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14.11.18

Regency Villas Title Ltd and others (Respondents/Cross-Appellants) v Diamond Resorts (Europe) Ltd and others (Appellants/Cross-Respondents)

The Supreme Court has handed down its judgments in the case of Regency Villas Title Ltd and others v Diamond Resorts (Europe) Ltd and others, in which the Respondents/Cross-Appellants claimed recreational easements. The well-known leading case of In re Ellenborough Park [1956] Ch 131 was revisited and affirmed. The Justices dismissed the Appellants/Cross-Respondents’ appeal and granted the Respondents/Cross-Appellants’ cross-appeal by a majority 4:1 ruling (Lord Carnwath dissenting). Katie Longstaff appeared as second junior counsel for the successful Respondents/Cross-Appellants.

Background

Timeshare owners claimed that recreational easements had been granted as part of a transfer in 1981, such that the timeshare owners and occupiers of Regency Villas had free use of a neighbouring championship golf course and swimming pool, as well as other facilities.

At trial the late Judge Purle QC found that the 1981 transfer created easements to use the gardens and sporting and recreational facilities on the Appellants’ land (the servient tenement) free of charge, even where such facilities had not been built at the time of the transfer.

Whilst the Court of Appeal upheld the majority of the easements identified by the trial judge, it found that the transfer only granted rights over those facilities that existed at the time of the transfer, therefore the Respondents did not have free use of the indoor swimming pool (which had been built in substitution of a filled in outdoor swimming pool) as a result. The Appellants appealed the Court of Appeal’s decision in respect of easements granted and the Respondents cross-appealed the decision limiting their rights in respect of the indoor swimming pool.

Decision

The Supreme Court affirmed In re Ellenborough Park, dismissed the appeal and granted the cross-appeal. Lord Briggs held that a “grant of purely recreational (including sporting) rights over land which genuinely accommodate adjacent land may be the subject matter of an easement, provided always that they satisfy the four well-settled conditions which I have described. Where the actual or intended use of the dominant tenement is itself recreational, as will generally be the case for holiday timeshare developments, the accommodation condition will generally be satisfied. Whether the other conditions, and in particular the components of the fourth condition, will be satisfied will be a question of fact in each case. Whatever may have been the attitude in the past to “mere recreation or amusement”, recreational and sporting activity of the type exemplified by the facilities at Broome Park is so clearly a beneficial part of modern life that the common law should support structures which promote and encourage it, rather than treat it as devoid of practical utility or benefit”.

The trial judge’s analysis that the 1981 transfer granted in substance a single easement to use the leisure complex on the servient land was preferred to the Court of Appeal’s interpretation. It was held to find otherwise would be unrealistic and would inhibit the servient owner from introducing improvements or replacements.

The judgment is available here.