Mobil Oil Company Ltd v Birmingham City Council

Contractual language should not be ignored merely because it creates tension within the document. The court must construe the provision against its factual matrix and give effect to business common sense where necessary. An implied easement requires both a common intention that the land be used in a definite and particular manner and necessity to give effect to that use. A lease may satisfy the intended access arrangements and prevent implication of a further easement. Section 62 of the Law of Property Act 1925 requires proof of the statutory factual conditions at the date of conveyance. A public authority’s planning function and its landowning function must be kept analytically distinct.

Mobil Oil appealed from a decision of Mr K. Garnett QC, sitting as a deputy High Court judge in the Chancery Division. The dispute concerned alleged rights of way over adjoining land owned by Birmingham City Council, serving a garage constructed on Mobil’s freehold land. The claims relied on express construction of a 1959 deed of exchange, implied easements, section 62 of the Law of Property Act 1925, and specific performance of a covenant to incorporate land into the highway.

The Council had granted a contemporaneous lease of part of the adjoining land, renewed several times. The central issues were whether the deed conferred interim access, whether further rights of way arose by implication or under section 62, and whether the Council was obliged to carry out the highway works.

1. Disposition. The appeal was allowed in part and the cross-appeal was allowed. The claimant was ordered to pay 90 per cent of the costs in the Court of Appeal and below. Permission to appeal to the House of Lords was refused.
2. Construction of clause 3. Aldous LJ held that the words referring to access being available by the time the new premises opened for trading should not be ignored. Applying the approach in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 AER 98, the words had to be given a commercially sensible meaning. He construed them as requiring interim access to the garage before road widening. Arden LJ likewise treated the new premises as the garage then to be constructed, but held that the Stratford Road access obligation was performed by the contemporaneous lease. Sedley LJ rejected the proposed express grant and considered the clause an intelligible but potentially idle provision connected with future road widening.
3. Implied easement. The applicable test, stated in Stafford v Lee (1992) 65 P&CR 172, required a common intention as to a definite and particular use and necessity to give effect to it. Aldous LJ found an intended garage and service station accessible from both roads and held that the claimed easements were necessary. Arden LJ reached the narrower conclusion that an implied right of way to Reddings Lane existed for the garage business, but only until road widening was implemented. Sedley LJ rejected implication, treating access from Stratford Road as supplied by the lease and access from Reddings Lane as arising by acquiescence or prescription.
4. Section 62. The evidence did not establish that Mobil’s predecessor occupied the freehold land for construction purposes at the date of the 1959 conveyance. The claim under section 62(1) therefore failed.
5. Specific performance. The covenant to carry out the highway works “as and when practicable” did not require the Council to undertake works where the road-widening scheme was not to be implemented. The claim for specific performance and related relief failed.

• Court of Appeal (Civil Division): The appeal from the deputy High Court judge was allowed in part, the cross-appeal was allowed, and costs were ordered against the claimant.
• Chancery Division: Mr K. Garnett QC held that the claimed rights of way had not been established, subject to a concession that a right of way to the freehold land from Reddings Lane had been acquired by prescription.