I recently re-stumbled across the decision in St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2) [1975] 1 WLR 468 and was reminded of my dissatisfaction with the law when it comes to the interpretation of ambiguities in reservation easements.
Common law presumptions
Reservation easements occur when a landowner disposes of part of his land and seeks to reserve an easement over that land for the benefit of the land that he has retained. Since the enactment of the Law of Property Act 1925, s65(1) a reservation is essentially viewed as one transaction, as opposed to a grant from the vendor to the purchaser, with a subsequent grant from the purchaser to the vendor for the reserved rights. As such, only one ‘grant’ is made – that from the vendor to the purchaser.
Ordinarily, where the meaning of a deed or instrument is unclear the contra proferentem rule dictates that it “shall be construed more strongly against the grantor or maker thereof” (Chitty on Contracts 33ed 13-095). The courts’ interpretation of reservation easements has largely been in line with this rule, especially in cases of implied reservations; the expectation is that reservations are clear, and there is a strong suspicion against those who derogate from their grant and reserve rights.
St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2)
In light of the Law of Property Act 1925, s65(1) and the foregoing common law presumptions, the decision in St Edmundsbury is unusual. In that case, the Court of Appeal held that it was bound by earlier decisions to find that a vendor’s reservation should be construed against a purchaser. In short, the purchaser should be considered the proferens for the purposes of the contra proferentem rule. In coming to that decision, the court was almost retreating back to the position of looking at a reservation as two transactions: a grant from the vendor to the purchaser that is to be construed against the vendor, and a subsequent grant of an easement from the purchaser to the vendor that is to be construed against the purchaser.
The rule in St Edmundsbury is problematic as, in situations where the usual rules of interpretation are of little assistance in determining the meaning of a reservation, a court is bound to come to a conclusion that is almost directly against settled common law presumptions on interpretation. As such, the rule in St Edmundsbury establishes a unique presumption that applies only to the very narrow case of reservation easements.
Solution?
The Law Commission considered the effect of the decision in St Edmundsbury in its consultation (Law Com CP No 186) and report (Law Com No 321) on the law of easements. In its consultation paper, the Law Commission proposed to reform the law by reversing the decision in St Edmundsbury, labelling the decision as “quite illogical” (para 4.13). The Law Commission was of the view that, because a vendor controls what they wish to sell and reserve, ambiguities should be construed against the vendor in line with the traditional view of the contra proferentem rule that a contract will be construed against the party that drafted it. However, after consultation, the Law Commission changed its view on the matter and in its report opted not to recommend reform (para 2.53).
The Law Commission changed its view in light of the consultation responses, which revealed that “while the rule in St Edmundsbury is not universally supported, there is little agreement as to how it should be reformed”. The rule in St Edmundsbury was described as a rule of last resort by one consultee (as supported in Chitty on Contracts 33ed at 13-095), and of greater academic interest than practical importance. On that basis, the Law Commission felt that “the impact of reform would be too insignificant to justify either the cost of reform or the risk of introducing an inappropriate substitute” (analysis of consultation responses, para 4.13).
Arguably, the Law Commission is right. If the rule in St Edmundsbury is indeed a rule of last resort, few disputes will ever be settled according to its application. The rules of interpretation that have developed and precede the rule last resort should settle most disputes that arise. Those rules seem to operate in accordance with the settled common law understanding of the contra proferentem rule, and generally favour a stricter and more traditional approach by interpreting reservations against vendors who seek to rely on them, especially where the reservation is claimed by way of implication (Adealon International Ltd v Merton LBC [2007] EWCA Civ 362).
However, some disputes may slip though the net and fall to be determined according to the rule in St Edmundsbury, and it seems wholly unsatisfactory that those disputes will produce a result that is almost directly opposite to that which would be expected according to the usual rules of interpretation. Furthermore, a reserving vendor who, on the regular principles of interpretation, has a weak case is encouraged to create confusion and ambiguity in proceedings in the hope that a court would have recourse to the rule of last resort, which would determine the dispute in their favour. In any event, it is questionable whether the infrequency of such decisions is really a justification for not disturbing the rule in St Edmundsbury.
Conclusion
The rule in St Edmundsbury may appear for the most part academic, but a purchaser who loses out as a result of the rule is unlikely to see it that way. In the interests of coherence and clarity it is respectfully suggested that the rule should be abolished and, in all instances of ambiguity, reservations should be construed against the vendor seeking to rely on them.
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