RHJ Ltd. v FT Patten (Holdings) Ltd & Anor

If a lease reserves to the landlord a right to build on adjoining land, does that prevent the tenant from acquiring an absolute and indefeasible right to light by prescription; or must the reservation expressly mention light? That is the preliminary issue that I must decide. The opposing arguments have been ably presented by Mr Stephen Bickford-Smith for the claimant and Mr Andrew Francis for the defendants. With becoming modesty, neither of them referred to their excellent jointly written book on the subject.

Regian House is an office block in Liverpool city centre. It lies between James Street and Redcross Street, and has a short frontage to Strand Street. On the corner of Redcross Street and Strand Street there is a car park known as the Strand Street Car Park. Across the road, on the other side of Redcross Street at its junction with Strand Street there is a building called Strand House and behind it there is another car park.

On 26 February 1980 Liverpool City Council granted a lease of Regian House to Possfund Trustees Ltd for a term of 99 years from 24 November 1975. At the date of grant of the lease Liverpool City Council owned both Regian House and the other parcels of land I have mentioned. Standard Life Assurance Company owned buildings to the north of Regian House called Victoria House and Graeme House. The freehold of Regian House is now owned by RJH Ltd; and the Strand Street Car Park, Strand House and its car park are owned by FH Patten (Holdings) Ltd and FT Patten Properties (Liverpool) Ltd.

The lease of Regian House contained the following relevant clauses:

It is common ground that until Liverpool City Council disposed of its landholdings in 1989 the only way in which Regian House could have acquired rights to light would have been by prescription under the Prescription Act 1832. It has been assumed for the purposes of the preliminary issue that Regian House has enjoyed twenty years’ light between the date of its construction and the date when a Light Obstruction Notice was registered under the Rights of Light Act 1959.

The essential dispute is whether exception or reservation (i) is an agreement or consent in writing for the purposes of section 3 of the Prescription Act 1832.

Section 3 of the Prescription Act 1832 provides:

“When the access and use of light to and for any dwelling house, workshop, or other building shall have been actually enjoyed therewith for the full period of 20 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 the same was enjoyed by some consent or agreement expressly made or given for that purpose by deed or writing.”

It is rightly common ground that under section 3 the enjoyment of light does not need to be “as of right” as that expression is generally used in the law of easements. Nor is a prescriptive right under section 3 confined to a freehold right. Thus it is possible for a tenant to acquire a prescriptive right to light against his landlord.

What section 3 bites on is the actual enjoyment of light for the full period of 20 years. Once that has been established as a fact the effect of the section is to deem the right to light to be “absolute and indefeasible”. The exception to the deeming provision is where it appears that the light “was enjoyed by some consent or agreement expressly made or given for that purpose by deed or writing.” While the reference to “consent” envisages a permissive enjoyment of light, I do not think that the word “agreement” necessarily does. The function of the agreement is to prevent the enjoyment of light from being deemed to be “absolute and indefeasible”. If, therefore, an agreement provides for the enjoyment of light not to be absolute and indefeasible it will, in my judgment, be sufficient to prevent the deeming provision from taking effect.

Before turning to consider the case-law, there is one other obvious point that I should make. A right to light (like other easements) may be acquired either by grant or by prescription. In the case of a grant the grant may be express or implied. An implied grant may arise by virtue of section 62 of the Law of Property Act 1925 or by the operation of the rule in Wheeldon v Burrows (1879) 12 Ch D 31. Whether the grant is express or implied, in the case of a lease it is made at the date of the lease. By contrast under section 3 a right to light may arise by the enjoyment of light that takes place subsequent to the grant of the lease. It is not dependent on the terms of the lease; it is dependent on the established facts and the absence of a consent or agreement that satisfies the concluding part of section 3.

Both Mr Bickford-Smith and Mr Francis accepted as correct the summary of principle contained in the judgment of Lightman J in Marlborough (West End) Ltd v Wilks Head & Eve (unreported 20 December 1996):

“Whether or not a document constitutes such a consent or agreement is a question of construction. In this context, care must be taken to distinguish between provisions designed to protect the servient owner by negativing the implication of a grant of an easement or the grant of analogous rights under the doctrine of non-derogation from grant or to establish by agreement the existing legal rights of the parties; and provisions designed to authorise the servient owner at a future date to carry out works or build as he pleases unrestricted by any easement of light in favour of the dominant land and notwithstanding any resultant injury to the light enjoyed. Provisions of the former character do not constitute either consents or agreements by the servient owner licensing or consenting to the future enjoyment of the access of light and accordingly do not prevent acquisition of light by prescription (see Mitchell v Cantrill (1887) 37 Ch D 36); but provisions of the latter character may be construed as consents or agreements permitting the enjoyment of light during the interim period and accordingly (as provided in Section 3) preclude any easement arising by prescription under the Act (see Willoughby v Eckstein [1937] Ch 167).”

Mr Francis fastens on that part of Lightman J’s summary which speaks of “provisions designed to authorise the servient owner at a future date to carry out works or build as he pleases”; while Mr Bickford-Smith emphasises the immediately following words “unrestricted by any easement of light in favour of the dominant land and notwithstanding any resultant injury to the light enjoyed”. These words, and the preceding case-law on which they are based, require, he says, that the writing relied on must refer expressly to light. The words of the clause that Lightman J was considering plainly referred to light, so that his summary of principle did not need to address the precise point in this case. In examining the case-law, it will be necessary to examine both the wording of the clauses considered by the courts and also the statements of principle.

The first of the cases is Mitchell v Cantrill (1887) 37 Ch D 36. In 1864 Sir Humphrey de Trafford granted a 999 year lease of a dwelling house “with all rights and appurtenances, legal, used, or reputed, to the said plot of land, except rights, if any, restricting the free use of any adjoining land or the conversion or appropriation at any time thereafter of such land for building or other purposes, obstructive or otherwise.” A dispute arose between the lessee and an adjoining lessee deriving title from the same landlord. The question was whether the exception of easements was an agreement or consent for the purposes of section 3. The Court of Appeal held that it was not. Cotton L.J. said:

“It is not an agreement given for the purpose of the enjoyment of the light, but it is simply an exception out of the grant made of appurtenances and rights, so as to prevent the lessee from urging as against the landlord or anybody claiming through him, before a right had been obtained under the statute, that the landlord could not derogate from his own grant either by his building or granting to anybody else a right to build so as to interfere with the Plaintiff's lights. That is the reasonable, and I think, the only meaning of this clause. It was in effect saying, "If I grant this house to you without protecting myself, you will say, if I build up any adjoining house, that is derogating from my own grant; and this clause is to prevent any such contention being made." But if independently of the grant the lessee has enjoyed the use of these windows for twenty years he will have the same right as against the adjoining lessee as against a stranger. There was certainly no case referred to in the argument to shew that such claim as is contended for by the Plaintiff exists. But he has the right simply by the effect and operation, not of the grant, but of the statute, and in my opinion he is entitled to enforce that.”

In other words the exception dealt only with rights existing at the date of grant of the lease; and not with rights subsequently acquired. Cotton L.J. contrasted that with:

“If you had an express proviso in the contract between the parties that, notwithstanding the grant to the Plaintiff, the landlord should be at liberty to build so as to interfere with his right, that would be another point, but that is not the express form of it, and in my opinion the fair and clear meaning of this clause, construing it without reference to the consequences to one party or the other, is not anything of that sort.”

Lindley L.J. said:

“The last words in the section mean that when you find an agreement under which the light is enjoyed you must look at that agreement and see what, if any, right to light is expressly given by it.”

Although Cotton L.J. referred to a proviso allowing the landlord to build “so as to interfere with his right”, he did not say that such a proviso must expressly refer to light or to the right to light; and Lindley L.J. treated the question as one of construction of the agreement relied on. It is, however, right to say that neither of the Lords Justices was interpreting an actual proviso of the kind they contemplated.

In Haynes v King [1893] 3 Ch. 439 the Ecclesiastical Commissioners had granted leases of houses in Leonard Street, City Road on terms that contained a clause in the following terms:

“that the lessors shall have power at any time, without obtaining any consent from or making any compensation to the lessee, his executors or assigns, to deal as they may think fit with any of the premises adjoining or near to the hereditaments hereby demised, and to erect or suffer to be erected on such adjoining or neighbouring premises any buildings whatsoever, whether such buildings shall or shall not affect or diminish the light or air which may now, or at any time during the term hereby granted, be enjoyed by the lessee…”

The clause thus referred expressly to light. Many years later the Ecclesiastical Commissioners entered into a redevelopment agreement relating to houses on the other side of the street. The lessee applied for an injunction to stop the redevelopment. The lessee argued that this clause only dealt with the possibility of derogation from grant, and did not preclude the acquisition of a prescriptive right. North J rejected the argument, holding that this was just the kind of clause that Cotton L.J. had had in mind. It plainly dealt with future events and was not restricted to negativing the grant of rights at the date of the lease. Since the clause expressly referred to light, North J did not have to consider whether that was a necessary feature of an agreement or consent for the purpose of section 3.

In Foster v Lyons and Company Ltd [1927] 1 Ch 219 a lease of architects’ offices off New Street Birmingham reserved to the landlord:

“full right to build to any height upon the land adjoining the land and premises hereby demised, notwithstanding such buildings may obstruct any light on the land hereby demised…”

The landlord entered into an agreement with Lyons for the redevelopment of neighbouring property. The lessee applied for an injunction to stop the redevelopment. Eve J posed the question as follows:

“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.”

He answered it as follows:

“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 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.”

Again the question was whether the clause related only to rights existing at the date of the lease or whether it was intended to govern the future. Once again the clause referred to light expressly, so that North J did not have to consider whether that express reference was a necessary feature of an agreement for the purposes of section 3.

The first of the cases to consider a clause that did not expressly refer to light was Willoughby v Eckstein [1937] 1 Ch 167. The lease of a house on the Grosvenor Estate contained a clause in the following terms:

“but without including any rights of light or other easements over other ground or premises and subject nevertheless to all rights and easements belonging to any adjacent property and subject to the adjacent buildings or any of them being at any time or times rebuilt or altered according to plans both as to height elevation extent and otherwise as shall or may be approved of by the ground landlord for the time being…”

There was, therefore an exception of rights of light and a clause which referred to the future rebuilding of adjacent buildings (but without itself expressly referring to light). Luxmoore J said that in order to come within section 3 an agreement must fulfil three conditions:

“(a)

the agreement must be by deed or writing, (b) it must be express, and (c) it must also have been entered into for the purpose referred to in the section.”

He then referred to the three cases I have mentioned and continued:

“I think the principle to be deduced from these decisions is that in order to prevent the acquisition of a statutory right to light under the Prescription Act there must be an express written agreement under which the actual enjoyment of light by a lessee is permissive throughout the whole of the term created by the lease.”

I am not entirely convinced that it is necessary for the agreement to provide for the actual enjoyment of light to be “permissive”. What seems to me to be necessary is an agreement which makes it clear that the right to light is not absolute and indefeasible.

Be that as it may, Luxmoore J concluded:

“The exception from the demise of any right to light over the last mentioned property seems to me to establish that there was an agreement between the lessor and lessee that the lessee was to have no absolute right to light under the lease. The exception is followed by these words: "Subject to the adjacent buildings or any of them being at any time or times rebuilt or altered according to plans as to height elevation extent and otherwise .... approved of by the ground landlord." Taken in conjunction with the exception they appear to me to constitute a grant by the lessee to the lessor of the right to build during the full term of the demise on the adjacent land including No. 15 Balfour Mews, notwithstanding the effect of such building on the light to No. 13 Balfour Mews; and to constitute, together with the exception from the demise of any right to light, an agreement by the lessee of No. 13 Balfour Mews that any enjoyment of light in respect of the premises demised to her was to be permissive only throughout the whole of the term.”

As I read this, what the judge was saying was that the exception, dealing with the state of affairs at the beginning of the lease, was enough to prevent the lessee from acquiring a right to light under the lease itself. The words following the exception, dealing with the future, were enough to prevent the lessee from acquiring a right to light by prescription under the Act. The grant (or regrant) to the landlord of the right to build was enough. The words held to have had that effect did not refer expressly to light.

The second case where the cause did not expressly refer to light is Blake and Lyons Ltd v Lewis Berger and Sons Ltd [1951] 1 TLR 605. That case also concerned property on the Grosvenor Estate and the lease appears to have contained a clause in the same terms as that considered in Willoughby v Eckstein, although the exception was not quoted in the judgment of Wynn Parry J. The reasoning is not easy to follow and I do not derive much help from it. But the judge did conclude that the clause in that case amounted to a consent for the purposes of section 3 and (unlike Luxmoore J) he reached that conclusion without referring to the exception.

The third case to which I should refer is Paragon Finance plc v City of London Real Property Co [2002] 1 EGLR 97. The lease in that case provided that nothing therein contained or implied:

“shall operate to prevent or restrict in any way the development of any land not comprised in this Lease”

HH Judge Rich QC, sitting as a judge of the Chancery Division, held that that clause:

“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.”

He held that a clause of that kind was a sufficient agreement or consent for the purposes of section 3.

I do not find in the case-law any statement to the effect that an agreement or consent for the purpose of section 3 must expressly refer to light. Indeed it would be remarkable if the use of the very word “light” were a prerequisite to a valid agreement or consent. If, for example, in a written agreement between neighbours one party acknowledged that “my windows have been opened with the consent of my neighbour who can require me to block them up at any time”, it would be astonishing if that were ineffective simply because the word “light” did not feature in the writing. In my judgment Mr Bickford-Smith’s primary argument is not supported by authority (except by inference) and is inconsistent with Willoughby v Eckstein. It is of some note that in Lightman J’s summary (which both Mr Bickford-Smith and Mr Francis agree is correct) Willoughby v Eckstein is cited as the only example of an agreement that was effective for the purposes of section 3. Mr Bickford-Smith also showed me a number of published precedents, all of which referred in terms to light. No doubt such a reference is good practice, but I do not consider that it is essential.

The real distinction that the cases draw is, as it seems to me, between clauses that deal with the position as it exists at the date of the lease, and clauses that deal with what might happen in the future. Clauses of the first kind are effective only to prevent the creation of easements by express or implied grant; and do not prevent the subsequent acquisition of a right of light by prescription. Clauses of the second kind may prevent the acquisition of a right of light by prescription if what they authorise would interfere with light. If, on a fair reading of the clause they do, then it is not necessary, in my judgment, for the clause to use the word “light”. Nor, in my judgment, is it necessary for the clause to provide that the enjoyment of light is “permissive”. What is needed is that the clause makes it clear that the enjoyment of light is not absolute and indefeasible. The court must “find out the substance of the contract”: in other words it is a question of interpretation of the clause in question. Once the clause has been interpreted, that interpretation will have been “expressly” agreed. A clause in a lease which authorises the landlord to build as he pleases is likely to satisfy the test.

In the present case clause 2 of the lease deals with the position as at the date of grant of the lease. It excludes any implied grant of easements. No express right to light is granted by the lease. So proviso (i), on which Mr Francis relies, must have been intended to deal with the future. Mr Bickford-Smith argues that it can be given content, as dealing only with potential claims for derogation from grant, or breach of covenant for quiet enjoyment. He says that the lessee would be precluded from relying on such causes of action as well as on causes of action in nuisance arising out of the creation of noise dust or vibration during building works. Since the clause can be given content in that way, there is no need to interpret it as precluding the acquisition of an indefeasible right to light. He points also to the express reservation of rights of light over other parcels belonging to the landlord and points out that this was not done in proviso (i).

Attractively as the submission was presented, I do not accept it. It is, in my judgment, simply a question of interpretation of the clause in question. In this case the landlord has reserved a “full and free” right to build on adjoining land. A right to build that could be thwarted by the assertion of a right to light would be neither full nor free. The right is also a right for the landlord to build as he “may think fit”; that is without fetters on his right. In my judgment the purpose of proviso (i) was to enable the landlord to build as he pleased on adjoining land; and its words, fairly read, achieve that effect. They make it clear that the tenant was not to have an absolute and indefeasible right to light and thus, in my judgment, operate as an agreement or consent for the purposes of section 3 of the Prescription Act 1832. I conclude therefore that clause 2 and paragraph (i) of the First Schedule to the lease prevented the acquisition of rights of light over Patten’s land.