Duchess of Bedford House Case: Have We Gone Parking Mad?!

The case of Duchess of Bedford House RTM Co Ltd v Campden Hill Gate Ltd [2023] EWCA Civ 1470, stands as a compelling testament to the role of property rights and legal interpretation within real estate law. The case revolved around contested parking privileges of leaseholders residing within a distinguished 1930’s mansion block. However, beneath the surface of the dispute lies a complex tapestry of historical agreements and legal principles, which captured the attention of the Court of Appeal. The case served as a reminder of the necessity for strong legal analysis when resolving disputes within the real estate sector.

Background of the case

In 1969, the freeholder (the Phillimore Estate) granted a headlease of two blocks (Campden Hill Gate and Sheldrake Place), roads and gardens to Campden Hill Gate’s predecessor in title, Keston Securities Ltd, (“the 1969 Headlease”). The Headlease reserved, in favour of the freeholder, “easements, quasi-easements and rights belonging to or enjoyed by any adjoining or neighbouring premises,” and the leaseholders argued that such rights included car parking rights for residents of the property, as some but not all of the residents had a long established practice of parking on the private road at Sheldrake Place East, which made up part of Sheldrake Square. In 1974, the freeholder granted a headlease of the block to London Midland Associated Properties Ltd (“the 1974 Headlease”), whereby the residents are the underlessees of the 1974 Headlease.

The 1974 Headlease granted a right of way over the roads stating “…shall not operate to demise any ways watercourses sewers drains lights liberties privileges easements rights or advantages” over the estate “except those now subsisting or which might restrict or prejudicially affect… future rebuilding alteration or development or redevelopment”.

What is important to note, is that section 62 of the LPA 1925 would pass the parking easement, reserved for the landlord in the 1969 Lease, to the long leaseholders. However, the clear exclusion from the demise in the 1974 Lease expressed an intention to exclude the creation of any new rights under section 62, while allowing any subsisting rights, such as the parking rights, to pass on, but only if they didn’t restrict or prejudice any future rebuilding or alteration.

Between 1974 and 1979, the flats in the block were let on long underleases, and if the right to park was not excluded by the carve-out clause in the 1974 Headlease, it would have passed down to Campden Hill Gate’s predecessor (as head-tenant under the 1969 Lease) and the leaseholders on the grant of the flat underleases.

Court of Appeals Decision

The Court of Appeal found in favour of the leaseholders that:

• The reservation in the 1969 Headlease was sufficient to include the de facto parking right due to the block residents’ long-established practice of parking, which had been converted into a legal easement on the reservation in the 1969 Headlease (applying Newman v Jones);
• The parking right was not caught by the carve-out clause in the 1974 Headlease as the ‘alteration or development against which the exclusion is tested…must be grounded in reality’. The parking right was subsisting and did not restrict or prejudice any future rebuilding or alteration. This conclusion was reached as it was too broad to interpret what might interfere with development, and in cases of other easements, it could always be said that the relevant easement “might” interfere with future development;
• There was a right of way granted in 1938 over the whole of the estate, which meant that the estate couldn’t be materially developed and the right to park over the same roads should continue as the right of way would continue to exist.

It is important to note the specific set of circumstances here, but it is useful to be aware that the easement arose because of settled practice and the subsequent reservation in the 1974 Headlease.

The court was mindful of the fact that the 1974 Headlease had been drafted between sophisticated, commercial parties who were advised by experienced professionals and the carve-out clause was a compromise between their competing interests, and in this case, the rights available to the head lessee were capable of being passed onto the current leaseholder.

What can we learn from this?

The Duchess of Bedford House case offers crucial insights for legal practitioners and property develops alike, underscoring the need for careful consideration of contractual language, particularly regarding rights and easements. Any development opportunities must bear in mind that section 62 of the LPA 1925 can be rebutted where the wording in the documents express a contrary intention to include any rights or easements that exist at the time of the grant. Based on the Court of Appeal’s decision that the parking right was not one that would impede future development, solicitors should be aware that it may be more difficult to exclude or prevent the passing or creation of rights on the basis that it could impede future development as a realistic approach has to be adopted and any carve out clauses have to be grounded in reality.

As the legal profession continues to grapple with the implications of this landmark ruling, it becomes increasingly apparent that the lessons learned from this case extend beyond the immediate context – by informing best practices, shaping future legal interpretations and ultimately contributing to the ongoing evolution of real estate law.