Parking rights: A warning to developers

Developers should beware of existing parking rights on a proposed development site. Getting it wrong may result in a mandatory injunction or an award of substantial damages being made.

This was the outcome in the recent Chancery Division case of Kettel v Bloomfold. This decision reminds developers and their lawyers that it is not just rights of way and rights to light which have to be looked out for. It concerned a right to park which had been granted to the Claimants who were the lessees of eight flats in East London, each having a designated parking space. The landlord wanted to build a new block of 12 flats and to do this needed to move the parking spaces. The landlord set about doing this unilaterally on the basis that it had the right to do so. The Claimants objected and sought an injunction to restrain the landlord.   

What is the legal basis of a parking right?

Surprisingly there is still great uncertainty as to the nature of a right to park in a single space. The parking spaces would prevent the landlord’s proposed development. However, if it went ahead the lessees would lose the amenity that they had bought into. The judge held that £517,500 was a reasonable assessment of the price that the landlord would have had to pay in order to successfully negotiate the movement of the parking spaces by consent.         

The first issue in the case was whether the rights “demised” the parking space to the lessee or granted an easement. The judge found it was not a lease because there was not truly exclusive possession of the space. It was then necessary for the judge to decide whether the right could be an easement. It is unfortunate and perhaps surprising that even now, there is not clarity that such a right (even if related to a single parking space) will be an easement. However, it is clear from this case that although the logic is uncertain, courts are striving to ensure that straightforward parking rights are upheld as easements.

Ability to move

The landlord in the Kettel case had placed great reliance in correspondence with the lessees on its ability to move the parking spaces. This was rejected by the judge. He applied the general principle that the “servient” owner (the landlord) cannot realign a right of way by extinguishing the right of way over one area and replacing it with a right of way over a different area. To prevent the moving of the parking spaces the judge ordered an injunction against the landlord. The landlord was considered to have acted in a high-handed manner and to be seeking to escape from the burden of the rights it had granted.

Although not awarding damages in lieu of an injunction the judge did set out how he arrived at the figure of £517,500 that he would have awarded if he had not granted an injunction. Interestingly he said he would have allowed a slice of the development proceeds to be taken out as developer’s profit (25% based on expert evidence) before splitting the final balance of the expected profit 50/50 rather than the third/two thirds split used historically.

Conclusions

1. Developers run a serious risk if an issue like this is ignored and the development goes ahead.

2. The grant of an injunction is the norm if rights, including parking rights, are to be infringed and if the infringement has occurred a mandatory injunction will be granted to undo the works that have been carried out;

3. The alternative to an injunction will be an award equal to a slice of the expected development profits – in the Kettel case 50%;

4. Negotiated releases are now expensive partly because there is a greater awareness of the willingness of the Courts to protect rights; 

5. When setting-up parking rights, from the grantor’s perspective it is preferable to avoid granting parking rights in relation to a designated space and to reserve an express ability to change the parking area. No parking rights would be ideal.

6. Reservation of a right to build will not override the express grant of rights such as parking rights.

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