The danger of granting informal rights 2

United Kingdom

Hair and another -v- Gillman

The recent Court of Appeal judgment in the above case (decided on 17th February), highlights the hidden danger that can lie in wait for landlords who grant informal rights to tenants.

The facts of the case were, briefly, as follows. B owned 182 High Road, South Benfleet, Essex. In 1971, B agreed to build a nursery school on part of the land for G. The school (now 182A High Road) was duly built and let to G in 1972 for a term of 7 years. At about the same time, B gave G permission to park a car on the forecourt of 182. In December 1979, following the expiry of the lease, G purchased the freehold interest in 182A from B.

Importantly, neither the lease nor the subsequent conveyance contained an express grant of a right to park on the forecourt. G nevertheless continued to use the forecourt for parking. In 1985, Mr and Mrs H acquired the freehold interest in 182 from B and subsequently succeeded in obtaining a declaration that neither G nor her employees were entitled to park on the forecourt.

G appealed against the declaration and the Court of Appeal held, in her favour, that when 182A was conveyed to her in 1979, section 62 of the Law of Property Act 1925 (which broadly provides that any conveyance or lease grant is deemed to include, amongst other things, all "privileges, easements, rights and advantages" relating to the land at the date of the conveyance or lease grant) had the effect of converting the previously informal right to park into a legal easement that was enforceable against Mr and Mrs H.

The court confirmed that whilst section 62 will not apply to rights which are temporary in the sense that, to the knowledge of the parties, they will only be capable of being enjoyed for a limited period (i.e. because it is known that the grantor of the right intends to redevelop the property), the section will nevertheless apply to rights which are only temporary in the sense that the grantor could have withdrawn the rights at any time before the relevant conveyance or lease grant, but does not do so.

In this case, the right was only temporary in the sense that between 1972 and 1979 (prior to the conveyance to G), it was clear that the permission to park could have been withdrawn. However, it was equally clear from the facts that there was no reason for G to believe that the forecourt would only be available for parking for a limited period, so that the right was not temporary in such a way as to prevent the operation of section 62 at the time of the conveyance.

Whilst it is clear from the judgment that not all informal rights will be converted into legal easements, the case nevertheless underlines both the danger of granting informal rights and the importance of excluding the operation of section 62 on any sale of part or on the grant of any new lease, in order to restrict the rights granted to those which are specifically set out in the conveyance or lease.

For further information please contact Clive Newnham on 020 7367 3981 (cxn@cms-cmck.com)