Out-Law News | 15 Nov 2018 | 10:38 am | 6 min. read
The Supreme Court has dismissed an appeal brought by the owners of the Broome Park country estate against a decision that owners of timeshare properties on neighbouring grounds had recreational rights to use facilities including a swimming pool, golf course, tennis courts and gardens. The owners had argued that these rights were not 'easements', but merely personal rights granted to the original owners of the timeshare properties when the land was first sold.
Property disputes expert Siobhan Cross of Pinsent Masons, the law firm behind Out-Law.com, said that although the decision confirmed that the grant of purely recreational and sporting rights over land can constitute an easement "in principle", whether the grant of such rights would actually be an easement "will be a question of fact in every case and turn on whether the four well-settled conditions for establishing an easement are satisfied".
An easement is a right benefitting a 'dominant' piece of land over a 'servient' piece of land owned by somebody else. To qualify as an easement, the right must meet four conditions: there must be identifiable dominant and servient pieces of land; the right must 'accommodate' or benefit the dominant land; the dominant and servient land must be owned by different people, and the right must be sufficiently clear and certain as to be capable of forming the subject matter of a grant.
"The most problematic of these conditions in cases involving pure recreational and sporting rights is whether the 'accommodation' condition is satisfied," said Cross. "The Supreme Court has now helpfully confirmed that, where the actual or intended use of the dominant tenement is itself recreational – as will generally be the case for holiday timeshare developments – this condition will usually be satisfied."
"The decision is particularly helpful in the context of the recent trend for recreational or leisure facilities to be incorporated within a residential or mixed use development and the government's desire to ban the sale of leasehold homes as, up until now, the leasehold structure had been the best way of ensuring that the grant of recreational and sporting rights was enforceable by successors in title," she said.
The Broome Park estate initially included the large Mansion House, the smaller Elham House and surrounding grounds. The Mansion House and a significant proportion of the surrounding grounds - referred to as 'the Park' in the judgment - were redeveloped into a timeshare and leisure complex. As a result of the early success of this redevelopment, Elham House and adjoining land were also redeveloped as timeshare properties known as Regency Villas. In 1981 the developer, through a series of transactions, transferred the freehold of Regency Villas to a trust operated by Barclays Bank, to be held for the benefit of the members of the Regency Villas Owners Club (RVOC). This transfer included a 'facilities grant' of rights including free use of the sporting and recreational facilities within the Park. The freehold was later transferred to a new owner, Regency Villas Title Ltd (RVTL).
The original transfer in 1981 also contained a covenant by the developer to maintain the sporting and recreational facilities within the wider park, although as a 'positive' covenant unsupported by a leasehold structure it did not bind the developer's successors in title. Over time, as a result of a lack of investment, many of the facilities were closed although a new indoor pool was built in the Mansion House.
From about 1983 onwards until the end of 2011, RVOC made periodic voluntary payments on behalf of the Regency Villas timeshare owners to the owners of the Park towards the cost of maintaining the facilities. From 2012 onwards, individual timeshare owners were charged fees from time to time for the use of specific facilities, which they paid notwithstanding their case that they were entitled to the use of those facilities free of charge.
In 2015, the Mansion House was temporarily closed for refurbishment, before reopening as a hotel. RVTL, together with some members of the RVOC, issued proceedings claiming that they were entitled to free use of all the sporting and recreational facilities at the site by virtue of an easement. They also sought return of any sums paid by them or on their behalf by the RVOC since 2008 for the use of these facilities. The owners of the hotel denied that any such easement existed in relation to the facilities.
The Supreme Court, by a majority of four judges to one, has now confirmed that the facilities grant was an easement, upholding an earlier decision by the High Court. It partially overturned the Court of Appeal's judgment in the case, which had found that the timeshare owners had no rights in relation to the facilities inside the Mansion House. The Supreme Court's judgment included discussion of whether the leading case on easements, the Court of Appeal's 1956 judgment in Re Ellenborough Park, covers the grant of recreational or sporting rights. The Supreme Court concluded that it did, provided that the four conditions set out in that judgment were met.
Lord Briggs, giving the judgment of the court, particularly considered the second 'accommodation' condition; and the fourth condition, whether the right is capable of forming the subject matter of a grant; in the context of recreational or sporting rights. He concluded that, applying the Ellenborough Park tests, it was "not fatal" to the recognition of a right as an easement that it was a purely recreational right, to be enjoyed for its own sake, provided that "the particular recreational or sporting rights granted accommodate the dominant tenement".
"[T]he reason why the accommodation requirement was satisfied [in Re Ellensborough Park] was not because the rights were recreational in nature, but because the package of rights afforded the use of communal gardens to each of the townhouses to which the rights were annexed," the judge said. "They provided those houses with gardens, albeit on a communal basis, and gardens were a typical feature serving and benefiting townhouses as dominant tenements."
"In the present case the dominant tenement was to be used for the development, not of homes, still less townhouses, but of timeshare apartments ... [T]imeshare units of this kind are typically occupied for holidays, by persons seeking recreation, including sporting activities, and it is to my mind plain beyond a doubt (as it was to the judge) that the grant of rights to use an immediately adjacent leisure development with all its recreational and sporting facilities is of service, utility and benefit to the timeshare apartments as such, just as (although for different reasons) the grant of rights over a communal garden is of service, utility and benefit to a townhouse," he said.
In regards to the fourth condition, the judge said that there was "no doubt … that the facilities grant was in sufficiently clear and precise terms, and it is not said to have been merely precarious".
In reaching its decision, the Supreme Court was swayed by the fact that it was "abundantly plain" from the facts of this case that the parties to the original facilities agreement had "intended to confer upon the facilities grant the status of a property right in the nature of an easement, rather than a purely personal right".
"[The right] was expressed to be conferred not merely upon the transferee, but upon its successors in title, lessees and occupiers of what was to become a timeshare development in multiple occupation," Lord Briggs said. "That being the manifest common intention, the court should apply the validation principle ... to give effect to it, if it properly can."
The Supreme Court also restored the High Court judge's decision requiring the owners of the Park to refund any payments made by the timeshare owners, or on their behalf by the RVOC, for use of the facilities since 2012. The High Court found that they were not entitled to a refund of the payments made between 2008 and 2011, as these payments had been made by agreement rather than under protest.
Lord Briggs acknowledged that the facilities grant in dispute "may be treated as breaking new ground" in comparison to the previous case law, due to the nature and extent of the facilities provided on the Park. However, he noted that the common law "should, as far as possible, accommodate itself to new types of property ownership and new ways of enjoying the use of land", such as the timeshare development in this case, particularly given the "clear statements" by the court in the Re Ellensborough Park case.
Lord Carnwath, in a dissenting judgment, supported many of the court's conclusions. However, in his view, enjoyment of the timeshare owners of the rights over the golf course and swimming pool in particular could not be achieved without the active participation of the owner of those facilities, particularly around maintenance and management. For this reason, he found the judgment of the court to be "commercially incoherent".