Lejonvarn v Cromwell Mansions Management Company

Note on Lejonvarn v Cromwell Mansions Management Company [2012] L & TR 31

With property prices in parts of London currently so high and space at a premium, a phenomenon has emerged over the past decade whereby landowners seek to increase their usable space by excavating basements, sometimes even creating large underground parking areas, swimming pools and cinemas. The practice is not without controversy and objections from neighbouring landowners who fear disruption and possible subsidence. As far as the law is concerned, there are obviously planning law issues, but what about the position in land law? In other words, when you own an estate what is the extent of your ownership rights which can be exploited under the surface of the land?

In the case of a freehold estate, the recent Supreme Court decision in Bocardo v Star Energy UK Onshore Ltd [2011] 1 AC 380 (affirming the Court of Appeal decision noted here previously) approved the Latin maxim cuius est solum eius est usque ad coelum et ad inferos (he who owns the soil owns up to heaven and down to hell) as the starting point as regards the position below the surface. This would mean that there would be no barrier for such an owner in land law to underground development. But what is the position where the relevant estate is a lease?
In Lejonvarn the claimant was a tenant under a 999 year lease of the ground floor and basement of a house. The rest of the house was divided into two further flats on the first and second floors. The freehold of the house was owned by a company, the defendant to these proceedings, and the claimant and the other two tenants were the directors of that company. When the claimant applied to the landlord company for permission to carry out the works of excavation beneath the current basement and the garden, he was outvoted and the board of directors by a majority rejected the application. Before the question arose as to whether the consent was reasonably refused (which it would have to be under s.19(2) of the Landlord and Tenant Act 1927) there was a prior question to be addressed, namely whether the claimant as tenant actually had any ownership rights in the sub-soil beneath the basement.
An initial construction of the lease to determine whether there had been an express grant of the subsoil did not yield an interpretation favourable to the claimant and the judge held that the way in which the lease was drafted only included the “built out” areas of the flat and not the sub-soil. The claimant then argued that the grant of the lease to him included the subsoil as a matter of law. In Lewison on the Interpretation of Contracts 4th edn, the leading work, it is states clearly that “[a] conveyance of land is presumed to carry with it the air space above and the soil below” effectively the usque ad presumption. This presumption has been applied in the context of leases (see for example, Kelsen v Imperial Tobacco [1957] 2 QB 334) at least in the case of a lease of a whole building. But there are different considerations, where as in this case, the lease is one of a number where a building has been divided horizontally. There are examples where the court has applied the usque ad presumption in this context upwards above a roof space, (Davies v Yadegar (1990) 1 EGLR 69) but this has usually been where the demise itself included not only the top floor flat but also the roof space so the presumption made sense. In the present case for Mr J Jarvis QC (sitting as a deputy judge of the Chancery Division), the correct approach was a contextual one looking at the way in which the flats in a building had been divided up. The conclusion he drew was that in such a scheme as this where any development under the ground would have consequences for the other tenants, unlike the development of airspace rights, it would be inappropriate to apply the presumption. Further, the presumption was excluded by inference from the way in which the leases were drafted. The careful drafting of the leases in this case, explicitly delineating what was included in the grant, left no room for the presumption to apply and give the tenant further or extra rights.