Philip Noble and William Charlesworth share the results of their recent trawl through the case law on easements.
The case of Jaggard v Sawyer [1995] 1 EGLR 146 shows the peril of pressing ahead with a development without the agreement of the servient tenement, even where an easement may be of no practical importance or benefit to the dominant tenement and the development results in no real financial loss to the servient tenement.
The Court of Appeal decision concerned a private development of 10 houses with a shared private road providing access to each. Each house owned half the roadway abutting its frontage and the costs of maintaining the roadway were shared equally.
There was a mutual covenant prohibiting the use of the gardens to any of the 10 houses otherwise than as a private garden.
The defendants obtained planning permission and built a new house in the rear garden of an adjacent road not subject to the restrictive covenant preventing building on its rear garden with access along the shared roadway.
The claimants claimed that the access road to the 10 houses was a private road, and using the roadway for access to the new house was a trespass and breach of the mutual covenant.
The owners of the new house offered to contribute equally to the maintenance of the roadway. In the vast majority of situations that would have been the end of the matter.
The court found that any damage to the claimants was nominal and that the increase in traffic and resulting costs was minimal and would in any event be met by the defendant. Despite that, the court awarded damages of £6,250 for the breach of covenant. That finding was in 1994 – almost 30 years ago.
The fundamentals
The key principles are set out in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1973] 229 EG 617. A developer built a number of houses in breach of a covenant restraining him from building, save in accordance with a layout plan submitted and approved by the claimants.
The claimants issued proceedings claiming an injunction shortly after the building work began, but did not seek interlocutory relief and all the houses were complete by the date of trial. The claimants then sought a mandatory injunction requiring demolition of the houses built in breach of covenant.
The injunction was refused. The judge refused to award nominal damages and awarded damages assessed on what the developer would have paid to be released from the covenant.
Brightman J held that the claimants had suffered no financial loss as a result of the development, saying: “No damage of a financial nature has been done to the plaintiffs by the breach of the layout stipulation. The plaintiffs’ use of the Wrotham Park Estate has not been and will not be impeded. It is totally unnecessary to demolish the houses in order to preserve the integrity of the restrictive covenants imposed on the rest of area 14. Without hesitation I decline to grant a mandatory injunction. But the fact that these houses will remain does not spell out a charter entitling others to despoil adjacent areas of land in breach of valid restrictions imposed by the conveyances. A developer who tries that course may be in for a rude awakening.”
He held that the claimants should be awarded such a sum of money as might reasonably have been demanded by the claimants from the developer as a quid pro quo for relaxing the covenant.
The same approach was adopted in Bracewell v Appleby [1976] 1 EGLR 119, where the judge awarded damages in lieu of an injunction, holding (in accordance with the approach of Brightman J in Wrotham Park) that the defendant should be liable to pay an amount of damages which, in so far as it could be estimated, would be equivalent to a fair and proper price payable for the acquisition of the right of way in question.
The judgments were followed by the Court of Appeal in Jaggard v Sawyer, where Sir Thomas Bingham MR stated: “If the plaintiff has the right to prevent some act being done without his consent, and the defendant does the act without seeking that consent, the plaintiff has suffered a loss in that the defendant has taken without paying for it something for which the plaintiff could have required payment, namely, the right to do the act. The court therefore makes the defendant pay what he ought to have paid the plaintiff, for that is what the plaintiff has lost… Where the obligation is contractual, that loss is the loss caused to the plaintiff by the breach of contract.”
Assessing the damages for unlawful breach of an easement
The court will assess the damages in accordance with the following principles:
- The overall principle is that the court must attempt to find what would be a “fair” result of a hypothetical negotiation between the parties.
- The context, including the nature and seriousness of the breach, must be kept in mind.
- The right to prevent a development gives the owner of the right a significant bargaining position.
- The owner of the right with such a bargaining position will normally be expected to receive some part of the likely profit from the development.
- If there is no evidence of the likely size of the profit, the court can do its best by awarding a suitable multiple of the damages for loss of amenity.
- If there is evidence of the likely size of the profit, the court should normally award a sum which takes into account a fair percentage of the profit.
- The size of the award should not in any event be so large that the development would not have taken place had such a sum been payable.
- After arriving at a figure which takes into consideration all the above and any other relevant factors, the court needs to consider whether the “deal feels right”.
Damages generally vary between 5% and 50% of the likely profit. In Tamares (Vincent Square) Ltd v Fairpoint Properties (Vincent Square) Ltd [2007] EWHC 212 (Ch); [2007] 1 EGLR 26, the judge assessed the relevant profit from the development at £174,500 and awarded damages in the amount of £50,000.
Protecting the position of the holder of the dominant tenement
The decision in Greenwich Healthcare NHS Trust v London and Quadrant Housing Trust [1998] 3 All ER 437 offers a possible solution in the case of some developments.
The claimant had acquired land to build a hospital, which would require realignment of a link road, over which the defendants had rights of way. The land was also subject to a restrictive covenant in favour of the defendants. The defendants did not object – the realignment of the right of way would improve the safety and convenience of access to the public highway.
The claimant wanted to protect themselves against possible future objections and claims over the realignment of the right of way or change of use of the land. It applied for declarations that the defendants would not be entitled to an injunction to restrain the proposed realignment, and that their rights, if any, would be limited to an award of damages for interference with the right of way or compensation for breach of the restrictive covenant. The application was unopposed save for one of the defendants, who sought only to preserve a possible right to compensation, and with whom a formula for that purpose was agreed.
The court held that there was no right in law to realign the right of way, but in the circumstances it was appropriate to grant the declaration. It held that there was no reasonable objection to the realignment, that the defendants had had notice and made no objection, and that the realignment was necessary to achieve “an object of substantial public and local importance and value” in the provision of the new hospital.
This line of authorities applies to every type of easement, including rights of way, drains and water pipes (see Simmons v Midford [1969] 2 Ch 415 and Martin v Childs).
Finally, developers should be aware that easements and rights relating to land pass on each successive conveyance under the Law of Property Act 1925, even if the wording of the easement suggests that it is confined to the original parties.
Philip Noble and William Charlesworth are barristers at Thomas More Chambers
