Energizer Supermarket Ltd v Holiday Snacks Ltd (Trinidad and Tobago)

An agreement granting rights over land for a gas pipeline may create an equitable easement, rather than a merely personal contractual licence, where the four requirements for an easement are met. A deed is required for a legal easement, but not for an equitable easement supported by consideration. An unregistered equitable easement binds a purchaser with actual notice. A licensing requirement does not necessarily invalidate the underlying agreement or easement. Its effect depends on statutory interpretation. Where the statute does not prohibit the transaction, common law illegality is assessed by considering the purpose of the prohibition, competing public policies and proportionality. Criminal non-compliance did not justify refusing enforcement where the rights and licensing regime were separable, safety purposes were not undermined and denial would be disproportionate.

Holiday Snacks claimed declarations that its land was subject to an equitable way leave for a gas pipeline and an injunction restraining Energizer from interfering with the pipeline. Energizer counterclaimed for removal of the pipeline, arguing that the March 1986 agreement was merely a contractual licence and was void or unenforceable because no pipeline licence had been obtained under the Petroleum Act.

Harris J held that the agreement created an equitable easement and that illegality did not prevent enforcement. The Court of Appeal of the Republic of Trinidad and Tobago dismissed Energizer’s appeal and affirmed the substantive relief. The appeal to the Privy Council concerned whether an equitable easement had been created and whether statutory or common law illegality defeated its enforcement.

Appeal dismissed. The declarations and orders affirmed by the Court of Appeal were upheld.

1. Equitable easement. The four requirements stated in In re Ellenborough Park [1956] Ch 131 and confirmed in Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] UKSC 57; [2019] AC 553 were satisfied. There was a dominant and servient tenement, the pipeline right benefited the dominant business land, the owners were different, and the right was capable of being granted. Because the agreement was supported by consideration but was not made by deed, section 10(1) of the Conveyancing and Law of Property Act prevented a legal easement but permitted an equitable easement.
2. Construction and notice. The agreement created an equitable easement, not a revocable contractual licence. Its commercial purpose and the absence of anything negating an intention that the benefit should run with the land supported that construction. Although unregistered, the easement bound Energizer because it had actual notice. The benefit passed with the dominant land under section 16(1) of the Conveyancing and Law of Property Act.
3. Statutory illegality. The Board held that a licence was required. Transporting natural gas was within petroleum operations under section 2 of the Petroleum Act, and regulation 3(1)(f) of the Petroleum Regulations identified a pipeline licence. However, the licensing regime did not impliedly prohibit the March agreement or the easement. The agreement was capable of lawful performance if a licence were later obtained. Mahmoud v Ispahani [1921] 2 KB 716 was distinguishable because the legislation there absolutely prohibited the contract. The ancillary-rights provisions did not prevent private rights being agreed before licensing.
4. Common law illegality. Applying Patel v Mirza [2016] UKSC 42; [2017] AC 467, with the guidance in Grondona v Stoffel & Co [2020] UKSC 42; [2021] AC 540 and Henderson v Dorset Healthcare University NHS Foundation Trust [2020] UKSC 43; [2021] AC 563, the policies clearly favoured enforcement. Denial would not materially advance the licensing purpose, was inconsistent with ordinary property-law certainty, and would be disproportionate because the failure to obtain a licence was separate from and not central to the transaction, the offence was summary, and the easement was important to the businesses supplied with gas. Statutory and common law illegality therefore provided no defence.

• Privy Council — [2022] UKPC 16 dismissed Energizer’s appeal and upheld the declarations and orders.
• Court of Appeal of the Republic of Trinidad and Tobago — dismissed Energizer’s appeal from Harris J and affirmed the substantive relief in an ex tempore judgment given on 28 June 2019.
• High Court of Trinidad and Tobago — Harris J’s judgment dated 28 March 2014 declared that the land was subject to an equitable way leave and granted an injunction restraining interference with the pipeline.