88 Tunis Road was (is?) a house laid out over three floors (ground floor, first floor and second floor) and a basement. Subsequently a rear extension (to all three floors) and a patio were added.
In 1991-1992 the property was divided into two flats: Flat 2 being the first and second floors of the building, Flat 1 being the ground floor (excluding a communal entrance hall and the paved area immediately in front of the front door), the patio and the basement. The original Lease of Flat 1 was granted on 17 December 1992, a Lease of Flat 2 being granted on or around the same date.
In 2015-2016 the leaseholder of Flat 1 obtained an extension of the original Lease under the Leasehold Reform and Urban Development Act 1993 (in fact a surrender and re-grant) extending the term of the Lease to 189 years. The essential terms of the original 1992 Lease – the extent of the flat (“the demise”) and the rights reserved to the Landlord (“reservations”) – were, however, incorporated into the 2016 Lease and remained unchanged.
In particular in the 1992 Leases of both Flats (referred to as “maisonettes”) the definition of the demise included the following:
“… the expression ‘the maisonette’ shall (in the case of an upper maisonette)_ include reference to the roof and (in the case of a lower maisonette) include reference to the foundations and the void or cellar below the ground floor.”
The Flat 1 Lease also required the Landlord’s consent to any alterations to the Flat (consent not to be unreasonably withheld).
As matters stood in 1992 (and indeed in 2016) the “void or cellar below the ground floor” was an area with a ceiling height of around five feet, no natural light and a compacted sand floor. The owners of Flat 1 (Brenda and Charles Gorst) decided it would be a good idea to convert the cellar into additional living space. This would involve, amongst other things, digging out an additional couple of feet from under the floor of the cellar (“the subsoil”).
Brenda and Charles Gorst applied for and obtained planning permission for the works intended. Because a light well was to be added and/or the external appearance of the property was to be materially altered planning permission was, on this occasion, required.
They then requested consent to the planned works from the Landlord (Ms Knight). The Landlord rejected the request for consent on the basis that the subsoil was not part of Flat 1.
The above Latin quote – frequently cited as a fundamental principle of English Law - effectively means that, unless there are explicit exceptions stated in the conveyance (such as commonly occurs in the case of minerals), a conveyance of land includes the surface and everything below it (as well as airspace and everything above). Pressed on the issue (and, presumably, advised that if the subsoil was part of Flat 1 then it was not reasonable for her to withhold consent) Ms Knight issued court proceedings in March 2017 seeking a declaration that the subsoil was not included in the Lease of Flat 1.
On 28 June 2017 Master Price made a first instance declaration confirming that the subsoil was not included in the Lease. Brenda and Charles Gorst appealed the decision.
Permission to appeal was eventually obtained and in February 2018 the appeal was heard in the High Court. On 28 March 2018 HHJ Paul Matthews gave judgment upholding Master Price’s declaration.
In his written judgment (Gorst v Knight  EWHC 613 (Ch)) HHJ Matthews sets out at some length the reasons behind his decision considering, for example, the alleged conflict between “textualism” and “contextualism” and their respective roles in the interpretation of contracts. In the end, however, the reasoning behind his decision can be summarised as follows:
Although the freeholder would in 1992 have had the capacity to grant a Lease including the subsoil beneath the cellar it would appear, in this instance, that he did not do so.
Whilst the definition of the maisonette (Flat 1) in the 1992 Lease included all parts of the building below the midway line those words did not include the subsoil as the subsoil was not part of the building and maintenance of the subsoil went to the issue of the stability of the building itself and hence to the interests of all owners (rather than just the owner of Flat 1). In addition the 1992 Lease reserved to the Landlord a right to run services through conduits in or under “the demised premises” (Flat 1) with the clear implication that there is a lower, vertical limit to the premises (Flat 1).
In the end, then, the Landlord/freeholder (who also happened to be the leaseholder of Flat 2) had control over whether or not the development would happen.
With the need for large numbers of residential properties and with continuing restrictions on the availability of land for building, basement extensions – formerly the realm of Russian Oligarchs and the high-end London property market - are increasingly being seen in Reading and other urban areas. Because they will frequently be being considered in areas which are already quite densely developed (with leasehold titles etc) the legal position is often complex.