Real estate

Can leaseholders release rights to light?
29 November, 2017

The High Court has considered whether a long leaseholder has a right to release rights to light in the case of Metropolitan Housing Trust Ltd v RMC FH Co Ltd.

The freeholder, RMC FH Co Ltd (‘RMC FH’), granted a 125 year headlease of a building comprising a number of flats on Royal Mint Street, London, to Metropolitan Housing Trust Ltd (‘Metropolitan’). The building lies opposite a development site, the owner of which had obtained planning permission to build a mixed-use development. 

Both RMC FH and Metropolitan considered that they enjoyed a right of light from windows facing the development site. It was common ground between RMC FH and Metropolitan that the development would interfere with that right of light. Metropolitan wanted to negotiate an agreement with the developer to release the right of light in exchange for compensation, but RMC FH argued that the right of light was part of the demised premises and that interference with the right would constitute a breach of the lease, which provides that Metropolitan, as leaseholder, will not permit an encroachment on the demised premises so as to cause damage, annoyance or inconvenience of RMC FH as freeholder. The lease also contains a clause providing that Metropolitan will not permit any easement to be acquired against the demised premises. 

Metropolitan sought a declaration that it was entitled to release the right of light enjoyed by the leased building.

Decision

Judge Morgan refused to make the declaration sought. Metropolitan, as long leaseholder, could not realise its right of light without the freeholder’s consent.

The Judge held that, even though the right of light had not existed at the date the lease was granted, and had instead come into existence during the lease term by prescription 20 years after windows were installed facing the development site, the right of light formed part of the demised premises. Acts of user by a leaseholder which are relied on to support a claim to a right acquired by prescription are treated as acts of the freeholder, and will lead to the creation of a right appurtenant to the freehold. Rights acquired as appurtenant to the freehold are to be treated as being part of the demised premises.

Allowing a development to go ahead which interferes with a right of light enjoyed by the demised premises would constitute an encroachment. There is no reason to limit the ordinary meaning of encroachment to acts that involved actual entry onto the demised premises; it extends to the interference with a right enjoyed by the premises.

Any encroachment would cause damage to the freeholder because it may result in the right of light being extinguished. Even if the right of light continued to exist at the end of the lease, the fact that interruption had continued for many years would significantly reduce the freeholder’s ability to obtain an injunction requiring the removal of the newer development building as an obstruction to the light.

The Judge also considered the implications arising from the fact that the newly opened windows on the development building would acquire prescriptive rights of light after 20 years. This would directly breach Metropolitan’s lease covenant not to allow an easement to be acquired against the demised premises.

The judgment shows that both tenants and developers must carefully consider the wording of a lease to check whether the freeholder’s consent to a release is required and consider inviting the freehold to take part in negotiations.


Prescriptive easements: the fiction continues
20 November, 2017

Acquiring rights by prescription is complicated and can be very confusing. The Upper Tribunal judgment in the case of Welford and others v Graham and another[1] is a useful reminder that provided the claimant can evidence the use of a right in the requisite manner for the relevant time period, the claimant will benefit from an evidential presumption that they had enjoyed the easement as of right.

First things first: how is an easement acquired by prescription?

Prescription derives from a principle of English law that exercising a right for a long period of time, without interference and as of right (that is, without force, without secrecy and without permission) should be capable of legitimisation. This is combined with an assumption (in some cases a misleading notion) that the right originally derived in a grant.

There are three ways of acquiring easements by prescription. One of these is the doctrine of lost modern grant and it is the method that is relevant to the case in question.

Under the doctrine of lost modern grant, if a right has been enjoyed for at least 20 year without any other lawful explanation, it is presumed:

1. to have had its origin in a deed of grant made after 1189; and

2. that the deed of grant has been lost.

Practically speaking, this won’t actually have happened, hence the fiction.

A claim of lost modern grant based on 20 years of use is not rebutted even when the use is interrupted after the required 20 years. The period of 20 years’ enjoyment can be claimed for any period in the past, and there is no need to prove the existence of the deed of grant, nor the parties to it. Even demonstrating that no grant was in fact ever made may be insufficient to rebut the presumption.

Welford v Graham: the facts

The Welfords were the registered proprietors of a former joinery workshop. The Grahams were the registered proprietors of an adjoining yard. The Welfords claimed that the workshop had the benefit of a right of way over the yard, with or without vehicles, for access to and egress from the workshop. As the right had not continued until the time the dispute arose, the Welfords relied on the principle of lost modern grant to establish a right of way across the yard on the basis of use by them and by their predecessors in title from 1964 to 2012.

The First-Tier Tribunal (FTT) accepted the evidence of over 20 years of use. However, on the basis that to satisfy the doctrine of lost modern grant a potential easement must be used ‘as of right’ (that is, without force, without secrecy and without permission), the court refused to grant an easement because the Welfords could provide evidence of use without permission for only 10 of the required 20 years.

The Welfords appealed that decision on the ground that the FTT was wrong in relation to the burden of proof as to the presence or absence of permission for the use of the yard.

The evidential presumption

The Upper Tribunal (Tax and Chancery Chamber) (UT) allowed the appeal.

The UT held that although the legal burden of proving that the use was without permission was on the party claiming the easement, that party could be assisted by an evidential presumption that:

1. If the alleged easement was used in the requisite manner for the necessary period of time, there was a rebuttable presumption that the easement had been enjoyed as of right and, in particular, without permission; and

2. The servient owner could then try to rebut that presumption by adducing evidence that there had been permission or that the use was contentious. If the servient owner did adduce such evidence, the court would then decide on the evidence whether the presumption had been rebutted.

Does this presumption make sense?

If the claimant of a potential easement had to prove that the use was without permission then, without the benefit of the evidential presumption, the claimant would have to call evidence to disprove:

1. the existence of an express permission at any time during the period of use;

2. the existence of any facts from which a permission could be implied during the same period.

As a claimant would often be unable to prove these matters, particularly during the time the dominant land was owned by a predecessor in title, the existence of this evidential presumption seems to make (at least) practical sense.

Conclusion: owners of servient land take notice

This case clarifies that, provided a claimant can evidence the use in the requisite manner for the relevant time period, a claimant will benefit from an evidential presumption that they had enjoyed the easement as of right. A claimant does not have to prove a negative, so owners of servient land who are seeking to object to a claim of prescriptive right should take note. If the presumption applies, it is up to them to try to rebut that presumption through evidence.


Legal 500 and Chambers UK 2018 rankings announced
14 November, 2017

We are delighted to announce that our Real Estate team has received excellent comments from the 2017 edition of the Legal 500.

In London, our commercial property (retail) practice area is ranked top tier, and our general commercial property, development and property dispute resolution teams are recommended.

In the South East, Cripps is ranked top tier in eleven practice areas and is recommended in twenty-four practice areas.

Some of the comments from the Legal 500 regarding our Real Estate team follow, and the full results can be viewed here.

In commercial property, Cripps LLP “goes above and beyond what is required to deliver an exemplary service“. Real Estate head Mike Scott “is calm under fire, creative and inventive“.

In property dispute resolution, the team is “very good on all fronts” providing “solid, well-structured and well-considered advice“.

Following publication of the Chambers UK 2018 guide, our property dispute resolution team has retained its band 1 position as National Leaders (outside London), with a client commenting “I think they’re all excellent at what they do“, and our agriculture and rural affairs practice area retained its band 1 ranking in Kent, with Sally Firby coming highly recommended, as clients note the team’s “total focus and commitment to achieving the best outcome based upon the law, common sense and experience“.

Our Real Estate team is noted for its particular expertise in asset management and investment for pension funds and institutional investors, and its experience in residential development, and James Blyth, a senior associate in our construction team, has been flagged as an “associate to watch”.

Please click here to see our 2018 profile on the Chambers website.


What the interest rate rise will mean for the buy to let market
3 November, 2017

Today’s small interest rate rise in the Bank of England’s base rate from 0.25% to 0.5% is the first rise in the cost of borrowing for a decade.

What does this mean for the buy to let market?

The average rates for 2 and 5 year fixed buy to let mortgages already appear to have risen and while the average rise is small, the base rate could potentially have an amplified effect on landlords, who are likely to have an interest only mortgage. The risk is that the bank rate becomes an escalator.

Already hit by punitive stamp duty and new restrictions on mortgage interest tax relief, landlords are now potentially facing rising borrowing costs and a further squeeze on their profits.

But, let’s not forget, we are talking about a small rise and historically these are still among the lowest rates we have seen and borrowing costs remain low.

If you would like further advice, please contact Sheetal Bahal on +44 (0)1892 506 150.


To search or not to search?
30 October, 2017

It is the responsibility of a buyer’s solicitor to make the appropriate conveyancing searches in the purchase of a property. Whilst it is widely accepted that solicitors carry out all of the ‘usual’ searches such as the search of the local land charges register, enquiries of the relevant local authority, drainage and water enquiries, to name a few, there is a myriad of less well known and unusual searches now available to solicitors from various search providers.

The issue for solicitors and buyers is determining which other searches are relevant and should therefore be carried out. Should solicitors simply carry out all of the available searches but decline to comment on the results of those which are outside of their expertise? Or should they inform their client about the searches available, requiring them to choose those they’d like carried out on their behalf?

In a recent High Court case, a buyer’s solicitors failed to disclose information regarding developments which were planned on the same street as the property being purchased. The information had been obtained via a planning search report, and the firm of solicitors had not informed the buyer of the contents of the report. The court, however, deemed the details obtained from the report as information that should have been brought to the attention of the buyer and so the solicitors were found to be in breach of duty.

The interesting issue, therefore, concerns whether solicitors are increasingly coming under pressure to commission more obscure searches simply because they are available. Take the example of a ground stability search, which is likely to only be carried out if the property in question may be affected by natural ground movement. It will identify historic underground workings which have resulted in ground stability hazards. Clearly this search will not be relevant to all conveyancing transactions but it is likely that providers will encourage solicitors to carry out the search in order to best inform their clients.

Where should the line be drawn? Where are solicitors left in terms of potential liability, should they opt to not carry out unusual searches such as this? It is interesting food for thought.


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