In the February edition of Property Update we considered the case of Risegold v Escala. The case concerned a right of entry onto adjoining property for the purposes of carrying out rebuilding or renewal work to the property with the benefit of the right. The issue in the case was whether the right of entry could be used where the existing buildings (two single-storey industrial units) were being knocked down and a five or six storey mixed use development being erected in their place.
The High Court found that the proposed work went beyond "rebuilding or renewal" and that the right of entry could not therefore be used. The building owner appealed.
The Court of Appeal has overturned the High Court's decision.
The right of entry was reserved in a transfer in 1993. The court ruled that it must have been contemplated that the situation of the existing land and buildings would not remain the same for ever, and that there would be possible changes in the character of the area and of the buildings that might be put on the property. The right was reserved in favour of "the property", as defined in the transfer. The court held that this was not confined to existing structures at the time of the transfer but extended to the land on which those structures stood. "Rebuilding or renewal to the property" had to be read in that context.
The court did agree however with the High Court judge that comparisons with the use of the words "rebuilding" or "renewal" in planning legislation or leasehold covenants were unhelpful. It did not follow that because those terms might have a restricted meaning in those contexts, they should bear a similarly restricted meaning in a right of entry.
The Court of Appeal decided that "rebuilding" must be capable of bearing a broader and more flexible meaning than that favoured by the High Court. It included pulling down the existing buildings on the property and (i) putting up no new buildings in their place; (ii) putting up buildings similar to the demolished buildings; and (iii) putting up different buildings in the place of the demolished buildings. It would make no sense for example if the right could be exercised in order to erect similar buildings, but not to demolish the existing buildings without putting up anything in their place (which would arguably be less intrusive to the adjoining landowner). A literal construction of the right of entry produced consequences that were not sensible and were unlikely to have been within the reasonable contemplation of the parties at the time of the creation of the right.
The Court of Appeal also pointed out that the narrower construction favoured by the adjoining owner would introduce a significant element of uncertainty into the right of entry, since the exercise of the right would depend on whether or not the proposed buildings were similar to the existing buildings. While the High Court's conclusion was one possible construction of the easement, it was not the only possible construction and produced consequences that, in the Court of Appeal's view, would have surprised the parties if they had been drawn to their attention at the time the right was created. Some flexibility of meaning and certainty of operation was necessary to make the right work in a sensible way.
The court added that, in case its view on the meaning of "rebuilding" was wrong, it thought that the developer's proposals would have been covered by "renewal"; entitling it to exercise its right of entry on that ground. It thought that the effect of the drafting was that "renewal" bore a wider meaning than "rebuilding".
Things to consider
The Court of Appeal's decision will be helpful to developers who need access to neighbouring properties for the purposes of their development and who are trying to bring this within the scope of existing easements. Those drafting easements should ensure that, if rights are intended to be restricted, this is done expressly.