Does a landlord have the right to move tenants’ parking spaces? A recent High Court case has decided it does not, unless the lease includes an express right to do so. The case, Howard John Kettel and others v Bloomfold Ltd [2012] EWHC 1422 (Ch), examined some interesting issues concerning tenants’ parking spaces.

Facts

Mr Kettel and his co-claimants hold long leaseholds in eight flats in a development known as City Walk in East London. The lease of each flat includes the sole right to use a designated parking space. Bloomfold Ltd is the freehold owner of the development.

Bloomfold obtained planning permission for a new housing block in 2006. It wrote to the tenants to state that their parking spaces fell within the site of the new block and they had been allocated new spaces within the development. The area was then fenced off by Bloomfold. However, because the tenants did not agree to the spaces being moved, building work was not started.

Demise or Easement?

The first issue to be decided was whether the parking spaces formed part of the property leased (the “demise”), or whether the tenants merely had a right to use the spaces (an “easement”). A demise includes, unless specifically limited in the lease, the airspace above the property and the subsoil below it. An easement is just a right to use property without depriving the owner of all reasonable use of it. It is now accepted that a right to park is capable of being an easement but whether or not a particular right amounts to an easement depends on the facts.

The tenants in this case argued that the right granted by their leases to use the parking spaces was either an express demise, or was greater than an easement (because it left the landlord with no reasonable use of the spaces) and so must, by implication, be part of the demise. Therefore, they had a demise of the airspace above the parking spaces and the landlord could not build either directly on the spaces or over them (an alternative “crash deck” scheme whereby the landlord could leave the spaces open, but put the building over them).

The judge decided that the wording in the lease did not grant an express demise of the spaces, so it could only be a demise if the grant was greater than an easement because it would leave the landlord with no reasonable use of its land. The question is one of fact and degree. The judge considered that Bloomfold would be able to pass over the space if there was no vehicle parked there. It could also repair the surface, lay conducting media under the space, build above it (as in the “crash deck” scheme) or put overhead projections over it such as wires. In the judge’s view that was sufficient to enable the right to park to amount to an easement, so there was no implied demise.

Could the Landlord Move the Spaces?

The leases did not contain express wording allowing the landlord to move the spaces and the judge held that there was no basis for such a right to be implied. The leases did include a right for the landlord to build on “Neighbouring Property” but the definition of that expression did not include the parking spaces. Previous cases have established that there is no general right unilaterally to extinguish an easement over one area of land by providing an equivalent easement over other land and the obstruction of an easement does not cease to be actionable because an alternative, equally convenient, easement is available.

What Remedy Was Appropriate?

The general rule is that claimants are entitled to an injunction to prevent interference with their property rights, such as easements, unless there are exceptional circumstances which justify an award of damages instead.

The landlord argued that damages were the appropriate remedy because the tenants’ loss was trivial as they would be given alternative spaces only a few yards away. However, the offer of alternative spaces was never finalised, nor put in a form which would have allowed the claimants to accept them and create an immediately binding right. Therefore, to exclude an injunction would allow Bloomfold to “expropriate” the tenants’ rights. The offer of alternative spaces was not entirely irrelevant, but was not enough on the facts of the case to justify the refusal of an injunction.

It was for the claimants to decide whether they would accept the offer of a different space and they were not acting unreasonably in seeking to enforce the rights that they had. Therefore the injunction was granted.

The judge went on to consider how damages should be assessed if they had been awarded. He rejected the landlord’s suggestion that nominal damages would be adequate, because the provision of an alternative space would not fully compensate the tenants for the right lost. He held that the correct method of assessment was the “release fee” basis, which is the sum that would be negotiated between willing parties for the right to move the spaces. In his view, that negotiation would result in the net land value generated (after costs and 25 percent developer’s profit) being split as to 50 percent for the claimants and 50 percent for Bloomfold. He would therefore have assessed damages in lieu of an injunction at £517,500, to be divided between the claimants.

Advice for Landlords

If tenants have specific designated parking spaces there is no right to move them even a small distance to a location no less convenient. It cannot be assumed that it will be possible to buy out their rights; the court may exercise its discretion to award damages rather than grant an injunction to prevent interference with the tenants’ rights, but this will be the exception rather than the rule. The safest course is therefore to grant parking rights in respect of spaces to be designated by the landlord from time to time, rather than