England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR K. GARNETT QC (SITTING AS A DEPUTY
JUDGE OF THE HIGH COURT)

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 2nd November 2001

LORD JUSTICE ALDOUS:

1. The appellants, Mobil Oil Company Ltd appeal the order of 19th April 2000 of Mr K. Garnett QC sitting as a Deputy Judge of the High Court by leave of this Court. They were joined in the appeal by the current owners, B.P. Oil (UK) Ltd. As Mobil were the owners at the date of the hearing before the judge, I will disregard the recent change of ownership.
2. The dispute between the parties concerns the existence of rights of way over land owned by Birmingham City Council which separates a garage from the highway. The garage is in the main built on land owned by Mobil. It is the land within the line BDHF shown on the map following. I shall refer to it as the freehold land. Around that freehold land, to the west, south and east is the land owned by the Council. I shall refer to it as the adjoining land. To the north are houses. The part of that adjoining land which is shown by a black line, trapezoidal in shape, which borders Stratford Road is at present leased to Mobil by the Council as additional forecourt space under a lease made in 1987 (the 1987 lease).

3. In the first rent review under the 1987 lease, the Council argued that Mobil was dependent upon the 1987 lease for rights of access to the freehold land and that this should be reflected in a "ransom" rent. Mobil disputed that and alleged that they were entitled to rights of way over the adjoining land. The rent review arbitration was stayed while Mobil sought determination of its claim by the court. That was the dispute that came before the judge. He held that Mobil did not have the rights of way claimed, but it was conceded that Mobil had acquired by prescription a right of way to the freehold land over the adjoining land from Reddings Lane. It crosses the adjoining land to the point marked H.
4. On appeal Mobil submitted that a deed of exchange dated 1959 (the 1959 deed of exchange) contained either expressly or by implication a grant of rights of way as claimed by them from Stratford Road and Reddings Lane. Alternatively they were entitled to the rights of way by reason of section 62 of the Law of Property Act 1925. Alternatively Mobil contended that it was entitled to an order for specific performance of the Council's obligation, under clause 3 of the 1959 deed of exchange, to incorporate the adjoining land into the highway and, failing the grant of such relief, damages in lieu or other relief which reflected breach of that obligation by the Council.
5. The background facts were fully set out by the judge in his careful and thorough judgment. I can therefore summarise the essential facts. In 1939, the adjoining land and the freehold land were owned by the predecessors of the Council, the Birmingham Corporation. A company called Hall Green Motors Limited (HGM) owned land some distance to the south on which it operated a service station. The Corporation had in mind a major road improvement scheme in south Birmingham which would involve the incorporation of the adjoining land and part of HGM's land into the highway. To allow this to happen an agreement was entered into on 26th July 1939 for an exchange of land between the Corporation and HGM. HGM would convey to the Corporation the land upon which it operated a service station and the Corporation would convey to HGM the freehold land upon which a service station would be constructed. After describing the lands to be exchanged, the 1939 agreement provided:

"15. It is a fundamental term of this Contract that the Company shall with all reasonable despatch and in any event within 12 months from the date hereof erect new garage premises on the [freehold land] deposited plans in respect of such garage buildings to be submitted and approved by the Corporation in the usual way.

…"

6. As the judge pointed out it was clear from this and the other documents that prevail that the whole of the adjoining land was contemplated as forming part of the highway scheme, so that the highway, when widened, would have abutted against the boundary of the freehold land.
7. The Second World War intervened and the transaction was not completed as envisaged. Various extensions of time for the conveyance were agreed between the parties to suit their requirements. The last being agreed in 1956 which extended the time for exchange to 1st January 1959.
8. On 23rd January 1956 HGM wrote to the council asking when the road widening was likely to be carried out. The Council replied on 17th July 1956.

"I see no prospect that it will be possible to carry out the permanent widening and reconstruction of Stratford Road for some years and I regret that I am unable to forecast when this will be done. Until the permanent road works take place, the Corporation will, however, provide such temporary access as may be necessary to both the existing and new sites in accordance with Clauses 16 and 17 of the Contract."

9. By deed dated 30th August 1957 HGM sold its business to National Benzole Co Ltd and on the same date a novation of the 1939 agreement took place between the Corporation, HGM and National Benzole.
10. National Benzole pursued the possibility of developing the freehold land and the part of the adjoining land that was ultimately leased. A request was made for planning permission to establish a petrol filling station. The Planning Officer recommended that planning permission be granted. He said:

"RECOMMENDED : That planning permission be granted for the establishment of a petrol filling station, including the erection of greasing and washing facilities, petrol pumps, storage tanks, etc. and construction of two footpath crossings to Stratford Road and Reddings Lane on land corner of Stratford Road and Reddings Lane, Hall Green, in accordance with Planning Application No.14754/2."

11. It was at this stage that the difference between the ownership of the freehold and adjoining land was seen to raise a difficulty. The City Estates Officer wrote on 20th November 1957 to the City Engineer and Surveyor:

"I understand that this land is subject to an exchange with Hall Green Motors Limited, who occupy premises in Stratford Road, corner of Green Road, ultimately to be affected by road improvement and it is not clear to me how the matter stands with regard to the arrangement or how it originated. Perhaps you will be good enough to clarify the matter and to advise me whether it is proposed to grant any form of tenancy relating to the land in front of the improvement line and if you wish me to take any action in connection therewith."

12. That was to taken up by the Planning Officer. In his report to the Council he stated:

"The City Estates Officer has now replied stating that he has no objection to the proposal, but points out that petrol pumps are to be sited temporarily on the land required for road widening purposes. This aspect of the matter will be the subject of a temporary tenancy to be negotiated with the applicants together with the submission of a further planning application, at a later date.

RECOMMENDED : That planning permission be granted for the establishment of a petrol filling station, including erection of greasing and washing facilities, petrol pumps and storage tanks, and construction of two footpath crossings to Reddings Lane and Stratford Road on land corner of Stratford Road and Reddings Lane, Hall Green, in accordance with Planning Application No.14754/2."

13. The proposal of a tenancy was accepted by National Benzole as was the necessity for a further application for planning permission. The result was the grant on 26th January 1958 of planning permission for a filling station in these terms:

"The Council of the City of Birmingham, as the local planning authority within the meaning of the above-mentioned Act and Order, and in pursuance of their powers thereunder, HEREBY PERMIT the following development:- the establishment of a petrol filling station, including the erection of greasing and washing facilities, petrol pumps and storage tanks on land at the corner of Stratford Road and Reddings Lane, Hall Green, Birmingham, AND ALSO PERMIT the construction of two footpath crossings to give access to Reddings Lane and Stratford Road …"

14. On 27th February 1958 planning permission for the pumps on part of the adjoining land was granted in these terms pursuant to the further application that had been made:

"The Council of the City of Birmingham, as the local planning authority within the meaning of the above-mentioned Act and Order, and in pursuance of their powers thereunder, HEREBY PERMIT the following development:- the erection of four petrol pumps and kiosk at Stratford Road, corner of Reddings Lane, Hall Green, Birmingham, for a period of five years from the date hereof,

in accordance with the application (numbered as shown above) which you have submitted to them. Such permission, however, is given subject to the following conditions:-

The said petrol pumps and kiosk are to be removed by the 27th day of February, 1963.

The reason for the Council's decision to impose the condition is as follows:-

The site will ultimately be affected by road widening proposals."

15. National Benzole was notified of the grant of planning consent by a March 1958 letter. Negotiations ensued over the terms of the lease of the trapezoidal-shaped land between the freehold land and Stratford Road. The result was agreement for the grant of a fourteen year lease. There followed the 1959 deed of exchange and a lease of the same date.
16. By the 1959 deed of exchange the Corporation conveyed to National Benzole the freehold land, but retained the adjoining land. National Benzole in exchange conveyed the HGM land further up Stratford Road. Clause 3 was in these terms:

"3. The Corporation hereby COVENANTS with [National Benzole] that the Corporation will as and when practicable (a) make and incorporate the [Adjoining Land] fronting the [Freehold Land] hereby conveyed to [National Benzole] into the public highway and shall at the same time form such access and crossings to the [Freehold Land] as are reasonably necessary for the efficient carrying on of [National Benzole's trade and/or business as Garage Proprietors and sellers of petrol so that access shall be available for the purposes of [National Benzole's] trade and/or business and customers by the time the new premises to be constructed by [National Benzole] are open for trading and (b) make up and incorporate the land colour green [the HGM land] hereby conveyed to the Corporation into the public highway and at the same time provide such crossings as are reasonably necessary to give such access to the filling and/or service station to be constructed on the adjoining land belonging to [National Benzole] so that access shall be available for the purposes of [National Benzole's] trade and/or business and customers by the time the said filling and/or service station is completed and open for trading."

17. The 1959 lease was for 14 years from 24th June 1958 at an annual rent of £1. It contained an obligation to use the land as "an access and forecourts to the land and garage on the freehold land and to erect temporary pumps and a kiosk". It also contained provision enabling termination by the Corporation by giving not less than 3 months notice in writing in the event of the land being immediately required for the purpose of its incorporation into the public highway, and by National Benzole if the planning permission for the pumps was not renewed. The plan attached to the lease showed the leased land as being between Stratford Road and the boundary of the freehold land which was referred to as the "improvement line". No access routes were shown on the plan either from Stratford Road or Reddings Lane.
18. The lease appears to provide a business tenancy. It is therefore renewable either by agreement or upon application to the Court, unless the Council rely on a ground contained in section 30 of the Landlord and Tenant Act 1954. In fact it has been renewed three times with the result that the 1987 lease is the current one.
19. National Benzole did not itself operate the garage. It granted a licence to Stratford Way Motors. The license was dated 2nd May 1960. It was stated to commence on 18th April 1959 with the first payment to be made on 24th June 1959.

Express Grant

20. Mr John Martin QC, who appeared on behalf of Mobil, submitted that clause 3 of the 1959 deed of exchange contained three obligations. First, an obligation upon the Corporation that it would, when practical, make up and incorporate the adjoining land into the public highway. Second, at the same time as the adjoining land was incorporated into the public highway, form such access and crossings to the freehold land as were reasonably necessary for efficient petrol trade. Third, that the Corporation would make available access "for the purposes of the company's trade and/or business and customers by the time the new premises to be constructed by the company are open for trading." It was that third obligation which granted the claimed rights of way.
21. The judge accept the first two obligations, but rejected the third. He said:

"Given that the road improvement scheme was not likely to be undertaken for a number of years but that the garage premises were clearly soon to be opened for trading (see below) there is a clear inconsistency. In my judgment the words 'by the time the new premises to be constructed by [Benzole] are open for trading' were adapted from the 1939 agreement without sufficient thought being given to their effect and are meaningless in the context of the 1959 deed. They should therefore be ignored."

22. As a result he went on to conclude:

"49. … I still cannot accept that these words in the Deed amount to an express grant of rights of way. Obviously the words do not amount to a grant on their ordinary meaning and in my judgment they cannot be tortured into doing so. It should be remembered that it was the intention that all of the Adjoining Land, right up to the boundary of the Freehold Land, would be made up into a highway. When that happened, Benzole would have been entitled to pass directly from the Freehold Land onto the highway. There was therefore no call for any grant of rights of way. In my judgment, the words in the Deed which refer to the making of accesses and crossings refer only to an obligation to carry out the necessary pavement works to enable traffic to cross over that part of the highway, once it had been made up."

23. For my part I believe that a conclusion that words in a contract should be ignored is only acceptable in extreme circumstances. It should be avoided in this case, where the words, which according to the judge should be ignored, appear in two places in clause 3 albeit changed to an extent. In effect he removed an obligation which was there because he was unable to resolve the tension imposed by the words. In my view it seems likely that they were intended by the parties to have a meaning. If so, the Court should give effect to that meaning if it can be ascertained.
24. There was no dispute between the parties as to the appropriate method of construction. However it is appropriate to cite a short passage from the speech of Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 AER 98 at 114:

"The principles may be summarised as follows:

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely nothing which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.

(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:

'… if a detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.'

…"

25. Mr Martin submitted that clause 3 of the 1959 deed of exchange should be construed taking into account the fact that the freehold land was landlocked and the only (or only practical) means of access was over the adjoining land from Stratford Road and Reddings Lane. There could be no doubt that the parties intended and expected that the freehold land should be used as a garage, for which purpose it was commercially essential that National Benzole should have rights of access over the adjoining land from Stratford Road and Reddings Lane. The Council had provided express confirmation in its letter dated 17th July 1956 that access would be available over the adjoining land until the road widening scheme was carried into effect. Further, the Council had accepted, when granting planning permission for the garage on the freehold land, that access to the freehold land would take place over the adjoining land from Stratford Road and Reddings Lane. They had also agreed the routes. Further, National Benzole, according to Mr Martin but disputed by the Council, had by the time of the deed of exchange started work on the construction and layout of the garage on the basis of the access routes as agreed with the Council. Certainly it was anticipated by the Council and National Benzole that the garage would be open for trade within a short time after the deed was signed. Whatever was the position on the ground in January 1959, it was vital that following the 1959 deed of exchange, National Benzole would have access over the agreed routes for the purpose of operating the garage which the parties realised would open shortly.
26. Further both the Council and National Benzole knew that the proposed road-widening works would not take place for some years to come and therefore neither of them could have thought that the road-widening would provide National Benzole with the necessary access. Thus the Council and National Benzole must have thought that, pending the road-widening, National Benzole would have access over the agreed access routes. It was a commercial necessity for National Benzole and there was no practical reason why the Council would not have been willing to grant rights of way over the agreed access routes to take effect pending the road-widening.
27. Mr Martin explained that the conclusion reached by the judge was that National Benzole had no entitlement to get to the garage on the freehold land, save by permission of the Council. That he submitted could not have been the intention of the parties to the deed of exchange which exchanged the HGM freehold land for the freehold land owned by the Council.
28. Mr Martin went on to submit that the clause 3, read in that context, envisaged that National Benzole should be able to obtain access by the time the service station was open, which the parties knew was imminent. Although the clause dealt with the position when the adjoining land would be incorporated into the highway, the parties knew that this would not take place for some time. It was for that reason that the obligation to carry out associated works was qualified as being "as and when practical". The substance of what was being promised lay in the last words of clause 3(a). They imposed an obligation upon the Council that access should be available as was reasonably necessary for the operation of the National Benzole's trade by the time the new premises were open for trade. It was unnecessary to spell out the routes of access as they had already been provided for in the planning permission. He submitted that such a construction was consistent with the intention of the parties and also was not inconsistent with the proposed scheme for widening the roads, in that the rights of way would be subsumed into the enlarged highway if and when constructed. Mr Martin submitted that the clause was clearly intended to confer rights upon National Benzole and that words at the end of clause 3(a) should be given a sensible commercial meaning in the context of what would happen. That could be done by reading the words "so that" as meaning "to the intent that" or "but so that", or "and that".
29. Miss Judith Jackson QC, on behalf of the Council, supported the judge's conclusion. Her main submission was that the last part of clause 3(a) could be given an appropriate meaning once it was realised that the "new premises" referred to were the resited temporary pumps after, or during any road widening that took place. To support that submission she drew attention to the fact that at the time of the 1959 deed of exchange and lease, it was known that the road-widening scheme would not occur, if at all, for at least four or five years. Further, it was realised that National Benzole would have had the use of part of the adjoining land under the terms of the lease for fourteen years, subject to a break clause if the land was required for road-widening. She submitted that the proposed forecourt with its petrol pumps were to be built on the leased land with access directly off Stratford Road. It was only if and when the forecourt and pumps were removed that the pumps would need to be re-sited on the freehold land. It was only in those circumstances that the last phrase in clause 3 of the 1959 deed of exchange would bite. Thus the covenant in clause 3 only operated when the road-widening scheme was to be implemented. At that time the company would have to re-site the petrol station and forecourt on the freehold land and at that time access had to be available by the time the new premises, the resited pumps, were open for business.
30. I reject that submission. It was clear from the correspondence between the parties that National Benzole would only site temporary pumps and a kiosk on the adjoining land, whereas it was contemplated that National Benzole would build garage premises upon the freehold land. It therefore seems odd to refer to resited pumps as being "new premises to be constructed" and to provide that there must be access "by the time the premise … are open for trading." Also, the words "the new premises" in clause 3(a) must be contrasted with the words "the said filling and/or service station" at the end of paragraph 3(b) where similar words appear. In my view the words "the new premises" mean just what they say. They should not be confined to temporary pumps after resiting. That being so, the words suggest that access must be available to the freehold land by the time the garage to be constructed on the freehold land is available for trading.

I will come back to the tension between the obligations in the last part of clause 3(a) which is imposed by the words "so that", but must first consider another suggested construction of clause 3. It was put forward in argument, but not taken up by Miss Jackson. The suggested meaning requires the third obligation in clause 3 to arise, and only to arise, when road widening takes place. Thus access upon road widening must be made at the same time as the road widening is implemented and must also be available by the time the new premises are open for trading. In my view such a construction is not suggested by the context in which the 1959 deed of exchange was agreed and also is contrary to the express words of clause 3. The "premises to be constructed" must refer to the garage which would be built on the freehold land. Both parties had in mind that the road scheme would not be implemented for a number of years, if at all, and that the garage would be open for business shortly after the deed of exchange was signed; certainly before the road scheme was implemented. Thus the words "by the time the new premises to be constructed by [National Benzole] are open for trading" must refer to the time when the garage would be open for business.

31. In my view the judge was right that, when read literally, the third obligation in clause 3(a) is inconsistent with the rest of clause 3. But that does not mean that the Court should ignore the last phrase of clause 3(a). As pointed out by Lord Hoffmann in Investors' Compensation Scheme, the words must yield to business common sense. In this case there are three possible ways that the words can yield. First that proposed by Mr Martin namely that the "so that" should be read as equivalent to "and that". Second as suggested by Miss Jackson so that the words "new premises" should be read as "the resited pumps". That I reject as being contrary to commercial reality. National Benzole required access to the garage long before it was contemplated that the pumps on the adjoining land would be resited and even when the pumps were being resited would need access to the rest of the garage. The last phrase is clearly directed to access being available for National Benzole's trade, not just the sale of petrol from 4 resited temporary pumps. The third is that suggested in argument. I reject that for the reasons already given. I conclude that the only meaning that is consistent with the words of the clause and the commercial intent as shown by the context in which the deed was concluded is that advanced by Mr Martin. That, to my mind is emphasised by the conclusion that I have reached on the submissions of the parties as to whether a grant of easements should be implied.

Implied Grant

32. The parties accept that the requirements for an implied grant are those set out in the judgment of Nourse LJ in Stafford v Lee (1992) 65 P&Cr 172 at page 175:

"Lord Parker's statement of the relevant principles in Pwllbach Colliery Company Limited v Woodman starts with his saying that apart from implied grants of ways of necessity, or of what are called continuous and apparent easements (i.e. those passing under the rule in Wheeldon v Burrows), the cases in which an easement can be granted by implication may be classified under two heads. Having dealt with the first class, where the implication arises because the right in question is necessary for the enjoyment of some other right expressly granted, he continues:

The second class of cases in which easements may impliedly be created depends not upon the terms of the grant itself, but upon the circumstances under which the grant was made. The law will readily imply the grant or reservation of such easements as may be necessary to give effect to the common intention of the parties to a grant of real property, with reference to the manner or purposes in and for which the land granted or some land retained by the grantor is to be used. See Jones v Pritchard and Lyttleton Times Co. v Warners. But it is essential for this purpose that the parties should intend that the subject of the grant or the land retained by the grantor should be used in some definite and particular manner. It is not enough that the subject of the grant or the land retained should be intended to be used in a manner which may or may not involve this definite and particular use.

Intended easements, like all other implied easements, are subject to the general rule that they are implied more readily in favour of a grantee than a grantor. But even there, as Lord Parker points out, the parties must intend that the subject of the grant shall be used in some definite and particular manner. If the grantee can establish the requisite intention, the law will then imply the grant of such easements as may be necessary to give effect to it.

There are therefore two hurdles which the grantee must surmount. He must establish a common intention as to some definite and particular user. Then he must show that the easements he claims are necessary to give effect to it."

33. The judge held that the rights of access claimed were not necessary to give effect to the intention of the parties and therefore there was no need to imply a grant. He said:

"54. As Miss Jackson QC, for the Council, points out, however, these submissions do not take sufficient account of the contemporaneous execution of the 1959 Lease. The Lease clearly contemplated that the Leasehold Land would not be used only as the site for pumps but also as an access to the Freehold Land. See, e.g. Clause 2(3)(b). There was therefore no need for implying a grant. I accept this."

34. Mr Martin submitted that the judge was right to conclude that there was a common intention between the parties in 1959 as to a definite and particular use for the freehold land. That use was, he submitted, as a garage accessible from Stratford Road and Reddings Lane. However the judge was wrong to conclude that it had not been established that the rights of access claimed were necessary to give effect to that intention.
35. The judge's conclusion that the parties contemplated that access from Stratford Road would be allowed by the lease from Stratford Road and from Reddings Lane by permission was untenable. To establish that submission Mr Martin drew attention to what he submitted were the commercial realities. The deed of exchange was essentially an exchange of freehold land: National Benzole acquired an estate unlimited in time which was landlocked unless access was achieved from Stratford Road or Reddings Lane. The parties must have intended that there be access. That could only come about if the road widening took place or by grant or by permission. The road widening was not imminent and might never happen. Any permission could be revoked. Also it could not have been contemplated by the parties that the lease would provide the necessary and intended access to the freehold land. The lease was only for a 14 year period with provisions for termination. In any case access was needed both from Stratford Road and Reddings Lane and the lease only related to land between the freehold land and Stratford Road. If the lease had been the intended vehicle for the right of access, then it would have included that part of the adjoining land which was situated to the East of the freehold land. The suggestion by the judge that access from Reddings Lane was by permission was not sensible as that would mean that the access to the freehold land was dependent upon the goodwill of the Council. Further permission was inconsistent with the concession of the Council that National Benzole had acquired a right of access from Reddings Lane by prescription.
36. Mr Martin also submitted that the conclusion of the judge was contrary to the factual background. The need for a lease only arose at the end of 1957 when the Council considered the application for planning permission which covered both the freehold land and the leasehold land. At that time the City Estates Officer pointed out that petrol pumps were to be sited temporarily on the land which was intended to be used for road widening. That was to be dealt with by a "temporary tenancy to be negotiated" and a further planning application. There followed negotiations as to the terms of the tenancy, but at no time was it ever contemplated that the lease would be the vehicle by which access would be obtained to the freehold land. If it had been, then commercial reality required at least a long lease or the equivalent.
37. Miss Jackson supported the reasoning of the judge. She submitted that the lease provided access for all practical purposes and that, when considering the intention of the parties, it was necessary to take into account the fact that the adjoining land over which the easements were claimed would probably become part of the highway. It would therefore have not been sensible to burden the adjoining land, subsequently the highway, with an easement. At most the Council must have intended access by permission. That was implemented through the lease.
38. I prefer the submissions of Mr Martin as I believe they reflect what happened and the commercial realities. Clearly the parties intended that a garage would be constructed on the freehold land and that there would be access to it before and after any road widening took place. Miss Jackson suggested that the parties intended that such access would be effected by the lease. I disagree. When giving my reasons I believe that it is appropriate to consider first what was the intention of National Benzole and then the intention of the Council.
39. Prior to signing the 1959 deed of exchange National Benzole sought planning permission for the freehold land. The terms of the application can be derived from the recommendation of the Planning Officer; the relevant parts have already been set out. That needs to be read together with the planning permission actually granted. From that it is clear that National Benzole intended to construct a garage on the site which was accessible from Stratford Road and Reddings Lane. Such access was required for the "efficient carrying on of [National Benzole's] trade …" which was the requirement in clause 3.
40. So far as the Council were concerned, they knew of National Benzole's intention as they were the person that received the application for planning permission and granted it. There is no positive evidence as to what was the intention of the Council, but the documents suggest that the Council intended that National Benzole should be able to use the freehold land in the manner that they had permitted. That was as a garage with access to Stratford Road and Reddings Lane. The permission actually referred to two crossings to Stratford Road and Reddings Lane.
41. There is no evidence that the Council intended that the required access should be provided by a lease. In fact the evidence is to the contrary. The lease was perceived to be required because of National Benzole's wish to position 4 pumps and a kiosk on the adjoining land. If it had been the Council's intention that the lease would provide the access, it would have included the adjoining land to the east of the freehold land to give access from Reddings Lane. Further, there is no evidence that anybody considered the effect of the grant of an easement over the adjoining land. Certainly the documents do not show that the lease was agreed to avoid any potential trouble that could arise if the road widening scheme was implemented.
42. I conclude that the planning permission granted by the Council shows what was the common intention of the parties as to the user of the freehold land. It was a garage/service station which would be accessible to the public from both Stratford Road and Reddings Lane. I also conclude that the easements claimed are necessary to give effect to that intention. The lease does not provide any access from Reddings Lane and in any case does not provide the permanent access intended by the parties.

Section 62(1) of the Law of Property Act

43. Section 62(1) provides:

"A conveyance of land shall be deemed to include, and shall by virtue of this Act operate to convey, with the land, all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, watercourses, liberties, privileges, easements, rights and advantages, whatsoever, appertaining to reputed to appertain to the land, or any part thereof, or at the time of conveyance, demised, occupied, or enjoyed with or reputed or known as part or parcel of or appurtenant to the land or any part thereof."

44. Mr Martin accepted that to succeed in establishing rights pursuant to section 62 he had to prove that, at the date of the deed of exchange, National Benzole were occupying the freehold land for the purpose of construction. He submitted that that could be proved by inference. First he drew attention to the fact that the obligation under the 1939 agreement had only been extended to 1st July 1959 and that the deed of exchange was not signed until 22 days later. From that he asked the court to infer that more than one of the construction obligations under the 1939 agreement had been carried out. A clever suggestion: but not one which appeals to me as providing proof, even on a balance of probabilities, that any construction had taken place by the date of the 1959 deed of exchange. More likely clause 3 of the deed of exchange, which used the words "to be constructed", indicated what actually was the position.
45. Mr Martin also drew to our attention to the licence. It was said to have started on 18th April 1959. If so, Mr Martin submitted, construction must have started before the 1959 deed of exchange was signed on 23rd July 1959. I disagree. There is no evidence as to what had been constructed by 18th April 1959 or how quickly any building that had to be built could have been completed.
46. The factual basis for grant of access pursuant to section 62 was not established.

Specific Performance

47. Clause 3 contained a covenant that the Council would "as and when practicable" make the access. Mr Martin submitted that that required the Council do the work and incorporate the adjoining land into the highway and to make when physically possible. I disagree. The word "practicable" needs to be construed in context where it was the Council who had to do the incorporation and to make available the access. A Council has to act in the interest of the public and according to the law governing their actions. If the road widening scheme was not to be implemented it could not be "practicable" for the Council to put the adjoining land into the highway. That restricted meaning becomes even clearer when it is appreciated that the obligation that the adjoining land should be incorporated into the highway is independent of the obligation in the last part of clause 3(a). Thus even if National Benzole have a right of access as claimed, the Council, according to National Benzole, is in breach of its obligation to make and incorporate the adjoining land into the public highway. This ground of appeal must fail.

Conclusion

48. I would allow the appeal.

LORD JUSTICE SEDLEY:

49. Gratefully adopting the account of the history and issues set out in the judgment of Aldous LJ, I agree with him and with Arden LJ that even if one ignores, as one must, the antecedent correspondence as an aid to construction, the factual imminence of the garage redevelopment gives obvious meaning to "the new premises" as going well beyond the installation of temporary pumps. What I do not accept – and this will matter – is that the council as planning authority can be taken in this or in any other relevant context as speaking for the council as landowner. The two capacities and the public law obligations they entail are different and potentially in conflict. Thus a council may not grant itself as landowner a planning consent which it would have refused to a private developer.
50. Aldous LJ would read "so that" in the critical covenant as "and that". Arden LJ does not so read the third limb of the covenant and considers it, so far as it has meaning, to have been satisfied by the contemporaneously executed lease. My conclusion corresponds with that of Arden LJ, but not the entirety of my reasons.
51. It appears to me, with respect, that Aldous LJ's reading not only radically alters the meaning of the covenant in one party's favour (in itself making it extremely doubtful whether this can have been simply a poorly expressed mutual intent), but alters the logic and purpose of the entire clause. It turns it from an arrangement to widen the highway without reducing access into an obligation amounting to a fee simple easement unrelated to the widening of the highway and related entirely to the convenience of the petrol station's business. This cannot be right.
52. But I am not wholly content with Arden LJ's alternative reading because it too changes the meaning of clause 3(a) when in my respectful view there is no need to do so. The literal meaning and effect of limb 3 are simply that if road widening begins before or while the new premises are constructed, access must be provided to the new premises as soon as they are ready. No doubt, given the anticipated delay before any road widening took place, the provision was likely to be unnecessary; but unnecessary is not the same as meaningless. It would not have been the first time, nor assuredly will it be the last, when an intelligible but idle provision is inserted into a conveyance.
53. In the result, though for reasons which not only differ from those of Arden LJ and the deputy judge but were not embraced with any enthusiasm by Miss Jackson QC when offered to her in argument, I would hold that there is no express term of the kind for which Mr Martin so ably contends.
54. It is for largely the same reasons that I would reject Mr Martin's argument that the conveyance impliedly granted or necessarily created an easement of access from both Stratford Road and Reddings Lane. I think it is necessary to distinguish the two roads with some care. Once the lease was granted, there was no necessity for access by some other right from Stratford Road. Since the lease and conveyance were executed in contemplation of one another, I agree with Arden LJ that neither Stafford v Lee implication nor Barry v Hasseldine necessity comes to Mobil's aid.
55. Once this was the case, however, there was equally no necessity of access from Reddings Lane. Such access was no doubt desirable and commercially valuable, but that is not enough. In respectful disagreement with Arden LJ, it seems plain to me that from 1959 access from and to Reddings Lane will have been (in the case of the northern entry) by acquiescence and (in the case of the southern one) neither by acquiescence nor by force nor by stealth and so eventually – as is conceded – by prescription.
56. To imply or insist upon any such easement, moreover, whether on the Reddings Lane side or on both sides, would be to introduce as from 1959 a right which in the event of highway widening the council would have had to buy out. Not only does it seem to me that this cannot possibly be ascribed to a poorly expressed mutual intent; I consider, with great respect to the contrary view of Aldous LJ, that it is impermissible to deduce it from the grant of planning permission for the site.
57. Planning permission concerns permitted user; it is unconcerned with the existence or non-existence of the rights needed to achieve what is permitted; it can relate to land in which the applicant has no legal or equitable interest at all. For reasons touched on earlier in this judgment, a local authority qua planning authority may consult itself qua landowner for information, but it may not consult its own interests either as landowner or (at least where money is involved) as highway authority. While there are certainly legal situations in which a public authority cannot be heard to say that its left hand did not know what its right hand was doing, there are others – of which this case is an example – in which such a body must be extremely careful to segregate the exchange of information between its departments from the self-interested use of its public powers. The planning department's use of information from other departments in the present case seems to me to have been cautious and proper, and the corporation and its successor ought not now to be treated as if they had misused their planning powers and deployed them as landowners.
58. I am thus in respectful agreement with Arden LJ in relation to Stratford Road but not to Reddings Lane. It seems to me with respect that the first declaration she proposes, and the second so far as it touches Reddings Lane, are inappropriate for the reasons I have given; and that the second, so far as it touches Stratford Road, deals with an uncanvassed and speculative question. For my part I would confine this court's decision to dismissing the appeal.

LORD JUSTICE ARDEN:

59. I agree with Aldous LJ on the section 62 issue, the issue of specific performance and that the respondent's notice must be allowed. However I have come to a different conclusion on (1) the question of the effect of clause 3(a) of the deed of exchange dated 23 January 1959 between Birmingham Corporation ("the Corporation", whose successor in title is the respondent), and National Benzole Company Ltd ("NB") when taken with the lease made between the same parties of even date, and (2) the issue whether an easement can be implied as a matter of law. The appellants in these proceedings are successors in title to NB, and in this judgment I will refer to them both, drawing no distinction between them.
60. I gratefully adopt the description of the background in this case given by Aldous LJ. I refer to the freehold land on which the garage stands and which belongs to the appellants as "the freehold site" and to the land which surrounds it and which the respondent owns as "the adjoining land".
61. The critical passage in clause 3(a) provides:-

"the Corporation hereby COVENANTS with the Company that the Corporation shall as and when practicable (a) make up and incorporate the land coloured blue on the said plan A attached hereto fronting the land coloured pink hereby conveyed to the Company into the public highway [limb 1] and shall at the same time form such access and crossings to the said land coloured pink as are reasonably necessary for the efficient carrying on of the Company's trade and or business as Garage Proprietors and sellers of petrol [limb 2] so that access shall be available for purposes of the Company's trade and or business and customers by the time the new premises to be constructed by the Company are open for trading [limb 3] …" (References to limbs 1, 2 and 3 added).

62. It is common ground that clause 3 of the deed of exchange must be construed in its factual matrix and having regard to all information and documents that were reasonably available to the parties at the date of the deed of exchange (see Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 to which Aldous L J refers). In considering the factual matrix, the history of the deed of exchange is obviously important and Aldous LJ has explained the circumstances in which the sale agreement dated 26 July 1939 was entered into. The time for performance of certain obligations imposed by that agreement was extended at various times. Aldous LJ has also referred to the letter 17 July 1956 ("the 1956 letter") and the planning permissions obtained in 1958. I will not repeat those matters. Further important elements of the factual matrix are as follows:-

(1) The physical characteristics of the freehold site and the adjoining land. Apart from the (important) fact that the freehold site was land-locked, there is little further information but I summarise the judge's findings in the next paragraph.

(2) It is clear from the 1939 agreement that the parties intended that the freehold site should be used as a garage and for the sale of petrol.

(3) As regards access, the Corporation had agreed in the 1939 agreement and the 1956 letter to provide such access across the Corporation's land as was reasonably necessary for the efficient carrying on of NB's business as garage proprietors and sellers of petrol and furthermore that that access would be available for the purposes for NB's trade and customers by the time the new premises on the freehold land were opened for trading.

(4) The Corporation could not (then or now) use the land for anything other than use in conjunction with the freehold site.

(5) Under the lease of the adjoining land the tenant would be a business tenant and entitled to protection under the Landlord and Tenant Act 1954.

(6) Clause 2(3)(b) of the lease expressly permitted the tenant to use the adjoining land for the purpose of access to the freehold site.

63. There is little further information about the physical characteristics of the adjoining land and freehold site at the date of the deed of exchange. There is a plan attached to the application for planning permission in 1958 but it is unclear whether this was attached to the original planning permission or to a later amendment of it. In any event, such a plan could not without more represent any common intention of the parties, only that of the applicant. There is a plan attached to the lease, which shows the same physical features as existed in 1939 but this was copied from an old plan since it shows a property called Green Bank which was at the eastern point of the site but which had been demolished before the deed of exchange. (We do not know the date on which it was demolished). That plan shows that there were trees and what looks like a close-boarded fence at the side of the freehold site which adjoins Reddings Lane. Moreover as I have said, I agree with Aldous LJ's conclusion that the judge's finding that work had been begun on the site before the deed of exchange and lease were executed is not supported by the evidence. It follows that any access point from the highway made by the respondent must have been constructed after the date of the deed and the lease. However while the plans do not support a common intention on the part of the parties, it is clearly part of the factual matrix that on 16 January 1958 the respondent gave planning permission to include access to Reddings Lane and Stratford Road.

Appellant's submissions on the construction issue

64. Mr John Martin QC, for the appellants, submits that limb 3 of clause 3(a) was intended to add a positive obligation to provide access to the appellants without charge by way of a right in fee simple or by virtue of a perpetual licence or lease to last until the road widening took place. He submits that it is not legitimate to take the course which the judge did in disregarding the words "by the time the new premises are opened for business". Taking that course the judge in effect disregarded the whole of limb 3. On the contrary the word "and" or "but" should be read in to clause 3(a) immediately before "so that".
65. Mr Martin relies on the intention of the parties which on his submission was to give access to both Stratford Road and Reddings Lane. He relies on the planning application.
66. Mr Martin submits that the expression "the new premises" in clause 3(a) of the deed of exchange cannot be some putative new premises to be built once the adjoining land is taken for road widening. In any event the pumps and kiosk could not be described as "new premises".
67. Mr Martin submits that clause 3(a) should be construed against the grantor, now the respondent. The grantor was retaining the adjoining land but transferring the freehold land. The right of access could not be construed so as to be inconsistent with the grant of the freehold site to which the appellants would not otherwise have access.
68. The idea of the lease arose by accident because an official dealing with the planning application noted that the plans provided for the pumps to be placed on the adjoining land. Therefore, submits Mr Martin, it is unlikely that the lease was intended to be a substitute for access in clause 3(a).

Respondent's submissions on the construction issue

69. Miss Judith Jackson QC, for the respondent, submits that there are two ways of construing limb 3 of clause 3. Either it is inconsistent with limb 1 and must be disregarded, as the judge held. Alternatively the expression "the new premises" means the pumps and kiosk as reconstructed on the freehold land. Therefore limb 3 does not take effect until the road widening scheme is implemented.

Appellant's submissions on the implied easement issue

70. In the alternative Mr Martin argues that the judge ought to have held that there was a right of access between points A to B, C to D and E to F as a matter of law. In this connection he relies on Stafford v Lee (1992) 65 P&CR 172 which established that in order to show an implied right of way in these circumstances the claimant must establish (1) a common intention as to some definite and particular user of the dominant tenement and (2) that the easement he claims are necessary to give effect to that user.
71. Mr Martin submits that the freehold site was land-locked. From this it would follow there would normally be implied a right of way irrespective of such common intention: see Barry v Hasseldine [1952] Ch.835.
72. Mr Martin submits that the parties intended that the freehold site should be used as a garage and a filling station. He submits that the rights of way claimed were clearly necessary if the lease had not been executed. So far as the lease is concerned it is not sufficient to meet the easement of necessity that leasehold access is given. The lease is only for fourteen years and the rent is subject to review. (An easement of necessity would have significant implications for the level of rent payable under the lease).
73. Mr Martin submits that it is not logical for there to be access only to Stratford Road and accordingly the execution of the lease does not deal with the fact that the parties clearly intended (on his submission) access via Reddings Lane as well.
74. It was only by accident that the lease was brought into being (see above).
75. By the 1956 letter, the respondent agreed to "provide such temporary access as may be necessary to both the existing and new sites in accordance with clauses 16 and 17" of the 1939 deed. The respondent therefore committed itself to provide the access now claimed.
76. Mr Martin contends that the appellants need, and are entitled to, permanent access. He further submits that it cannot have been intended that the respondent should be able to demand a ransom rent for access via the adjoining land.

Respondent's submissions on the implied easement issue

77. Miss Jackson submits that evidence does not show that at the time of the execution of the deed of exchange and the lease the parties intended that there should be access points on to Reddings Lane.
78. Miss Jackson also submits that the parties could not have intended that there should be an easement in fee simple because the respondent would need the land in due course for road widening. To be a legal easement the right of way would have to be either in perpetuity or for a term of years (Law of Property Act 1925, section 1). It could not have been agreed for a term of years because there was no agreement to that effect.

Conclusions

The construction issue

79. I am in agreement with Aldous LJ and the appellants that the words "the new premises" in clause 3(a) mean the premises which as at the date of the deed of exchange and lease were then about to be constructed, namely the garage premises on the freehold site and perhaps the pumps and kiosk on the adjoining land. I do not think they can sensibly refer to pumps and kiosk which might be constructed in the future as a result of moving the proposed pumps and kiosk from the adjoining land to the freehold land.
80. I also observe that in limb 3 the access referred to is not "such access" which would restrict the word to "access" as described in limb 2. Access as described in limb 2 is access from the freehold site to the adjoining site on the incorporation of the latter into the public highway. In those circumstances, given the construction of "new premises" which I have preferred, and differing on this point from the judge, the word "access" in limb 3 must in my judgment mean access from the freehold land across the adjoining land to the highway before road widening takes place. Accordingly, what is conferred is an interim right of access. The three parts of clause 3(a) accordingly provide for the making up and incorporation of the adjoining land into the road scheme (limb 1), the forming of access points (limb 2) and a requirement that interim access be made available by the time the company starts to trade (limb 3). If to achieve this "so that" at the start of limb 3 must be read as "and that", so be it. The substance of the obligation of limb 3 has to prevail over any infelicities in the use of the words "so that" rather than "and that". It is easy to see how the mistake has been made. Clause 3(a) represents an obligation in the 1939 agreement with the words "as and when practicable (a) make up and" inserted. The draft could easily have overlooked what is no more than a consequential amendment at the start of limb 3.
81. Accordingly limb 3 deals with the question when access is to start. It also requires access to be "available". However it does not state when interim access is to terminate. In my judgment the point at which the right of access terminates, so far as Stratford Road is concerned, is dealt with in the lease. The likely event for the termination of the lease would be the implementation of road widening. The other possibility contemplated was the termination of planning permission on the adjoining land. However Mr Martin was hard pressed to think of circumstances in which the revocation of planning permission (without road widening) could occur and in any event if it did occur the termination of the lease was merely an option for the lessee: the appellants would not have to terminate the lease and could therefore continue to have access to the freehold site. As I see it the obligation in clause 3(a) to provide access to Stratford Road was wholly performed by the lease and no one considered that the execution of the lease would not satisfy the reasonable requirements of the owner of the freehold land in that regard. If the appellants continue to want the rights granted to them by the lease, they have to accept that their rights of access are those granted by the lease. The Court should not seek to imply a right of way which they do not need and which may have repercussions on the re-negotiation of rent by the procedure agreed in the lease.
82. We are not concerned at this point with the situation which might arise at the end of the lease in circumstances where the freehold site has ceased to be used as a garage and filling station. In my judgment clause 3(a) does not give access for the purposes of any other business. There is no present intention to discontinue that business.
83. So far as the principle of non-derogation from grant is concerned, I do not consider that that presumption is applicable because, once clause 3(a) is construed against its factual matrix, its meaning is clear. In addition it is difficult to see how that presumption can be applied when the question at issue is whether any right of access at all has been granted.

The implied easement issue

84. At the date of the lease and deed of grant the parties intended that NB would use the freehold site as garage proprietors and for a filling station. They also contemplated that at some point the adjoining land would have to be used for road widening. In my judgment that common intention is inconsistent with the grant of any easement of necessity in fee simple. That would result in the creation of an interest which would have to be acquired later by compulsory purchase. The road widening scheme current in 1959 has been revoked but in due course another scheme may be put in its place, and clause 3(a) does not limit any road widening scheme to the one in force in 1959. Subject to that point, I now turn to deal separately with the rights of access claimed to Reddings Lane and Stratford Road.

Reddings Lane

85. We are only concerned with the northern exit since that on the south has been acquired by prescription. As I see it, from the terms of the 1939 agreement and the 1956 letter, the Corporation must have been content to provide such access to the freehold site as the appellants reasonably required for the purposes of their garage business. Accordingly it could not object to access over the adjoining land at Reddings Lane for that purpose: Stafford v Lee, above. However it would be going too far to say that that access was for the purpose of any other use of the freehold site. It is not shown that the common intention was any wider than I have stated.
86. In addition, as I have explained, the right of way could not in my judgment be in fee simple as both parties intended that the adjoining land should be taken for road widening in due course. In those circumstances it would in my judgment be contrary to the intentions of the parties to grant them any further right of way than a right of way in the interim period until the road widening took place.

Stratford Road

87. The lease set out rights of access across the adjoining land to Stratford Road. The lease was a business tenancy and therefore conferred a significant measure of security of tenure.
88. It is difficult to see how the Corporation could recover possession of the adjoining land for redevelopment since redevelopment for some purpose other than the highway was unlikely: indeed Mr Martin accepted in argument that the Corporation could have not use for the leased land other than for road widening. Likewise revocation of the planning permission was an unlikely event but if it happened then the tenant could still continue the lease. Limb 3 of clause 3(a) conferred rights of access which were formally given by the lease of even date. Accordingly, in my judgment the judge's conclusion that the appellants had not established an easement of common intention and necessity to Stratford Road is correct, subject only to the possibility considered in the next paragraph. Moreover, the execution of the lease in the circumstances of this case subsumed any right of access granted by the 1956 letter so far as Stratford Road was concerned, again as the judge held. There is no reason to think that the parties intended any further right of way to Stratford Road than that granted by the lease. The lease would meet all the needs of the owner of the freehold site when carrying out the user agreed upon prior to the execution of the lease and deed of exchange.

Cesser of garage business and termination of the lease

89. It must not be forgotten that the freehold site is land-locked. The lease of the adjoining site which currently provides a right of access to the public highway might terminate, for example because the tenant was no longer able to comply with the permitted user clause. The parties had no common intention about that eventuality. My provisional view is that, subject to the possible application of the rule against perpetuities, there has to be an implied right of way of necessity on the Barry v Hasseldine basis from the freehold site to Stratford Road and/or also to Reddings Lane which comes to operation if the lease terminates and the tenant no longer has a garage business. For this purpose, the necessity would have to be judged as at the date of the deed of grant, so that the right of way to Reddings Lane which the appellants have since acquired by prescription would not be relevant. Mr Martin points out that in Barry v Hasseldine the fact that the owner of the land-locked site had conditionally abandoned the easement of necessity did not prevent him from enforcing that easement once his alternative means of access had determined. Miss Jackson on the other hand contends on the authority of Dunn v Blackdown Properties Ltd [1961] Ch. 433 that any such easement would be void under the rule against perpetuities. These points have not been fully argued and therefore I express no concluded view on them. However, so long as there is a garage business, the required element of necessity is not present or the right is in abeyance because of the right of access conferred by the lease to Stratford Road and because of the right of way to Reddings Lane which arises on the Stafford v Lee basis (see above).

Outstanding issues

90. We have only heard argument on the issues of principle. We have not been concerned with the precise location of any right of way. Likewise we have not been concerned with the question whether any right of access for the purposes of a garage business should be determined by reference to the garage business as proposed in 1959 ignoring any subsequent extension or development in that business.

Summary

91. In my judgment the appeal should be allowed for the limited purpose of declaring that, the owner of the freehold site has a right of way to Reddings Lane for the purpose of a garage business and filling station on the freehold site by way of an implied easement on the Stafford v Lee basis, but so that such easement shall determine if and to the extent that a scheme for widening Reddings Lane is implemented.
92. I would further direct that the parties are to be at liberty to apply to the High Court for directions so that the court can determine any issue as to the location of such right of way which is not agreed.
Order; Claimant's appeal allowed in part; cross-appeal allowed; the claimant to pay 90 per cent of the costs here and below; permission to appeal to the House of Lords refused. (Order does not form part of the approved judgment)