January 22, 2019

Recreational easements

Regency Villas Title Ltd and others v Diamond Resorts (Europe) Ltd and others [2018] UKSC 57

Facts

In 1979, Gulf Investments Ltd acquired Broome Park (“the Park”), a substantial country estate near Canterbury, for the purposes of developing a timeshare and leisure complex around a large 17th century Grade 1 listed house (“Mansion House”). The development scheme originally included the creation of 18 timeshare apartments alongside a communal club house and additional recreational facilities including an outdoor heated swimming pool, tennis and squash courts and an 18-hole golf course.

Following the early success of the Mansion House development, Gulf Investments created a second timeshare development on adjacent land they had recently acquired (“Elham House”). Elham House was transferred as a freehold to Elham House Development Ltd, another member of the Gulf Group, on 11 November 1981. Elham House was subsequently transferred to the members of the Regency Villas Owners Club (“RVOC”). The 1981 Transfer included the following grant of rights:

“the right for the Transferee its successors in title its lessees and the occupiers from time to time of the property to use the swimming pool, golf course, squash courts, tennis courts, the ground and basement floor of the Broome Park Mansion House, gardens and any other sporting or recreational facilities (hereafter called ‘the facilities’) on the Transferor’s adjoining estate.”

The promoters of the leisure complex in the Park envisaged that it would attract sufficient paying members of the public (aside from the timeshare residents) to fund its ongoing operating costs. However, this did not materialise and starting in 1983, from time to time, members of the RVOC made voluntary payments on behalf of timeshare owners to the owners and operators of the Park towards the costs, including upkeep, of the facilities. They made these voluntary payments under a reservation of rights and any individual timeshare owners that were charged fees for the use of specific facilities, paid them notwithstanding their case that they were entitled to the use of those facilities free of charge.

First instance

The timeshare owners claimed a declaration that they were entitled, by way of easement, to the free use of all the sporting or recreational facilities from time to time provided within the Park, and an injunction restraining interference with them by the Defendants (the current freehold and leasehold owners of the Park). The timeshare owners also sought the return of sums paid by them or on their behalf by the RVOC for the use of those facilities since 2008, as damages for interference with their easement, or by way of restitution.

At the trial before the late Judge Purle QC sitting as a High Court judge in 2015, the timeshare owners succeeded in all their claims, save only for the recovery of payments made for the use of facilities before 2012, which the judge held had been made by agreement rather than under protest. The timeshare owners were held to have a right to use all of the sporting and recreational facilities, even where such facilities had not yet been built at the time of transfer.

Court of Appeal

In the Court of Appeal, the timeshare owners were successful again on the main issue about whether the rights over the facilities granted by the 1981 Transfer constituted an easement or easements. However, the court held that the timeshare owners did not have any rights in relation to the new swimming pool which did not exist at the time of transfer. The Court of Appeal also excluded rights in relation to anything provided on the ground floor and basement of the Mansion House.

The Defendants appealed the contention that the 1981 Transfer granted no enduring rights in the nature of easements in relation to any of the facilities within the Park. The timeshare owners cross-appealed and sought to restore the trial judge’s conclusion that they had a right in relation to all of the facilities, including the new swimming pool.

Supreme Court

The Supreme Court dismissed the appeal of the Defendants and granted the timeshare owners’ cross-appeal in respect of the new swimming pool and, in doing so, affirmed the decision in re Ellenborough Park, the leading case on the conditions for the recognition of a right as an easement. These are as follows:

  1. There must be a dominant and a servient tenement;
  2. The easement must accommodate the dominant tenement;
  3. The dominant and servient owners must be different persons; and
  4. A right over land cannot amount to an easement, unless it is capable of forming the subject-matter of a grant.

Lord Briggs held that:

“The grant of purely recreational (including sporting) rights over land which genuinely accommodate adjacent land may be the subject matter of an easement, provided always that they satisfy the four well-settled conditions… Where the actual or intended use of the dominant tenement is itself recreational, as will generally be the case for holiday timeshare developments, the accommodation condition will generally be satisfied. Whether the other conditions, and in particular the components of the fourth condition, will be satisfied will be a question of fact in each case. Whatever may have been the attitude in the past to “mere recreation or amusement”, recreational and sporting activity of the type exemplified by the facilities at Broome Park is so clearly a beneficial part of modern life that the common law should support structures which promote and encourage it, rather than treat it as devoid of practical utility or benefit”.

The trial judge’s interpretation that the 1981 Transfer constituted a single easement was preferred to the Court of Appeal’s interpretation.

Comment

This judgment is significant in that it recognises a new ‘species’ of easement. It illustrates that the common law can adapt to new types of property ownership and new ways of enjoying the use of land (in this case a timeshare development). Property owners and developers of mixed-use complexes should be aware that sporting and recreational activity can be the subject matter of an easement and be conscious not to expressly or inadvertently grant such a right unless they are willing to take the financial risk of maintaining such facilities without the contribution from those who can make use of them as of right.

The article first appeared in our Real Estate Bulletin - January 2019.