IDC Group Ltd & Ors v Clark & Ors

Whether a deed creates a legal easement depends on its construction in context. The deliberate use of licence in a professionally drawn deed may indicate personal rights, despite references to successors and occupiers. Law of Property Act 1925 section 60 does not convert a personal right into a proprietary interest where a contrary intention appears. A purchaser’s notice of an unenforceable obligation does not ordinarily create a constructive trust. Such a trust requires very special circumstances, including a new undertaking affecting the purchaser’s conscience. The benefit-and-burden principle applies where the right and obligation arise under the same deed.

The plaintiffs, owners and head-leaseholders of 23 St James’s Square, sought relief against the sublessee of flat 35 in the adjoining property. A 1969 deed provided fire-escape access through the adjoining premises, but the doorway had later been blocked. The court considered whether the deed created rights capable of binding the defendant and whether any such rights bound her as registered proprietor of the underlease, having regard to the Land Registry entries. The plaintiffs relied on a legal easement, a constructive trust and the benefit-and-burden principle. The second issue was left undecided because the substantive claims failed.

Judgment for the defendant, with costs. The plaintiffs were also ordered to pay the third party’s costs. Leave to appeal was given if necessary.

1. Legal easement. The fire-escape rights were capable in law of constituting an easement, but the issue was the true construction of the deed against its factual background. The professionally drawn deed deliberately used the language of a licence. The words granting a licence, the reference to occupiers for the time being and the provision concerning successors and assigns did not sufficiently indicate proprietary rights. The 1969 deed therefore created only a personal licence.
2. Statutory argument. Although section 205(ix) of the Law of Property Act 1925 defined land to include an easement, right, privilege or benefit in or over land, section 60 was subject to a contrary intention in the conveyance. The Act did not convert a personal right into a freehold proprietary right.
3. Constructive trust. Following and applying Ashburn Anstalt v Arnold [1989] Ch 1, a conveyance subject to, or acquired with notice of, an unenforceable contractual obligation did not ordinarily create a constructive trust. Equity may intervene only in very special circumstances where the transferee undertook a new liability, so that the transferee’s conscience was affected and legitimate expectations required performance. Lyus v Prowsa Developments Ltd [1982] 1 WLR 1044 was treated as such a special case because of the express undertaking and assurance there.
4. Mrs Clark’s purchase subject to the underlease, her inspection of the flat, her knowledge of the doorway and the plan, and her knowledge of the fire-escape arrangements did not show any bargain by which she undertook de novo to honour the obligation. A constructive trust could not therefore arise.
5. Benefit and burden. Halsall v Brizell [1957] Ch 169 had no application. The right to occupy the flat arose under the underlease, whereas the alleged fire-escape obligation arose under the separate 1969 deed. The benefit-and-burden principle was therefore unavailable, and there was no appropriate means of withholding the benefit of occupation.

It was unnecessary to decide whether any rights were binding on the defendant as registered proprietor, since the plaintiffs failed on the easement and constructive-trust claims.

1. Court of Appeal (Civil Division) The supplied judgment determined two preliminary issues, gave judgment for the defendant with costs and granted leave to appeal if necessary. No judgment appealed or lower-court citation is stated.