Regency Villas Title Ltd and others (Respondents/Cross-Appellants) v Diamond Resorts (Europe) Ltd PDF

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Summary

Case rundown on Regency Villas, based around easement creation and whether the 4th ground could be satisfied. ...

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1. What was at risk for the parties and for others not directly involved in the litigation?

The cross-appellants, Regency Villas timeshare owners (RVOC) risk not being granted free access to all facilities in Broome Park (the ‘Park’). This would result in owing a larger Quantum Meruit (QM) to the defendants for the provision of the all of the Facilities in and after 2012. Furthermore, they risk dismissal of their eligibility to monetary entitlement in relation to reluctant payments made for the facilities. Diamond Resorts (Europe) Ltd, the appellants, risk the RVOC being granted full rights to free usage of the recreational and sporting facilities in the nature of an easement. This would result in dismissal of their QM, as the RVOC wouldn’t owe an amount for usage of the facilities. The rights conferred by the easement will burden the Park, long after the leisure complex exists, which could prevent further developing of the Park, as this could infringe on the RVOC’s rights conferred in the Facilities Grant (the ‘Grant’). As there is currently no statutory basis for discharging easements, this could cause a long-term issue. This decision could lead to a “deluge of claims”1 on behalf of a wide section of the public who “enjoy sport and have rights over…land for such use”2 , resulting in either the courts scrutinising “the extent of positive obligations placed on servient land”3 or taking a more lenient approach. Land owners risk granting unintended recreational rights if their grant of rights lacks specificity, which would ultimately place an unsolicited burden on their land.

2. What were the legal issues in the case?

The focal concern is whether the “Grant is capable in law of amounting to one or more easements”4. The second essential condition for the recognition of a right as an easement, requires approval: (A) should the law be extended to recognise a purely ‘sporting and recreational’ right as a right capable of accommodating the dominant tenement, providing utility and benefit and therefore forming the subject matter of an easement. Due to absence of statutory authority for the modification of easements, close 1Chris Bevan, ‘Opening Pandora’s box? Recreation pure and simple: easements in the Supreme Court’ [2019] | conveyancer and property lawyer| 55-70 2Judith Bray, ‘More than just a walk in the park: a new view on recreational easements’ [2017] |Conveyancer and Property Lawyer| 416-439 3 See n1, above. 4 [2018] UKSC 57, para 21

analysis of the decision held in Ellenborough5 is required, in order to assess whether the judgment could extend to the current case, to recognise in law essentially a breaking new ground of easement. A subsequent issue interests the fourth condition, if the right over land was “capable of forming the subject matter of a grant”6. This divides into (B) if the ‘step in-rights’ “were so extensive or invasive as to oust the servient owner from the enjoyment or control of the servient tenement”7, thus requiring the servient owner to act beyond mere passivity in relation to the rights to the facilities, (C) if the expression of the rights are wide-reaching or vague, in this case whether the dominant owners were entitled to the usage of all recreational facilities at the Park, and any facilities created after the 1981 transfer and (D) if the rights possess no utility or benefit and are purely for recreation.

3. How were the legal issues resolved by the judges?

Lord Briggs stated that in order to satisfy ‘A’, clarity on what particular recreational or sporting rights grants accommodates the dominant tenement is vital. He relies on Re Ellenborough8, which granted an easement due to the package of rights afforded to use of communal gardens. The communal gardens are a typical feature which serves and benefits townhouses, the dominant tenements, thus supplying ‘utility and benefit’ to them, which also satisfies ‘D’. Whether the grant of rights is recreational or traditional was held to be irrelevant. Similarly, the value of timeshare units shares association with holidays and recreation. Therefore, a grant of rights of sporting and recreational facilities is of utility and benefit to the owners, the same way a communal garden is of utility and benefit to townhouses. Lord Briggs indicated the use of Hill9 submitted by Diamond Resorts Ltd was no authority for the failure of the accommodation principle. The case held failed easement formation was due to the incapability of a proprietary right being granted to do business on a whole canal, which meant that the enjoyment of the land couldn’t be described as subordinate/ancillary to the enjoyment of the dominant tenement. Therefore, the more suitable legal resolution would be the grant of a personal right between canal owner and 5 [1955] EWCA Civ 4 6 Ibid, para 35. 7 Ibid, para 58. 8 See n5, above. 9 [1863] 159 ER 51

plaintiff lessee. This decision was not reached due to absence of accommodation, but a separate legal issue and therefore doesn’t undermine easement formation in the current sense. In relation to condition ‘B’, Lord Briggs’ rejected the hypothetical situation of what would occur if the servient owners ceased to maintain the relevant recreational facilities. Instead, he affirms that the correct procedure should be to base presumptions of ouster upon the ordinary expectation of the parties that the leisure complex was to be maintained by the owners, and not the RVOC, to which all judges of this case are in agreement. The dominant owners would only exercise ‘step-in rights’ as a result of the servient owners giving up control, management and maintenance of the facilities. Therefore, in his view, the Facilities Grant couldn’t have amounted to an ouster. He relied upon Dowty, where mowing a disused airfield did not amount to an ouster when the servient owners discontinued to maintain it as it didn’t amount to taking control from the servient owner. A subsequent rationale for dismissing the issue of ouster is that ‘step-in rights’, according to Gale on Easements10 and Carter11, are “rights to reasonable access for maintenance of the servient tenement”12. Therefore, this only grants the dominant owners to do necessary work, not to take complete possession and control, thus an inability to amount to an ouster. Next, in order to satisfy condition ‘B’, the servient owner should not have been obliged “…to expend money or do anything beyond mere passivity”13 in order for the rights to be of ‘meaningful’ use. If an easement is to “involve the use of structures, fixtures or chattels on the servient tenement”14, much like the facilities at the Park, it could be presumed active participation of the servient owner is required in order for the rights to be enjoyed. However, Lord Briggs reaffirmed the previous courts view that the rights would be of meaningful use, even if the servient tenements acted in mere passivity. The appellants submitted that Moncrieff15 held that a right could not be a servitude if its enjoyment was dependent on the active participation of the servient tenement, namely for the usage of a

10 Gaunt QC J, Gale on Easements (20th edn, Sweet & Maxwell 2016). 11 [2006] EWCA Civ 398. 12 Ibid, para 65. 13 Ibid, 58. 14 Ibid, 67. 15 [2007] UKHL 42

swimming-pool. Lord Briggs stated this only prevented easement formation if the dominant owner imposed a legal obligation to maintain the facility, and so was no good authority. Lord Briggs reaffirmed there was no imposed legal obligation to the servient owner, rather an understanding between the grantor and grantee that the costs of maintenance were to be taken by the owners of the Park. Despite his dissent, Lord Carnwath agrees there was “no doubt that the respondents were intended to have free access to the recreational facilities on the estate”16, and so was just common understanding. This was supported by Jones17 concerning a right of way over a substantial bridge. There was no legal obligation, but a shared expectation that maintenance of the bridge would lie with the servient owner. The same principle applies in the present case, the servient owners are not legally obliged to maintain the facilities, and so have no legal requirement to act beyond mere passivity, thus satisfying condition B. Concerning requirement ‘C’, Lord Briggs reaffirmed the Judge’s stance that there was “nothing vague or of excessive width”18 in relation to the expression of rights, rejecting the Court of Appeal’s view that natural meaning of the words of the grant were “in the nature of separate easements”19. He firmly suggested the Grant should be regarded as a single easement, extending to all recreational facilities on the ‘leisure complex’, and to those that were not in existence in 1981. His reasoning is as follows: creating a grant of separate easements could interfere with the RVOC’s rights as if the servient owner introduced improvements or replacements within the Park, their rights would not extend to these facilities. Further, he rejected the authority of Dunn20 and Adam21 in relation to whether the Grant of future rights conflicted with the rule of perpetuities. He concluded they differed factually, as in the present case the grant of rights was immediately effective, and so didn’t conflict with the rule, in contrast to the requirement of a future act enabling the usage of the right which did. Moreover, despite the Grant lacking express word of futurity, the expression “to use…facilities… on an

16 Ibid, 94. 17 [1908] 1 Ch. 630 18 Ibid, 83. 19Ibid, 84. 20 [1961] Ch 433. 21 [2006] 1 P & CR 27.

indefinite basis”22 compensated this. Assuming grantees to have a “steadily reducing set of rights”23 as alterations to the Park were made would be nonsensical. For these reasons, Lord Briggs allowed the cross appeal on behalf of the RVOC, restoring the Judge’s consequential orders including the monetary compensation and did not allow the appeal on behalf of Diamond Resorts Ltd. 4. Giving reasons, discuss whether Lord Briggs’ judgment or Lord Carnwath’s dissenting judgment provides a more satisfactory resolution to the litigation.

Lord Briggs’ judgment arguably is not consistent with previous caselaw, and therefore doesn’t constitute a satisfactory resolution. Lord Carnwath suggests that in relation to condition ‘B’, precedent such as Dowty24and Jones25 were not directly comparable to the organisation of a ‘leisure complex’ as they lacked commercial context and didn’t require extensive participation of the servient owner, thus offering no genuine support to the majority. He also points out there lacked practical evidence of what could be realistically achieved by the RVOC, should the servient owners act in mere passivity. Instead, he cites Moncrieff26, which distinguishes between a right requiring a positive action from the servient owner in order for enjoyment, to which an easement cannot be formed, and where servient owner plays a passive role, with the dominant owner exercising a “right ancillary to his right of way to make good any failure to keep the way in repair”27, to which an easement can be formed. The present case concerns the former, and so should not satisfy condition ‘A’. He submits that, this inconsistency with caselaw extends further. Precedent cited by all courts did not support a “wholly new form of property right”28 as they didn’t directly address easements that required extensive management. He recognises the grant of rights as extending to “permanent membership of a country club”29, rather than a simple property right. For example, Re Ellenborough concerns the enjoyment of a communal garden which is hardly comparable to a ‘leisure complex’. As this case provides the first authority for 22 Ibid, 86. 23 Ibid. 24 [1976] Ch 13 25 [1908] 1 Ch. 630 26 See n13, above. 27 Ibid, 98. 28 Ibid, 96. 29 Ibid, 96.

facilities such as a tennis court, swimming pool and golf course to be used by right, as an easement, it is discouraging the reasoning has lacked consistency with the doctrine of legal precedent. Furthermore, Lord Carnwath submits the majority’s decision conflicted with the long-established common-law rule, the rule of perpetuities due to the inclusion of wholly new facilities in the Grant. Dunn30, the authority used to justify extending these rights only supports future substitutions, not wholly new facilities, and so for the rights to grant usage of facilities that aren’t even in existence is misguided. Undermining the rule forecasts uncertainty of the value it entails and doesn’t adhere to policy purposes of preventing “freehold land being permanently encumbered by proprietary restrictions and obligations”31. In conclusion, Lord Briggs hardly provides a satisfactory resolution to the litigation. He leaves major questions unanswered in relation to how far rights can extend and excuses his acceptance of ‘recreational easements’ by stating the common law should be modernised to accommodate this, despite the lack of consistency with precedent. However, the defective viewpoints of Lord Carnwath and Lord Briggs highlight the courts difficulty in interpreting caselaw, which suggests there should be a clear and concise legislation created on a statutory basis for the formation of easements. Such a judgment that has major impacts on landowners in particular should not have been open to ‘creative lawyering’ and the shaping of jurisprudence.

Bibliography:

Books:

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Bevan C, Land Law (OUP 2018)

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Duddington J, Law Express – Land Law (5th edn, Pearson 2006)

30[1961] Ch 433. 31 [2018] UKSC 57, para 60.

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Jeremy Waldron, The Right to Private Property (Clarendon Press 1988) 32-33

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McFarlane, Hopkins & Nield, Land Law (5th edn, OUP 2018)

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Thomas M, Property Law – Blackstone’s Statutes on Property Law (25th edn, OUP 2017)

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Gaunt QC J, Gale on Easements (20th edn, Sweet & Maxwell 2016) 1-93

Cases:

- Ackroyd v Smith [1850] 10 CB 164 - Adam v Shrewsbury [2006] 1 P & CR 27 -

Carter v Cole [2006] EWCA Civ 398

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Dowty Boulton Paul Ltd v Wolverhampton Corpn [1976] Ch 13

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Dukart v Corpn of the District of Surrey [1978] 2 SCR 1039

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Duncan v Louch [1845] 6 QB 904

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Dunn v Blackdown Properties Ltd [1961] Ch 433

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Hill v Tupper [1863] 159 ER 51

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Jones v Pritchard [1908] 1 Ch. 630

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Moncrieff v Jamieson [2007] UKHL 42

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Mounsey v Ismay [1865] 3 H & C 486

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Re Ellenborough Park [1955] EWCA Civ 4

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Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] UKSC 57; [2018] WLR 1603

Journal Article:

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A.J Waite, ‘Easements: Positive Duties on the Servient Owner?’ [1985] | The Cambridge Law Journal| 458-476.

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Chris Bevan, ‘Opening Pandora’s box? Recreation pure and simple: easements in the Supreme Court’[2019] |conveyancer and property lawyer| 55-70...