Kettel & Ors v Bloomfold Ltd

Factual and Procedural Background

The claimants are long leaseholders of eight flats in a residential development constructed in the 1990s in the East End of London, referred to as City Walk. The defendant is the freehold owner of the development. Each leaseholder has a designated parking space, but the nature of their entitlement to these spaces is disputed. The claimants seek an injunction to prevent the defendant from building a new block of flats that would cover their parking spaces. The defendant argues it has the right to require the claimants to use alternative parking spaces to facilitate the development, and alternatively submits that any remedy should be limited to nominal damages rather than an injunction due to the offer of alternative spaces.

The development consists of two phases with flats and commercial units nearly enclosing the site perimeter, except for a gap along the northern edge where the new building is proposed. This new construction would occupy ten parking spaces, including the eight used by the claimants. The defendant obtained planning permission in 2006 for a three-story building of eight flats with a condition that no additional parking would be provided on site.

The defendant asserted a right to reallocate parking spaces and notified the claimants accordingly in 2008. Despite some initial willingness from certain claimants to accept alternative spaces, no binding agreement was reached. In 2009, the defendant fenced off the affected parking spaces without prior warning, effectively preventing their use. The defendant has not proceeded with construction due to lack of claimant consent. The claim was issued in 2010 and, after failed settlement discussions, was set for trial.

Legal Issues Presented

1. Whether the claimants’ entitlement to use the parking spaces constitutes a demise or merely an easement.
2. Whether the defendant has a reserved right under the leases to build on the designated parking spaces.
3. Whether there is a right to change or reallocate the designated parking spaces.
4. Whether the claimants have pleaded a valid cause of action for interference with their parking rights.
5. The appropriate remedy: whether an injunction should be granted or damages awarded.

Arguments of the Parties

Claimants' Arguments

• Their entitlement to use the parking spaces amounts to a demise, granting exclusive possession, or at least an easement that cannot be unilaterally overridden.
• They seek an injunction to prevent the defendant from building on their parking spaces, as this would entirely abrogate their rights.
• Damages should be assessed on a "release fee" basis if an injunction is refused, reflecting the value of the right lost.
• The offer of alternative parking spaces does not negate their existing rights as no binding agreement was made.

Defendant's Arguments

• The right to use the parking spaces is an easement, not a demise, and the defendant is entitled to require the claimants to accept alternative spaces.
• Lease provisions reserve the landlord’s right to build on neighbouring land, which includes the parking spaces.
• Any interference with parking rights is minor and compensable by nominal damages rather than an injunction.
• The availability of alternative parking spaces of equal convenience justifies refusal of an injunction.
• The claimants’ pleaded causes of action are not made out.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Batchelor v Marlow [2003] 1 WLR 764	Test whether a parking right amounts to an easement or a demise based on whether the servient owner retains reasonable use of the land.	The court applied the test to determine that the parking rights granted were easements, not demises, as the servient owner retained reasonable use and control over the land.
Moncrieff v Jamieson [2007] UKHL 42	Clarification and qualification of the 'reasonable use' test for easements; servient owner retains possession and control subject to the easement.	The court adopted the principle that the servient owner retains possession and control, rejecting the strict 'reasonable use' test, supporting the finding of an easement.
Virdi v Chana [2008] EWHC 2901	Confirmed continuing binding authority of Batchelor v Marlow and discussed residual rights of servient owner adjacent to parking spaces.	Used to support the conclusion that the servient owner retains significant rights, consistent with the easement characterization.
Greenwich NHS Trust v London & Quadrant Housing Association [1998] 1 WLR 1749	Servient owner cannot unilaterally extinguish an easement by offering an alternative easement.	Applied to reject the defendant's claim to unilaterally reallocate parking spaces, holding that obstruction of the easement remains actionable.
Heslop v Bishton [2009] EWHC 607 (Ch)	Obstruction of an easement is actionable even if an alternative equally convenient easement is offered.	Followed to support that the defendant’s fencing off of parking spaces constituted actionable interference.
Overcom v Stockleigh [1989] 1 EGLR 75	Building that entirely destroys an easement right is not permitted.	Applied to reject the defendant’s argument that lease provisions permitted building on parking spaces that would destroy the easement.
Owners of Strata Plan 42472 v Menala Pty Ltd (1998) 9 BPR 97,717	Implied obligation on servient owner to mark out parking spaces and ability to change allocation if necessary.	Distinguished as not supporting an express right to change designated spaces absent clear lease terms.
Shelfer v City of London Electric Lighting Company [1895] 1 Ch 287	Sets out criteria when damages may be awarded instead of an injunction.	Considered as the starting point for remedy analysis, with emphasis on the exceptional nature of refusing injunctions.
Wrotham Park Estates Ltd v Parkside Homes Ltd (1974) 1 WLR 798	Basis for "release fee" damages in lieu of injunction.	Referenced in the discussion of damages assessment methodology.
Jaggard v Sawyer [1995] 1 WLR 269	Refusal of injunction due to delay and minimal harm.	Referenced as an example of circumstances where injunctions may be refused.
Midtown Ltd v City of London Real Property Company Limited [2005] EWHC 33 (Ch)	Refusal of injunction where claimants had only financial interest or no real injury.	Referenced in remedy considerations.
Tamares Ltd v Fairpoint Properties Ltd [2007] 1 WLR 2148	Damages awarded in lieu of injunction where injunction would be oppressive.	Used to illustrate damages as alternative remedy in easement infringement.
Regan v Paul Properties DPF Ltd [2006] EWCA Civ 1319	Reaffirmed the prima facie entitlement to injunctions for continuing infringement of legal rights.	Applied to emphasize the strong presumption in favor of injunctions absent exceptional circumstances.
Stadium Capital Holdings (No 2) Ltd v Marylebone Property Co PLC [2011] EWHC 2856 (Ch)	Principles for assessing hypothetical negotiation damages ("release fees").	Followed for damages valuation methodology.
Enfield LBC v Outdoor Plus Ltd [2012] EWCA Civ 608	Approval of hypothetical negotiation damages principles.	Supported damages assessment approach.
Stokes v Cambridge Corporation (1961) 180 EG 839	Compulsory acquisition compensation principles and apportionment of value.	Referenced in assessing appropriate division of damages between parties.

Court's Reasoning and Analysis

The court first examined whether the claimants' rights to parking spaces constituted a demise or an easement. Applying the test from Batchelor v Marlow, the court found that the rights granted did not amount to a demise because the defendant retained reasonable use and control over the land. The leases granted the right to park but did not grant exclusive possession of the parking spaces themselves. The court also considered Moncrieff v Jamieson and concluded that the servient owner’s residual rights were significant and the ownership was not illusory.

Lease provisions reserving rights to build on "Neighbouring Property" or land adjoining the "Building" did not, on proper construction, permit the defendant to build on the parking spaces themselves in a way that would extinguish the easements. The court rejected the defendant's argument that such rights allowed substantial interference or destruction of parking rights.

The court rejected the defendant's submission that it had an implied right to reallocate parking spaces. It held that a servient owner cannot unilaterally extinguish or relocate an easement without express terms allowing it, even if the alternative offered is equally convenient. Temporary obstruction for maintenance may be implied, but permanent substitution is not.

The claimants’ pleaded causes of action for breach of lease obligations and interference with their easements were found to be valid. The fencing off of parking spaces constituted substantial interference, and the defendant’s intention to build on those spaces would similarly infringe the claimants’ rights.

Regarding remedy, the court reaffirmed the prima facie entitlement of the claimants to an injunction to prevent continuing infringement of property rights, citing Shelfer v City of London Electric Lighting Company and subsequent authorities. The court emphasized that damages in lieu of injunction are exceptional and require special circumstances, which were not present here.

The defendant’s reliance on the availability of alternative parking spaces was insufficient to justify refusal of an injunction. The defendant had not secured binding agreements for alternative spaces, and the claimants’ rights to their designated spaces could not be overridden by unilateral reallocation. The injury to the claimants was total and significant, not trivial or adequately compensable by nominal damages.

The defendant’s conduct was described as high-handed, proceeding without claimant consent and providing inadequate notice. The court distinguished this case from others where injunctions were refused due to public benefit or minimal harm.

Finally, on damages, the court outlined the appropriate basis as hypothetical negotiation damages ("release fee") reflecting the value of the right lost, not nominal damages. Expert valuations were considered, and the court estimated a fair negotiated sum to be approximately £1,035,000 in total land value, with an equal 50/50 split between parties, resulting in damages of about £517,500 to be divided among the claimants.

Holding and Implications

The court’s final decision was to grant the injunction sought by the claimants, thereby restraining the defendant from building on the designated parking spaces and interfering with the claimants’ easements.

Holding: The rights granted to the claimants are easements, not demises, and the defendant is not entitled to unilaterally reallocate or extinguish those rights. The claimants are prima facie entitled to an injunction to prevent interference with their parking rights, and no exceptional circumstances exist to justify refusal of that injunction.

Implications: The decision protects the property rights of leaseholders against unilateral alteration by the freeholder absent express lease provisions or binding agreement. It confirms the principle that substantial interference with easements warrants injunctive relief, even where alternative arrangements are offered but not agreed. The ruling does not establish new precedent but applies established legal principles to the facts of this case. The defendant must negotiate with claimants to vary parking rights rather than impose changes unilaterally.