Posts Tagged ‘capable of forming the subject matter of a grant’

Regency Villas: the validity of a recreational easement

February 22, 2019

The issue

In Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd ([2018] UKSC 57) the UK Supreme Court had to consider the validity of a recreational easement. The question was whether the right of timeshare owners to enjoy ‘the free use of sporting and recreational facilities provided in a country club environment’ was capable of being an easement (Lord Briggs at ([1]).

The transfer of a timeshare apartment building contained a right for the timeshare owners:

‘to use the swimming pool, golf course, squash courts, tennis courts, the ground and basement floor of the Broome Park Mansion House, gardens and any other sporting or recreational facilities on the Transferor’s adjoining estate.’

The facilities included a restaurant, gymnasium and sauna. After the transfer, there were changes to the facilities provided.

Lord Briggs gave a judgment with which the majority of the other members of the Supreme Court agreed.

Interpretation of the right granted

Lord Briggs reached the following conclusions as to the construction of the relevant terms of the transfer:

  1. the parties intended to create an easement, not a purely personal right ([25]);
  2. the right granted was ‘a single comprehensive right to use a complex of facilities’ including not only the facilities as they existed at the time of the transfer but also any later replacements or additions ([26]);
  3. the grant was not conditional on the grantees making a financial contribution to the operating, maintenance or updating of the facilities ([30]).

The essential characteristics of an easement

In re Ellenborough Park, the English Court of Appeal accepted that easements must have the following characteristics:

  1. there must be a dominant and a servient tenement;
  2. an easement must accommodate the dominant tenement;
  3. the dominant and servient owners must be different persons; and
  4. a right over land cannot amount to an easement unless it is capable of forming the subject matter of  grant.

Did the rights to use the sporting and recreational facilities accommodate the dominant tenement?

Lord Briggs noted that the dominant tenement in this case was a development of timeshare apartments, typically used for holidays. The grant of rights to use the neighbouring facilities was, ‘of service, utility and benefit to the timeshare apartments as such’ ([53]).

Were the rights capable of forming the subject matter of a grant?

Step-in rights and the ouster principle

If the rights granted were an easement the dominant owner would have the right to enter the servient land to maintain the facilities so that they were capable of use if the servient owner failed to do so (‘the step-in right’).

The argument was that the exercise of the step-in right would deprive the servient owner of lawful possession and control of the servient land and so infringe the ouster principle.

The ouster principle was explained in these terms (referring to the speech of Lord Scott in Moncrieff v Jamieson):

‘the ouster principle rejects as an easement the grant of rights which, on one view, deprive the servient owner of reasonable beneficial use of the servient tenement or, on the other view, deprive the servient owner of lawful possession and control of it’ ([61]).

Lord Briggs rejected the proposition that the exercise of the step-in rights would amount to an ouster:

  1. the question was whether the grant itself (not the step-in right) would be an ouster ([64]);
  2. in any event, the step-in right allowed the dominant owner to do no more than what was sufficient to enable the rights granted to be exercised ([65]).

An easement can only demand ‘mere passivity’ on the part of the servient owner

An easement cannot require the servient owner to take positive action (Moncrieff v Jamieson at [47]). This principle was not infringed; although there was a commercial expectation that the servient owner would maintain the facilities there was no obligation to do so. The continued, meaningful use of the rights did not depend on the servient owner carrying out works of management, maintenance, repair and renewal ([71]).

Lord Carnwath’s dissent concerning the ‘mere passivity’ point

In his dissenting judgment, Lord Carnwath argued that the enjoyment of the right to use the facilities required the servient owner to manage and maintain them ([95]). The right claimed ‘is not a simple property right, but permanent membership of a country club ([96]).

Should these recreational rights be accepted as easements?

The easement claimed was, ‘a recreational right pure and simple’ ([75]). It went beyond Re Ellenborough; should the right be accepted as an easement provided that the Re Ellenborough criteria were satisfied ([74])?

Lord Briggs thought that it should be:

‘Where the actual or intended use of the dominant tenement is itself recreational, as will generally be the case for holiday timeshare developments, the accommodation condition will generally be satisfied.’ ([81]).

Michael Lower