Rights of light –– Easement –– Rights granted by lease –– Lease reserving rights to develop other land –– Whether right of light subject to right to develop other land –– Whether “other land” restricted to land belonging to landlord –– Whether “other land” including after-acquired land –– Whether provisions in lease can restrict right of light otherwise arising under Prescription Act 1932
By an underlease dated 2 December 1987, the claimant held from the Mercers Company a 15-year term of an office building. The defendant conceded that, prior to the grant of the underlease, the freehold to the building had acquired, under the doctrine of lost modern grant, an easement of light over an adjoining court. The defendant acquired the freehold to the court, which had recently been closed as a public highway. At the date of the grant of the underlease, the Mercers Company had held no interest in the court. But, contrary to the facts agreed for the purposes of the first hearing in this matter (16 July 2001), the Mercers Company later acquired, or would acquire, an interest in the court. The defendant and the Mercers Company proposed a joint venture development, involving the construction of a building over the court. The defendant accepted that it would interfere with the right of light, and that the right was granted to the claimant as an “appurtenance” by the terms of the underlease. However, the defendant contended that clause 6(7) of the lease held by the Mercers Company, and clause 7(7) of the underlease (which was in identical terms) contained provisions that disabled the claimant from objecting to the development of land belonging to the defendant or “of any land not comprised in the [underlease]”. Both parties made applications for summary judgment under CPR 24. Judgment was first given on 16 July 2001, but, following an admission by the defendant that an agreed fact, that the Mercers Company had no interest in the court, was wrong, a further issue arose as to whether “any land” in clauses 6(7) and 7(7) included any land acquired by the underlessor after the grant of the underlease.
Held: Judgment was given for the claimant.
The underlessors reserved the right to interfere with a right of light if it interfered with the development of land not comprised in the underlease. However, the expression in clause 7(7), “any land not comprised in [the underlease]”, meant any land of the landlords as at the date of the grant of the underlease and did not include after-acquired land. Accordingly, as the underlessors had not owned the court in 1987, clause 7(7) did not assist the defendant. The claimant could not assert a right enjoyed as of right under the Prescription Act 1832, as a landlord is entitled to agree with a tenant that the tenant should not be entitled to a such a right of light. The right of light granted was subject to the reservation, which amounted to a grant back of a right to build.
The following cases are referred to in this report.
Foster v Lyons & Co Ltd [1927] 1 Ch 219
Johnston & Sons Ltd v Holland [1988] 1 EGLR 264, CA
Mitchell v Cantrill (1888) LR 37 ChD 56
Overcom Properties v Stockleigh Hall Residents Management Ltd (1989) 58 P&CR 1; [1989] 1 EGLR 75; [1989] 14 EG 78
William Hill (Southern) Ltd v Cabras Ltd (1987) 54 P&CR 42; [1987] 1 EGLR 37; 281 EG 309
This was the hearing of applications by the claimant, Paragon Finance plc, and the defendant, City of London Real Property Co Ltd, under CPR 24 for summary judgment in proceedings by the claimant for declarations and relief in respect of a claim to a right of light.
Paul Morgan QC (instructed by Dewar Hogan) appeared for the claimant; Jonathan Gaunt QC (instructed by Maxwell Batley) represented the defendant.
JUDGE RICH QC delivered the following judgment on 16 July 2001.
The claimant holds an underlease, dated 2 December 1987, of an office building known as 28 King Street in the City of London. The term is until 2012, and the rent is a full market rent. The underlessors are two charitable companies, going under the name of the Mercers Company, and no doubt established by that company, which also, on 2 December 1997, granted to them their lease at a peppercorn.
It is agreed on behalf of the defendant, by Mr Jonathan Gaunt QC, who has properly conceded everything that should be conceded, that, prior to the date when the lease and underlease were granted, the ground to third floors of the Lawrence Lane elevation of that building had, for probably a century and a half, enjoyed access of light over what was a public highway known as Mumford Court. Consequently, the freehold had acquired an easement of light under the doctrine of lost modern grant.
Mumford Court has been closed as a highway and the defendant company has recently acquired the title from the City of London. It proposes, as a joint venture with the Mercers Company, to build a new office building, partly owned and belonging to the Mercers, but also, so far as is here relevant, over Mumford Court, in which Mercers neither has, nor ever has had, any interest. Mr Gaunt accepts that to do so would interfere with the light to the building to a degree that would be actionable at the suit of a person entitled to the benefit of a right of light over Mumford Court.
The underlease defines the demised premises as the property described in the schedule, namely “all that land together with the building thereon known as 28 King Street”, but the demise adds also “together with the appurtenances belonging thereto”. Again, it is agreed that a right of light attaching to the underlessors’ interest would be an appurtenance, and would be included in the demise held by the claimant subject to any special terms in the underlease.
The defendant says that neither the underlessors nor the claimant were entitled, by reason of their respective grants, to prevent or restrict the development at Mumford Court. The defendant says that this follows from clause 6(7) of the lease. The underlessors now hold a lease dated 1994, which no doubt was intended to put the question now raised beyond doubt. But, again, Mr Gaunt accepts that that 1994 grant cannot affect the rights granted to the claimant under its 1987 underlease. In order to ascertain what was within the power of the underlessors to grant, reference can be made only to the effect of clause 6(7) of the 1987 lease. In
The claimant seeks an injunction to prevent the proposed interference with the light to its building. It applies for judgment under CPR 24 on the ground that the defendant has no real prospect of successfully defending such a claim. I have indicated to Mr Paul Morgan QC, for the claimant, in the course of his opening, that even if I thought that the claimant was entitled to its easement, it would, in the circumstances of this case, probably be a matter for trial whether the remedy should be an injunction or damages in lieu.
For this reason, only the issue of construction of the lease and underlease was argued before me. That issue is raised equally by the defendant’s application for judgment under CPR 24 on the ground that the claimant has no real prospect of succeeding.
Although the issue between the parties is thus a point of construction, the answer to which is not simple or obvious, I accept that it is right for the courts to resolve such a question under this summary procedure, and, having done so, to give such judgment under CPR 24 as might be appropriate. The issue is one of law and the construction of documents, all material matters of fact being, as I have already recited, agreed or admitted.
At the beginning of the hearing, Mr Morgan sought permission to amend the particulars of claim, first, and without objection, to refer specifically to the right of light as an appurtenance, but, second, to allege a conspiracy to procure the underlessors to breach the covenants of the underlease.
I gave permission so far as the first is concerned, but made no order as to the second, it being agreed that the need for, and the appropriateness of, any such amendment would raise issues that Mr Morgan accepted would have to go to trial, and could best be considered after I had given this judgment on the two applications under CPR 24.
Clause 6(7) of the lease is headed “Landlords other premises”. There is then a proviso as follows. I will read it, interpolating numbers to identify four separate phrases into which Mr Morgan, for the purposes of his argument, conveniently quotes the clause:
1. Without prejudice to the provisions of clause 5(1) hereof…
that is, a covenant for quiet enjoyment:
… nothing herein contained or implied
2. shall impose or be deemed to impose any restriction on the use of any land or buildings of the landlord not comprised in this Lease; or
3. give the Tenant the benefit of the right to enforce or to have enforced or to prevent the release or modification of any covenant condition or stipulation entered into by any tenant of the landlord or other person in respect of property not comprised in this lease; or
4. shall operate to prevent or restrict in any way the development of any land not comprised in this Lease.
So far as the present proceedings are concerned, both parties rely only upon phrases 1 and 4, although they would refer to phrases 2 and 3 to assist interpretation of the other phrases. I shall, therefore, reread phrases 1 and 4 together, adding to clause 4 the general words that apply also to phrases 2 and 3 to give them their application.
1. Without prejudice to the provision in clause 5(1) hereof… nothing herein contained or implied…
4. shall operate to prevent or restrict in any way the development of any land not comprised in the lease.
I find it convenient to look at phrase 1 first, which, as Mr Morgan submits, and I accept, governs the other phrases, including phrase 4. I shall do so on the assumption that phrase 4 would, without it, have the effect contended for by the defendant, namely that no easement, including a right of light appurtenant to the demise, is to prevent or restrict development that would otherwise be an act of interference with such right.
Mr Morgan says that since the proviso is “without prejudice” to clause 5(1), clause 6(7) is to have effect only in so far as it does not involve interference to the lessee’s enjoyment of the property demised, including, therefore, the appurtenances. I look to clause 5(1) to see whether it can have such effect. The covenant in clause 5(1) is in common form. It reads:
Quiet Enjoyment
That the tenant paying the said yearly rent hereby reserved and observing and performing the covenants, conditions and agreements hereinbefore contained on its part to be observed and performed, shall and may quietly enjoy the demised premises during the said term without any interruption by the landlord or persons lawfully claiming through, under or in trust [There must be inserted the word “for”] the landlord.
I do not accept Mr Morgan’s submission as to the effect of this clause. The covenant as to quiet enjoyment is concerned only with interruption by the landlord, or persons lawfully claiming under the landlord. I do not see how an exception to the proviso that nothing is to prevent the development, which development is not a development by the landlord or those claiming under the landlord, can restrict the application of the proviso in respect of development that is, in fact, by others. The covenant for quiet enjoyment has nothing to do with it. This, no doubt, is why Mr Morgan proposed his amendment in the particulars of claim to allege that the development is, in effect, by persons claiming under the landlord. But I must base my present judgment upon the fact that the development is not by the lessor, nor is it the lessor’s land.
Second, as a matter of the words used in phrase 1, to say that the proviso is to have no effect if it involves a breach of the covenant of quiet enjoyment, in my judgment involves reading “without prejudice” as if it meant “subject to”. But the phrases are different. In my judgment, “without prejudice” means, as Mr Gaunt submits, that clause 5(1) is to continue in operation save in so far as clause 6(7) omits infringement on the rights that a landlord has covenanted not to interrupt. It does not mean that clause 6(7) is to have no effect in so far as it permits impingement upon rights that the landlord has otherwise covenanted not to interrupt.
Mr Morgan points out that Mr Gaunt would himself not construe clause 6(7) as entitling the landlord to, in effect, destroy the subject matter of his demise. I accept that the words of each phrase of clause 6(7) would be construed subject to such gloss as Vinelott J applied to the lease he had to construe in Overcom Properties v Stockleigh Hall Residents Management Ltd (1989) 58 P&CR 1*. In that case, the lease granted the defendant rights of access over the grounds and forecourts of a block of flats, but reserving to the lessor the right to develop “notwithstanding that the access of light or air or any other easement appertaining to the flat may be obstructed or interfered with”. Vinelott J held at p10:
looking at the lease as a whole and to the situation of the flat and the entrances, the words “obstructed” or “interfered with” should be read as permitting acts which would otherwise amount to an unjustified obstruction to or interference with an easement and which would otherwise be an actionable nuisance but not acts which would for practical purposes destroy it.
* Editor’s note: Also reported at [1989] 1 EGLR 75; [1989] 14 EG 78
In my view, that is a proper limitation upon the words both in phrase 2 of the clause, which I have to construe, which concern restriction on the use of any land or buildings of the landlord, and in phrase 4, as to the development of any land not comprised in the lease.
Such construction avoids the dilemma that Mr Morgan suggests otherwise arises, that unless the effect of phrase 1 is as he submits, the lessee is deprived of any right to sue in nuisance. He is, in my judgment, so deprived in respect of uses or development to which phrases 2 or 4 apply, but only to the extent that the proviso in those phrases that
I turn, therefore, to consider the extent of such rights; that is as to the proper construction of phrase 4 itself. In this respect, Mr Morgan makes two rather tentative submissions in his skeleton. First:
The parties appear to have principally, if not exclusively, in mind land owned by the landlord (see the heading to clause 6(7) although the claimant recognises that the lease contains clause 6(11)). If the reference to any land not comprised in this lease refers to land owned by the landlord, then this part of clause 6(7) will have no bearing on the present dispute because Mumford Court is not land owned by the landlord.
Second:
Further, the parties appeared to have in mind when drafting clause 6(7) matters which would operate as restrictions on the use of or development of some other land and not matters of positive right and enjoyment of the demised premises and its appurtenances.
I can dismiss the second argument quite easily. Phrase 2 is concerned only with use. Phrase 4 uses the expression “development”, which is defined in clause 1(8) to have the same meaning as in the Planning Act; that is, it includes building and other works as well as the making of a material change of use. It seems to me that it is that that the persons permit, rather than, and even at the expense of, the enjoyment of the demised premises.
The first argument, however, although expressed to be based upon an appearance of intention derived from the heading, requires more consideration. I think Mr Gaunt is right that one should consider this argument of Mr Morgan solely by reference to the context of phrase 4 within clause 6(7). Clause 6(11), as Mr Morgan accepts, does not entitle the parties to construe the clause by reference to its heading.
Mr Gaunt points to the different language used in each phrase. Phrase 2 is concerned expressly with use of “any land or buildings of the landlord not comprised in the lease” (my emphasis). Phrase 3, which is concerned to exclude any claim that the lessee has the benefit of covenants either by any tenant of the landlord or other person, is expressed to be “in respect of any property not comprised in this lease” (my emphasis). Nevertheless, the phrase can be concerned only with covenants attached to the property of the landlord. It could not otherwise arise if the lessee would have any claim to the benefit of covenants by reason of the lease. When, therefore, in phrase 4, reference is made to “any land not comprised in this lease” (my emphasis), is it to be treated as referring to any land by whomsoever owned, or is it to be understood as referring only to the land of the landlord as, in practice, must be within the scope of phrase 3, and is expressed to be within the scope of phrase 2?
I think Mr Morgan is right to submit that the phrase must be construed restrictively and against the grantor. He refers me to the decision of the Court of Appeal in William Hill (Southern) Ltd v Cabras Ltd (1987) 54 P&CR 42*. The case is by no means direct authority. Its facts are set out in the headnote, which reads as follows:
* Editor’s note: Also reported at [1987] 1 EGLR 37; (1986) EG 309
In 1978 the defendants’ predecessors in title granted a 20-year lease of a licensed betting office, situated on the first floor of premises, to the plaintiffs. The plaintiffs were already in possession under an earlier lease and had previously affixed two illuminated signs advertising the business above the entrance at street level. In 1979 one of the signs had been replaced with the express consent of the then landlord. Clause 2 of the lease demised “the premises,” defined in clause 1A as including the appurtenances thereto. Clause 3 provided that the demise could not be deemed to confer any easement except such as was specifically granted. Tenant’s covenant (xv) provided that no sign was to be attached to the premises without the lessor’s consent which, in respect of a sign stating the lessee’s name or business should not be unreasonably withheld. In 1983 the ownership of the building and of the reversion was acquired by the defendants who asserted that there existed a licence to maintain the signs revocable on the giving of reasonable notice. The plaintiffs sought a declaration that they were entitled to maintain the signs. The judge held that, on the true construction of covenant (xv) of the lease, the plaintiffs had been specifically granted a right to exhibit the signs.
On appeal by the defendants.
Held, dismissing the appeal, that although there was no grant of the right to exhibit the signs, on a proper construction of covenant (xv), the right to maintain the signs was granted by the demise of the appurtenances to the demised premises. In the circumstances, the words “together with the appurtenances thereto” in clause 1A could not, in the context of the present lease, be treated as mere surplusage. Bearing in mind the permitted user of the premises and the practical and commercial considerations, it was to be supposed that the appurtenances included the right to maintain the signs. That view was not invalidated by clause 3 which did not refer to appurtenances as such and which made express exception to the rights specifically granted by the lease. Further, applying the general principle that the grantor shall not derogate from his grant, the court would not construe a general provision, most of all an exception in very general terms, such as that in clause 3, to take away that which had already been granted in the dispositive provisions of the lease.
Clause 3, to which reference has been made, provided, as is recited at p45 of the report:
The demise hereby made shall not be deemed to include or confer and shall not operate to convey or demise under the Lessee any right of light or air liberties privileges easements or advantages (except such as are specifically granted by this Lease) in through over and upon any land or premises adjoining or near to the demised premises.
Nourse LJ said at p47:
There was some debate as to whether it could be said that the appurtenances were specifically granted, on the ground that the word is an entirely general one. However, I do not think that there is much in that point. The appurtenances were clearly granted expressly, and I think that that is enough, particularly when the general principle to which I now come is borne in mind.
He then stated the general principle as follows:
Mr Sparrow submits that the court will not construe a general provision in a lease, particularly an exception and most of all an exception couched in very general terms such as those in clause 3, so as to take away with the other hand that which has already been granted by the one hand in the dispositive provisions of the lease. Although Wheeldon v Burrows was a case on implied rights, I accept Mr Sparrow’s proposition in regard to the construction of express rights, it being, as Thessiger LJ said, consonant to reason and common sense and also, I would add, to the commercial realities of a case such as this.
In this case, the grant is of a right of light. As I construe it, the landlord reserves a right to interfere with such right if it interferes with development of land not comprised in the lease. If that is to be construed as meaning that the tenant has no right to light against anyone, then the landlord is indeed taking with his other hand what he had already granted by the one hand in the dispositive provisions of the lease. That result is at least mitigated by construing “any land not comprised in the lease” to mean any land of the landlord, and I so construe it.
I receive some modest reinforcement for that construction, in that, as I have already pointed out, it is only such development that could be permitted “without prejudice to clause 5(1)”. It would have no application to development of the land of others. This is more an understanding of the general purpose of the clause than a direct aid to its construction.
That is, on the facts admitted, enough to entitle the claimant to judgment, either for an injunction or damages in lieu. But Mr Morgan had a further submission, with which I must deal, because it was addressed in argument by both sides. He says that, at least as against the defendant, the claimant is, independently of the lease, entitled to enforce a right arising under section 3 of the Prescription Act 1832. That section provides:
When the access and use of light to and for any… building shall have been actually enjoyed therewith for the full period of twenty years without interruption, the right thereto shall be deemed absolute and indefeasible, any local usage or custom to the contrary notwithstanding, unless it shall appear that
There is no dispute that the building has enjoyed the access of light for 20 years. Equally, there is no dispute that the claimant, whose interest dates only from 1987, has not. In cases where the claimant has enjoyed such right for 20 years, the claim for prescription has been negatived where it has appeared that he has enjoyed it by consent. The relevant question to be asked was expressed by Eve J in Foster v Lyons & Co Ltd [1927] 1 Ch 219 at p227 thus:
The question is whether the words I have just read operate as an agreement within the section or were only meant to negative the implied right which the lessee would otherwise have had of insisting that the lessor should not derogate from his own grant by building on the adjoining land –– in other words, does the case fall within the decision of Hayes v King or that in Mitchell v Cantrill? It cannot be disputed that if the words in question had not been inserted the lessee by virtue of the lessor’s implied covenant not to derogate from his grant would have been entitled to the continued access over the lessor’s land of the light actually enjoyed at the date of the demise, and that by the uninterrupted enjoyment thereof for the statutory period he could have acquired an absolute right under the Act to the access of that light. As the lease contains a covenant by the lessee not to alter the elevation or structure of the demised premises without the written consent of the lessor the only windows in the contemplation of the parties to which reservation was directed must have been those in existence at the date of the demise. Whether the right to which the lessor lays claim by virtue of the qualifying words can really be described as a reservation, I very much doubt, but the matter cannot be disposed of by a criticism of this nature. One must find out the substance of the contract, and in my opinion the words must be construed as a grant by the lessee to the lessor of the full right to build on his adjoining land notwithstanding the resultant injury to the light of the demised premises.
It seems to me that adopting that approach, the reservation in phrase 4 of clause 6(7) must be construed as granting to the lessee the rights of light attached to the building, only subject to the reservation of the right to develop other land not comprised in the lease, which is, in effect, a grant back by the lessee to the lessor of a right to build. If, as I have held, such land means only the landlord’s land, the effect of the Act would be unaffected by the reservation, unless, perhaps, the Mercer’s Company were now to acquire Mumford Court.
I record that possibility because I should make clear that no argument has been addressed to me as to whether the limitation on the right to develop, which I have found does apply to phrase 4 of clause 6(7), restricts the scope of clause 6(7) only to the case of a landlord’s land, as at the date of a grant or also to any after acquired land.
For this reason, in case circumstances are changed, it is desirable to consider whether the consent that I construe is contained in the lease does have the effect of preventing an absolute and indefeasible right being claimed by the claimant in respect of rights enjoyed only with consent granted under the lease.
Mr Morgan’s submission is that consent other than by the servient owner is not within the exception provided by section 3 of the Prescription Act. That amounts to a submission that it was not within the landlord’s power, in granting a demise of the property, to exclude from his grant the easement of light that would arise by prescription, although, of course, he could exclude the easement presumed to arise from a lost grant.
Reading the words of section 3 alone, there is nothing to say that the consent referred to must be that of the servient owner. That, Mr Morgan, says must be implied. Any right under prescription existing in 1987 that then arose from more than 20 years’ enjoyment remained, however inchoate, because there was, by reason of section 4, no relevant period of 20 years. That section reads:
Each of the respective periods of years herein-before mentioned shall be deemed and taken to be the period next before some suit or action wherein the claim or matter to which such period may relate shall have been or shall be brought into question;…
If action is now brought by or against the lessee, wherein the right is brought into question, he cannot establish that the right has been enjoyed other than with consent during the whole period. The freeholder would be in no such difficulty.
It is, in my judgment, for this reason that it is within the power of the owner of the building that has enjoyed a right for more than 20 years to agree with the person to whom he grants an interest in such building that he should not be entitled to assert such a right. I see no reason why the position in respect of rights arising by prescription should be different from the rights held by the freeholder as grantee. In respect of such right, there can be no doubt that the grantee can refuse to grant it to a person taking an interest under him.
For this reason, I conclude that the claimant does not have a right under the Prescription Act independent of the grant of the right derived from loss of grant as an appurtenance of the demise.
Following an application by the defendant, JUDGE RICH said on 27 July 2001:
On 16 July, I gave judgment under CPR 24 in favour of the claimant, who was seeking either an injunction or damages in lieu thereof in respect of a proposal by the defendant that, it was accepted, would adversely affect the right of light enjoyed by the building of which the claimant is the lessee. That right of light had been enjoyed by the building for, perhaps, a century and a half. In 1987, the claimant was granted a lease of it.
The grant of the lease was by way of an underlease and derived through the mesne holding of companies associated with the Mercers Company, from the Mercers Company, which was the freeholder. I was told in the course of the proceedings, and recorded early in my judgment, that the proposal of the defendant was, as a joint venture with the Mercers Company, to build a new office building, partly owned and belonging to the Mercers, but also, so far as is here relevant, over Mumford Court, in which the Mercers neither has, nor ever has had, any interest. Mumford Court is the source of the light for the protection of which the claimant brings these proceedings. That agreed fact has turned out to be mistaken. It appears that the Mercers either already had an interest, or it is at least intended, probably at a date before the determination of whether or not an injunction should be granted or damages awarded in lieu thereof, that it will have acquired an interest over Mumford Court.
It is in those circumstances that I have been asked, and have agreed, to hear further submissions as to the entitlement of the claimant to its judgment if Mumford Court is indeed land over which Mercers does, contrary to what I was told, had an interest. I do not want to say anything that is unfair to those acting for the defendant, but it is extremely unfortunate that the matter has come back to me in the circumstances in which it has, and I should record that Mr Paul Morgan QC, for the claimant, has observed that matters entirely within the knowledge of the defendant have been misrecorded in the evidence placed before the court, both as to the registration of the title of the land included in Mumford Court and as to the relationship between the Mercers and the present defendant. Those are matters to which Mr Morgan drew attention in case they should become material in any issue as to the form of relief to which he should be entitled, if he is entitled to judgment, as so far given in his favour.
From my point of view, the discovery of an erroneous factual basis for my judgment is unfortunate because I do feel constrained to reopen the matter, but since I have already given leave to appeal the judgment that I had already given, I think that I should be very careful in not revisiting the issues that are raised in these proceeding to revise, in the light of argument directed to the new issue raised today, the reasoning that I had given for the judgment at which I had previously arrived.
The issue that is raised now has been encapsulated in a letter from the defendant’s solicitor to the claimant’s solicitor. It is as to whether the intended obstruction of light to the premises, caused by the building on land previously known as Mumford Court, or other, proximate land, at a time when the freehold of such land is vested either legally or beneficially in the Mercers Company, would be an infringement of any right of light enjoyed by the claimant. Such formulation of the issue
Due to my reluctance to appear to reopen any matter that I have already decided, and appear to provide new and maybe better reasons for that which I have already decided, or, alternatively, should I be persuaded to dissent from that which I have already decided, I think it is helpful to take, as my starting point, the neat summary of my reasoning provided by Mr Jonathan Gaunt QC, for the defendant, in his skeleton for today’s proceedings. He said that the right reserved to the lessors in the lease that fell for construction is “widely expressed to apply to ‘any land not comprised in this lease’”.
Mr Gaunt’s skeleton goes on:
The court has implied a limitation confining the right to develop to land belonging to the landlord because: (a) the court will not construe a general provision so as to take away with the other hand what has already been granted with the one hand in dispositive provisions of the lease; (b) a construction which meant that the tenant had no right to light against anyone would offend that rule; (c) that result would be mitigated by construing “any land, etc” as “any land of the landlord”.
That, I accept, is a reasonable summary of the reasoning that led me to the conclusion at which I arrived on 16 July. That reasoning, Mr Gaunt says in his argument, does not compel the further limitation of the right to develop to any land of the landlord owned by the landlord at the date of the grant or exclude the application of the right to develop to after-acquired land of the landlord.
The arguments that have been addressed to me today have been careful and detailed, and (I hope I will be forgiven for saying) difficult. I am conscious that, by adopting the course that I am of giving an extempore judgment immediately after they have been addressed to me, may be doing less than full justice to them and may be thought, if the matter goes to appeal, less than helpful to the Court of Appeal than I should be. I have, however, decided to adopt this course, first, because I think it is important that this matter, which concerns a development that is on a large scale and has already been, in part, commenced, should be disposed of as quickly as possible without any contributory delay an my part, and, second, because I am anxious that, in giving judgment, I should say only as much as is necessary for the purposes of my judgment, rather than trespassing on matters that may be open to the parties to address to the Court of Appeal when they are not constrained by assuming that that which I have said in my judgment on 16 July is to be taken as being right.
I accept Mr Gaunt’s submission that the reasoning that he has summarised does not compel the further limitation of the right. His exposition, however, of why it should not be so limited depends, in large measure, upon criticisms that may be justified, but that I have, for the purposes of this judgment, to assume are not justified, and the detail of the reasoning that analysed the different parts –– the four phrases, as I called them –– in clause 6(7) of the lease that fell to be construed.
I will not, for the reasons that I have just given, follow him in supporting or reanalysing those reasons, or the construction of the different phrases and their ambit, in order to see whether the new question that falls to be answered would have been answered differently if I had analysed them differently in aid of the answering of the question that I sought to answer on 16 July.
I will deal now only with an argument, which, in his submission, was his fifth argument, that is a new point, separate from the analysis of the different phrases, and that says ought to lead to the conclusion that the “right to develop” (I use words perhaps loosely) reserved to the lessor by clause 6(7) should apply, not only to his land at the time of the grant but also to after-acquired land. Mr Gaunt says the clause is designed to prevent acts that would otherwise be a derogation from grant from being in breach of the obligation not to derogate from grant.
It is established that that obligation does apply to after-acquired land of the landlord, and he cites Johnston & Sons Ltd v Holland [1988] 1 EGLR 264. One would thus, Mr Gaunt goes on, expect a provision designed to displace or negative that obligation to apply also to after-acquired land, unless it made clear that it was not intended to.
In my judgment, the implication from the decision in Johnston is precisely the opposite. That was an unusual case, where there had been a grant of a right to advertise on the flank wall of a building. The grantor was not, at the time of the grant, the owner of adjoining land, which he subsequently acquired. On that adjoining land, he deliberately erected a hoarding for the purpose of obscuring any advertisement on the flank wall.
In those circumstances, the Court of Appeal allowed the appeal, saying that that was a derogation from the grant of the flank wall. Nicholls LJ said, however, at p268, after asking the question as to whether a grantor can be at liberty to frustrate the whole purpose of the letting by erecting his own advertising hoarding hard up against the flank wall of the building:
In my view, common honesty permits of only one answer to that question. Of course in considering what is necessarily implicit in a transaction in a case where the grantor owns no other land, very great weight indeed must be given to that factor. It will be a very exceptional case for it to be necessarily implicit in a lease that the activities of a lessor who owns no adjoining land, and has no plans to buy any adjoining land, are to be restricted on the adjoining land should he ever become owner or tenant of that land. Whether it is so implicit or not will depend on all the circumstances, including the purpose of the grant and the nature of the activity sought to be restrained.
Thus, the Court of Appeal made absolutely clear that it was dealing with an exceptional case, where the peculiar circumstances justified an exceptional finding as an exception to a general rule that was accepted at p226 of the report in the following terms: “Counsel for the grantor,” it is recorded, “accepted that Mr Wade” (that is, the grantor) “was under an implied obligation not to derogate from that grant made (or notionally made) by him. Mr Tager” (that is, his counsel) “submitted, and this is clearly right,” says Nicholls LJ, “that that implied obligation falls to be construed by reference to the circumstances existing at the time of the grant.”
That, in my judgment, is the general rule, and the particular provision of the lease that I have here to construe would, if it were extended to apply to land to be acquired after the grant, have to be construed as being directed to possible exceptional cases. The case of Johnston was, in effect, a case of the frustration of the very grant that had been made.
In the course of my judgment of 16 July, I accepted submissions of Mr Gaunt based upon the decision in Overcom Properties v Stockleigh Hall Residents Management Ltd (1989) 58 P&CR 1 that limited the right of interference with the rights of light to be derived from clause 6.7 as not extending to that exceptional case dealt with in Johnston where the interference would, in effect, destroy the grant.
Thus, in my judgment, the decision in Johnston, if anything, supports the construction of clause 6(7) by reference to the circumstances existing at the time of the grant, and, therefore, not extending to after-acquired land of the lessor.
Mr Morgan gives additional reasons why I should construe the clause in that way: one entirely radical approach that he has invited the court to adopt is to suggest that, in any case, the Mercers Company (the original freeholder who granted the mesne lease to an associated pair of charitable companies) does not have the benefit of the reservation, if reservation it properly be called, to develop any land, whether belonging to it at the time of the grant or after-acquired.
For the purposes of dealing with an argument that Mr Morgan addressed to me at the first hearing in regard to the Prescription Act, I analysed the clause in terms of the regrant back by the lessees, whether they were the underlessees, or the re-lessees, to their respective lessors of a right to build. The lease from which the claimant’s underlease was derived, as I noted, although it was agreed not to affect the situation with which I then had to deal, had been surrendered in 1994.
Mr Morgan now submits that such a surrender of the lease, including, therefore, the grant of the right of light to the lessee, involved also the bringing to an end of the grant back of the right to vary it granted to the lessor. If, for that reason, that grant back was thus determined, Mr Morgan invites me to say that Mercers cannot have any
There may be, I accept, some inconsistency in the analysis of the lessor’s rights in terms of regrant and treating them simultaneously in terms of reservations out of the grant of the right of light. If such inconsistency is irreconcilable, then I am afraid that will be foundation, no doubt, for conflicting argument elsewhere. But, in my judgment, having arrived at the conclusions that I did on 16 July, I ought not to depart from, first, the analysis that I undertook, which I thought at the time was common ground at the commencement of my judgment, to the effect that I did not need to concern myself with the distinction between the terms of the lease and the terms of the underlease because the underlessors could not grant more than they had been granted by lease, and did not grant less. Nor should I depart from the analysis undertaken for the purposes of dealing with the argument under the Prescription Act, which has, I had already accepted, involved an analysis of the provisions of the clause that I had to construe in terms of grant back to the underlessors and then, in turn, to the lessor.
With those two propositions, therefore, without an attempt here to reconcile them, it seems to me that I must also derive from the judgment that I have already given that when the underlessors surrendered their lease to the Mercers Company, the Mercers became directly (if only momentarily) the direct reversioner upon the underlease. It cannot, by that route, have been the intention to enlarge the grant to the underlessee, which had been limited by the extent of the underlessors’ own grant. When, therefore, a new grant was made in 1994, which granted even less by way of right of light because it retained a greater right to develop, it cannot possibly have been the intention, and, I would say, cannot possibly have been the effect, to grant to the underlessee a right of light unconstrained by a grant back, ultimately to the Mercers, to develop the land whose development was, in my judgment, protected as at the date of the grant of the lease in 1987.
Mr Morgan also repeats arguments derived from the Prescription Act. I, in giving judgment –– a judgment that actually raised the issue that I am now seeking to resolve –– concluded from the analysis of the effect of the clause, in the following words of my judgment at p100 supra:
It seems to me that adopting [the approach of Eve J] the reservation in phrase 4 of clause 6(7) must be construed as granting to the lessee the rights of light attached to the building, only subject to the reservation of the right to develop other land not comprised in the lease, which is, in effect, a grant back by the lessee to the lessor of the right to build.
In the course of argument before me, I have accepted that a clearer way of expressing what I was attempting to express there, and what I think and hope is no more than proper clarification of what I was actually attempting to say, would have been to say:
It seems to me that, adopting that approach, the grant, subject to the reservation in phrase four of clause 6(7) must be construed as granting to the lessee the rights of light attached to the building, only subject to the reservation of the right to develop other land not comprised in the lease, which is, in effect, a grant back by the lessee to the lessor of the right to build.
It was on that conclusion that I then observed:
If, as I have held, such land means only the landlord’s land, the effect of the Act would be unaffected by the reservation, unless, perhaps, the Mercers Co were now to acquire Mumford Court.
Those final words, “unless, perhaps, the Mercers Co were now to acquire Mumford Court”, were, I hope, a proper reservation to make.clear the limits of the argument that had then been addressed to me, and what I thought that I was then considering. But the decision that I was making was as to whether, independently of the proper construction of the clause, the claimant had acquired by prescription a right of light that would be unaffected by what I had there described as the reservation or grant back of the right to build.
I concluded, and I think, for very different reasons, counsel for each of the parties submits that I rightly concluded, that the form of the clause that I was construing fell within the class of clause that Eve J identified in Foster v Lyons and not within the class of clause dealt with in Mitchell v Cantrill (1888) LR 37 ChD 56. Had I concluded otherwise, I would, I think, have been forced to the conclusion that the enjoyment of the right of light by the claimant under its lease was not enjoyment with consent such as is referred to in section 3 of the Prescription Act. Had I so concluded, I would have come to the conclusion that the claimant could add its 14 or so years’ enjoyment to the century and a half that preceded it; that there had not been an enjoyment with consent; and that, therefore, there was a prescriptive right that overrode any reserved right to build under the grant.
My reasoning in this part of my judgment of 16 July was directed to explaining why, in my judgment, such conclusion was not right. If it is displaced, I see no basis for coming to the conclusion that Mr Gaunt would wish me to come to, namely that there was a clause to be construed as a consent within the terms of Eve J’s judgment, but which extended to the circumstances of the development of land not within the ownership of the lessor at the date of the grant. I think it probably not helpful to attempt, myself, to reanalyse these conclusions on what was, on 16 July, a subsidiary argument, only because it has been apparent, in the argument before me today, that Mr Morgan, for the claimant, would seek to address questions as to the proper nature of a consent for the purposes of section 3 on the basis of arguments and cases not cited to me when I considered the matter on 16 July.
Mr Gaunt, likewise, wishes to approach these same issues afresh in a way that, so far as my judgment is concerned, is necessarily inhibited by the judgment and reasoning that I have already embarked upon. I will content myself, therefore, with saying that, for the reasons that I have now attempted to give, I would construe the limitation to the protection of the right to develop to the landlord’s land as being referable to that land of the Mercers Company as at the date of the grant of the lease and the underlease in 1987.
Claim allowed.
