Easement: implied reservationAppellant claiming easements over adjacent town-centre site repurchased by council under buy-back option whether claim limited to rights subsisting before sale to appellant effect of standard condition of sale based on fictional conveyances whether it precluded consideration of parties actual intentionsSelby District Council v Samuel Smith Old Brewery Ltd: Court of Appeal: Peter Gibson LJ, Chadwick LJ, Tuckey LJ: 26 May 2000

The respondent council owned and wished to redevelop a run-down area in the centre of Tadcaster.

In March 1990 it agreed with the appellant (the brewery) to: (i) sell the centre site to the brewery for 90,000; and (ii) take an option from the brewery to repurchase the centre site at the same price (adjusted for inflation) in the event of the brewery failing, by October 1991, to commit itself to carrying out an agreed programme of works, such commitment to be assumed by the conclusion of an agreement under section 33 of the Local Government (Miscellaneous Provisions) Act 1982.By November 1991 no section 33 agreement had been entered into and the council exercised the option.

However, the parties failed to reach agreement on what easements would be reserved over the centre site (in particular rights of light, access, and car parking) in favour of the brewerys properties.

Because the buy-back contract incorporated clause 5(3) of the Law Societys conditions of sale (the LS condition), it was not disputed that rules as to implied easements were to apply as if both the centre site and the brewerys properties had been simultaneously conveyed by the brewery to different purchasers.

The brewery claimed entitlement under common law rules (chiefly Wheeldon v Burrows (1879) 12 ChD 31), as well as section 62 of the Law of Property Act 1925, to reserve as perpetual easements all rights subsisting in its favour as quasi-easements at the date when the council exercised its option.The judge found a clear intention that, in the event of the option being exercised, matters should be restored as far as possible to the way they were before the 1990 agreement: see [1998] EGCS 158, [1998] PLSCS 286.

The brewery appealed, contending that, although such an approach could be taken to the reconveyance, it could not, by reason of the LS condition, be taken to the fictional conveyance deemed to have been executed.Held: The appeal was dismissed.

Since the LS condition was a term of the actual agreement between the parties, it must be taken to mean what the parties intended it to mean.

Since the fictional conveyance was deemed to occur simultaneously with the actual conveyance, the knowledge to be attributed to the hypothetical purchaser could not be sensibly different from the actual knowledge of the brewery and council, as parties to the option agreement and the actual conveyance.

If there was a clear understanding inconsistent with the reservation of rights over the centre site, the LS condition could not require such a reservation merely because a hypothetical purchaser of the brewerys properties was present.The purpose of the LS condition (based upon Swansborough v Coventry (1832) 2 Moore & Scott 362) was to redress the imbalance between the vendor and purchaser that would otherwise exist under the general law: see Megarry & Wade: the Law of Real Property, paras 18-106.

The parties could not be taken to have agreed that the condition was to operate on the basis urged by the brewery, namely that any connection between the fictional conveyance and the circumstances giving rise to the actual reconveyance had to be disregarded.

The hypothesis to be made was that the fictional conveyance of the retained land was made pursuant to an obligation under the 1990 agreement, and that the underlying bargain, as regards implied easements, was to revert to the status quo ante on the making of that conveyance.Jonathan Gaunt QC (instructed by Dickinson Dees of Newcastle upon Tyne) for the appellant; Michael Briggs QC and John Machell (instructed by Walker Morris, of Leeds) for the respondents.

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