B2/2005/121, B2/2005/1211A
Neutral Citation Number: [2006] EWCA Civ 251
IN THE SUPREME COURT OF JUDICATURE 
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON CIVIL JUSTICE CENTRE
(HIS HONOUR JUDGE RICH QC)
Royal Courts of Justice
Strand
London, WC2

Tuesday 21st February 2006
 B E F O R E:

LORD JUSTICE CHADWICK

LORD JUSTICE MOORE-BICK

MR JUSTICE LAWRENCE COLLINS

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1)	MONTROSE COURT HOLDINGS LIMITED
2)	MONTROSE COURT MANAGEMENT LIMITED
      CLAIMANT/APPELLANT
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1) JAMIL SHAMASH
2)   DIANA SHAMASH
3)   ZEUSS ESTATES COMPANY LIMITED
DEFENDANT/RESPONDENT
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(DAR Transcript of 
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No:  020 7404 1400  Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
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MR R PEARCE (instructed by Messrs Warner) appeared on behalf of the Appellant.
MS A MCALLISTER (instructed by Messrs Michael Segen & Co, LONDON EC4A 1LL) appeared on behalf of the Respondent.
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J U D G M E N T
1.	LORD JUSTICE CHADWICK:  We have before the Court is an appeal and cross-appeal from an order made on 18 May 2005 by HHJ Rich QC sitting in the Central London County Court in proceedings brought by Montrose Court Holdings Limited and Montrose Court Management Limited against Mr Jamil Shamash, his wife, Mrs Diana Shamash, and Zeuss Estates Company Limited.  

2.	Montrose Court is a development at the northern (or Hyde Park) end of Exhibition Road, London SW7.  It lies between Princes Gate and Princes Garden.  It comprises property formerly known as 32 to 43 Princes Gate.  The development includes an eight-storey block of flats, fronting onto Exhibition Road but separated from that road by a small forecourt.  On the other three sides of the block of flats there is a service road.  The service road runs along the back of the block of flats and is linked to Exhibition Road by a spur at each end.  On the other side of the service road – that is to say to the east of the block of flats – there is a row of eight two-storey houses.  Mr and Mrs Shamash are the owners of the most northerly of the houses in that row – known as No. 1 Montrose Court.  Zeuss Estates Company Limited, which has taken little or no part in these proceedings, is the owner of another of those houses, No. 6 Montrose Court.  A third house, No. 5 Montrose Court, is also in freehold ownership.  The remaining five houses are held under long leases.  Montrose Court Holdings Limited is the owner of the block of flats, the forecourt and the service road.  It is also the freehold owner of the five houses that are still held under long leases.  Montrose Court Management Limited is a wholly-owned subsidiary of Montrose Court Holdings Limited.  It holds a lease of the service road.  For convenience I shall refer to the two companies together as “the estate owners”.  

3.	The block of flats contains 87 flats and 5 penthouses.  It includes a basement garage with parking space for about 84 cars.  The judge found that it was possible to park up to 19 cars along the service road – that is to say in front of the eight houses.  There was also some room for parking in the forecourt in front of the block.  But, at a maximum, the available parking space is limited to about 114 places.  That would be sufficient if each of the households – about 100 in all – owned and used only one car.  It is plainly not sufficient if, as is now the case, most households have more than one car.  

4.	To meet the problem arising from the excess demand for residents’ parking space – and, also, the use of the service roads for parking by outsiders – the estate owners have sought to impose parking regulations over the land which they own; that is to say, over the service roads and the forecourt.  The proposed regulations were promulgated in the form of a draft dated 23 May 2003.  So far as material, the regulations seek to control parking by the issue of permits.  With certain exceptions a vehicle may not enter or remain on the Montrose Court Estate without a permit.  Permits will be issued to residents – including the residents of the freehold houses – on payment of a fee.  Not more than one permit may be held by the residents of any one property.  The permit authorises entry and parking by the car or cars specified in the permit.  Regulation 10 is in these terms:

“A residents’ permit will authorise each of the cars specified in it to be brought onto the estate and parked in the parking areas for up to 72 hours if space is available, but no more than one of the cars specified in the residents’ permit may be on the estate at the same time.”

In that context, parking areas means the service road, other than the two spurs, and the forecourt.  It does not include the basement garage.  There were provisions in the regulations for visitors’ permits.  

5.	It is not in dispute, at least in these proceedings, that Montrose Court Holdings Limited is entitled to impose parking regulations on the occupiers of the flats and on the occupiers of the five houses which are still held under long leases.  The reason is that the leases under which the flats are held include a covenant by the tenant (in paragraph 5 of the first schedule) that he will observe all regulations made by the lessor or the management company relating to the parking of vehicles.  The long leases of the dwelling houses contain a similar covenant.  Nor is there any dispute in relation to No. 5 Montrose Court, one of the freehold houses.  The transfer of the freehold of that house contains a prohibition against parking.  But there is no comparable prohibition in the transfer under which Mr and Mrs Shamash derived freehold title to No. 1 Montrose Court nor in the transfer under which Zeuss Estates Company Limited derives freehold title to No. 6 Montrose Court.  

6.	Mr and Mrs Shamash have made it clear in correspondence that they would not regard themselves as bound by the parking regulations which the estate owners propose to make.  It was in those circumstances that these proceedings were commenced by the issue of a claim form on 7 October 2003.  The claimants sought a declaration that they could validly make regulations and impose fees relating to the parking of vehicles on the estate in terms of the draft regulations and tariff annexed to the claim form.  Following an amendment on 17 May 2005 – made, I think, in the course of the trial – the claimants sought a declaration that they could impose charges on the defendants in an amount not exceeding £200 per year in respect of the residents’ permits and by not exceeding £15 per day in respect of the visitors’ permits.  

7.	Mr and Mrs Shamash served a defence and counterclaim.  The part 20 counterclaim sought a declaration that the property known as No. 1 Montrose Court enjoyed an easement to park on the service road running along the houses at the rear of the block of flats, and a declaration that the proposed regulations and tariff would amount to an unlawful and substantial interference with that easement.  

8.	Those proceedings came before HHJ Rich QC.  He accepted that the defendant had a right to park on the rear service road.  He made a declaration in these terms:

“There is appurtenant to the premises known as No. 1 Montrose Court, Princes Gate, Exhibition Road, London, SW7 and registered at HM Land Registry under Title No. NGL59581 an easement to park in common with all others entitled so to do on the rear service road shown coloured red on the plan annexed hereto but not on the spur roads forming part of the first claimant’s estate known as Montrose Court and registered at HM Land Registry under Title No. LN95615 such easement being enjoyed subject to the provisions of the transfer dated 28 May 1987 which is referred to in the particulars of claim.”

There is no challenge to that declaration.  

9.	The judge went on to make a declaration in relation to the proposed regulations.  He declared that:

“The claimants may validly make regulations relating to the parking of vehicles on the said estate in terms of the draft regulations annexed to the particulars of claim subject to:

“(a)  the first and second defendants being entitled to two residents’ permits at the same time;

“(b) the tariff referred to in the said regulations imposing a charge on the first and second defendants not exceeding £200 per year for each residents’ permit; and 

“(c) the tariff referred to in the said regulations imposing a charge on the first and second defendants with visitors’ permits not exceeding such sum as shall in all the circumstances be fair and reasonable.”

10.	The estate owners challenge paragraph (a) of that declaration.  They contend that the judge should not have held that Mr and Mrs Shamash were to be entitled to two residents’ permits under the regulations.  That would have the effect of entitling them to park two cars at the same time.  Mr and Mrs Shamash challenge the judge’s finding – implicit in the declarations which he made – that the regulations could restrict parking to a temporal limit of 72 hours at any one time.  They ask the court to direct that the declaration as made be varied by adding a further paragraph, paragraph (d), to the effect that the first and second defendants be entitled to park without limitation of time.

11.	As appears from the first declaration made by the judge, Mr and Mrs Shamash are registered as the proprietors of No. 1 Montrose Court at HM Land Registry.  In fact the title is registered under Title No. NGL594811 rather than under the Title No. 59581 stated in the order, but nothing turns on that.  Entry number 2 in the property register is in these terms:

“The land has the benefit of the rights granted by but is subject to the rights reserved by the transfer dated 28 May 1987 referred to in the Charges Register.”

The transfer of 28 May 1987 is a transfer of the land shown red on the annexed plan and known as No. 1 Montrose Court, together with the rights set out in the first schedule of the transfer.  Those rights include, at paragraph (b) of the first schedule:

“A right in common with the transferor and its successors in title and with all other persons who have or may hereafter have the like right, the right at all times and for all purposes to pass and re-pass over and along footpaths and service road leading from Exhibition Road to the property and the rear of 32 to 43 Princes Gate with or without motor vehicles over the service road coloured brown on the said plan and on foot only over the footpath coloured yellow on the said plan, transferees and their successors in title owner or owners for the time being of the property paying or bearing a fair and proper proportion of maintaining cleaning and lighting of the said footpaths and service road and the gullies thereof.”

12.	Entry number 3 in the Charges Register protects covenants in the transfer of 28 May 1987.  Clause 2 of the transfer contains a covenant by the transferees to observe and perform the stipulations and restrictions in the third schedule.  Paragraph 8 in the third schedule to the transfer is in these terms:

“Not to leave or park or permit to be left or parked so as to cause any obstruction in or on any approach roads or passageways adjacent or leading to the property any motor car, motorcycle, bicycle, perambulator or other vehicle belonging to or used by the transferees of occupiers of the property or by any friends, servants or visitors of the transferee to observe all regulations made by the transferor from time to time relating to the parking of vehicles.”

As the judge observed at paragraph 8 of his judgment, paragraph 8 of the third schedule to the 1987 transfer:

“… appeared to accept that notwithstanding that the express right is a right to pass and re-pass only the transferee did have or might be granted some rights to park.”

13.	At paragraph 9 of his judgment, the judge noted that it was accepted that the estate owners have the power to make the regulations which they propose unless those regulations derogate from the grant of any right made on the transfer of 28 May 1987.  On the basis that the express right to pass and re-pass over the service road granted by the transfer did not of itself confer a right to park, the judge went on to consider whether a right to park had been conferred by the operation of the general words in section 62(2) of the Law of Property Act 1925.  That section is in these terms:

“The conveyance of land having houses or other buildings thereon shall be deemed to include and shall by virtue of this Act operate to convey with the land houses or other buildings all liberties, privileges, easements, rights and advantages whatsoever, appertaining or reputed to appertain to the land houses or other buildings conveyed or any of them or any part thereof, or at the time of the conveyance occupied or enjoyed with or reputed or known as part or parcel of or appurtenant to the land, houses and other buildings conveyed or any of them or any part thereof.”

14.	The judge noted that, prior to the transfer of 28 May 1987, Mr and Mrs Shamash had occupied No. 1 Montrose Court under an under-lease dated 5 July 1957.  That lease had contained an express grant of a right to pass and re-pass over the service road in common with the lessors and all persons authorised by the lessors.  It contained, also, a covenant by the lessees (at clause 2.11) to perform and observe and conform with all reasonable regulations and conditions from time to time made by the lessors and to be observed and performed by the inhabitants of the estate.  The judge asked himself whether, in those circumstances, the claimed right to park had been “enjoyed with or reputed or known as part or parcel of or appurtenant to” the house known as No. 1 Montrose Court.  

15.	The judge found as a fact that, at the time of the grant in 1987, the householders – including Mr and Mrs Shamash – were parking on the service road.  He found that they were doing so with the permission of the estate owners; and that that permission was a “liberty or privilege” which, by virtue of section 62(2) of the 1925 Act, was conveyed with the freehold under the transfer of 28 May 1987.  At paragraph 23 of his judgment he said this:

“The right conveyed by the transfer would therefore I think be a right in common with the other householders to park over the roadway cars visiting or used in connection with the house.  That right would itself be subject also to the rights of the flat lessees to use the road and also by virtue of paragraph 8 of the third schedule to the transfer it would be subject to such regulations as might be made by the transferor from time to time relating to the parking of vehicles.”

It was that finding which led the judge to make the declaration which he did in paragraph 1 of his order of 18 May 2005.

16.	It is unnecessary on this appeal to decide whether the judge was correct to take that view.  Support for his approach can be found in judgments of this court in Wright v Macadam [1949] 2 KB 744 and Hare v Gilman and another [2000] 80 P&CR 108.  

17.	It is unnecessary to decide that question because there is no challenge to the declaration which the judge made in paragraph 1 of his order.  What can be said, with some confidence, is that whatever right to park Mr and Mrs Shamash acquired under the 1987 transfer was a right which could only be exercised in accordance with whatever regulations might properly be made by the estate owners from time to time.  There are two reasons for that conclusion.  First, whatever right, permission, liberty or privilege in respect of parking may have been enjoyed by Mr and Mrs Shamash before the transfer was clearly subject to their obligations as tenants under clause 2.11 of the lease.  Second, whatever easement of parking was granted by the transfer of May 1987, it was exercisable subject to paragraph 8 in the third schedule to the transfer.  It is important to keep in mind that section 62(2) of the Law of Property Act 1925 does not operate outside or independently of the conveyance: the section provides that the conveyance shall be deemed to include the liberties and privileges which it operates to convey.  

18.	Had the transfer contained an express grant of a right to park in the terms set out by the judge in paragraph 23 of his judgment – that is to say a right in common with the householders to park over the roadway cars visiting or used in connection with the house – that right would have been a right which was subject to such regulations as might be made by the estate owners from time to time relating to the parking of vehicles.  The position is the same if the transfer has had the effect of granting a right to park by the operation of the general words in section 62 of the 1925 Act.  And that is the effect of paragraph 1 of the order of 18 May 2005 – which provides, in terms, that the easement is to be enjoyed subject to the provisions of a transfer.  Those provisions include paragraph 8 in the third schedule.  

19.	The sole question in this appeal, therefore, is whether the regulations proposed in 2003 were regulations which the estate owner could properly make for the purpose of regulating parking on the service road.  In that context, it is important to have in mind that the easement to the benefit of which the judge declared Mr and Mrs Shamash were entitled is “an easement to park in common with all others entitled to do so on the rear service road”.  

20.	The judge noted, at paragraph 12 of his judgment, that it was agreed by the parties that the right to use the service road conferred on the tenants of the flats by clause 1 of, and paragraph 1 in the third schedule to, the standard form of flat lease did include a right to park on the service road.  So the easement declared in paragraph 1 of the order of 18 May 2005 is a right to park in common not only with the other seven householders, but also in common with the flat tenants and the occupants of the penthouses.  Seen in that context, it is clear that the proper purpose of regulations is to control parking in such a way that all those entitled to a right to park in common can obtain some real benefit from that right.  

21.	The judge directed himself that the sole issue was whether the regulations proposed derogate from the grants “which I have defined”.  If, by that, he thought that the right to park was a right to be enjoyed in common only with other householders, he fell into error.  The grant which he defined, both in his judgment and in his order, was a right to park in common with the owners and the tenants of the seven other houses and with the tenants of the 87 flats and 5 penthouses.

22.	At paragraph 24 of his judgment the judge said this:

“I think that the duty to observe regulations, subject to which the right was granted as a result of Section 62, entitles the grantor to regulate the manner of exercise of the right but not to cut down the right itself, at least substantially.  It seems to me to restrict a right of parking which was exercisable over an area which would give those with the prior right to park the scope for parking two cars each to only one car would be to substantially deprive the grantee of the enjoyment of that benefit.”

But the judge did not declare that the easement was to be enjoyed by the householders in priority to the flat tenants.  It was a right to be enjoyed by householders and flat tenants in common.  

23.	The judge took the test of substantial restriction from the judgment of Sir Christopher Slade (with whom the other members of the court agreed) in Saeed v Plustrade Ltd [2002] EWCR Civ 2001, [2002] 25 Estates Gazette 154, [2002] EGLR 19.  It is necessary to have the facts of that case in mind: they can conveniently be taken from the head note in the EGLR report:

“The claimant tenant held a long lease of a flat in a mansion block owned by the defendant landlord.  The lease had been granted by a predecessor of the landlord, Cabtel in 1977 together with ‘a right in common with other persons entitled to the like right to park his private motor car on such part of a defined area of land retained by the landlord as may from time to time be specified by the lessor as reserved for car parking when space is available’. Between 1976 and 1987 Cabtel granted a total of 18 long leases in the same form.  In 1985 the claimant acquired her flat and the long lease from the original tenant.  At that time there was a designated parking area for 13 parked cars in the forecourt.  Between 1987 and 2001, 47 further long leases were granted but without parking rights.  Between 1997 and 2000, the landlord carried out refurbishment works to the mansion block.  It also prevented parking in the forecourt and informed the claimant that she had no right to park and it was not in breach of the terms of the lease.  The landlord’s new scheme would provide only four parking spaces.  In the court below, the judge declared that: (1)  the tenant had an easement to park subject to an alternative space being specified; (2) the landlord’s scheme of four spaces constituted a substantial interference with that right to park; and (3)  that there had been substantial interference with her right for some three years.’”

24.	The effect of the new scheme, in that case, was that the number of parking spaces available to the holders of the 18 long leases (of which the claimant was one) was reduced from 13 to 4.  So, instead of competing with the 17 others having a like right for one of 13 spaces, the tenant was required to compete with the same competitors for a total of 4 spaces.  At paragraph 33 of his judgment, Sir Christopher Slade said this:

“The lease in terms conferred upon the lessee ‘the right to park his private motor car’.  The parties clearly contemplated that this was a right which would be capable of being exercised.  As [counsel] pointed out on behalf of the claimant, the function of specifying a part of the retained property for parking purposes was equally clearly conferred upon the lessor for the purpose of giving effect of that right and not for the purpose of enabling him to extinguish it.  The subject matter of the grant of a right to park was not on the true construction of paragraph 7 of the second schedule to the lease a right wholly determinable at the whim of the lessor.”

He went on, at paragraph 34, to say this:

“The attitude of the defendant as revealed in past correspondence appears to have been ‘since we have the power to specify a parking area it logically follows that we have the power to withdraw a specification or not to specify at all’.  In my judgment, this attitude represents a breach of the well known and well established principle that a grantor shall not derogate from his grant.”

His conclusion is set out at paragraph 41 of that judgment:

“In my judgment, however, [counsel] was right when he pointed out that the relevant date for determining whether or not there has been a substantial interference is not 1985 but the date of the interference.  His submissions in this context were very simple.  But for the interference the claimant was able to park on some 12 or 13 spaces in competition with a number of other persons.  At that point she was restricted to parking on 3 or 4 spaces in competition with the same number of persons.  This must constitute substantial interference with the enjoyment of her right.”

25.	The power to specify was used in Saeed v Plustrade to reduce the number of parking spaces available to all having a like right with the claimant.  The effect of an exercise of the power in that way was to interfere with the enjoyment of the claimant’s right – and, incidentally, with the enjoyment by all other tenants competing with her with their rights.  The right was a right to compete for 13 spaces and the effect of the exercise of the power was to reduce that right to a right to compete for 4 spaces.  That was, if I may say so, plainly a substantial interference with the right that had been granted.  

26.	That is not the position in the present case.  The effect of the declaration which the judge has made is that Mr and Mrs Shamash continue to have a right to compete for some 17 spaces on the service road in competition with the other house owners and the flat owners.  The right to compete for a parking space is not reduced by the regulations made: it is regulated by the regulations made.  The purpose of the regulations is to enable those who have the right to compete (a total of some 114 households) to enjoy that right in an orderly way.  The regulations do not reduce the overall right to park on the service road which is to be enjoyed in common with others.  The regulations seek to ensure that those having the right to park all have an opportunity to enjoy that right.  They do so by regulating the basis upon which 114 households can compete for the 17 spaces available.  

27.	It is important to appreciate that the regulations are intended to operate for the benefit of all who have the right to park.  It is a common feature of regulations of this nature that a regulation which is intended to operate for the benefit of members of a group as a whole may have the effect of restricting the way in which each member of that group is able to enjoy his rights.  The restriction of each individual in the exercise of the common right operates for the benefit of all the individuals in the group. That, plainly, is what regulations made or determined by the estate owners under this power may properly seek to achieve.  

28.	For those reasons it seems to me that the regulations in the present case – which limited the right to park to the parking of one vehicle at a time – were proper regulations to make.  They were regulations which can be seen as necessary if all those having the right to park on the service road are to be able to enjoy that right in orderly competition.  

29.	In relation to the temporal restriction – to parking for no more than 72 hours at any one time – the judge applied that test correctly.  He said this, at paragraph 25 of his judgment:

“The regulation limiting the period of parking to 72 hours only is no doubt an inconvenience.  It is directed to ensuring some opportunity for changeover in occupation of parking spaces.  Since the right to park is in common with others and not only other householders, such objective does seem to me to be consistent with ensuring to the grantee the benefit of the grant whilst so managing it as to enable others to share the parking space.”  

That, if I may say so, is a correct statement of the principle.  The judge applied that principle correctly in relation to the temporal limitation to 72 hours; but failed to apply it in relation to the numeric limitation to one vehicle at a time.  

30.	I would add that I am not persuaded that a right to park can subsist as an easement if part of the serviced land is to be occupied for a continuous period of 72 hours to the exclusion both of the freeholder and of all others having a like right.  But it is not necessary to decide that point on this appeal.  It is enough to say that the regulation was properly made in relation to the temporal limitation as well as in relation to the numeric limitation to one vehicle at a time.

31.	For those reasons I would allow the appeal.  I would dismiss the cross-appeal; for which  we have extended time.  I would direct that paragraph 1 of the judge’s order be amended so as to show the true title number of the claimants’ property.

32.	LORD JUSTICE MOORE-BICK:  I agree that the appeal should be allowed and the cross-appeal dismissed for the reasons given by my Lord Chadwick LJ.  In my view, neither of the regulations under consideration was such as substantially to deprive the grantee of the benefit of the grant in this case.

33.	LORD JUSTICE COLLINS:  I also agree.

Order:  Application allowed.  Allowed the r/n out of time and dismissed the cross-appeal.
Costs - the Appellants have their costs here and below subject to a detailed assessment.