Ancient canal act rocks the boat

A new Appeal Court ruling has caused major ripples on the waters of Britain's canals. While raising the hopes of owners of hundreds of miles of canal banks, it has dismayed the British Waterways Board (BWB).

The ruling, albeit interlocutory, is viewed as important as far as the rights of owners of land flanking the Grand Union Canal are concerned when it comes to developing their land.

BWB's counsel told the Appeal Court that the decision could deal a "severe financial blow" to the board. It is currently considering a direct application for leave to appeal to the House of Lords, the Court of Appeal having refused leave.

But as far as the Grand Union canal is concerned, a legal team led by Debenham & Co commercial property law specialist and senior litigation partner, Nigel Beaumont, has, after scrutinising the ancient provisions in the Grand Junction Canal Act of 1793, won a major victory which could well boost the development potential of canal-side sites.

The case centred on a development scheme on a bank-side site near Northampton. Swan Hill Developments went to BWB with plans for major office and industrial development on the west bank of the canal and sought consent to build a new canal bridge and widen two others.

The company says it was prepared to pay a reasonable sum to BWB for its permission to put up the bridges and that it had always understood that such payments were necessary under the 1793 Act.

However, after negotiations ended in deadlock, with BWB asking a "ransom" price, Swan Hill called in Beaumont and his partner Nick Lear.

After a detailed study of the Act the duo decided that Swan Hill was entitled to carry out bridge building without paying any "ransom" sum.

BWB at first argued that the bridge-building provisions of the Act were no longer available to present-day owners adjoining the canal. It then argued that only present-day owners whose lands adjoined both sides could seek permission without being charged.

The High Court upheld Swan Hill's view that neither of those points was correct, and this ruling has now been upheld by the Court of Appeal, headed by the Master of the Rolls, Lord Woolf.

A question mark still remains over how extensive the work can be before payment has to be made to BWB. That will form the subject of future litigation.

Whatever the outcome, the decision so far is good news for landowners. On the important preliminary issue, the court has firmly rejected BWB's argument that only an owner of land on both sides of the canal is entitled to exercise the rights under the Act.

What effect the ruling will have on other owners of land along canal banks depends on the wording of the individual statutes governing them, says Beaumont. There are 30 or 40 such statutes, he says, but the wording in many is similar to that of the 1793 Act, which means that the ruling in the recent case could well have implications for other owners of land which adjoins canals.

Counsel who successfully argued the case against BWB were Terence Etherton QC and Jonathan Karas. BWB was represented by Ian Travers, senior property litigation partner for Nabarro Nathanson, Anthony Scrivener QC and John Whittaker.