The rule against perpetuities was developed in the 17th century to prevent property from being tied up for unacceptably long periods. It restricts the time within which future interests can be created, so that interests that vest too remotely are void.
The rule affects the commencement of interests, not their duration. Consequently, it has never affected rights or interests that take effect immediately. However, interests that commence at a future date – such as rights of passage over future roadways or those to connect to services that have not yet been constructed – may be or become invalid as a result of the application of the rule.
The common law rule applied – and continues to apply – to interests granted before 16 July 1964, when the Perpetuities and Accumulations Act 1964 came into force. This was updated by the Perpetuities and Accumulations Act 2009. The 2009 Act extricated most land transactions from the effects of the rule with effect from 6 April 2010, although some restrictions affecting leasehold interests continue to apply.
Magrath v Parkside Hotels Ltd [2011] EWHC 143 (Ch); [2011] PLSCS 40, which concerned rights of fire escape granted in 1947 while the common law rules were in force, reminds us that the previous rules are still alive and kicking..
At common law, a future interest in property was void as against third parties if there was any possibility that the interest could vest outside the perpetuity period (which was generally calculated by reference to a life or lives in being plus 21 years). It was not then possible to wait for the perpetuity period to expire to establish whether the interest had vested within that period (although the concept of “waiting and seeing” was subsequently introduced by the 1964 Act).
The deed that granted the rights of escape in Magrath included rights over existing and future staircases and did not restrict the rights granted to staircases that were brought into existence within the perpetuity period. In due course, the staircase on the servient land was replaced by another in a different position, leaving the owner of the dominant land to claim rights over a staircase that had not existed when the rights were granted.
The High Court ruled that the original parties to the deed could have avoided the rule against perpetuities by including appropriate wording limiting the rights granted to those that vested within the perpetuity period. They had not done so. The properties had changed hands and the rights granted were not binding on the current owners of the servient land.
The decision underlines the care required when considering whether a property has adequate and permanent rights over a fire escape. The documents may appear satisfactory. However, closer scrutiny may reveal that rights are defeasible, even though they appear to be permanent because they were granted by deed.
Allyson Colby is a property law consultant
