Easements: A leisurely pursuit

The judgment in the case of Regency Villas Title Ltd and others v Diamond Resorts (Europe) Ltd and another [2015] EWHC 3564 (Ch), handed down late last year, confirms that new types of easement can still be granted. 

Classic types of easement include, for example, rights of way, rights to drainage, and rights to light and air. In this case, however, the High Court considered whether a right granted by a transfer to use leisure facilities, including a swimming pool, golf course, squash courts, tennis courts, gardens, and ‘any other sporting or recreational facilities’, on the adjoining estate had taken effect as a legal easement. In reaching the decision, the test established in Re Ellenborough Park [1956] Ch 131 was applied, namely that:

• There must be dominant and servient land;

• The easement must accommodate the dominant land;

• The dominant and servient owners must be different persons; and 

• The right must be capable of being the subject matter of a grant. 

The claimants succeeded in showing that the right to use leisure facilities, as granted by the transfer, was intended to be a legal easement and that it did take effect as such. The right therefore continued to benefit the land; these were not merely personal rights.

This case is up-to-date authority that if a right fits the accepted characteristics of an easement, then it can be granted as an easement, even if it seems unusual. It is worth noting that this is not ?a new idea – indeed, a Scottish House of Lords judgment in the 1852 case of Dyce v Lady James Hay includes a statement that ‘the category of… easements must alter and expand with the changes that take place in the circumstances ?of mankind’.

A recent example of this rationale being applied in practice is the grant of an easement ?of noise in connection with the development ?of a tower block near to the Ministry of Sound nightclub in south London. The easement ?allows the club to continue to generate noise, notwithstanding the residential scheme, and drew significant press interest in early 2014. The parties presumably followed the analysis that a right to make noise can meet the tests set out in Re Ellenborough Park by accommodating the dominant land and allowing the passage of sound waves over the servient land. Regency Villas confirms this approach and is a helpful reminder to keep an open mind about what can and cannot be classed as an easement.

Measuring standards

The newly launched international property measurement standards for office buildings ?(IPMS office code) mean that, for the first time, office buildings will be measured in a consistent way around the world. Greater transparency of measuring standards allows consistency across property transactions and financial markets, and will enable international occupiers, investors, ?and owners to benchmark their office assets without needing to expend significant resources in doing so. 

From 1 January 2016, it is mandatory for all members of the Royal Institution of Chartered Surveyors (RICS) to measure office buildings in line with the new IPMS office code. The RICS ‘Code of measuring practice’ (6th edition) will no longer apply to offices and will be replaced by the RICS professional statement: office measurement (which is in line with the IPMS office code). The existing RICS 6th edition will continue to apply to residential, industrial, retail, and mixed-use property but, over time, will be phased out as new professional statements for these property types are developed. 

The RICS 6th edition is often referred to in property documentation in the context of a definition of gross external area (GEA), gross internal area (GIA), or net internal area (NIA). The terminology in the professional statement has changed – the new terms are set out below, along with their RICS 6th edition counterparts – but practitioners should be aware that there are differences between the measurement methods applied, so they are not like-for-like swaps:

• IPMS 1 is used for measuring the area of a building, including external walls, and is similar to GEA;

• IPMS 2 – office is used for measuring the interior of each floor of an office building ?and is similar to GIA; and

• IPMS 3 – office is used for measuring the floor area available to an office occupier on an exclusive basis, and is similar to NIA, although practitioners should note that it includes internal walls and columns, which are excluded from NIA under the RICS 6th edition.

The IPMS office code is the first in the series of IPMS codes. The second public consultation for an IPMS for residential buildings is in progress and closes on 15 April 2016. An IPMS for residential property is anticipated to be followed by IPMS codes for industrial, retail, ‘other’ (e.g. leisure centres, hotels, and theatres), and, finally, mixed-use properties. 

Assets of community value

A number of recent high-profile campaigns to save local pubs have helped to publicise the process of listing a property as an asset of community value (ACV) under the Localism Act 2011. While providing an important benefit to communities by allowing them to protect the assets they value, the ACV legislation can prove tricky for investor clients who will not want the sale of assets to be potentially stymied. 

The Assets of Community Value (England) Regulations 2012 set out the underlying detail of the ACV regime. The key point for practitioners to consider when advising clients on the acquisition trail is to flag up where a property may be at risk of ACV designation. The potential application (and implications) of the ACV regime should be reported to clients as early on in the process as possible and, in any case, well in advance of contracts being exchanged. 

An ACV can be any property used to further the social well-being or social interests of the local community – even where that use has ceased but may begin again. Car parks, football grounds, and even hospitals have been granted ACV status, so any property attended by the public should be highlighted as a potential ACV. 

ACVs are listed via a community nomination, following which local councils have an eight-week period during which to consult with the owner (or occupiers) before deciding whether to list the property. Councils can decide in less than eight weeks, so owners need to object quickly – although, if the listing is successful, then a land owner can challenge the listing and then appeal to a first-tier tribunal.

A common misconception is that ‘once an ACV, always an ACV’ – in fact, the designated status simply creates a liquidity issue for the owner by providing time for the community to go on the fundraising trail. An owner cannot sell the property (or enter into a contract to sell) without first notifying the relevant local authority that ?it wishes to sell. If no bid is received from a community interest group within six weeks of notification, the sale can go ahead. If notification is received of a potential community bidder, there can be no exchange of contracts for six months. Following either the six-week period or the six-month period, an owner is free to dispose ?at will for 12 months.

If the ACV legislation causes losses, for instance for a delay in a sale caused by the ACV process, then compensation is available from the local authority, although there is little guidance as to how reasonable those losses must be. Finally, the legislation is not currently applicable in Wales, Northern Ireland, and Scotland.

Annabel Cox, Peter Selwyn, and Laura Williamson, pictured, are solicitors in the commercial real estate team at Forsters @ForstersCRE www.forsters.co.uk