You're in my (air)space

Ralph Kline Limited v Metropolitan and County Holdings Limited [2018] EWCH 64 (Ch)

Summary

The ever-changing skyline of London is predominantly a result of ambitious and creative uses of limited space by developers. It is often desirable for landlords to consider whether they can develop in airspace above demised premises and/or occupy airspace by the oversailing of cranes. However, it is not always clear whether demised premises include or exclude airspace above them and, even where it is included, to what extent.

In this case, the High Court held that on a proper construction of the lease, the demised premises included airspace to the extent that is required for the ordinary use and enjoyment of the premises.

The facts

The Claimant, Ralph Kline Limited, was granted a lease which demised the airspace above a series of buildings in Finchley Road, London to the height of 8 metres.

However, when the Claimant tried to register this lease at the Land Registry, the Defendant, Metropolitan and County Holdings Limited, objected to this on the grounds that this lease should be registered subject to the superior lease vested in the Defendant (the "Defendant's Lease").

The Claimant sought a declaration from the Court that the Defendant had no right to possession of the airspace and that its lease should be registered without being subject to the Defendant's Lease.

The issue

The Court considered whether premises demised to the Defendant by the Defendant's Lease included airspace. If it did, the Claimant could not register its lease without it being subject to the Defendant's Lease. If it did not, the Claimant could obtain its declaration and register its lease without it being subject to the Defendant's Lease.

The Claimant's position was that the demised premises related to internal parts only and therefore not the roofs or airspace. The Defendant's position was that the demised premises included the entirety of the building including the roofs and the airspace.

The approach

The Court approached this issue by breaking it down into three parts:

What did the Defendant's Lease say?
Could a subsequent reversionary lease be relied upon when construing the Defendant's Lease?
What did case law say?

Lease

As a starting point, the Court approached the construction of the Defendant's Lease in accordance with the test in Arnold v Britton [2015] UKSC 36, namely that the intention of the parties should be considered in the context of what a reasonable person with all the background knowledge would have understood the language used to mean.

The Court then went on to look at the definition of demised premises in the Defendant's Lease, the exceptions and reservations and the obligations to repair, decorate and insure the premises.

The Court considered that a proper construction of the Defendant's Lease was that the demise included the roofs and also the airspace. If the demise did not include the roofs and the airspace, there would be numerous gaps relating to various obligations on the leaseholder.

Reliance upon a subsequent reversionary lease

Both the Claimant and Defendant also wanted to rely upon a subsequent reversionary lease for opposing reasons.

The Court considered the general principle that a subsequent contract is inadmissible as an aid to the construction of a previous written contract. This principle is subject to an exception relating to the construction of conveyances of land whereby extraneous evidence can be taken into account where a conveyance is unclear or ambiguous (Ali v Lane [2006] EWCA Civ 1532). However, any extraneous evidence will be of probative value only.

In these circumstances, the Court determined that the Defendant's Lease was not unclear or ambiguous, the parties to the Defendant's Lease were different to the parties to the subsequent reversionary lease and that the exception only applied to boundary disputes.

Case law

The Court revisited the starting point that ownership of land carries with it the ownership of the airspace above the land, to such height is necessary for the ordinary use and enjoyment of the land (Bernstein of Leigh (Baron) v Skyviews & General Limited [1978] 1 Q.B. 479).

It drew a distinction between a lease of land and buildings which may normally be expected to include the airspace above and a lease of a flat comprised within a larger building which may or may not include airspace. The latter situation will depend on whereabouts the flat is located within the building (e.g. it is more likely for a top floor flat to be granted airspace rights than a ground floor flat) and the specific terms of the lease in question.

The Court has taken a more favourable attitude towards leaseholders of a maisonette with a flat roof including skylights (Dorrington Belgravia Limited v McGlashan [2009] 1 EGLR 28) and of a top floor flat where a loft conversion was sought (Davies v Yadegar [1990] 1 EGLR 71) whereby in both occasions it was held that the demise included airspace. The Court appears to be more willing to determine that airspace is included where the roof of a building is expressly included in the demise and has gone further to hold that "there is no horizontal cut off which excludes airspace above the building" (Waites v Hambledon [2014] EWHC 651 (Ch)).

Any presumption that a lease which demises a roof also demises the full height of the airspace has been rejected by the Court and it has been held that "there are no clear presumptions relating to divisions of individual parts of a building" (Rosebery Limited v Rocklee [2011] EWHC 2947 (Ch)). A distinction can be drawn between a top floor flat where the demise includes the whole of the roof against a demise of part of the roof where its use could have an impact on other tenants in the building.

The decision

The Court decided that the premises demised by the Defendant's Lease included airspace and therefore the Claimant was not entitled to a declaration and could only register it leases subject to the Defendant's Lease.

Our comment

Case law in this area has often been conflicted between the right to enjoy property without interference and the desire and need to carry out development works. The ways in which airspace can potentially be interfered with has expanded rapidly in recent decades as a result of technological advancement and methods of construction.

This case provides a helpful analysis of the case law associated with this issue to provide a commercial basis for the decision.