H Waites Ltd v Hambledon Court Ltd & Ors

A demise described as “the Garage” ordinarily includes the garage’s physical structure, including its roof, unless the lease indicates otherwise. Where a building is demised by reference to a vertical division, with no horizontal boundary, the demise may also include the airspace above it. A letting scheme does not, without more, justify implying a covenant preventing the lessor from constructing additional flats. If the parties’ original assumption as to the number of flats is later falsified, the court may instead imply that fixed service-charge apportionments are replaced by a fair proportion. Rights under a development lease may extend to external structural supports where the intended development could not otherwise be carried out.

The claimant was the assignee of a 2007 lease of the surfaces of the roofs of two garage blocks and the airspace above them. It wished to construct a flat above each block, supported by columns outside the existing structures, with access by external staircases.

The majority of the flat and garage lessees opposed the development. The court had to determine the extent of their demises, whether those demises included the airspace above the garages, whether the leases contained an implied restriction on further development, whether the 2007 lease authorised external supports, and whether consent to staircases had been unreasonably withheld.

1. Garage demise. The words “the Garage” in the leases described the garage as a physical structure. They included the floor, doors, roof timbers, roof and enclosing walls, subject to the stated half-wall boundary between adjoining garages. The repairing provisions did not require the court to rewrite that wording to exclude the main structure. The single continuous roof over each block did not alter the conclusion, having regard to Tennant Radiant Heat Ltd v Warrington Development Corporation [1988] 1 EGLR 41 (paras [29]–[39]).
2. Airspace. The demise included the airspace above each garage. The demise was expressed by vertical division and contained no horizontal cut-off. The 999-year term and the physical character of the garages supported that construction. The reasoning in Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334, together with the other authorities considered, supported the result (paras [40]–[51]).
3. Implied restriction. The leases created a scheme of covenants binding the lessor in relation to the Estate, but that did not justify implying a covenant prohibiting further flats. The service-charge provisions showed an assumption that there would be 12 flats. If that assumption were falsified, the fixed one-twelfth apportionment could cease to apply and be replaced by a fair proportion. That was sufficient to address the identified unfairness without implying the more radical restriction sought (paras [52]–[69]).
4. External supports. The parties to the 2007 lease were taken to understand that the proposed flats could not be supported by the existing garages. The development provisions were just sufficient to authorise external columns necessary to carry out the development, although the court identified further possible problems concerning the extent of the demised airspace, protrusion beyond the demise, and foundations and subsoil (paras [83]–[95]).
5. Staircase consent. The court declined to determine whether consent had been unreasonably withheld because the development could not proceed in light of the lessees’ rights in the garage airspace, and the issue had not been properly argued (paras [96]–[97]).