England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Rolls Building. Fetter Lane, London. EC4A 1NL
		02/11/2012

Mr Justice Morgan:

Introduction

1. This judgment concerns a transfer of land dated 30^th November 1989 and made between Richard Walby, known as Dick Walby, as the transferor and his son Malcolm Walby, as the transferee. In these proceedings, Dick Walby claimed rectification of the transfer so as to exclude certain land and buildings. That claim was based on his assertion that he had made a mistake at the time of the transfer which led to the extent of the land transferred being wrongly expressed. I have already given judgment in relation to the claim for rectification of the transfer. I held that Dick Walby did not make any relevant mistake at the time of the transfer and the transfer should take effect in accordance with its terms.
2. At the trial of the rectification claim, the Claimants raised a further question as to whether, if the transfer were not rectified, the transferor impliedly reserved to himself two easements, the first being an easement of drainage and the second being an easement of support for buildings retained by the transferor. I reserved my decision on that question and that is now the subject matter of this judgment.

The background facts

3. In my judgment dealing with the rectification claim I set out the factual history in some detail. In order to understand the present judgment dealing with the possible reservation of easements, I need to summarise some of those factual matters.
4. The land and buildings which were the subject of the transfer were at Upton Farm, Berwick St John, Shaftesbury, Dorset. In the 1970s, the land and buildings at Upton Farm were all owned freehold by Dick Walby. In 1974, Dick Walby and his wife entered into a farming partnership to farm Upton Farm. On the same day, Dick Walby as freeholder granted a tenancy of Upton Farm to himself and his wife. At some point, their eldest son (Andrew) began to assist his parents in running the farm. On 31^st March 1986, Andrew was taken into the farming partnership with his parents. It was agreed that the tenancy of the farm was held for the benefit of the partnership. In 1984, Dick Walby transferred part of Upton Farm to Andrew, subject to the existing tenancy. Dick Walby's wife died in 1988 whereupon the legal title to the tenancy vested in Dick Walby alone, by survivorship. The tenancy has continued in existence at all times thereafter up to the present day. The tenancy was protected by the Agricultural Holdings Act 1948 and later the Agricultural Holdings Act 1986. The succession provisions contained in Part IV of the Agricultural Holdings Act 1986 apply to the tenancy.
5. On 30^th November 1989, Dick Walby executed two transfers of two parts of Upton Farm, subject to the existing tenancy. One transfer was to another son (Alistair). The other transfer was the transfer to Malcolm which is now material. I will refer to the terms of that transfer in more detail later in this judgment. In around 2001, Dick Walby sold to Andrew all of the land which he had retained at the time of the 1989 transfers. By two transfers executed in 2010, Malcolm Walby transferred most of the land, which had been the subject of the 1989 transfer to him, to his wife Laura. He retained the farm yard and buildings which were the subject of the 1989 transfer.
6. If the transfer to Malcolm had impliedly reserved an easement of drainage and/or an easement of support, then the servient land is still owned by Malcolm (i.e. it was not part of the land transferred to Laura) and the dominant tenement is now owned by Andrew (having been sold to him by Dick Walby in 2001).
7. Before turning to the terms of the 1989 transfer to Malcolm, it is necessary to describe the physical layout of the farmyard at the time of that transfer. The farmyard lies on a comer formed by a road running to the north and a road to the east of the farmyard. The farmyard slopes downwards from the southern end of the farmyard towards the road to the north. Nearest to the road, which runs to the north of the farmyard, is a building described as a grain dryer or store which was sold to a third party in the 1960s and is not material to the present dispute. To the south of this building, is a farm yard which has been concreted in the past. To the west of the concreted yard is a large portal frame general purpose building. There are silage clamps between this large portal frame building and the grain dryer/store to the north. To the south-east of the large portal frame building is a steel frame stock building sub-divided into stock pens and open-fronted with gates. To the east of the large portal frame building, on the other side of the concreted yard, is a range of older stone-walled buildings. These stone-walled buildings are in two sections, to which I will refer as the front stone buildings and the rear stone buildings. Both the front and the rear stone buildings are L-shaped. There is an area of open yard between the front and rear stone buildings.
8. There is a drainage system which serves the farmyard and some of the buildings. I will describe the arrangement of this drainage system at the present time and I will then consider what the evidence shows as to the arrangement of the drainage system at the time of the 1989 transfer. In the rear stone building there are two or more catchpits set into the floor of the building. When the catchpits were installed, that building was used to house a dairy herd. Effluent from the herd could run into the catchpits and enter the drainage system at that point. In the yard to the north of the rear stone building there are two or more further catchpits. If animals were standing in the yard near to those catchpits, then effluent from the animals could run into those catchpits and enter the drainage system. In addition, rain falling in that area of the yard could run into those catchpits. In the front stone buildings, there was a further catchpit set into the floor of the building which could receive any effluent or other liquid at that point. As regards the yard between the large portal frame building and the stone buildings, rain falling on that yard would run off in the direction of the road to the north of the yard and would run into two catchpits set into the yard. All of the catchpits to which I have referred gave access to an underground drainage system which drained into a large settlement chamber on the east side of the farmyard. The contents of the settlement chamber could be pumped out into an underground system which ran from the east side of the farmyard and towards the west side of the farmyard. The underground system then continued in a westerly direction through an open field to the west of the farmyard. The underground system then arrived at a point which was described as a "take off" point. Then the underground system turned south underneath an open field passing a second take off point and ending in a third take off point. Up to the point where the system turned south, it ran through a field included in the 1989 transfer. From the point where the system turned south, it ran through a field not included in the 1989 transfer and therefore retained by Dick Walby at that stage. I was not given any detailed evidence as to the drainage of rain water falling on the roofs of the buildings in the farmyard but there were general references in the evidence to rain water falling on such roofs finding its way into the drainage system.
9. The above description of the drainage system refers to the position at the present time. There was an issue as to when a drainage system of this kind was installed and whether it had been altered between its first installation and its present layout. It should have been obvious that it was critical to the Claimants' case that they establish the existence of and the layout of any drainage system at the time of the 1989 transfer. In fact, the evidence provided by the Claimants was self contradictory and inadequate. What may have happened in that respect is that the Claimants' evidence was served at a time when there was no pleaded issue as to the reservation of easements. Then in August 2012, not long before the trial, the Claimants amended their claim to assert that easements of drainage and support had been impliedly reserved by the transfer to Malcolm. However, the Claimants did not attempt to give any evidence as to the existence or layout of any drainage system at the time of the 1989 transfer. The Claimants did serve a surveyor's report after they had amended their claim; that report gave some information as to the present position in relation to drainage but did not provide any information as to the position in 1989.
10. To make matters worse for the Claimants, they called Mr Dick Walby as a witness and his witness statement stated: "I installed a drainage system shortly after the Transfer was done" (my emphasis). When Mr Dick Walby came to give his evidence, he confirmed that the contents of his witness statement were true. He was not asked to reconsider his written evidence that the drainage system was installed after the transfer to Malcolm. During his cross-examination, he was asked about a quotation for drainage work which was dated 18^th March 1989, which was before the date of the transfer to Malcolm. This quotation had been provided to the court on the first day of the trial. Dick Walby stated that he did not have the invoice from the contractor who had provided the quotation and he did not have any partnership accounts for 1989 or 1990 which could show any relevant expenditure on drainage. Mr Dick Walby was not re-examined as to the time when the drainage system was installed.
11. The Claimants then called Andrew Walby as a witness. In his witness statement, he referred to work done to concrete the yard in about 1994. He then said that the farm yard had been very carefully designed so that water from the covered yard roofs and dirty water ran into a specially designed drainage system so as to prevent flooding in the village. He said: "we would not have made that level of investment if there had been any thought of having to give up the yard to Malcolm at any time". That statement seemed to refer to the time when the partnership made its decision to incur expenditure in connection with the drainage works. If the drainage work had been done before Dick Walby decided to transfer some land to Malcolm, then the comment was not apposite. If the drainage work had been done after Dick Walby decided to transfer some land to Malcolm then the comment might have made more sense. On the evidence before me, Dick Walby had formed a general intention to transfer some land to Malcolm from around late April 1989 and by 18^th May 1989 he had participated in identifying the land to be transferred so as to include land which included part of the farmyard. I consider that Andrew Walby prepared his evidence in his witness statement to suggest that the decision by the partnership to carry out drainage works was after the transfer to Malcolm and at a time when the partners did not appreciate that part of the farmyard had been included in that transfer. As it happens, this comment in the witness statement involved some reconstruction of what really happened in this case. Nonetheless, for present purposes, it does not amount to positive evidence that the drainage system existed before the transfer to Malcolm.
12. Andrew Walby was cross-examined about the works to the yard which he said had been carried out in 1994. He explained that with further concrete being laid, there was more run off of rain water and the partnership had to "keep up" with the drainage. He said that they "improved the gutters as well". He said that before the partnership made changes to the drainage (i.e. in 1994) there had been a succession of collecting places which had been upgraded over time. He said: "I am struggling with whether pumping was there in 1989".
13. The Claimants called Dick and Andrew Walby on the first day of the trial. On the first day, the Claimants provided the court with the quotation dated 18^th March 1989 to which I referred earlier. At the beginning of the second day of the trial, the Claimants produced some documents which referred to some survey work (as to levels) being carried out at Upton Farm in late February 1989 followed by certain drainage work in the period from March to May 1989. A drainage contractor's invoice dated 30^th June 1989 referred to laying drains and irrigation pipes, installing tanks, concreting the yard and installing irrigation mains and hydrants. The sums due as described in the invoice were paid in June and July 1989. An invoice from an irrigation company referred to work of installation and commissioning of an "effluent and dirty water disposal system". The Defendants did not ask to be allowed to re-open their cross- examination of Dick and Andrew Walby after these documents were produced. Further, counsel for the Defendants did not ask me to leave these documents out of account as they had not been produced by any witness. The Claimants did not disclose any documents relating to the work which Andrew Walby had said were carried out in the yard in 1994.
14. The way in which the Claimants handled the evidence as to the state of the drainage system in 1989 was not satisfactory. It seems highly likely that Dick and Andrew Walby could have given reliable evidence as to the work done in 1989 if they had been asked to deal with the 1989 invoices, but they were not. Further, it is likely that the Claimants had documents relating to the 1994 works but they did not disclose them. Further, it was not helpful to the Claimants' case that they led positive evidence from Dick Walby that the drainage works were done after the transfer to Malcolm.
15. I have to consider what to do with this highly unsatisfactory evidence as to the state of the drainage in 1989. I have concluded that I ought to make findings based upon the 1989 documents. Those documents are obviously reliable and contain much useful information. Although it is astonishing that the Claimants called Dick Walby to give evidence that the drainage work was done after the transfer to Malcolm, I am not prepared to accept his evidence on that point nor to hold that the Claimants are prevented from asking the court to make a different finding, if the 1989 documents compel a different finding. In that regard, it helps the Claimants that in the judgment I gave in relation to Dick Walby's claim to rectification, I held that he was not a reliable witness.
16. Accordingly, based on the 1989 documents, I conclude that before the transfer to Malcolm on 30^th November 1989, the partnership installed in the farm yard a drainage system which consisted of catchpits in the buildings and yard (as earlier described), some concreting of the yard, underground pipes leading to a tank and an irrigation system which led from the tank to points in the fields where there were "hydrants", which I consider are what I earlier referred to as "take off" points. The way in which the Claimants presented their case has left me unable to make any useful findings as to what changes were made to the drainage system in 1994 save that it is likely that the partnership did some further concreting work at that time.

The 1989 transfer

17. Against that background, I now refer to the 1989 transfer from Dick to Malcolm Walby. Dick Walby's title to the relevant land was registered at HM Land Registry. The transfer was in the form appropriate for the transfer of a part of an existing registered title. The transfer referred to the registered title and described the property as "Land at Upton Farm Berwick St John". The transfer was expressed to be in consideration of natural love and affection. The transfer then referred to the land as edged red on an attached plan.
18. The plan attached to the transfer was based on the 1900 Ordnance Survey. It showed the part of the farmyard and the part of the open field to the west of the farmyard which were being transferred. As regards the farmyard and buildings, the plan did not show the existence of the large portal frame building because that building did not exist in 1900. It did show the rear stone buildings. It showed part of the front stone buildings. The land transferred was shown by a straight red line running from west to east. It clearly ran through the rear stone buildings rather than around the perimeter of them. All of the land to the north of the red line up to the northern end of the farmyard (apart from land such as the grain dryer/store which did not belong to Dick Walby at the date of this transfer) were included in the land transferred.
19. The red line on the plan does not appear to follow physical features on the ground. It would be challenging to define with precision the boundary of the land conveyed. In the present litigation, neither side asked the court to determine the precise boundary of the land transferred and, in particular, neither side sought a determination of the boundary where it divided buildings which existed at the date of the transfer. It is nonetheless clear, in relation to the rear stone buildings in particular that the northern part of that range of buildings is within the land transferred and the southern part of them is not. This has given rise to the claim by the Claimants that there must have been impliedly reserved by the transfer an easement of support in favour of the part of the buildings then retained by Dick Walby over the part of buildings then transferred to him. Further, as regards the yard between the front and the rear stone buildings, part of that yard was transferred and part was retained.
20. The transfer to Malcolm was executed by Dick Walby. I was not given any evidence that the transfer was ever executed by Malcolm Walby. I was also not given any evidence as to any involvement by Malcolm Walby in any communications between Dick and Malcolm Walby prior to the transfer.
21. Following the transfer, the solicitor acting for Dick Walby arranged for the land transferred to Malcolm to be registered at HM Land Registry with Malcolm as the registered proprietor.

The rival cases

22. The Claimants' pleaded case was that the transfer impliedly reserved to Dick Walby "such rights of support and/or drainage as were necessary to facilitate the ongoing use of the farm buildings, structures and/or drainage system". It was further pleaded that the facts of the case "give rise to the necessary inference of an intention on the part of [the transferor] to retain the easements contended for".
23. The Defendants say that no reservation of a right of drainage is to be implied. Conversely, the Defendants do not dispute that a right of support for buildings from buildings was impliedly granted and impliedly reserved. I will deal with the position as regards easements of support towards the end of this judgment but I will first consider the disputed claim to an implied reservation of a right of drainage.
24. Counsel for the Claimants put their case in relation to drainage in three ways. The first contention was that an easement of drainage was impliedly reserved as an easement of necessity. The second contention was that the drainage system operated for the benefit of both the land transferred and the land retained and so easements to use the drainage system had been both impliedly granted and reserved as reciprocal easements. The third contention was that the parties to the transfer had intended that the land retained by Dick Walby would be used in a definite and particular manner and a reservation of an easement of drainage was necessary to give effect to this common intention. As will be seen, this case has a number of unusual features. This makes it necessary to consider the relevant legal principles in a little detail before attempting to apply them to the facts of this case.

Unilateral transfers

25. The transfer of what is said to be the servient land was a unilateral act, a gift, by the transferor and the transfer was not executed by the transferee. Moreover, there was no evidence that the transferee had any involvement in the transfer to him.
26. As will be seen, the circumstances in which the law implies the grant or the reservation of an easement in a bilateral transaction have been the subject of a considerable body of authority. Do the same principles apply to a unilateral transfer? A unilateral transfer may be pursuant to an inter vivos deed of gift or an assent to give effect to a testamentary gift. In Phillips v Low [1892] 1 Ch 47, Chitty J considered the position of two parcels of land which had been devised by the same will. He held that there was an implied grant of a right of light for the benefit of one plot on which there was a house the windows of which received light passing over the other plot. It was argued that the principles as to implied grant only applied to a conveyance for valuable consideration and did not apply to a voluntary deed or a will. This submission was said to be "absolutely without foundation". It was stated that the principles as to implied grant applied to an inter vivos gift and that, whether one took account of the intention of both the grantor and the grantee or of the grantor alone, the result would be the same. Further, the principles applied to a will and had been applied in earlier cases which were referred to. This decision was approved by the Court of Appeal in Bee v Thompson [2010] Ch 412 at [31], although that case turned on the express terms of the will rather than any implied grant. There is possibly a difference between gifts by will and gifts inter vivos. Where the will makes two gifts of two adjoining plots, the gifts will be regarded as simultaneous so that the principles as to implied grant, rather than implied reservation, will apply. However, with an inter vivos gift, where the donor retains land, it may be necessary to consider whether there an implied reservation in favour of the land retained, as is indeed the argument in the present case.
27. Before 1926, an easement purporting to be expressly reserved by a transferor of land was in truth granted by the transferee. For this reason, there could only be a legal reservation of an easement in favour of the transferor if the transfer were executed by the transferee. Since 1925, the position is different. Section 65(1) of the Law of Property Act 1925 has the effect that a transfer which expressly reserves an easement in favour of the transferor creates a legal easement, even where the transfer is not executed by the transferee. Section 65(1) refers to the reservation of "a legal estate" but that phrase is to be understood as including an easement for an interest equivalent to an estate in fee simple: see section 1(2) and (4). The operation of section 65(1) is considered in St Edmundsbury v Clark (No. 2) [1975] 1 WLR 468 at 477 - 478. In my judgment, section 65 operates in this way whether the reservation is express or is to be implied. Thus the fact that Malcolm did not execute the transfer does not preclude the Claimants arguing that the transfer impliedly reserved easements to Dick Walby in relation to the land he retained.

The implication of easements

28. There is a long established distinction between the rules which apply to the implied grant of an easement and the implied reservation of an easement. This distinction was clearly made as long ago as the decision of Lord Westbury in Suffield v Brown (1863) 4 De G J & S 185 which was approved by the Court of Appeal in Wheeldon v Burrows (1879) 12 Ch D 31; and see also Adealon International Ltd v Merton LBC [2007] 1 WLR 1898 at [14] - [16] per Carnwath LJ. The distinction derives from the principle that a grantor of land should not derogate from his grant. The implication of a grant of an easement may be appropriate to enable the grantee to enjoy that which has been expressly granted. Conversely, an implied reservation of an easement, in favour of the grantor of the land and adverse to the grantee of the land, may well contradict the principle that the grantor should not derogate from his grant. Hence, there is a prima facie rule that if the grantor of land wishes to reserve an easement he ought to do so expressly and he ought not to be allowed too readily to rely on an implication in his favour of something which he did not express.
29. The distinction is illustrated by the very different approach adopted in the case of continuous and apparent quasi-easements. The question of whether there is an implied grant or an implied reservation typically arises where the owner of land transfers part of that land and retains the other part. Before the transfer, the common owner may have used one part of the land for the benefit of the other part. Such use was not pursuant to a legal easement as the common owner did not have an easement over his own land. The use is often described as being pursuant to a quasi-easement. If the land transferred is the quasi-dominant tenement, then a continuous and apparent quasi-easement may be the subject of an implied grant in favour of the transferee. But if the land transferred is the quasi-servient tenement, then the fact that the land transferred had been used, before the transfer, for the benefit of the land retained will not normally be sufficient to imply a reservation of an easement over the land transferred in favour of the land retained.
30. The Law Commission has recently considered the law in this area. It was critical of the present law and recommended a new rule for the implication of easements so that an easement should be implied if it is necessary for the reasonable use of the land at the date of the grant. The Law Commission also recommended that the distinction between implied grant and implied reservation be abolished: see "Making Land Work: Easements Covenants and Profits a Prendre", Law Comm. No. 327, para. 3.30. However, these recommendations have not yet been enacted and the established distinction and the established principles must be applied in this case.
31. The prima facie rule that the law does not imply the reservation of an easement is subject to exceptions. Attempts have been made to list the relevant exceptions: see Aldridge v Wright [1929] 2 KB 117 at 130 per Greer LJ. However, the other members of the court in that case thought it wiser not to attempt an exhaustive list: see at 124 and 134. The latter view has generally been adopted in later cases. In the present case, the Claimants contend that there are three established exceptions to the prima facie rule and that one or more of these exceptions applies so that the court should hold that there was an implied reservation of an easement of drainage in this case.

Easements of necessity

32. One exception to the prima facie rule is the case of an easement of necessity. This exception is typically relied upon in relation to a right of way of necessity for the benefit of retained land which would be landlocked in the absence of the implied reservation. However, in principle, the possibility of implying an easement of necessity is not confined to an implied right of way but can give rise to the implication of another easement. The test for necessity is a strict one. The facts must be such that the land retained cannot be used at all without the implication of an easement: see Union Lighterage Co v London Graving Dock [1902] 2 Ch 557 at 573; that case concerned a claimed easement of support. It is not enough to show that the easement is necessary for the reasonable enjoyment of the land retained. The test as to whether the land can be used at all without the suggested easement, was applied where the claim was to an implied reservation of a right of way as an easement of necessity: see MRA Engineering v Trimster Co Ltd (1987) 56 P&CR 1.

Mutual easements

33. Another exception to the prima facie rule is where there ought to be implied the mutual grant and reservation of easements. This exception is recognised in Wheeldon v Burrows (1879) 12 Ch D 31 at 59, referring to "reciprocal and mutual easements". It was also recognised in Re Webb's Lease [1951] Ch 808 at 816, 817, where it was said:

" ... rights will be impliedly reserved which are in their nature reciprocal to rights which the grant must be taken to have conferred upon the grantee."

34. This exception is illustrated by a number of examples. If a house gives support to and derives support from an adjoining house and the common owner of the houses transfers one of them and retains the other, then the law will readily imply the grant of a right of support for the benefit of the house transferred and, in return, will imply the reservation of a right of support for the benefit of the house retained: see Richards v Rose (1853) 9 Exch 918. In that case, it was said that each house "necessarily requir[ed] mutual support".
35. In Jones v Pritchard [1908] 1 Ch 630 a house was built with flues on an outside wall. The owner of that house then sold one half in width of the outside wall to the owner of the adjoining land who built a house on that land. It was intended that smoke from the first house would pass through such part of the flues as were on the adjoining owner's side of the line and that smoke from the second house would pass through such part of the flues as were on the first owner's side of the line. It was held that on the sale of one half in width of the outside wall, there was both an implied grant and an implied reservation of a right to use the flues. This case can be analysed as a case of mutual easements or of easements of intended use (discussed below).
36. In Kent v Kavanagh [2007] Ch 1, a common freeholder granted a lease of a house followed by the grant of a lease of an adjoining house to another lessee. The houses were separated by a pathway which was 3 feet wide. Each lease demised one half of the width of the pathway. It must have been appreciated that the pathway could not be used by either lessee without passing over the other half of the pathway, which was included in the other lease. It must have been the intention of the parties to the two leases that that was how the pathway was to be used. In those circumstances, the necessary grant and reservation of reciprocal rights of way were implied: [2007] Ch 1 at [63]-[65].
37. In relation to the claim that the present case involves mutual rights of drainage, the Claimants relied upon Pyer v Carter (1857) 1 H&N 916, as interpreted in Wheeldon v Burrows (1879) 12 Ch D 31. In Pyer v Carter, the owner of a house converted it into two houses and sold off one to the Defendant, initially retaining the other. He later sold the retained house to the Plaintiff. At the time of the sale to the Defendant, the drainage system was as follows. Water from the eaves of the Defendant's house fell on to the retained property and then flowed into a drain which ran first under the retained property and then back under the property sold to the Defendant and then into the public sewer. The retained property was also drained through the same drain which, as explained, ran under the Defendant's property on its way to the sewer. It was held that there had been an implied grant to the Defendant of a right to drain through the retained property. It was also held that there was an implied reservation in favour of the owner of the retained property to drain the retained property through the property sold to the Defendant. The court in that case did not distinguish between the principles applicable to implied grants and implied reservations.
38. The reasoning in Pyer v Carter was criticised in Suffield v Brown (1864) 4 De G J & S 185 where Lord Westbury said he would "wholly refuse to accept it as any authority". Lord Westbury's reasoning was approved by the Court of Appeal in Wheeldon v Burrows (1879) 12 Ch D 31. Pyer v Carter was discussed in detail by Thesiger LJ in that case: (1879) 12 Ch D 31, in particular at 52-53 and 59. He regarded Pyer v Carter as "a case of a somewhat special character". He understood the facts to be that the water which came from the Defendant's house onto the Plaintiffs land was drained back through the Defendant's land. He referred to the fact that the Defendant had blocked the drain under his land and this caused flooding on the Plaintiff's land. He commented that the water which caused the flooding was "the very water coming from the Defendant's house": see at page 52. At page 59 he commented that there was a possible way in which to support the actual decision in that case. He suggested that there could be an implied reservation of an easement over the house sold to the Defendant, for the benefit of the retained land, to allow the owner of the retained land to send back oyer the Defendant's land "that very same water" as the Defendant had drained onto the retained land in the first place. He did not mention the possibility that the owner of the retained land might also wish to drain other water, which originated on the retained land, through the drain on the Defendant's land.
39. As the facts of Pyer v Carter were explained in Wheeldon v Burrows, it was open to the court to hold that there was an implied grant of an easement of drainage in favour of the land transferred (drainage from the eaves of the land transferred was continuous and apparent) and also an implied reservation in favour of the land retained, to get rid of the water which originated on the transferred land, by the pre-existing drainage system which provided for water on the retained land to be discharged to the sewer across the transferred land. The point which is not mentioned in Wheeldon v Burrows was whether the owner of the retained land could also use the existing drainage system to discharge water which originated on the retained land. There might be arguments either way on that point. The argument in favour of extending the implied reservation in that way would be that such an extension would avoid having to determine, in relation to any particular water in the drainage system, where it had originated.

Easements of intended use

40. Another exception to the prima facie rule was stated by Lord Parker in Pwllbach Colliery Co v Woodman [1915] 634 at 646, in these terms:

"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.

... 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."

41. Lord Parker referred to the earlier case of Jones v Pritchard [1908] 1 Ch 630 which I have mentioned above. He also referred to Lyttleton Times Co Ltd v Warners Ltd [1907] AC 476. In that case, the owner of a building leased the upper parts of it to a lessee with the intent that the upper parts would be used as additional bedrooms for an adjoining hotel. The parties intended that the lessor would use the ground floor of the building as a printing works. They believed that use of the ground floor as a printing works would not cause any nuisance to the upper parts. The lessor used the ground floor as a printing works but the noise generated did interfere with the use of the upper floors. It was held that the lessor had impliedly reserved the right to use the ground floor as a printing works, notwithstanding the noise generated by that use.
42. In Pwllbach Colliery Co v Woodman itself, it was held that a lease which recognised that the lessee would, or might, carry on mining operations did not impliedly grant the right to create a nuisance by generating coal dust which landed on the lessor's adjoining land. The coal dust was generated by the use of screening plant installed after the date of the lease. There was no evidence that mining operations could not be carried on without the use of the screening plant.
43. Lord Parker's statement of principle refers to both implied reservation and implied grant. The suggestion by Scrutton LJ in Aldridge v Wright [1929] 2 KB 117 at 126 that Lord Parker was only dealing with implied grant appears unfounded. Lord Parker's statement that the law will "readily" imply a grant or a reservation to give effect to a common intention is no doubt correct as regards implied grant but appears to be over stated as to the possibility of an implied reservation. His comment appears significantly out of step with the many earlier authorities which relied upon the principle of non-derogation for grant to make a real distinction between the readiness with which the court will imply a reservation as compared with implying a grant.
44. In any event, cases subsequent to Pwllbach Colliery Co v Woodman have distinguished between implied grants and implied reservations when applying the principles identified by Lord Parker. In Re Webb's Lease [1951] Ch 808 at 817, Evershed MR appeared to somewhat doubtful about Lord Parker's formulation when applied to implied reservation. He said that an implied reservation "might be possible" and he used the words "[wjhatever be the proper significance of the language I have quoted" when referring to what Lord Parker had said. At 826, Jenkins LJ commented: "[t]he illustrations given by Lord Parker in support of this general proposition seem however to show that it is of less comprehensive import than would at first sight appear". In Re Webb's Lease, the Court of Appeal restated the prima facie rule laid down in Wheeldon v Burrows as to the duty of the grantor to reserve rights expressly from the grant if he wished to enjoy rights which would otherwise derogate from the grant to the grantee. The fact that the right or quasi-right was being openly enjoyed at the time of the grant did not suffice as the basis for implying a reservation of the right to continue that enjoyment following the transfer of the quasiservient land. Before the court can imply the reservation of an easement, it must be shown that the facts are not reasonably consistent with any explanation other than that such a reservation was intended. It does not suffice to show that the facts are simply consistent with the implication of the reservation of an easement.
45. In Stafford v Lee (1993) 65 P&CR 172, a case of implied grant, Nourse LJ commented on Lord Parker's statement in Pwllbach and said that the court was less "ready" to imply a reservation than to imply a grant.
46. The statements of principle in Re Webb's Lease [1951] Ch 808 were applied in Peckham v Ellison (1998) 79 P&CR 276. That case is not so useful as an illustration of the application of the principle because the facts (as summarised at page 298) which were relied upon by the court as making it an exceptional case, where it was right to imply a reservation, appeared (to my mind impermissibly) to include matters which occurred after the date of the relevant transfer of the land.

The application of the above principles

47. I will now seek to apply the above principles to the facts of this case. The first thing to note is that the facts of this case are unusual. The transfer of land and some buildings and part of another building was an abnormal property transaction. I explained above that the land transferred included part only of an existing building and that the boundary between the part transferred and the part retained, wherever precisely the boundary was, did not follow any physical feature of that building. All of the building in question was being used at the time of the transfer for housing diary cattle. Further, the transfer included only a part of the yard in front of that building. All of that yard was being used at the time of the transfer in connection with the cattle. The drainage system in question was installed shortly before the transfer principally to provide drainage for the effluent generated by the cattle in the building and in the yard. Nonetheless, the fact that the freehold title to the northern part of that building, and the northern part of the yard, were transferred to Malcolm and the southern part of the building, and the southern part of the yard, were retained by Dick Walby did not cause any immediate practical problem. This was because all of that building and all of that yard and indeed all of the other buildings and the farm yard were the subject of a tenancy in favour of Dick Walby. He was able to use all of the buildings and the farm yard and the drainage system pursuant to his tenancy and he did not immediately need to rely upon an implied reservation of an easement of drainage appurtenant to the freehold of the retained land. That tenancy was a tenancy from year to year but it was protected by the Agricultural Holdings Act 1986 and, further, the tenancy had the benefit of the succession provisions contained in Part IV of the 1986 Act. Under those provisions, on the death or retirement of Dick Walby, Andrew Walby could apply for a succession tenancy, provided he was an eligible person within section 36 of the 1986 Act. The only time that it would be relevant to know if there was an easement of drainage across the land transferred, and in favour of the land retained by Dick Walby, would be when the tenancy of the land transferred would come to an end. However, if the tenancy of the land transferred came to an end, the result would be that Dick Walby would be entitled to possession of the part of the building where he had retained the freehold but he would not be entitled to possession of the remainder of that building. He would be entitled to possession of part of the yard in front of that building but not all of that yard. That state of affairs would then have an important impact on Dick Walby's ability to use the part of the building, and the part of the yard, he had retained. There must be serious doubt about his ability in such an event to use that part of the building, and that part of the yard, for keeping dairy cattle or indeed any stock. There would be difficulties about access to his part of the building and yard and his part of the building and yard would not be self contained. If his part of the building and yard was not suitable, on its own, for keeping stock, then the drainage system which could drain effluent from his part of the building and yard would be of little importance to the owner of that part of the building and yard.
48. The explanation for this abnormal property transaction was that it was entered into for tax planning reasons. Dick Walby wished to give away to his sons (Malcolm and his brother Alistair, in particular) part of the assets he then owned so that those assets would not form part of his estate on his death and the transfers would be potentially exempt transfers for inheritance tax purposes. Further, it is probably the case that he wished to fragment the farm so as to reduce the value of his retained assets. In the judgment I gave in relation to his claim to rectify the transfer to Malcolm, I set out in detail the evidence which supported this conclusion and I need not repeat that evidence here.
49. Against this background, I have now to ask whether the easement of drainage which is claimed was a necessary easement. Was the land such that it could not be used at all unless such an easement were impliedly reserved? In so far as the land retained consisted of agricultural land (i.e. not including any buildings), then the absence of a drainage easement would not significantly affect the ability to use that land. In so far as the land retained included a part of the building and a part of a yard, where the freehold was severed by the transfer, the ability to use that part of the building and that part of the yard was adversely affected by the fact that it was only a part of a building and a part of the yard and these parts were not self contained parts. Those parts would have to be adapted before they could be put to beneficial use. The absence of a drainage easement would not have much impact on the use that could be made of that part of the building and that part of the yard. In any case, the absence of such an easement would not by itself produce the situation that the part of the building and the part of the yard could not be used at all. In so far as rainwater falling on that part of the building and that part of the yard had been drained into the drainage system prior to the transfer, and the evidence was not very clear on that point, then it might be necessary to arrange for new gutters and down pipes and drainage as part of the process of making the building and yard self-contained but it cannot be said that the absence of an easement of drainage produced the result that that part of the building and that part of the yard could not be used at all. Accordingly, it would not be right to imply the reservation of a drainage easement on the ground that it was an easement of necessity.
50. I will now consider whether an easement of drainage should be impliedly reserved on the ground that the transfer gave rise to an implied grant and an implied reservation of mutual easements of drainage. The Claimants suggested that the present case was similar to Pyer v Carter, as explained in Wheeldon v Burrows. In my judgment, the facts of the present case are nowhere near so compelling as the facts in Pyer v Carter. In that case, the movement of the water started on the transferred land and was the subject of an implied grant of an easement of drainage in favour of the land transferred. The pre-existing drainage system then allowed that water, arriving on the retained land, to be drained back through the land transferred. If there were no implied right of drainage back through the land transferred then the water arriving on the retained land would flood that land. In those circumstances, a court would be able to hold that there was also a reserved right of drainage, reciprocal to the right of drainage impliedly granted for the benefit of the land transferred.
51. In the present case, the movement of the effluent and other liquid began on the retained land. If the transfer had reserved a right to drain onto the land transferred, then the land transferred would have the burden of dealing with that effluent and other liquid; but if there were no reserved right of drainage, then the land transferred could refuse to accept effluent and other liquid from the land retained. In the context of considering whether this is a case of implied reciprocal rights of drainage, it is not helpful to assume that the land retained has the benefit of a right of drainage reserved over the land transferred and then to ask whether one would also imply a grant of a right of drainage in favour of the land transferred. It seems to me to be more helpful to consider whether the land transferred had the benefit of an implied grant of a right of drainage and then to inquire whether there should be a reciprocal right of drainage reserved in favour of the land retained.
52. In Pyer v Carter, it was clear that there was an implied grant of a right of drainage in favour of the land transferred. In the other cases of reciprocal easements, to which I referred above, it was reasonably clear that there was an implied grant of an easement in favour of the land transferred and against that background the court considered whether there was also a reciprocal implied reservation of an easement. In the present case, the Claimants did not make any detailed submissions as to whether there was an implied grant of an easement of drainage in favour of the land transferred. Conversely, the Defendants submitted that there was no such implied grant.
53. The drainage system included catchpits on the land transferred which ran into the storage tank on the land transferred. Use of the drainage system on the land transferred to drain into the settlement tank did not involve any use of an easement by the owner of the land transferred. Those parts of the drainage system were all on the land transferred. If there is to be any case for implying the grant of an easement of drainage for the benefit of the land transferred, that would have to be based on the fact that the drainage system ran across a field on the land transferred and then turned south onto the land retained. Was there an implied grant of a right of drainage onto the land retained at this point in the system?
54. The difficulty in holding that there was an implied grant of a right of drainage onto the land retained at the end of the drainage system was that the system did not provide for liquid to seep away on the land retained. The system provided for the effluent and other liquid to be taken off at hydrant points. If the owner of the land transferred did not have a right to enter the land retained and release the effluent and other liquid onto the land retained, then (so far as this matter was explained in the evidence), unless the owner of the retained land chose to release the effluent and other liquid, the effluent and other liquid would back up in the system and would not leave the land transferred. Accordingly, there could not be an effective right of drainage from the land transferred onto the land retained unless the owner of the land transferred had the right to go onto the retained land and open the hydrants and allow the effluent and other liquid to spray onto the land retained. It might be said that such a right was impliedly ancillary to an implied right of drainage. However, in the absence of an express right of drainage, there would be a strong argument that there should not be an implied right of drainage which depended upon a potentially very invasive alleged ancillary right. Merely going onto the retained land to open the hydrants might not of itself be very invasive but spraying effluent from the system onto the retained land, whatever the time of year and whatever the condition of that land and against the wishes of the owner of the retained land, could be very invasive of the rights of the owner of the retained land.
55. While the land transferred and the land retained were the subject of the tenancy, there was no real need to consider the existence of reciprocal freehold easements. The only time that the question of reciprocal easements would arise would be when the tenancy of one or other parcel of land came to an end. If the tenancy of the land transferred came to an end, it is far from obvious that the owner of the land transferred would wish to use the integrated drainage system to send effluent or other liquid onto the land retained. That system was designed to take effluent from the southern part of the stone building and the cattle yard in front of that building and those areas were not on the land transferred.
56. In my judgment, it is far from clear that there would be, in favour of the land transferred over the land retained, an implied grant of an easement of drainage and an implied grant of a right to enter the land retained to spray effluent and other liquid over the land retained. In those circumstances, I consider that it is difficult for the Claimants to establish the case for an implied reservation of an easement of drainage and effluent from the land retained onto the land transferred.
57. It was not suggested by the Claimants in the course of submissions that the receipt of effluent and water from the land retained might be a benefit to the land transferred. It was not said that it might be beneficial for the land transferred to have a flow of effluent that could be spread on the land transferred. My assessment is that the flow of effluent and other liquid onto the land transferred would be an obvious burden far in excess of any arguable benefit.
58. Standing back, the position appears to me as follows. If Dick Walby wished to reserve an easement of drainage, it was his duty to reserve it expressly. He did not do so. In some cases, it is possible to imply the grant and the reservation of easements of drainage as mutual or reciprocal easements. Having considered the circumstances of the present case, I am not persuaded that the court should find that there was an implied derogation from the express grant to the transferee and hold that he took the land subject to the burden of being obliged to take and deal with effluent and water from the land retained.
59. Lastly, I consider whether the court should imply a reservation to give effect to the obvious intention behind the transaction. If the building which was retained by Dick Walby had been self-contained and useable for keeping stock and if the drainage system would have been a significant advantage for that purpose, and if there had been no tenancy of the land and buildings at the time of the transfer, then I might have been able to imply the reservation of an easement of drainage for the benefit of the freehold of the retained land. I might have been assisted in reaching that conclusion by the fact that the drainage system had been installed by the partnership, of which Dick Walby was a member, shortly before the date of the transfer, to enable the building to be more beneficially used, specifically for keeping stock. Further, it might have been right to be influenced by the consideration that the transaction was a unilateral one, by way of gift. However, the situation as referred to above did not accord with the actual position at the date of the transfer. I have already described the circumstances of this transaction when I considered whether a drainage easement was an easement of necessity. The fact that a freehold drainage easement was not of practical importance while the tenancy subsisted, the fact that the question of a freehold drainage easement would only become relevant on the determination of the tenancy in relation to the land transferred, the fact that in such an event, the relevant part of the land retained would comprise a non self contained part of a building and part of a yard, which would require adaptation before they could be beneficially used, and the fact that it was not obvious that they would be used for keeping stock following such adaptation, all produce the result that it is not possible to say that a drainage easement should be impliedly reserved to give effect to an intention that the land retained should be used in some definite and particular manner.
60. The result is that I do not consider that I can imply into the 1989 transfer the reservation of an easement of drainage in favour of the retained land.
61. That leaves the question of whether the court should imply into the 1989 transfer the implied grant and the implied reservation of rights of support for one part of the building from the other part. The Claimants submit that such rights are to be implied. That is not opposed by the Defendants. I consider that it is in accordance with established principle to imply mutual rights in this way. Such rights are of obvious benefit to both the land transferred and to the land retained. This will be the case whatever happens as regards the use of the retained part of the building following the termination of the tenancy of the transferred land.