that they would look after him and that he would live with them until his death (‘the promise’).

Relying on the promise, P executed deeds of gift of his half share in each of the properties so that they were divided among the defendants. Having an assurance that he would be looked after in his old age was P’s dominant concern. When the defendants failed to live up to the promise that they had made, P sought to have the deeds of gift set aside on the grounds that they had been procured by undue influence.

P did not allege that he had been misled or coerced or that he had failed to understand the nature of the deeds of gift. Au Yeung J pointed out (at [4]) that he could still show actual undue influence where:

(a) the defendants had failed to point out to P that the transaction was not to his advantage and to ensure that he took proper independent advice; and

(b) there was unconscionability.

Unconscionability is a serious allegation and is not to be found lightly ([5]).

There were express findings that P did not repose trust and confidence in the defendants and that he understood what he had signed.

The transaction was obviously disadvantageous to P since he lost all of his sources of income as a result and had only his savings to rely on. The defendants had not pointed this out to P. Although P had legal advice this was not independent; the lawyer who gave the advice did not consider the implications of the transaction from P’s perspective but saw P and the defendants as being a single client with identical interests ([115]).

The defendants had behaved unconscionably. They had acted in concert to get P to transfer his interest in the properties to them. In doing so, they preferred their own interests over those of P and had disregarded the adverse consequences that the gift would have for them.([104]).

‘[I]t was clear that the Defendants were the dominant party, had the capacity to influence the plaintiff and did exert that influence. That exercise was undue as they preferred their own interests over that of the Plaintiff … The Defendants did not allow the Plaintiff to exercise free and informal judgment … The Plaintiff’s mind was a mere channel through which the will of the Defendants operated.’ ([138])

Michael Lower

In Power Plus Ltd v Fruit Design & Build Ltd ([2016] 5 HKLRD 707, LT) the tenant of a flat paid a security deposit of HK$150,000 at the commencement of the tenancy. The forfeiture clause provided that this would be forfeited to the landlord ‘as liquidated damages’ should the tenant be in breach of its obligations under the terms of the lease. The tenant fell into arrears with the rent and the landlord obtained judgment for the sum of HK$105,000. The question was whether the landlord could forfeit the deposit and, in addition, enforce the judgment.

The Lands Tribunal (Judge Wong King Wah) decided that whether this was possible or not depended on the terms of the lease. In this case, on a proper interpretation of the forfeiture clause, the landlord was not entitled to forfeiture and to enforce the judgment without giving credit for it ([15]). The parties’ intention was that the security deposit should be liquidated damages in respect of any claim that the landlord might have against the tenant in respect of the lease.

Michael Lower

In Fast Happy Ltd v Lee Chun Pong Bruce ([2017] HKEC 121) the plaintiffs entered into provisional sale and purchase agreements (‘the agreements’) for the sale of land by the plaintiffs to the defendants. The initial deposit was to be paid in two instalments on dates specified in the agreements.

The cheque for the first instalment was not honoured when presented. The cheque for the second instalment was proffered after the date specified in the agreements. Time was of the essence for making the payments.

The sellers’ solicitors sent an email and a letter to the estate agents handling the transactions terminating the agreements on the grounds of the buyers’ breach. The plaintiffs’ bank then re-presented the cheque for the first instalment of the deposit and it was honoured.

The defendants registered the agreements at the Land Registry and the plaintiffs sought the vacation of these registrations. The defendants argued that the plaintiffs had waived the breach by presenting the cheque for the first instalment of the deposits after the defendant’s breach.

The defendant’s argument failed. The sellers were entitled to cash the deposit cheque and to forfeit the deposit without waiving the breach. This was especially the case since the sellers had by then given clear notice of their intention to treat the agreement as having come to an end.

This was a case where the estate agents were acting for both parties and not only for the sellers. Thus notice of termination given to the agents was an effective way of giving notice to the defendants.

Michael Lower

In Matchmove Ltd v Dowding ([2016] EWCA Civ 1233, CA (Eng)) Matchmove (a company controlled by F, a property developer) was negotiating for the purchase of a plot of land (‘the land’) and the adjoining meadow. F intended to split the land into two plots and to build a house on each plot. He orally agreed with his friend D that D would buy one of the plots and the meadow (D wanted to keep horses on the meadow).

In due course, Matchmove entered into a written contract for the sale of the plot to D and this sale was completed. There was, however, no written contract for the sale of the meadow to D. F and D fell out and F sought to resile from the oral agreement to sell the meadow to D.

D sought a declaration that Matchmove held the meadow on trust for him. Matchmove denied the existence of a binding agreement for the sale of the meadow. It relied on the lack of a signed written agreement to satisfy section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989.

F had intended the oral agreement concerning the meadow to be immediately binding. He was well known by D to have a business approach that attached real importance to his word as a businessman. By the time of the dispute, D had paid the entire purchase price for the meadow to Matchmove.

In these circumstances, the question was whether the agreement gave rise to a common intention constructive trust that could fall within section 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989.

The Court of Appeal referred to Arden LJ’s discussion of this question in Herbert v Doyle. There, Arden LJ said that section 2(5) could  not be relied on:  (1) if the parties intend to make a formal agreement setting out the terms on which one or more of the parties is to acquire an interest in property; (2) if further terms for that acquisition remain to be agreed between them so that the interest in property is not clearly identified; and (3) if the parties do not expect their agreement to be immediately binding.

The Court of Appeal did not see this statement as setting out three conditions to be satisfied but as being three ways of making the same point about the effect of the judgment in Cobbe v Yeoman’s Row ([32]).

There was a clear express agreement between the parties. Although both parties were well aware that a written contract would be needed, they regarded this as a technicality and took the view that they already had a binding agreement. The payments made by D provided the detrimental reliance.

There was a common intention constructive trust that fell within section 2(5). D could enforce the oral agreement for the purchase of the meadow.

Michael Lower

In Tang Ying Loi v Tang Ying Ip ([2017] HKEC 204, CFA) D was the administrator of his father’s estate, his father having died intestate. D bought a property for himself for HK$27.3 million.

He obtained 40.4% of the funds used to purchase the property from cash forming part of his father’s estate. The plaintiff, D’s brother, argued that he was entitled to a share in the value of the property, which had increased in value since the purchase.

The Court of Final Appeal (Lord Millett giving the only full judgment) held that the plaintiff was entitled to this.

Since the estate had provided part of the purchase price, it had a proprietary interest in the property that had been acquired; this is not a question of tracing, the estate was a purchaser of the property ([17]).

When the beneficiaries discovered the unauthorised disbursement by D, they could elect either to reject or affirm the transaction. If P had elected to reject the transaction, he would have no interest in the property but D would be obliged to make good the amount missing from the estate accounts.

P had, however, elected to affirm the transaction (since the property had increased in value). This meant that P had a proprietary interest in the property but there was no deficit in the estate accounts.

Lord Millett explained that:

‘The policy behind a claim by a beneficiary for a breach of trust of the present kind is to deter the trustee from using the trust fund as his personal bank account, borrowing from it for his own private purposes and merely repaying the amount he has borrowed. Such conduct puts the trust fund at risk without hope of gain. Equity’s response is to insist that any profit is for the beneficiaries and any loss for the trustee.’ ([27])

D argued that the amount taken from the estate should be taken as a loan: he had always intended to repay it and had repaid it. This was unsuccessful: it was for the court, not one of the parties to the transaction, to determine the legal nature of the transaction ([19]).

Nor, despite what had been said in the courts below, was this a case of a trustee having made a secret profit; it was much simpler than that.

Michael Lower

In Wodzicki v Wodzicki ([2017] EWCA Civ 95, CA (Eng)) G and his wife (‘W’) bought a house intending that it should be a permanent home for G’s daughter (‘D’) and her children. Title to the house was in G and W’s name as legal joint tenants.

G died intestate. W began possession proceedings. D counterclaimed that she was the sole beneficial owner of the property.

The first instance judge was of the view that G’s beneficial ownership share belonged to D. He ordered an account to be taken of W and D’s respective contributions to the purchase price, maintenance and outgoings. Their ownership shares would correspond to their contributions.

D appealed. She argued that this resulting trust approach was inappropriate in this domestic context. This argument failed. The first instance judge found that G and W intended  the property to be D’s long-term home. They did not, however, intend D to be the sole beneficial owner. There were no grounds for departing from this finding of fact.

D argued that Jones v Kernott applied and that the intention that she was to be the sole beneficial owner should be imputed as a matter of fairness. This could not succeed given the judge’s finding as to the parties’ actual intentions.

In any event, this was not a context akin to that of co-habitees. D and W were not close. The use of a resulting trust approach was not precluded here.

Even if G had intended D to be sole beneficial owner, this intention could have no effect on W. D sought to rely on Hammersmith & Fulham LBC v Monk and to argue that W was bound by the intention of her joint tenant. This was a misapplication of Monk. That decision has no relevance to a purported disposal of a beneficial interest ([27]).

The finding as to G’s actual intention also meant that D’s claim to sole beneficial ownership based on proprietary estoppel had to fail.

A strange feature of the proceedings was that W presented no evidence when the account was taken. The result was that D was found to be sole beneficial owner.

Michael Lower

In Gallarotti v Sebastianelli ([2012] EWCA Civ 865, CA (Eng)) G and S were friends. They had each gone to England from Italy. G and S shared rented accommodation and then bought a flat. This was a platonic arrangement. They were happy to share until they were ready to buy homes of their own.

The title was in S’s name. G and S had an express agreement that they would be equal beneficial owners. This agreement was conditional on G contributing more than S to the mortgage repayments since S made a larger contribution than G to the down payment.

G did make some contributions but did not pay as much as S did towards the mortgage; the disparity was significant. The conditional element of the express agreement was not satisfied.

The friends fell out and G sought a declaration as to the extent of his beneficial interest. Arden LJ gave the only full judgment; the other members of the English Court of Appeal were content to agree with her.

The terms of the express agreement showed that ‘the parties were concerned that their ultimate shares in the Flat should, broadly speaking, represent their contributions to it’ ([24]). ‘[T]he inference to be made from the parties’ course of conduct was that they intended that their financial contributions should be taken into account but not that there should be any precise accounting’ ([25]). S had a 75% beneficial interest and G had 25%.

Michael Lower

In Splendid Resources Inc v Secretary for Justice ([2017] HKEC 504) the plaintiffs had constructed columbaria on land owned by them. The Government contended that this was a breach of the terms of the Government lease.

The lease did not contain an express covenant not to use the land for any purposes other than as agricultural land. It had, however, been sold as ‘agricultural land’.  The question was whether this was purely descriptive of the use at the time of sale or implied a covenant only to use the land for this purpose.

Deputy Judge Le Pichon pointed to various features of the New Grant that could only be explained on the basis that the words imposed a restriction on the use to which the property could be put. These included a provision requiring the land to be cultivated.

The judge referred (at [35]) to a statement in Halsbury’s Laws of Hong Kong that ‘[w]ithout special permission from the Government, all Government leases granted in the New Territories are for agricultural purpose and can not be used for other profitable purposes.’

Further, ‘where an interpretative ambiguity arises in the context of a Government lease, a presumption in favour of the Government applies’ (at [36]).

The landowner’s argument that the covenant was purely personal to the original lessee was also rejected.

Finally, Deputy Judge Le Pichon held that the columbarium was a structure; it was a breach of the covenant not to build any structure on the land.

Michael Lower

In Preedy v Dunne ([2016] EWCA Civ 805, CA (Eng)) D’s mother (J) and his step-father (B) were partners in a pub business. J owned the pub building.

J died leaving her half share in the pub business to trustees. B had a life interest in the half share. After B’s death the half share was to go to D and his two siblings (J’s children).

D spent over GBP300,000 on renovations at the pub between 1999 and 2003. B sold D a half share in the business in 2001. The renovations enhanced the value of the interests of B as well as D and his siblings.

The dispute was as to whether the trustees of J’s share of the business were liable to contribute to the cost of the renovations.

D relied on estoppel by convention. He alleged a common assumption that the trustees owned J’s share of the business (they did not) and so jointly and severally liable to contribute to the repayment of the loan of the funds for the renovations. The claim failed because there was no such common assumption.

D tried to make a ‘wider case’ based on the proposition that he ought not, in justice, to be left to bear the cost of the renovation works on his own. This was rejected (Vos LJ at [59]).

D’s problem was that he had undertaken the work without securing a clear commitment from anyone else to contribute to the cost.

Michael Lower

In Si Tou Choi Kam v Wealth Credit Ltd ([2017] 1 HKLRD 1074) A and B acquired property as legal joint tenants. B’s creditor, C, obtained, and registered charging orders over the property. C then applied for an order for sale of the property. A obtained a declaration that A was sole beneficial owner of the property (having supplied the entire purchase price) and registered it at the Land Registry.

The priority of unwritten equitable interests is governed by the doctrine of notice. The charging order is to be treated as if it were an equitable charge. Priority is governed by the first in time rule. A’s interest, having arisen at the time of acquisition, has priority under this rule.

There is no authority for the proposition that A is under a duty to obtain a declaration and register it in order to preserve this priority. It was surprising, therefore, that the court held that A’s priority was governed by the date of registration of the declaration.

Michael Lower

In Foremost Hill Ltd v Li Hon ([2017] HKEC 708) P and D owned adjoining shops in a building covered by a Deed of Mutual Covenant (‘DMC’). P had been in possession of part of D’s shop (‘the disputed area’) since 1981 (possibly earlier) due to a wrongly positioned partition wall. P claimed to have acquired title to the disputed area by adverse possession. The court agreed.

There was a clear ouster; P’s actions were incompatible with D’s right to exclusive occupation of the disputed area.

D also relied on the DMC covenant provisions conferring on each owner a right to the exclusive use of its own unit. Andrew Chung J commented that this effectively raised the question as to whether adverse possession can ever operate as between co-owners of units covered by a DMC ([25]).

The matter seemed not be covered by authority and should be approached from first principles.

An action to enforce the DMC term as a contractual term was time-barred after six years (section 4(1) of the Limitation Ordinance).

There was no limitation period for an action to enforce a restrictive covenant in equity but the doctrine of laches applies. The adverse possession began so long ago that it would be inequitable to allow D to enforce the covenant against P.

Andrew Chung J. also agreed with the proposition that since the action was, in substance, an action to recover land the limitation period in section 7(2) is engaged ([37]).

Michael Lower

In Armstrong v Onyearu ([2017] EWCA Civ 268, CA (Eng)) title to Mr and Mrs Onyearu’s family home was in Mr Onyearu’s name but the couple had equal beneficial shares. Mr Onyearu borrowed money to finance his business. The loan was secured by a charge over the family home. The business failed. A was Mr Onyearu’s trustee in bankruptcy.

The question was whether Mrs Onyearu was entitled to rely on an equity of exoneration as against Mr Onyearu (and as against A). A contended that she was not since she had derived an indirect benefit from the loan: it enabled Mr Onyearu to keep his business going and so to continue to meet the mortgage payments.

David Richards LJ, delivering the Court of Apeal’s judgment, explained the equity of exoneration:

‘Where property jointly owned by A and B is charged to secure the debts of B only, A is or may be entitled to a charge over B’s share of the property to the extent that B’s debts are paid out of A’s share.’ ([1])

Whether the equity applies depends on the parties’ common intention ([3]). Where there is no evidence of an actual intention, a presumed intention may arise depending on all the relevant circumstances. In particular, the court looks at whether the co-owner derived any benefit from the debt secured on the property ([3]).

The equity is part of the law relating to the rights of sureties ([24]).

The importance of this case is that it examines whether the type of indirect benefit that Mrs Onyearu was said to have derived from the loan to her husband was relevant to the parties’ presumed intention ([8]).

A contended that the equity could only arise if Mrs Onyearu received no benefit, direct or indirect, from the secured loan ([20]). In effect, A was arguing that the equity could rarely arise in the family home context given the likelihood that the parties’ financial affairs were, at least somewhat, intertwined.

David Richards LJ’s review of the authorities led him to the conclusion that an indirect benefit is not sufficient to deny a right of exoneration to parties in the position of Mrs Onyearu ([82]).

He said:

‘An indirect benefit of the type relied on in this case is far from certain to accrue. In the present case, any benefit was subject to a double contingency: first, that the firm would survive and, secondly, that it would be profitable. Further, the intention as regards the equity is to be inferred as at the date of the transaction. As at that date, the prospect of benefit was wholly uncertain and incapable of any valuation … In general, the benefits must be capable of carrying a financial value’ ([83]).

Mrs Onyearu was entitled to rely on the equity.

Michael Lower

Cheung Lai Mui v Cheung Wai Shing ([2017] HKEC 740) concerned property that had been owned by three brothers (W, F and K) as tenants in common in equal shares.

W died and D1 and D2 inherited W’s share. When F and K died, P (K’s adopted daughter) applied to be administratrix and executrix of their respective estates.

D3 was D1’s son. He claimed to be solely beneficially entitled as a result of a common intention constructive trust. This succeeded.

This was a traditional Chinese family residing in the New Territories ([78]). D3 was the only male descendant of the family. This was a significant fact that lent credence to the allegation of the common intention.

There was evidence of express discussions concerning the common intention and other surrounding circumstances that made it likely that the common intention had come into existence.

The lack of any formal written evidence of the common intention was understandable in the family context ([94] – [95]).

A defence of estoppel by standing by also succeeded ([103]).

So did D3’s adverse possession claim. He had erected a gate. This was an unambiguous assertion of control even though the gate had not been locked ([108]).

Michael Lower

In Virdi v Chana ([2008] EWHC 2901 (Ch)) A claimed to have acquired a car parking easement over land (‘the servient land’) partly owned by B. The question was whether the claim was invalidated by the ouster principle.

In Batchelor v Marlow, the English Court of Appeal rejected a claimed car parking easement on the basis that it left the servient owner without any reasonable use of the land.

If the whole of the surface area would be taken up by the car there was an ouster. An application of this test might seem to invalidate the easement claimed in Virdi.

Batchelor came in for severe criticism by the UK Supreme Court in Moncrieff v Jamieson. Moncrieff made ‘control and possession’ the test. This was a relaxation of the strict test in Batchelor.

Judge Purle QC noted, however, that Moncrieff had not overruled Batchelor and felt bound to apply Batchelor. He held that the easement was valid even when the Batchelor test was applied.

First, peculiar to the facts of this case, B did not own all of the servient land, only a part of it. It could not be said that the claimed easement prevented B from parking since B had no right to  do so.

Second, some uses of the land owned by B remained possible: planting trees or shrubs, erecting a trellis. These could be done so long as they did not prevent the parking of a car.

Judge Purle thought that even the right to resurface the land prevented the easement from infringing the ouster principle. When the land was next to domestic property, resurfacing might have aesthetic value. Such a right was not wholly insignificant and illusory.

Michael Lower

In Kettel v Bloomfold Ltd ([2012] EWHC 1422) the claimants were long leaseholders of flats in a development. Their leases granted them the right to park in the car parking space identified in the lease. The developers wanted to allocate them new spaces and build on the existing spaces. The developers fenced off the area that they wanted to build on and enclosed the spaces. The flat owners sought an injunction to restrain this interference with their car parking rights.

The owners argued that they had either a lease or an easement of the space. It was agreed on all sides that, if there was no lease,  they had an easement. The judge (HHJ David Cooke) found that there was no lease. Despite the fact that the parties agreed that there was an easement, he considered whether the ouster principle prevented the flat owners from having an easement.

Moncrieff had not overruled Batchelor v Marlow and the judge accepted that Batchelor was binding on him: the test was whether the exercise of the car parking right left the developer with no reasonable use of the car parking space. It was a question of fact in each case whether the right granted made ownership of the servient land illusory.

In this case, the developer could pass over the space on foot when there was no car parked there and could authorise others to do so: it had granted such rights to pass over the spaces to other tenants in the leases to them. It could change or repair the surface, arrange for service media to pass under, or wires to pass over, the space. It could build over the space (and had made plans to do so). These rights had importance and value to the developer in managing the estate ([24]). The ouster principle was not infringed.

The flat owners were entitled to an injunction to restrain the actual and threatened interference with the car parking rights. This was not one of these exceptional cases where damages should be awarded instead. It would not be right to expropriate the car parking rights.

The judge held that if, contrary to his view, damages were to be awarded then they should be more than purely nominal. Even assuming that the flat owners were given an equivalent car parking space, they were entitled to damages on a release fee basis:  the flat owners should be awarded a sum that would be negotiated between willing parties for the right to build on the spaces ([61]).

Michael Lower