How low can you go? Does a leasehold demise include the subsoil underneath a ground floor flat?

The old adage states that "cuius est solum, eius est usque ad coelum et ad inferos” "whoever's is the soil, it is theirs all the way to heaven and all the way to hell”. But, do demised premises necessarily include all the land up to heaven and all the way down to hell? The recent case of Gorst v Knight 2018 EWHC 613 (Ch) considered this question – unusually, in relation to subsoil rather than the more common issue of airspace rights.

Mrs and Mrs Gorst wanted to redevelop their cellar

Brenda and Charles Gorst, the tenants under a long lease of Flat 1, 88 Tunis Road, London, applied to court for a declaration that their long lease included the subsoil under the terraced house it was part of. The house consisted of two flats (Flat 2 upstairs was occupied by the freehold owner, Annabel Knight) plus a cellar, which was specifically demised to the Gorsts. The cellar was only five feet high, with no natural light and a sandy, compacted earth floor. The Gorsts therefore applied for and obtained planning permission to dig into the subsoil and create a habitable space. Ms Knight objected to the proposed works.

The question therefore was straightforward: did the Gorsts' lease demise the subsoil? If no, then they couldn't carry out the works without trespassing over Ms Knight's land and would need her consent to carry out the works. If the subsoil was demised to the Gorsts, then they could carry out the works – subject to landlord's consent, which couldn’t be unreasonably withheld. Ms Knight had confirmed that if the court decided in favour of the Gorsts, she would grant consent.

What was the intention of the parties?

It was agreed between the parties that under the maxim above, Ms Knight owned the subsoil, and could have demised it to the Gorsts. The exercise for the court was therefore one of interpretation.

Whilst the current lease took effect from 12 May 2016, the Gorsts had in fact extended their original lease (dated 17 December 1992) under the Leasehold Reform, Housing and Urban Development Act 1993. This meant that they were effectively granted a new lease, with the same demise as the previous one (entered into in 1992), but now for a much longer term. The Gorsts argued that the court should take into account what was in the contemplation of the parties in 2016 rather than what was in the contemplation of the parties in 1992.

The judge refused this, mainly because the 2016 lease was with reference to the 1992 lease – and, the landlord had not been able to negotiate the terms of the lease (because the Gorsts had extended the lease under the 1993 Act). The judge was therefore bound to consider the parties' intentions as to the subsoil when the original lease was granted in 1992.

What were the factors to consider?

Because the position is more usually considered in respect of airspace, because of modern development, crane oversail and urban crowding, this was the law that the judge turned to. It was clear that, in principle, there is no reason why airspace cannot be demised to a tenant. Generally, if the demise is expressed by reference to a vertical division and there is no wording to confirm any horizontal division, the courts will hold that there is no horizontal cut off to exclude the airspace above the building or, for that matter, the subsoil.

Case law also suggests that, where the whole of the roof is demised to a tenant (as part of e.g. a top floor flat, or a whole building) the airspace would be included in that demise so that the tenant could carry out works to the roof if required – but, it's not the case that just because you are at the top of the building (or in this case, the bottom) you automatically have the airspace as well.

The difficulty here was that because the division of the building between flat 1 and flat 2 was horizontal, it wasn't clear where the demise ended. The definition of the demise was therefore key. It would depend on looking at the particular circumstances of the lease within the context of the whole property from which the lease had been carved out.

What did the demise expressly or impliedly include?

The judge noted that subsoil differs from airspace in three key respects: it is key to the stability of the whole building, access to it is difficult and it is not open to the elements, meaning that problems with the subsoil might not be noticed at an early stage.

In this case, the foundations were expressly demised to the Gorsts – but, Ms Knight was able to enforce the covenant to keep them in repair, which meant that she retained control over them.

The demise extended to Flat 1, on the ground floor of the Building, including all parts of the building below the midway line. Those words did not specifically include the subsoil, because the subsoil was not part of the definition of the Building.

A separate clause added the cellar and foundations of the Building into the definition of the flat, rather than into the definition of the "Building". Ms Knight retained the right to services through the neighbouring or adjoining property of the landlord, which suggested that the subsoil was not included in the demise as there was a lower limit to the demise. The express inclusion of the foundations and the cellar also suggested that the subsoil was excluded (because it could have been included, but hadn't been).

Conclusion

The judge concluded that overall, on the construction of the lease, in the context of the transaction, and whilst the freeholder had the ability in 1992 to grant a lease of the subsoil, the lease did not include the subsoil beneath the Building – meaning that the Gorsts could not require Ms Knight to give consent to the works.

The legal rights in the lease had been deliberately created by the parties, and therefore the question was not what is reasonable in the circumstances but what the parties had contractually agreed. The parties had agreed a specific demise, including the cellar and foundations, which did not include the subsoil.

It is therefore crucial to include a thorough definition of the demised premises in the lease – particularly if the property is in an area where development, whether upwards or downwards, would add value to the property.