Selby District Council v Samuel Smith Old Brewery (Tadcaster)

Where a contract incorporates Condition 5(3) of the Law Society's General Conditions of Sale, implied grants and reservations are determined through the mechanism of hypothetical simultaneous conveyances. The exercise remains one of contractual construction. The court must consider the actual transaction, its commercial purpose, and the parties' actual knowledge and intentions. The rules in Wheeldon v Burrows and section 62 of the Law of Property Act 1925 yield where a clearly inconsistent intention appears. In a repurchase intended to restore the parties' former position, the relevant rights are those constituted as easements before the original conveyance, rather than precarious quasi-easements enjoyed later. An appellate court may also uphold an interlocutory costs order where the issues have substantially narrowed through concessions.

The Council sold the Centre Site to Samuel Smith in March 1990 as part of a proposed redevelopment. The transaction included an option allowing the Council to repurchase the site if Samuel Smith did not enter into a development agreement. The option agreement incorporated Condition 5(3) of the 1984 Law Society's General Conditions of Sale.

Samuel Smith failed to proceed with the development, and the Council exercised the option. The parties disputed which rights over the Centre Site had to be reserved for Samuel Smith's adjoining retained land. Blackburne J held that only easements established when the option was granted were relevant. Samuel Smith appealed that construction and the consequential costs order.

1. Appeal dismissed. The costs appeal was also dismissed. The judge was entitled to order Samuel Smith to pay the specified proportion of the Council's costs, and permission to appeal was refused.
2. Condition 5(3) defines the mechanism for ascertaining implied rights and reservations. The court must proceed on the deemed basis of simultaneous conveyances of the transferred and retained land, applying the general law of implied easements.
3. That mechanism does not require the court to ignore the actual transaction. Condition 5(3) was a term of the option agreement, and its meaning depended on the parties' intention in the context of the whole transaction. The knowledge attributed to the hypothetical purchaser could not sensibly differ from the actual knowledge of the Council and Samuel Smith when the option was agreed.
4. The rules in Wheeldon v Burrows and section 62 of the Law of Property Act 1925 are subject to a contrary intention shown by the circumstances. Any inconsistency must be clear. The circumstances here showed that the option was intended to restore the status quo ante, including the former pattern of rights and liabilities, rather than confer new perpetual easements.
5. The relevant rights were therefore easements fully constituted at 30 March 1990. Later precarious use did not become an easement merely because the option was exercised later. The matching property, price and lease arrangements supported restoration of the original position, while the claimed access and parking rights would have permanently burdened the Centre Site.

• Court of Appeal (Civil Division): dismissed Samuel Smith's appeal from Blackburne J's decision of 5 November 1998, both on construction and costs.