Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2015] EWHC 3564 (Ch)

Summary

  • An easement is a right benefitting a piece of land (known as the dominant land) that is exercised and enjoyed over land owned by a third party (known as the servient land).
  • In the Regency Villas case, the Court held that the right to use the sporting and leisure facilities on the adjoining estate took effect as an easement.
  • This demonstrates that the categories of possible easements are not closed and that the Court is willing to extend the types of easements which exist going forwards.
  • The Regency Villas case also emphasises that the four part test in Ellenborough Park must continue to be applied when deciding whether or not a right constitutes an easement.
  • Owners of properties relying on the use of leisure facilities on adjoining land ought to think twice before paying for the use of such facilities, as they may be entitled to use such facilities free of charge if they can establish that an easement exists.

The Facts

Regency Villas Title Ltd (“Regency Villas”) owned the freehold of land on which timeshare units were constructed (the “Timeshare Land”). Regency Villas held the Timeshare Land on trust for the timeshare owners. Diamond Resorts (Europe) Ltd (“Diamond Resorts”) owned the estate which was adjacent to the Timeshare Land. There were various leisure and sporting facilities including tennis and squash courts, a swimming pool, golf course and gardens on Diamond Resorts’ estate (the “Estate”). The recreational facilities were open to members of the public who paid to use them.

In 1981 the Timeshare Land was transferred to Regency Villa’s predecessor in title. The title to the Timeshare Land provided that the Timeshare Land had the benefit of the rights of way and services and the right for the transferee, its successors in title, tenants and occupiers to use the sporting and leisure facilities on the transferor’s adjoining estate.

Diamond Resorts argued that Regency Villas did not have a right to use the sporting and leisure facilities as the “user” rights set out in the 1981 Transfer were not capable of running with the land so as to bind or benefit successors in title.

Regency Villas therefore issued a claim against Diamond Resorts to establish an easement with the intention of being entitled to use the leisure and sporting facilities free of charge.

Easements: the four part test

An easement is a right benefitting a piece of land (known as the dominant land) that is exercised and enjoyed over land owned by a third party (known as the servient land).

The law on what amounts to an easement was set out by the Court of Appeal in Re Ellenborough Park [1956] Ch 13 (“Ellenborough Park”). The Ellenborough Park case established that, in order for a right to be an easement, it must have the following characteristics:

1. There must be dominant land (which enjoys the benefit of the easement) and servient land (over which the easement is exercised); 2. The right must accommodate the dominant land; 3. The dominant and servient land must be owned by different persons; and 4. The right must be capable of forming the subject matter of a grant.

When deciding whether a right satisfies the fourth part of the above test, the Courts will consider the following:

  • Is the right expressed in terms which are too wide or vague?
  • Would the right amount to a right of joint occupation or substantially deprive the servient owners of legal possession of their land?
  • Would the right constitute a right of recreation, having no quality or utility or benefit?

If the four parts to the test are not satisfied, a right is likely to be merely a personal right over land and would not constitute an easement which binds successors in title of the servient land.

The Decision

The Court held that the right to use the sporting and leisure facilities did take effect as an easement. In fact, the Court’s decision provides the first authority as to whether the right to use a golf course, swimming pool or tennis court is capable of being an easement.

When determining this case, the Court found that the first, second and third characteristics of an easement, as set out in the Ellenborough Park case, had been easily met. This is because:

  • The Timeshare Land was the dominant land and the Estate was the servient land;
  • Both the Timeshare Land and the Estate were owned by different persons; and
  • The use of the sporting and leisure facilities was clearly connected with the enjoyment of the Timeshare Land and, therefore, the rights accommodated the dominant land.

The key question for the Court to decide was whether the fourth part of the test, i.e. whether the rights were capable of forming the subject matter of a grant, could be satisfied, or whether the rights did not qualify as easements because they were merely rights of recreation. As the rights were clearly for the use of all the leisure facilities on the Estate, the Court decided that the rights were not vague or excessive. Further, the rights did not amount to a joint occupation and did not deprive Diamond Resorts of legal possession of the Estate.

Therefore, the Court held that there is no legal barrier to the grant of an easement to use a golf course, swimming pool or tennis court, provided the intention to grant an easement, as opposed to a merely personal right, is evident on the proper construction of the grant construed in light of the circumstances of each case.

As it was decided that the timeshare owners have an easement over the Estate, they were entitled to damages for nuisance in the amount of payments they had made for the use of the facilities.

Our Advice

In light of the above case, it is clear that the class of possible easements is not closed and that the Court is willing to extend the types of easements which exist going forwards. The case also emphasises that the four part test in Ellenborough Park must continue to be applied when deciding whether or not a right constitutes an easement.

Consequently, this decision is useful for those owning timeshare developments as use of leisure facilities could amount to a binding property right. Therefore, owners of properties relying on the use of leisure facilities on adjoining land ought to think twice before paying for the use of such facilities, as they may be entitled to use such facilities free of charge if they can establish that an easement exists.