Adealon International Corporation Pty Ltd v Merton London Borough Council

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Carnwath,Mr Justice Silber,Lord Justice Mummery
Judgment Date25 Apr 2007
Neutral Citation[2007] EWCA Civ 362
Docket NumberCase No: A3/2006/0970

[2007] EWCA Civ 362

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CHANCERY DIVISION

HH JUDGE KIRKHAM

HC 03 C 03077

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Justice Mummery

Lord Justice Carnwath and

Mr Justice Silber

Case No: A3/2006/0970

Between
Adealon International Proprietary Limited
Appellant
and
The Mayor and Burgesses of the London Borough of Merton
Respondents

Ian Partridge (instructed by Messrs. Barrea & Co) for the Appellant

Jonathan Small QC (instructed by London Borough of Merton Borough Solicitor) for the Respondents

Hearing date: Tuesday 27 th March, 2007

Lord Justice Carnwath

Background

1

The claimant (“Adealon”) is the owner of a strip of land (“the red land”), of about 525 square metres, lying along the A24 Merantun Way to the south. The defendant council (“the council”) owns the land adjacent and to the north (“the green land”), which extends to about 3,237 square metres and is bounded on the north by another road, High Path. The red land has no direct access to High Path, and cannot lawfully obtain access to the trunk road A24, without planning permission which has been consistently refused. Until 1989 the red and green land were in common ownership. Adealon claims that, on the severance of the two plots at that time, it became entitled by operation of law to an “easement of necessity” over the green land, to give it access to High Path. It further claims that the right of way is for both vehicular and pedestrian traffic.

2

The judge (HH Judge Kirkham, sitting as a judge of the High Court) dismissed the claim to an easement of necessity. She indicated that, if she had upheld the claim, she would have determined that it was for vehicular and pedestrian traffic. In the appeal the former conclusion is challenged by the company, and the latter by the council.

3

The proceedings had begun in August 2003, as a claim by the company for trespass by the council on the red land. However, by a compromise agreed immediately before trial, the other issues were settled, subject to the claim for damages for trespass, which were determined by the judge. There is no appeal from that decision. The only live issue before us relates to the claimed easement.

The history

4

The judge made detailed findings as to the history. It had to be extracted largely from the documentary evidence, which does not appear to have been very complete. The only witnesses were Mr Manzoor Hussain, a director of Adealon, whose statement was accepted without cross-examination; and Mr Joy, an officer with the council, who gave evidence on the physical layout, and the planning history, and was “cross-examined very briefly, and on very limited points”.

5

For present purposes it is sufficient to note the following points in the chronology, based on the judgment supplemented by Mr Hussain's witness statement:

i) From the mid-1980s, a company called Boastdean Limited had owned a site including both the red and green land, together with land to the south which was part a disused railway. There was a warehouse on the green land, used as a cash and carry store, with a hardstanding on the land behind it to the south. There was a U-shaped “in and out” drive which ran around both sides and the rear of the building. (I note that a plan attached to the particulars of claim indicates that the southern part of the “drive” adjoined what became the boundary of the red land. At this stage I shall proceed on that basis, although there appears to be no specific evidence to support it.)

ii) In 1988, the land owned by Boastdean immediately to the south of the red land was acquired for the construction of what became the trunk road A24. That road was completed and opened to traffic by February 1989. In December 1988 a traffic order had been made prohibiting the use of this stretch of the road by pedestrians.

iii) Mr Hussain became interested in the site through a company called Parbrook Ltd, registered in Liberia, of which he was the beneficial owner. In 1989 Parbrook acquired the shares in Boastdean.

iv) On 23 rd October 1989 “as part of the overall transaction” Boastdean transferred the green land to a company called Kempstone Limited (a company incorporated in the Isle of Man), in which Mr Hussain also had “a beneficial interest”. Boastdean retained the red land. Mr Hussain gave this explanation in his statement:

“The reason part of the land only was sold to Kempstone was that I, through Parbrook Limited, had found an investor in Jersey who wanted a stand alone company in which to participate. It was agreed to use Kempstone Limited for such purpose. Parbrook at the time had other interests in various ventures and in any case wanted to exercise a degree of control over the proposed venture as it did not want Kempstone to 'run off' with the deal on its own.”

His intention was to seek to develop both parcels together “as a joint venture” with Kempstone. At that time the green land was mortgaged to Dunbar Bank plc.

v) In November 1989 an application was made for outline planning permission for the erection of light industrial buildings on the whole site, with access from High Path only. Conditional consent was granted. As to what followed, I again quote Mr Hussain:

“Having obtained planning permission, the property market at the time started to deteriorate. There was hardly any demand for light industrial/office type of premises at the time. Consequently, I started to renegotiate with the architects and Merton Council for a change of use (fresh planning) for a petrol station and some light industrial units. I had reached an agreement with BP to build a petrol station and car wash facilities on part of the land at the time. The petrol station was to face Merantun Way and the industrial units would face High Path.”

vi) There followed various applications for permission for development of light industrial units and of a petrol filling station with access from Merantun Way. The details are not complete in the evidence. It is sufficient to note one application, made in August 1992, which related to a site including both the green and the red land. It was made for 3 light-industrial units fronting High Path, and a petrol station with access from Merantun Way and egress to High Path. The owner of the site was said to be Kempstone. It was refused in May 1993 on grounds which included prejudice to traffic flow in Merantun Way.

vii) On 29 th March 1994, the land owned by Kempstone was sold to the council. At paragraph 17 of her judgment the judge recorded that this was by agreement between Mr Hussein and Dunbar. At paragraph 14 of his witness statement Mr Hussain said:

“This was at a time when the property market was in serious decline and with no end in sight to the recession, it was considered best that the land be disposed of. Once the land was sold to Merton Council I did not visit the site for some time, as I had other matters to deal with and lots of other commitments back in Australia to take care of.”

viii) The council took occupation of both the green and red land, apparently not realising that the red land was under separate ownership from the green land. In January 1995, the council obtained planning permission to build a day-care centre on the whole site, including an area for parking for disabled transport. They built the day-care centre, incorporating the western section of the red land into the garden, taking up the concrete hard-standing. In May 1996, they leased the eastern side of the site, including the eastern section of the red land, to Merton Association for Disabled People for parking ambulances.

ix) In July 2000, Boastdean transferred the red land to Adealon, to which it also assigned all causes of action pertaining to the land. In August 2003, the present proceedings were begun.

6

The judge commented on the evidence of Mr Hussain's property dealings:

“Mr Hussain does not give a very full account of matters relevant to the decisions to sell the larger parcel of land to Kempstone and to retain the smaller, rear of parcel of land. He refers to negotiations with an investor with a view to entering into a joint venture to develop both parcels of land, but it is not clear, for example, whether any joint-venture agreement was entered into. It appears that Mr Hussain decided to retain the rear land in the hope that anything built on that land would face Merantun Way and have access to it. It seems to me that the expectation, at that time, was that there was likely to be access from the rear land on to the highway.

Mr Hussain chose to retain the red land. I infer from all the evidence available to me that Mr Hussain had hoped to be able to develop the land to the south and to do so by gaining access to the highway and not from and to High Path. Initially, the rear land was thought likely to be incorporated into the new highway. That did not happen, but Mr Hussain then sought planning permission for a petrol station and car wash facing Merantun Way. It appears to me that Mr Hussain took the view that it would benefit him to retain the red land. The sale by Dunbar in March 1994 was not a hostile act on the part of the bank. The sale was consistent with Mr Hussain's desire to dispose of some land and to retain and develop the red land.”

7

The judge held that there was no basis for implying an easement over the council's land to High Path, either as an “easement of necessity” or on the basis of “common intention” at the time of the 1989 transfer. As to the former, a detailed review of the authorities led her to the conclusion that as a matter of law an easement of necessity could only arise...

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