My article, Have we forgotten the social dimension of private property? has just appeared in the SCMP. The link is here.

In Erismus Housing Ltd v Barclays Wealth Trustees (Jersey) Ltd ([2014] EWCA Civ 303, CA (Eng)) EHL were tenants of Barclays under the terms of a five year lease that expired on 31 October 2009. They held over at the end of the lease and continued to pay the rent payable under the expired lease while they negotiated the terms of a new lease. The negotiations progressed slowly and by fits and starts but were never abandoned. The tenants then decided to move to new premises. They gave notice to terminate their possession on 31st August 2012. Barclays contended that EHL had been periodic tenants during the holding over; it was agreed between the parties that, if this were so, EHL could not give a notice to quit that would expire before 31st October 2013. Thus, this is a case about the factors to be borne in mind when considering whether or not an implied periodic tenancy has arisen during a holding over. The Court of Appeal turned to the judgment of Nicholls LJ in Javad v Aqil for the relevant principles.

Patten LJ, giving the leading judgment, then said:

‘When a party holds over after the end of the term of a lease he does so, without more, as a tenant on sufferance until his possession is consented to by the landlord.  With such consent he becomes at the very least a tenant at will and his continued payment of the rent is not inconsistent with his remaining a tenant at will even though the rent reserved by the former lease was an annual rent.  The payment of rent gives rise to no presumption of a periodic tenancy.  Rather, the parties’ contractual intentions fall to be determined by looking objectively at all relevant circumstances.  The most obvious and most significant circumstance in the present case, as in Javad v Aqil, was the fact that the parties were in negotiation for the grant of a new formal lease.  In these circumstances, as in any other subject to contract negotiations, the obvious and almost overwhelming inference will be that the parties did not intend to enter into any intermediate contractual arrangement inconsistent with remaining parties to ongoing negotiations.  In the landlord and tenant context that will in most cases lead to the conclusion that the occupier remained a tenant at will pending the execution of the new lease.  The inference is likely to be even stronger when any periodic tenancy would carry with it statutory protection under the 1954 Act which could be terminated by the tenant agreeing to surrender or terminating the tenancy by notice to quit: see Cardiothoracic Institute v Shrewdcrest Ltd [1986] 1 WLR 368.’ ([23])

EHL held over as tenants at will and not as periodic tenants.

Michael Lower

In Friends Life Limited v Siemens Hearing Instruments Limited ([2014] EWCA Civ 382, CA (Eng)) S were tenants and the lease contained a break clause giving them the right to determine the lease before the end of the term on serving a notice exercising the right on the landlord. The break clause clause required the tenant’s break notice to be ‘be expressed to be given under section 24(2) of the Landlord and Tenant Act 1954′ (in fact this section makes no reference to the service of any notice). The tenants served a break notice that complied with the requirements of the clause in every respect except that it was not expressed to be given under section 24(2) of the Landlord and Tenant Act 1954. The question was whether the notice was valid. The English Court of Appeal (Lewison LJ giving the main judgment) held that the notice was not valid; it had failed to comply with one of the conditions for its exercise.

Break clauses are a form of option. The conditions for the exercise of an option must be fully complied with; there is no concept of substantial compliance. In failing to be expressed in the manner required, the notice failed to comply with one of the conditions for its valid exercise.

‘Where an option prescribes substantive conditions that must be fulfilled by the promisee before the promisor’s obligations are triggered, those conditions must be completely fulfilled. Substantial fulfilment is not enough.’ ([27])

‘Here there was no compliance with the formal requirement of clause 19.2 that the notice be “expressed” in a particular way. There was quite simply no reference in the notice to section 24 (2) at all.’ ([65]).

Michael Lower

Hong Kong Mansion, Causeway Bay (IO) v Bothlink Ltd ([2014] 2 HKLRD 78, CA) concerned the ownership of roof voids. The incorporated owners argued that they were common parts and sought to recover them from the defendant (B) who argued that they had been assigned to his predecessor in title. The voids were in the roof space and were the lower portion of a space, the upper portion of which housed the maintenance platform for the lifts.

The Court of Appeal looked at the question as being one that turned on the construction of the first assignment in the building. This had included the right to ‘the remaining self-contained portions’, flat roofs and other roofs. It had not included property intended to be used for the common enjoyment of co-owners and co-occupiers. The question was as to whether the roof voids had been included in the first assignment or were property intended for common enjoyment. The Court of Appeal (like the Court of First Instance) held that the roof voids were intended for common enjoyment.

The question was as to the parties’ contractual intention at the time of the first assignment. The elements of the factual matrix all supported the incorporated owners’ contention that the voids were common parts: they were not included in the calculation of the gross floor area or building volume calculations in the approved building plans; the plans did not distinguish between the upper and the lower levels of the spaces in question (and it was agreed that the upper levels were common parts); the plans suggested that the relevant structures (in their entirety) were intended to house lift machinery; and at the time of the first assignment there was no means of access to the lower levels of the voids ([29] – [30]).

Michael Lower

In Mo Ying v Brillex Development Ltd ([2014] HKEC 724, CFI) title to the flat that was the matrimonial home was in H’s name alone. H entered into an agreement to sell the flat to B and took a lease back. The lease arrangement continued after completion. When H failed to meet the rental payments, B brought proceedings to recover possession. W then claimed that she had a beneficial interest under a common intention constructive trust and that B had imputed or constructive notice of this interest and so took subject to it.

W argued that there was an express common intention in that, after acquisition, H had given an excuse for not putting her name on the title deeds. W invited the court to follow the example given by Grant v Edwards and Eves v Eves but the court refused to do so. The ‘excuse’ was equivocal and, anyway, did not induce W to believe that she had or would have any interest in the property ([59]). Further, this was an alleged post-acquisition agreement and the courts are reluctant to infer a common intention constructive trust in such a case ([60]). There was no express common intention.

W argued that a common intention constructive trust could be inferred from the fact of the marriage. Marriage, alone, however, is not a basis from which to infer a common intention constructive trust ([66] – [68]). W’s sister had made a loan to H. It could not be shown that this was used towards the purchase price of the property. In any event, it was not clear that this could be regarded as a contribution by W ([69] – [70]). While the pooling of family assets could be evidence of a common intention ([71]), there was no evidence of such pooling. In any event, it seems that the court was of the view that there was simply no such common intention ([80]); so even if there had been evidence of pooling, it would only be a factor to be taken into account in determining on the balance of probabilities whether or not there was a common intention. The court was not prepared to infer a common intention from W’s contributions to household expenses (‘the everyday expense of the family’ ([81])) ([81] – [85]).

There was no detrimental reliance; neither her contributions to household expenses nor her decision to give up her job could be so regarded in this case. The necessary causal link was missing ([92]).

Deputy Judge Eugene Fung SC went on to consider whether if, contrary to her view, W had a beneficial interest, B was subject to it. W argued that the estate agent handling the transaction knew of the interest and that this knowledge should be imputed to B. The factual basis of this proposition was doubted. In any event:

‘In cases where an agent’s function is to receive communications on behalf of his principal, one can readily understand why the knowledge of the agent would be imputed to the principal. However, I have some doubt as to whether such a principle applies to an estate agent in Hong Kong. In a typical case, an estate agent’s function is to perform a service by introducing a counter-party to his principal so as to enable his principal to conclude a particular transaction with that counter-party; his function is not to receive communications on behalf of his principal. No cases have been cited to suggest that an estate agent in Hong Kong has the general authority to receive communications for his principal. Accordingly, I am unable to accept Mr Wong’s submission that notice of an estate agent in Hong Kong is imputed to his principal.’ ([117]).

B had, however, failed to inspect the property and so, by virtue of W’s occupation, had constructive notice of any interest that W might have. The fact that this was a sale and leaseback made no difference to this ([131] – [132]).

B’s attempt to avoid this conclusion by invoking estoppel by representation failed since W did not owe B a duty to speak out and inform B of her interest ([148]). The facts did not support B’s defence of waiver ([154]) nor acquiescence ([155] – [157]).

Nor could B rely on laches. Section 20(2) of the Limitation Ordinance provided the limitation period for an action to recover trust property from a third party and this had not expired. In any event, there had been no substantial lapse of time and it was not inequitable for W to enforce her claim against B ([165]).

Michael Lower

In Davies v Davies ([2014] EWCA Civ 568, CA (Eng)) a couple owned a farm. Their youngest daughter (E) lived with the parents for much of the time up to the time of her final falling out with them. E worked for her parents for little money, although her pay increased over time. Around 1985 her parents assured E that the farmhouse would be hers one day. She later fell out with them and moved out.  E was later reconciled with her parents but left the farm a second time after another falling out. E’s father induced her to return by promising that she could live rent free in the farmhouse. During part of the time that she lived away from the farm she worked as a technician for a company that provided livestock reproduction services. She enjoyed this work and was good at it. After a third dispute with her father, he brought proceedings to evict her from the farmhouse. She relied on proprietary estoppel to claim some interest in the farmhouse and / or the business.

The English Court of Appeal was concerned only with the threshold question as to whether she had established her right to some form of relief on the basis of proprietary estoppel. The particular issue was that of detrimental reliance. She had received countervailing benefits and the parents disputed her claim that she had been able to earn more from her work as a technician than she had from her work on the farm.

The question was whether the first instance decision that she was entitled to equitable relief was perverse or clearly wrong (Suggitt v Suggitt). In Gillett v Holt, Robert Walker LJ stated that the question of detriment should be approached as part of a broad inquiry. On this basis, the judge at first instance had been entitled to find that there was detrimental reliance:

‘The judge had to determine whether there was substantial detriment by contrasting the rewards of the job at Genus with its better lifestyle with those of working on the farm (including the free accommodation at Henllan) with its greater burdens in terms of working hours and more difficult working relationships. I am not at all persuaded that his conclusion as to where the scales came down in this balancing exercise was wrong.’ (Floyd L.J at [54])

Michael Lower

In L Batley Pet Products Ltd v North Lanarkshire Council ([2014] UKSC 27) L was the intermediate landlord and T was sub-tenant. The head-lease and sub-lease contained full repairing covenants and the terms of the head lease were incorporated in the sub-lease. Both leases required all notices to be in writing. L and T had entered into a Minute of Agreement authorising T to make alterations. The Minute required T to reinstate the property at the end of the term at the request of L and did not expressly require such notice to be in writing. The Minute stated that its terms should be deemed to be incorporated into the sub-lease.

L argued that oral notice that it required the alterations to be removed and the property to be reinstated at the end of the term was sufficient. T argued that it had no obligation to deal with dilapidations (breaches of the repairing covenant) nor to remove the alterations and reinstate the property because it had not received written notice before the end of the term.

Lord Hodge (with whom the rest of the Supreme Court agreed) dealt first with the dilapidations point. A repairing covenant in the form used here ‘imposes a continuing obligation on the tenant which does not require any notice for the landlord to activate it.’ ([14])

L should also be allowed to proceed with its claim concerning the removal / reinstatement. It was a question of the construction of the Minute of Agreement and he referred to the accepted approach to contractual interpretation ([18] – [19]). Looking at the clause in question in the context of the document as a whole and of the factual matrix he preferred the straightforward approach to the construction of the clause which did not expressly require notice to be in writing.

Michael Lower

In Marks & Spencer plc v Bnp Paribas Securities Services Trust Company (Jersey) Ltd ([2014] EWCA Civ 603, CA (Eng)) a lease contained a break clause. If exercised, the lease would determine in between the quarter days on which rent payments were to be made. The tenants exercised the break clause. On the next quarter day, they paid a full quarter’s rent. After the lease had come to an end, the tenants argued that they were entitled to a repayment of that portion of the rent attributable to the period after the end of the lease.The lease provided that rent was payable ‘yearly and proportionately for any part of a year by equal quarterly payments in advance on the Quarter Days.’ At first instance, it was decided that a term should be implied requiring the landlord to repay the portion of the final rent payment attibutable to the period after the termination of the lease. The landlords successfully appealed against this.

Arden LJ gave the only full judgment. After the decision of the  Privy Council in A.G. of Belize v Belize Telecom Ltd , the approach to implied terms has become an aspect of the general principles of contractual interpretation:

‘The test in Belize requires the court to ask whether the agreement has the meaning that such a term would achieve, because, even though the parties did not expressly include that term in their agreement, that is what their agreement means.’ ([23]).

In the next paragraph:

‘the implication of terms by interpretation requires a high level of loyalty to the parties’ agreement, read against the admissible background. The party seeking to establish an implied term must therefore show not simply that the term could be a part of the agreement but that a term would be part of the agreement.’ ([24])

The starting point is that no term should be implied ([25]). It must be necessary to imply a term to achieve the parties’ express agreement (determined in the usual way) ([26]).

Here, the parties must have realised that this question would arise and could have dealt with it by express words ([35]). The state of the case law at the time of the lease (part of the admissible background) was such as to point to the conclusion that there was no right to recover the rental for the period after termination. This reinforces the need for express words ([39]) No term was to be implied ([43])

Michael Lower

In A-G of Belize v Belize Telecom Ltd ([2009] UKPC 10, PC) the question was whether a term should be implied into the articles of association of a company (‘the company’) that had been formed to carry on the business of the Belize Telecommunications Authority. Belize Telecom (‘BT’) was the majority shareholder in the company. The company’s shares were divided into classes. BT, as holder of  C shares that exceeded 37.5% of the issued share capital, had the right (under the terms of the company’s articles) to appoint two of the members of the board of directors. When BT defaulted on loans made to it by the Government, it had to transfer a substantial number of shares to the Government. The result was that its C shares no longer amounted to 37.5% of the issued share capital.

The question was whether its appointees to the board remained members of the board. There was no express term dealing with this contingency. Was there an implied term to the effect that a director appointed by virtue of a specified shareholding should vacate his office if there is no longer any holder of such a shareholding.

Lord Hoffmann gave the only full judgment. He emphasised that the law on the implication of contract terms was an aspect of the general law concerning contractual interpretation:

‘It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean.’ ([21])

The term contended for was implied, ‘to avoid defeating what appears to have been the overriding purpose of the machinery of appointment and removal of directors, namely to ensure that the board reflects the appropriate shareholder interests in accordance with the scheme laid out in the articles’ ([32]).

Michael Lower

In HKSAR v Lau Kam Ying ([2013] HKEC 1503, CFA)  Company X transferred the title to land to indigenous villagers. The villagers executed declarations of trust to the effect that each of them held his section on trust for company X. This declaration was never registered. Company X was wound up.  When the Government resumed the land, some of the villagers assigned their land to Company Y which had been set up to collect compensation on their behalf. They made false statutory declarations to the effect that the title deeds had been lost. These were then submitted to the Government as part of the process of claiming the compensation.

The leading players behind the scheme were convicted of conspiracy to defraud. They had falsely represented that company Y was a bona fide purchaser for valuable consideration and concealed the beneficial interest of company X. In this decision, the Court of Final Appeal rejected the defendants’ application for leave to appeal against the convictions.

The defendants argued, first, that the declarations were null and void as against company Y as a result of section 3(2) of the Land Registration Ordinance. This failed since sections 3 and 4 of the Land Registration Ordinance, ‘concern priorities between registered instruments but do not affect remedies which may be available whether in contract, tort or equity.’ (Tang P.J. at [19]). The second argument was that the declaration was unenforceable on the grounds of public policy. This would have failed anyway since company X would not need to plead an illegal act (Tinsley v Milligan) ([20]).

In any event, the conviction relied on the fact of the concealment not on whether company X had an indefeasible beneficial interest ([21]).

Suen Shu Tai v Tam Fung Tai ([2014] HKEC 1125, CA) is a case where a mother transferred two properties to her daughter. The question was whether the daughter held the properties on resulting trust.

The presumption of advancement as between mother and child

Whether a person who has made a voluntary transfer of property to another intended to make a gift  or to retain beneficial ownership is ultimately a question of fact. Where there was no intention to transfer the equitable ownership, a resulting trust arises. The courts may make use of the presumption of resulting trust and, in appropriate cases, the presumption of advancement to help them find their way through the evidence and to reach a conclusion as to the transferor’s intention.

Historically, the presumption of advancement (equity’s presumption of an intention to make a gift in relevant cases) did not apply as between mother and child (Bennet v Bennet (1878 – 79) L.R. 10 Ch.D. 474). A number of jurisdictions have recently made the point that in modern times, there is no reason to distinguish between fathers and mothers when it comes to the presumption of advancement. This not only reflects the changed social and economic context but also legal policy as regards sex discrimination.  Obiter statements in this case argue that Hong Kong should now take the line that the presumption of advancement applies equally as between fathers and mothers.

In Suen Shu Tai v Tam Fung Tai a mother transferred title to two properties she owned to her daughter.  The mother claimed that the daughter held the properties on resulting trust for her. She succeeded at first instance where the judge found as a fact that the mother did not intend to make a gift of the properties to her daughter. This finding, which the Court of Appeal saw no reason to question, led inevitably to the conclusion that the daughter held the properties on resulting trust. There was no need to rely on any presumption.

Nevertheless, Cheung JA, giving the main judgment, commented on the possible operation of a presumption of advancement as between mother and child. He referred to the approach in other common law jurisdictions and to academic authority. He noted that the Court of Appeal had presumed that the presumption did apply in Au Yuk Liu v Wong Wang Hin Eddy ([2013] 4 HKLRD 373). He concluded that the position in Hong Kong was that there was no basis for distinguishing between fathers and mothers when it comes to the presumption of advancement ([10.15]).

Of course, the presumption of advancement remains an evidential tool and its weight and usefulness depends on the facts of each case. It might be irrelevant in the case of an independent adult child ([10.16] – [10.19]). Little weight would have been attached to it in the present case ([10.20]).

Can there be a resulting trust where the assignments are expressed to be for consideration and record the seller’s receipt of the money?

The daughter also sought to rely on the terms of the assignments to rebut the mother’s claim that there was a resulting trust. The assignment of each of the properties stated that the assignment was made in consideration of the payment of a purchase price and stated that the seller had received the purchase monies. In fact, no money had changed hands.

The daughter first relied on CPO, s.17:

‘Unless the contrary provision is expressed in the assignment, an assignment shall operate to assign all the estate, right and interest in the land assigned which the assignor has in that land, and which he has the power to assign.’

The daughter argued that this provision meant that the mother must be taken to have assigned all of her interest in the property unless an intention to retain a beneficial interest is recorded in the assignment. Cheung JA rejected this. Section 17 did not ‘override the question of intention of the plaintiff at the time of the transfer and also the operation of the resulting trust’ ([7.4]).

The daughter also sought to rely on CPO, s.18:

‘A receipt for consideration in the body of an instrument shall be a sufficient discharge to the person paying the consideration and, in favour of any other person acting on the faith of the receipt, shall be sufficient evidence of payment.’

The daughter (relying on passages in Tsang Chun v Li Po Kwai and Mascall v Mascall) argued that there is a rule to the effect that one cannot adduce evidence to contradict the terms of the receipt clause.  Cheung JA rejected the application of any such rule to the facts of the present case. He referred to a passage in the judgment of Godfrey JA in Tsui Hoi Pan v Wong Chun Ling:

‘as between immediate parties who know all the circumstances, there can be no estoppel by deed. If the facts are as the plaintiff  has pleaded, there is no objection to his asserting the existence of an implied, constructive or resulting trust, merely because of the fact that the assignment to the 1st defendant, on the face of it, appears to be an instrument of value. The law does not allow an instrument such as the instrument here to be used as an instrument of fraud: see eg Booth v Turle’ (Godfrey JA at 3).

Michael Lower

In Tang Teng (or Ting) Hong (or Hon) v Cheung Tin Wah ([2014] HKEC 643, CFI) a Tso transferred property to a developer under the terms of a development agreement that provided for the return of the land to the Tso in the case of certain events of default. There was no intention, the court found, to make an outright transfer to the developer. This implies, presumably, that the transfer was simply part of the machinery for implementing the agreement. The developer had failed to apply for building licences as envisaged by the agreement. The Tso sought the return of the land to it relying not on the terms of the agreement but on the basis that the developer held the property on resulting trust for it (there being no intention that the developer should be the beneficial owner of the land).

The main question was whether the claim must fail since the agreement was tainted with illegality  in that its implementation necessarily involved the making of false declarations to the Government by tings ((ie a male indigenous villager of the New Territories entitled to benefit under the Small House Policy). The court found that the Tso could recover the property since it did not need to rely on the unlawful agreement (it merely supplied an explanation as to why the tso  had made the transfer to the developer) ([49]).

The assignment to the developer contained an acknowledgement of receipt of the purchase price (though it had not been paid). It was held that this did not prevent the resulting trust claim since this was collateral to the assignment and not an action on the assignment. The plaintiff was not estopped from bringing evidence to show that the consideration had not been paid ([44]).

Michael Lower

Best v Chief Land Registrar [2014] EWHC 1370 (Admin)

This English case looks at whether a claim to adverse possession can be based on possession which amounted to a criminal offence (and not merely the tort of trespass). Although it arose in the context of the scheme contained in schedule 6 to the Land Registration Act 2002, the court made it clear that the same principles would apply to a claim concerning unregistered land and relying on the Limitation Act.

Section 144(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 criminalised trespass by living in a residential building which had been entered as a trespasser. B had moved into an empty house the owner of which had died. He entered in 2000. In 2012, he applied to HM Land Registry to be registered as proprietor. He claimed that he had been in adverse possession “for the period of ten years ending on the date of the application” as required by Schedule 6 to the Land Registration Act 2002. The Chief Land Registrar rejected the claim on the basis that the possession relied upon amounted to a criminal offence and that it could not, therefore, be relied upon. B sought judicial review of this decision.

The Chief Land Registrar’s argument was that there is a general principle to the effect that no enforceable rights could be derived from the criminal acts of the person who sought to enforce them. B’s primary, and successful, argument was that section 144(1) was not intended to have any impact on the entirely separate scheme concerning adverse possession in Schedule 6 to the Land Registration Act 2002.

Ouseley J. explained that the mischief that section 144 sought to eliminate was ‘the difficulty faced by the householder, and particularly by the occupying householder, dispossessed by squatters, removing them without police assistance and with only unduly slow and cumbersome civil processes.’ ([29]) Parliament did not intend section 144 to affect the interpretation of Schedule 6 to the Land Registration Act 2002. Had it intended this, one would have expected Parliament to make this clear and to spell out the intended impact on the scheme in the Land Registration Act 2002 ([80]). The fact that section 144 caught only certain types of acts of possession (‘living in’) in respect of a specific type of property (‘residential premises’) ([81] – [83]) was a further sign that s. 144 was not intended to have any effect on Schedule 6 or the general law of adverse possession. These restrictions on the scope of s.144  indicate its true target: ‘They mean that the criminal law has a restricted scope, tackling a need for house owners to receive a swifter remedy and more forceful help than hitherto in dealing with what were distressing and pressing circumstances, in which the law appeared to give considerable protection to those who did not merit it.’ ([83]). The protections offered to registered owners by Schedule 6 are not weakened by refusing to adopt the interpretation argued for by the Chief Land Registrar ([84]). Section 144 is not weakened either, since the squatter can still face criminal charges in respect of possession before becoming registered as proprietor ([85]). Thus:

‘Parliament should be taken to have thought that the public policy advantages of adverse possession at common law meant that the mere fact that the adverse possession was based on criminal trespass did not and should not preclude a successful claim to adverse possession.’ ([86]). The Chief Land Registrar’s decision was quashed and B was able to pursue his claim to be registered. The claim could now proceed to the next stage in accordance with the machinery contained in Schedule 6 to the Land Registration Act 2002.

Michael Lower

Youseffi v Musselwhite ([2014] EWCA Civ 885, CA (Eng)) is an English Court of Appeal case arising out of a lease renewal case under Part II of the Landlord and Tenant Act 1954. It does, however, raise a general issue about the construction of user clauses.

The clause in question read:

‘at all times during the said term to use the Premises for the purposes of any retail trade within Classes A1 and A3 of the Town & Country Planning (Use Classes) Order 1987 and not to use the Premises or any part thereof for any other purpose without the written consent of the Landlord (such consent not to be unreasonably withheld)…’

There was no keep-open clause.

The tenant had not used the demised premises for the permitted use and the question was whether this covenant positively required the property to be put to the permitted use or whether it was only negative, restraining other uses of the property.

The Court of Appeal, Gloster LJ giving the only full judgment, noted that the clause began with a positive obligation and that, therefore, it did impose a positive obligation to put the property to the permitted use.

Michael Lower

In Superene Ltd v Metro Fair Ltd ([2014] HKEC 99, CA) the Court of Appeal had to consider whether an assignment had included the whole of a column next to the front entrance of the property that had been assigned or only part of it. The assignment described the property by reference to a plan. Although the plan was rough and ready, the Court of Appeal felt that it was sufficiently clear to allow a conclusion to be reached without any need to refer to extrinsic evidence. It decided that only half the column had been included in the assignment. 

The judgment of Barma JA notes the argument of counsel for the defendant ([12]) that extrinsic evidence (here a description of the property in a tender document) is admissible either (i) as part of the factual matrix according to the established principles of contractual interpretation or (ii) where the instrument in question does not clearly define the land transferred (Scarfe v Adams [1981] 1 All ER 843 at 851, CA (Eng) per Griffiths LJ).

Michael Lower

In Grigsby v Melville ([1974] 1 WLR 80, CA (Eng)) a property in single ownership had been divided into two semi-detached properties and each of these was sold to a separate buyer (P and D respectively). The entrance to the cellar under P’s property was on D’s land. The conveyance to P excepted and reserved ‘such rights and easements or quasi-rights and easements as may be enjoyed with the adjoining property’.

P learned that D was using it and sought an injunction to restrain what he alleged to be a trespass. D argued: (i) that the cellar had been conveyed to her not P; or (ii) that she enjoyed an easement allowing her to use the cellar.

The Court of Appeal held that P’s ownership of his land included the cellar underneath it. Stamp LJ said: ‘It is, however, axiomatic that a conveyance of land carries with it all that is beneath the surface’ (at 85). It was ultimately a matter of the construction of the conveyance but nothing in the conveyance pointed to any other conclusion than that P’s ownership included the cellar.

The Court of Appeal saw nothing on the facts of the case that would point to D’s enjoyment of an implied easement to use the cellar. The easement issue was explored in greater detail in the first instance judgment.

Michael Lower

In Hau Gay Yau v Wong Muk Din ([2014] HKEC 1456, CA) a landlord served notice to quit to determine a periodic tenancy on the solicitor acting for the tenant. The Court of Appeal, overturning the first instance decision, held that the notice had been validly served. Sections 62(2) – (4) of the Conveyancing and Property Ordinance do not exclude other modes of service than those that they specify ([22]). It was clear that the solicitors on whom the notice had been served had been instructed by the tenant in relation to this matter ([23]). The tenant’s actions showed that he regarded his solicitors as having had authority to receive the notice ([23]).

Michael Lower

In Warmington v Miller ([1973] QB 877, CA (Eng)) M’s lease contained a covenant prohibiting him from assigning, underletting or parting with possession of part only of the demised premises. He entered into an agreement with W to grant W a tenancy of part of the demised premises but refused to execute the underlease. W sought specific performance.

This failed since specific performance would not be awarded ‘where the result would be a breach by the defendant of a contract with a third party or would compel the defendant to do that which he is not lawfully competent to do.’ (at 886 per Stamp LJ).

There was no equitable lease, the rule in Walsh v Lonsdale did not apply, unless the lessee was entitled to specific performance. (at 887 per Stamp LJ).

Michael Lower

Re Threlfall ((1880) 16 Ch D 274, CA (Eng)) concerned a lease at a yearly rent of GBP 800 payable in equal quarterly installments.  The landlord had the right to enter at any time after three months from the date of the lease without giving notice. The lease was contained in a mortgage deed (the mortgagee granted the lease to the mortgagor and the re-entry provision reflected this context). The question was whether this was a periodic tenancy or a tenancy at will. The English Court of Appeal held that there was a periodic tenancy despite the re-entry provisions.

Cotton LJ said:

‘But I know of no law or principle to prevent two persons agreeing that a yearly tenancy may be determined on whatever notice they like. There is freedom of contract in this respect. ‘ (at 281 – 2).

Michael Lower

In Lawrence v Fen Tigers Ltd ([2014] AC 822, SC) (Coventry v Lawrence) C used former farmland near a village for speedway and similar types of racing. The land used as the stadium had planning consent for the various types of races held there. A succession of temporary consents began in 1992 ending when permanent planning permission was granted in 2002. L was a resident in the village having moved there in 2006. L brought an action in nuisance because of the noise caused by racing and ancillary activities at the stadium. The Supreme Court decided that the judge at first instance had been right to find that the noise was a nuisance and that C had not acquired an easement by prescription entitling it to make the noise that was complained of (although the acquisition of such an easement was legally possible). The fact that the defendants had planning permission to carry on the noisy activity did not settle the question as to whether or not there was a private nuisance.

This note relies principally on the judgment of Lord Neuberger. Although the other judges agreed with him in general there were differences of approach on some issues.

Can an easement to commit what would otherwise be a nuisance by noise be acquired by prescription?

Lord Neuberger held that it is possible to acquire an easement to carry on an activity which results in noise ([33]) and it can be acquired by prescription ([37]). But it is not enough to show that the noise has been created for 20 years. It must also have constituted a nuisance during that time ([42]). Otherwise, the servient owner would not know that a claim was being made against his land ([43]).

Coming to the nuisance

It was no defence to say that the claimant came to the nuisance where the claimant continues to use the property in the way that it had previously been used by her predecessors ([51]). It may be different where the claimant built on the land or changed the use to which it was put after the alleged noise nuisance had started ([56]).

Reliance on the defendant’s own activities in defending a nuisance claim

The character of the locality is an important consideration in nuisance cases ([59]). The court has to have regard to ‘the established pattern of uses’ ([60]). On this basis, the defendant’s own activities clearly should be taken into account ([63]) to the extent that they have become part of the character / established pattern of uses but not to the extent that there has been some change / intensification that might constitute a nuisance ([65]). Even where it was originally a nuisance, the right to make the noise might have been acquired by prescription or sanctioned by a previous decision to award damages rather than an injunction for the breach ([69]). See also Lord Carnwath (at [187]).

The effect of planning permission on an allegation of nuisance

Lord Sumption explained the importance of this issue and the next (remedies):

‘It is, I think, worth pointing out that the question what impact the grant of planning permission should have on liability in tort for private nuisance and the question what remedies should be available for a nuisance are closely related. They both raise a broader issue of legal policy of some importance, namely how is one to reconcile public and private law in the domain of land use where they occupy much the same space?’ ([155]).

It is normally not a defence ([94]) but neither is it irrelevant; it may have evidential value ([96]).

The award of damages instead of an injunction

The role of this issue in the general scheme or design of the law in this area is explained thus:

‘What saves, or could save the law from anomaly and incoherence is the court’s discretion as to remedies. An injunction is a remedy with significant side-effects beyond the parties and the issues in the proceedings. Most uses of land said to be objectionable cannot be restrained by injunction simply as between the owner of that land and his neighbour. If the use of a site for (say) motocross is restrained by injunction, that prevents the activity as between the defendant and the whole world. Yet it may be a use which is in the interest of very many other people who derive enjoyment or economic benefits from it of precisely the kind with which the planning system is concerned. An injunction prohibiting the activity entirely will operate in practice in exactly the same way as a refusal of planning permission, but without regard to the factors which a planning authority would be bound to take into account. The obvious solution to this problem is to allow the activity to continue but to compensate the claimant financially for the loss of amenity and the diminished value of his property. In a case where planning permission has actually been granted for the use in question, there are particularly strong reasons for adopting this solution. It is what the law normally provides for when a public interest conflicts with a proprietary right.’ (Lord Sumption at [157]).

An injunction had been granted at first instance. C now contended that damages should be awarded instead. This issue and the question as to how damages should be assessed was an issue in all but one of the judgments. The Supreme Court clearly saw this as an important issue and an area that needed to be settled. Lord Neuberger envisaged that it would be argued and considered more fully in later proceedings ([152]).

Michael Lower