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Access Rights: Unconscionable Behaviour27th November 2015 Commercial
When granting and taking a lease of a part of a larger property the landlord and the tenant should of course be careful to ensure that appropriate rights of access are expressly reserved by the landlord and granted to the tenant. The recent case of Hoyl Group Ltd v Cromer Town Council is a reminder that, after the lease is granted, the parties need to be careful about their actions as well.
The facts were as follows:-
- The Council owned a headquarters building in a park.
- Hoyl Group took a lease of a basement area for use as a flat under a 99 year lease. They also rented offices in an upper floor in the building under a 21 year lease.
- Hoyl initially planned to use the flat to accommodate directors visiting the offices but there was no restriction on selling it to an unconnected purchaser.
- Following discussions with the Council Hoyl carried out works in the basement at some considerable cost, changing the layout in such a way that it was clearly contemplated that the access to the flat would be through a garden.
- Hoyl decided to move their offices and market the flat for sale.
- The sale plans fell through because the flat lease did not expressly grant an adequate right of access through the garden and the Council would not allow it.
- Hoyl took the issue to Court and the Council lost.
The Court held that by its conduct the Council had encouraged Hoyl to believe that it would have a right of way via the garden and in reliance on that Hoyl had spent money on converting the flat and the Council was well aware of that fact. The judge concluded that it was unconscionable for the Council, as landowner, to approve the construction of the flat according to a layout which both parties recognised was only consistent with a right of way through the garden, and then to refuse to allow that access. The Court ordered that the Council should install a suitable gateway, gate and paving to give effect to the right of way through the garden, but could recoup the costs of the work from Hoyl.
The principle on which Hoyl relied was proprietary estoppel. Decisions based on this principle invariably turn on their own particular facts but the successful claimant needs to prove various key ingredients. The Court in the Hoyl case found that the Council had allowed the tenant to believe that it had or would have the benefit of a right of way; in reliance on that belief, Hoyl had, to the Council's knowledge, acted to its detriment in carrying out its conversion works; and it became unconscionable for the Council to deny the tenant its preferred access.
Reliance on proprietary estoppel should be viewed as a measure of last resort. The risks of pursuing claims based on the principle can be considerable. However, landowners should be careful about giving misleading impressions about their intentions because they could be obliged to act in accordance with their words.