BAILII is celebrating 24 years of free online access to the law! Would you
consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it
will have a significant impact on BAILII's ability to continue providing free
access to the law.
Thank you very much for your support!
[New search]
[Printable RTF version]
[Buy ICLR report: [2001] Ch 459]
[Help]
Case No: A3/2000/2380
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (LLOYD J)
Royal Courts of Justice
Strand, London, WC2A 2LL
Friday 21 July 2000
B e f o r e :
LORD JUSTICE SCHIEMANN
LORD JUSTICE ROBERT WALKER
and
SIR RONALD WATERHOUSE
- - - - - - - - - - - - - - - - - - - - -
|
MORRELLS
OF OXFORD LTD
|
Appellant
|
|
-
and -
|
|
|
OXFORD
UNITED FC LTD & ORS
|
Respondents
|
- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr J Cherryman QC and Mr C Sydenham (instructed by Cartwrights, Bristol
BS99 7BB) for the appellant
Mr G Fetherstonhaugh (instructed by Lewis Silkin, London SW1H 0NW) for
the 1st, 3rd, 4th and 5th
respondents
Ms K Purkis (instructed by Legal and Corporate Services, Oxford City
Council, Oxford OX1 4YS) for the 2nd respondent
- - - - - - - - - - - - - - - - - - - - -
Judgment
As Approved by the Court
Crown Copyright ©
LORD JUSTICE ROBERT WALKER:
1. This is an expedited appeal, with the permission of the judge, from an
order of Lloyd J made on 9 June 2000. By the order the judge acceded to an
application made under Part 24 of the Civil Procedure Rules by the first
defendant Oxford United FC Ltd ("Oxford United") and the third, fourth and
fifth defendants Firoka (Oxford Hotels) Ltd, Firoka (Oxford Leisure) Ltd and
Firoka (Oxford United Stadium) Ltd ("the Firoka companies") and dismissed the
claim against them by the claimant Morrells of Oxford Ltd ("Morrells"). Indeed
the judge went further and also dismissed the claim made by Morrells against
the second defendant Oxford City Council ("the City Council").
2. By its claim form (issued as recently as 15 March 2000) Morrells claimed
injunctions to enforce a covenant entered into by the City Council in a
conveyance dated 23 August 1962 ("the 1962 conveyance"). The appeal is
concerned with that covenant and with the effect of section 79 of the Law of
Property Act 1925 ("the 1925 Act"). The Firoka companies and Oxford United
(together "the purchasers") are concerned in the case as conditional purchasers
from the City Council or as prospective lessees of land which (if Morrells is
right in its claim) is burdened by the covenant, and will remain burdened by
the covenant even after disposal to the purchasers.
3. The background to the matter is that at the beginning of the 1960's the
City Council was developing the Blackbird Leys housing estate on the south-east
edge of the city of Oxford. It lies just outside the Oxford ring road between
Littlemore and the Cowley motor works. The City Council wished to ensure that
those who lived on the estate had community facilities, including a church, a
health centre, a community centre, a youth club and a public house. The public
house, the Blackbird, was to be on Blackbird Leys Road, next to the community
centre and backing on to school playing fields.
4. By the 1962 conveyance the site for the public house was conveyed by the
City Council (under its then style of the Mayor Aldermen and Citizens of
Oxford) to Ind Coope (Oxford & West) Ltd ("Ind Coope"), Morrells'
predecessor in title. Clauses 2 and 3 contained covenants on the part of Ind
Coope and the City Council respectively. I should set out the opening words of
the two clauses in full since much of the argument has been centred on them.
5. Clause 2 began as follows:
"The Company with intent and so as to bind so far as practicable the property
hereby conveyed into whosesoever hands the same may come and to benefit and
protect the Estate of the Vendors known as the Blackbird Leys Estate but not so
as to render the Company liable for any breach of covenant committed after the
Company shall have parted with all interest in the property in respect of which
such breach shall occur hereby covenants with the Vendors that the Company and
its successors in title will at all times hereafter observe and perform the
restrictions following in relation to the property hereby conveyed namely
..."
6. There followed two restrictive obligations: (a) that Ind Coope would use
the premises to be erected as a public house, and for no other purpose; (this
was arguably also a positive covenant, to keep the public house open as a
community facility, but no point has been taken on that); and (b) that it would
build only in accordance with plans approved by the City Estates Surveyor.
There were also three positive covenants: (c) to fence; (d) to make good any
damage in connection with a drain to be laid by Ind Coope; and (e) to indemnify
the City Council in respect of any non-repair of the drain.
7. By contrast clause 3 was in a much simpler form:
"The Vendors hereby covenant with the Company as follows: (a) For the benefit
of the land hereby conveyed that the Vendors will not at any time hereafter
permit any land or building erected thereon within half a mile radius of the
land hereby conveyed which is in the ownership of the Vendors at the date of
this Conveyance to be used as a Brewery or Club or licensed premises for the
preparation manufacture supply sale or consumption either on or off the
premises of intoxicating liquors."
There followed a positive covenant by the City Council (b) to make up and
maintain roads and footpaths and to indemnify Ind Coope in respect of that
liability.
8. The football ground where Oxford United play is due to be closed at the end
of next season following the Hillsborough disaster and the ensuing Taylor
enquiry. In 1996 planning permission was granted for the construction of a new
stadium and associated leisure facilities on a site at Minchery Farm,
Littlemore. This site had at all material times been owned by the City Council
and it is common ground that some or all of it lies within a circle of half a
mile radius from the Blackbird public house.
9. Construction of the stadium began in August 1996 but was delayed (because
of lack of funding) six months later. Since then the planning permission has
been revised twice and the proposals now include an hotel and a leisure centre
as well as the football stadium. There is in evidence a conditional agreement
dated 4 February 2000 for the development and sale of the site to which the
City Council and the purchasers are parties. It shows that the City Council
will become `B' shareholders in Firoka (Oxford United Stadium) Ltd and will
have blocking powers over certain reserved matters, including the grant of
leases. The Part 24 application made on 22 March 2000 by the purchasers was
supported by a witness statement of Mr Firoz Kassam, who is a director of all
four purchasers which would acquire freehold or leasehold interests in the
developed site under complex provisions which it is not necessary to set out in
further detail. The application was made on the basis that Morrells' claim for
injunctions against the purchasers had no real prospect of success, because (a)
the covenant in clause 3(a) of the 1962 conveyance would not bind the
purchasers, and (b) the proposed sale by the City Council would not be a breach
of the covenant.
10. In his clear and thorough judgment the judge summarised the facts and
noted that he was concerned, on the Part 24 application, only with the
possibility of the clause 3(a) covenant being enforced against the purchasers
(although after he had delivered judgment he also dealt with the possibility of
the City Council being in breach after disposal of the site to the purchasers).
The Part 24 application might be a knock-out blow to Morrells but it could not
be decisive in Morrells' favour, because of other points taken by some or all
of the defendants, that is restraint of trade, the contention that the covenant
benefits a business rather than land, waiver and estoppel.
11. The judge set out the covenants in clauses 2 and 3 of the 1962 conveyance
and observed that they were in very different form. He said that simply
reading clause 3(a) in its context (and apart from s.79 of the 1925 Act), he
would think that it was intended to relate, and did relate, only to use (of any
part of the land for the prohibited purposes) permitted by the City Council
itself. I am in full agreement with the judge on that point.
12. The judge then went on to s.79 of the 1925 Act, which is headed "Burden of
covenants relating to land" and is in the following terms:
"(1) A covenant relating to any land of a covenantor or capable of being bound
by him, shall, unless a contrary intention is expressed, be deemed to be made
by the covenantor on behalf of himself his successors in title and the persons
deriving title under him or them, and, subject as aforesaid, shall have effect
as if such successors and other persons were expressed.
This subsection extends to a covenant to do some act relating to the land,
notwithstanding that the subject-matter may not be in existence when the
covenant is made.
(2) For the purposes of this section in connection with covenants restrictive
of the user of land "successors in title" shall be deemed to include the owners
and occupiers for the time being of such land.
(3) This section applies only to covenants made after the commencement of this
Act."
13. The section is a sort of counterpart to s.78 of the 1925 Act (Benefit of
covenants relating to land) but whereas s.78 replaced s.58 of the Conveyancing
Act 1881, s.79 was new in 1925 (although s.59 of the Conveyancing Act 1881 had
touched some of the same ground). Moreover s.78 contains no reference to
yielding to the expression of a contrary intention.
14. It is now clear from the decision of the House of Lords in Rhone v
Stephens 1994] 2 AC 310, 321-2 that s.79 did not have the far-reaching (and
perhaps unexpected) effects which s.78 has been held to have. Section 79 was
enacted (in the words of a note originating with Sir Benjamin Cherry, the
principal draftsman of the 1925 property legislation, and now found in
Wolstenholme & Cherry's Conveyancing Statutes, 13th ed, Vol 1,
p.163) in order "to remove conveyancing difficulties in regard to the form of
covenants". The most important of those difficulties has been identified
(Megarry & Wade, Law of Real Property, 6th ed (C. Harpum)
16-016) as follows:
"The burden of a restrictive covenant will run with the covenantor's land only
if the parties so intend. The effect of the section is that such an intention
will be presumed unless the contrary is expressed."
On one view it achieves that result because the words which it reads into a
covenant are a modified form of the traditional words used by conveyancers
before 1926 (see Kemp v Bird (1877) 5 Ch D 974, 976-7): "that the said
[covenantor], his heirs, executors, administrators and assigns, shall not
[etc]". But that was not common ground on the hearing of the appeal. It is
still not clear, as this appeal shows, just how the process of removing that
difficulty was intended to operate and how far it was intended to go.
15. The judge seems to have been troubled by this point, on which he did not
hear such full submissions as have been made in this court. But the judge did
not find it necessary to express a final view on the point, since after
discussing the authorities (and in particular Re Royal Victoria Pavilion
Ramsgate [1961] Ch 581 and Sefton v Tophams [1965] Ch 1140, [1967] 1
AC 50), he came to the conclusion that the effect of importing the words
indicated in s.79 would be to change the covenant in clause 3(a) of the 1962
conveyance "into something rather different or, on Mr Harper's submission,
something very different". (Mr Joseph Harper QC appeared below with Mr Colin
Sydenham for Morrells; the words just quoted reflect his submission on the
point on which the judge expressed no final view.)
16. The outcome was that the judge acceded to the Part 24 application and
dismissed the claim against all the defendants, including the City Council.
Morrells has appealed to this court (Mr John Cherryman QC leading for Morrells)
with an appellant's notice which runs to thirteen paragraphs but whose general
contention is that the judge misconstrued the 1962 conveyance and misapplied
s.79. The purchasers (appearing in this court, as below, by Mr Guy
Fetherstonhaugh) have put in a respondent's notice which challenges the judge's
provisional view on the point which he did not decide. The City Council
(appearing in this court, as below, by Ms Kathryn Purkis) has adopted the same
position, although without having put in a separate respondent's notice.
17. As I have said, I consider that the judge was right in his view that apart
from the effect of s.79, clause 3(a) of the 1962 conveyance would operate as a
personal covenant only. Its express terms contain no reference to successors
in title to parts of the City Council's land within half a mile of the
Blackbird public house, apart from the tenuous hint which might be derived from
the contrast between "at any time hereafter" and "in the ownership of the
vendors at the date of this conveyance". The contrast between clause 2 and
clause 3 could hardly be clearer, and Mr Fetherstonhaugh has analysed the
differences in detail.
18. It is therefore necessary to consider the effect of s.79. It refers to a
contrary intention being "expressed", and Mr Cherryman has placed great
emphasis on that word. But in Re Royal Victoria Pavilion Ramsgate
[1961] Ch 581, 589, Pennycuick J said,
"But it seems to me the words "unless a contrary intention is expressed" mean
rather: unless an indication to the contrary is to be found in the instrument,
and that such an indication may be sufficiently contained in the wording and
context of the instrument even though the instrument contains no provision
expressly excluding successors in title from its operation. It can hardly be
the intention of the section that a covenant which, on its natural
construction, is manifestly intended to be personal only, must be construed as
running with the land merely because the contrary is not expressly
provided."
19. Pennycuick J found support for that approach in two decisions of this
court on what is now s.62 of the 1925 Act, Broomfield v Williams [1897] 1 Ch 602 and Gregg v Richards [1926] Ch 521. Gregg v Richards
(which, we were told, was not cited to the judge) is a fairly striking decision
since the grant of an express right of way over a limited strip was held not to
be an expression of a contrary intention excluding a larger grant. The Master
of the Rolls said (at p.527) that he had to find something unequivocal if he
was to conclude that a contrary intention had been expressed. It is however
reasonably easy to see how s.62 of the 1925 Act operates where it applies (as
Mr Fetherstonhaugh put it, it simply adds parcels) whereas the operation of
s.79 is more obscure.
20. Pennycuick J's approach has been followed in some more recent cases. It
should be noted that in Re Royal Victoria Pavilion Ramsgate the
indications in favour of a purely personal covenant were quite strong: apart
from the contrast between the wording of three consecutive clauses, there was
the limited duration of the personal obligation (corresponding to the unexpired
portion of a lease of the pavilion) and the character of the obligation
(requiring the covenantor, which had sold the goodwill of a cinema and a
theatre in the town, to "procure" that public entertainment at the pavilion of
which it remained lessee was limited to occasional live performances, with no
films).
21. The judge approached the possible application of s.79 by a series of
steps:
"... first, to come to a view as to the meaning and effect of the clause apart
from the Section, then to consider what its effect would be if there were read
into it the words needed to satisfy the Section, and then to address the
question whether the clause expresses a contrary intention, in the way
described by Pennycuick J., so as to exclude the effect of the Section."
22. Mr Cherryman has criticised that as the wrong approach. Instead he has
urged on us the approach put forward by Sargant LJ in Gregg v Richards
([1926] Ch 521, 534) (cited and followed by Cross J in Green v Ashco
Horticulturist [1966] 1 WLR 889, 895):
"... I think perhaps the way to regard it may be this, to consider that in such
a conveyance there is added to the parcels a printed form of words such as you
find in the common form printed forms of clause, and that then if the
conveyance expresses an intention to exclude, you may consider that printed
form of words struck out in ink and removed from the conveyance in that way;
while, if an intention is shown to limit or alter the form, the limitation or
alteration being introduced in the particular conveyance would of course
prevail, according to the ordinary rules of construction of such documents,
over the common form which you find in the print."
Similarly Brightman LJ in Federated Homes Ltd v Mill Lodge Ltd [1980] 1 WLR 594, 606 (a case on s.78 of the 1925 Act) made a passing reference to s.79
as having "achieved no more than the introduction of statutory shorthand into
the drafting of covenants".
23. Mr Fetherstonhaugh has submitted that whereas the approach put forward by
Sargant LJ is appropriate for cases under s.62 of the 1925 Act which are
concerned with parcels, it is not appropriate to s.79 because the recommended
technique would as it were obliterate the original text, which is all that the
court has to go on (apart from the admissible matrix of fact) in order to
decide whether or not there is a contrary intention. There is some force in
that submission, although it is possible to imagine a comparable problem under
s.62 (for instance on a deed of exchange in order to rationalise boundaries;
the grant one way might specify easements in detail, with the other wholly
silent).
24. In this case as in many comparable cases, any description of the requisite
mental process is likely to be metaphorical and inexact. The judicial mind
does not in practice proceed in an orderly series of immutable choices in order
to reach a conclusion on a question of construction. In practice it scans
repeatedly from one point or proposition to another, often forming and
rejecting provisional views in the search for the most satisfactory (or least
unsatisfactory) resolution. Ultimately there is a single question to be
answered, that is whether the words provisionally read in by the statute can,
in the commercial context of the particular case and having regard to the words
of the particular document, usefully supplement those words, or whether any
extended meaning read in by those means would on a fair reading be
"inconsistent with the purport of the instrument" (the expression used by Lord
Evershed MR in IRC v Bernstein [1961] Ch 399, 412, which is in another
line of analogous cases on s.69(2) of the Trustee Act 1925; the two lines
finally met in Re Evans [1967] 1 WLR 1294).
25. Apart from the strikingly different form of clauses 2 and 3 of the 1962
conveyance the argument about contrary intention has concentrated on two main
areas: commercial realities, and the degree to which consistency (or
inconsistency) of style, in a legal document of a commercial character, should
be taken as a significant guide to construction. On the first point Mr
Cherryman has relied strongly on the commercial improbability of Ind Coope
being satisfied with a covenant of a purely personal nature. Mr
Fetherstonhaugh has challenged that, pointing out that Ind Coope and Morrells
successively have now been protected by the covenant for 38 years, and that it
is impossible to know what commercial view Ind Coope took when it bargained for
the benefit of the covenant in 1962. The judge did not attach much weight to
the argument based on commercial realities, and I think he was right not to do
so.
26. On the second point Mr Cherryman relied on what Neuberger J said in
Oceanic Village Ltd v United Attractions Ltd [2000] 1 AER 975, 981.
Immediately after a citation from Kemp v Bird (1877) 5 Ch D 974, 976-7
(a case on restrictive covenants in a lease) Neuberger J said:
"In my judgment, while it is right to take into account the fact that the
draftsman of the lease has departed from, or has omitted part of, a
well-established form of words, that will not, at least on its own, normally be
a sufficient reason for not giving the words he has used the natural meaning
which they would otherwise bear. The fact that the draftsman has used a
different form of words in relation to two provisions of a lease concerned with
the same concept, in this case the use to which land is not to be put, is also
something which should be taken into account when construing either of those
provisions, but, again, I do not consider that it should normally justify
departing from the natural meaning of either provision.
While it is appropriate for the court to contrast a provision which falls to
be construed with a well-established form of words or with the way in which
another provision in the lease is drafted, it is also right for the court to
bear in mind the way that leases are drafted in practice. It is well known
that draftsmen of leases will frequently use many expressions where one will do
- see eg per Hoffmann J in Norwich Union Life Insurance Society v British
Railways Board [1987] 2 EGLR 137 at 138 and in Tea Trade Properties Ltd
v CIN Properties Ltd [1990] 1 EGLR 155 at 158. Furthermore, draftsmen may
take the wording of different clauses from different precedents and different
clauses may come from different hands."
27. Oceanic Village was a case about a very complex lease (of part of
the old County Hall on the south bank). It was cited to the judge who noted
its complexity and said of the 1962 conveyance,
"Here I have a short document with two immediately adjacent clauses on one
page. Clause 2 is certainly carefully drawn, and it seems to me that clause 3
is as well, and the differences are deliberate and are intended to achieve
different results."
28. My view of this appeal has fluctuated. I see force in Mr Cherryman's
submissions that (if s.79 is to be excluded) a contrary intention must be
expressed, and that (as the Master of the Rolls said in Gregg v
Richards) it must be unequivocal. I also accept that in the process of
negotiation of a commercial document all sorts of inconsistencies of style may
arise to which it would be wrong to attach importance. Nevertheless I have
been persuaded by Mr Fetherstonhaugh's excellent written and oral submissions
that the contrast between clause 2 and clause 3 of the 1962 conveyance is too
stark and too immediate to be ignored. To read into clause 3 words which are
not there, but which are in clause 2, would in my view be inconsistent with the
purport of the instrument.
29. That is sufficient to dispose of the appeal, so far as the purchasers are
concerned (the position of the City Council is considered at the end of this
judgment). But since we have had quite extensive argument and citation of
authority on the point raised by the respondent's notice and since it is a
point of some general interest, I will say something about it, while
emphasising that my remarks are not necessary to the decision of this
appeal.
30. Where it applies s.79 provides for a covenant of a particular description
to be "deemed to be made by the covenantor on behalf of himself his successors
in title" (including, if the covenant is restrictive, owners and occupiers for
the time being) "and the persons deriving title under him or them" and "shall
have effect as if such successors and other persons were expressed". There was
some inconclusive debate at the hearing as to the significance of the last
dozen words. It is reasonably clear that if in a conveyance of freehold land A
covenants with X that no building shall be erected on Blackacre, A (by s.79)
covenants on behalf of his successors in title and the others mentioned above,
and (by s.78) X's successors in title will get the benefit of the covenant.
A's successors in title are not bound by the covenant so as to make any of them
liable in damages for breach of covenant. There is no authority for any
statutory agency (although Mr Sydenham, following his leader, did make that
submission). But each of the successors in title is bound in the sense of
being amenable to the equitable remedy of an injunction if the covenant is
breached in circumstances in which he or she is responsible.
31. That is in my view the real significance of Powell v Hemsley [1909] 1 Ch 680 (Eve J) [1909] 2 Ch 252 (CA), the facts of which were very unusual.
Mr Hemsley purchased some freehold land and covenanted for himself, his
executors, administrators and assigns to erect no buildings except houses of a
particular description, and in accordance with plans to be approved by the
covenantee or his assigns. He had himself complied with the covenant since he
had not done any building and he had inserted an appropriate covenant in a
building lease of the land which he granted to lessees for a term of 250 years.
The lessees breached both covenants and then went bankrupt with an unapproved
and half-completed house on the property. Their trustee in bankruptcy
disclaimed the lease and Mr Hemsley found himself in possession again. He was
sued by an assignee of the original covenantee. That was the context in which
Eve J held that Mr Hemsley was not liable for the breach committed by the
lessees, since it was not a continuing breach.
32. Eve J said (at p.688) that a covenant by a purchaser for himself, his
executors administrators and assigns that he will or will not do a particular
act is not equivalent to a covenant that he his executors administrators and
assigns will or will not do that act. The decision that Mr Hemsley was not
liable was upheld in this court, even though the Master of the Rolls was
prepared to assume that the effect of the covenant might be different from that
stated by Eve J. But the case gives no support at all for the view that if A
(either expressly or by force of s.79) covenants on behalf of his successors in
title that he will not build, his successor in title (B) is not amenable to an
injunction if he (B) builds. It was assumed that Mr Hemsley's lessees were in
breach, but they were bankrupt and no longer in possession of the property.
33. Nor do the other authorities relied on by Ms Purkis appear to me to give
any support to that view. Re Fawcett & Holmes' contract (1889) 42 Ch D 150 was a case long before the enactment of s.79, and the wording of the
particular covenant was unusually compelling (as Lord Esher MR noted at p.155).
Bell v Norman C Ashton Ltd (1956) 7 P&CR 359 was concerned with
whether the trustees of the will of the survivor of two deceased covenantees
could approve departures from a building scheme. It does not state any
principle relevant to this appeal.
34. Although it is always necessary to take proper account of the wording of
the particular covenant under consideration, I am not persuaded by any of the
authorities cited to us that there is a great gulf (or trap) between a covenant
expressed in the passive voice ("no building shall be erected") and one in the
active voice ("not to build" or "not to cause or permit to be built") in a case
where equity's other requirements (that the covenant is restrictive in nature,
and that the covenantee retains land capable of being benefited) are satisfied.
(In Sefton v Tophams, discussed below, it was conceded throughout that
the covenant could not be enforceable in equity against successors in title of
Tophams Ltd, because Lord Sefton retained no other land capable of being
benefited, which is why so much attention was focused on the precise extent of
that company's obligation. Lord Sefton's boats had been burned and his lawyers
had to fight on the limited ground left to them.)
35. My tentative view, therefore (coinciding, I think, with the judge's) is
that section 79 (where it applies, and subject always to any contrary
intention) extends the number of persons whose acts or omissions are within the
reach of the covenant in the sense of making equitable remedies available,
provided that the other conditions for equity's intervention are satisfied.
Where a restrictive covenant is expressed in the active voice, and s.79
applies, its normal effect is not to turn "A covenants with X that A will not
build" into "A and B covenant with X that A will not build". Rather it is that
"A (on behalf of himself and B) covenants with X that A (or, as the
circumstances may require, B) will not build" (see also Megarry & Wade,
16-037 and 16-038).
36. Sefton v Tophams [1965] Ch 1140 (Stamp J, CA) [1967] 1 AC 50 (HL)
is a case which calls for careful study although it was ultimately decided on
what Lord Guest called a "very short point". On that point five of the nine
judges who considered the matter (including Lord Reid and Lord Wilberforce)
would have decided it in favour of the Earl of Sefton, but the other four
included a majority of the House of Lords and so Tophams Ltd ("Tophams") was
successful. The essential point was whether the word "permit", in the third
schedule to a conveyance executed in 1949 from Tophams to Capital and Counties
Property Company Ltd, covered a sale for the purpose of future building
development which Tophams would not, after the sale, be able to control. The
House of Lords was split over how wide a meaning should be given to a personal
covenant not to permit specified land to be used otherwise than for horse
racing purposes: see (in the majority) Lord Hodson at p.64, Lord Guest at p.68
and Lord Upjohn at p.75 and (in the minority) Lord Reid at p.62 and Lord
Wilberforce at p.83. However (as Lord Reid explained at p.61) the question
whether the covenants were intended to run with the land was material as part
of the commercial context in which the narrow issue of the meaning of "permit"
had to be decided. It was known that Lord Sefton did not at the date of the
writ own any land capable of being benefited by the covenants, but it was
unclear (see at pp.81-2) whether that had been the state of affairs in 1949
also.
37. All their lordships' speeches, and in particular their (fairly cursory)
references to s.79 of the 1925 Act have to be read in the light of the limited
scope of what they had to decide. Attention was focused especially on a
passage in the speech of Lord Upjohn at p.73, and two passages in the speech of
Lord Wilberforce at pp.81-2. The judge set out the three passages in his
judgment and said that Lord Wilberforce's observations made him hesitant about
what would otherwise have been his view as to how s.79 operates.
38. Lord Upjohn said (at p.73) that the lower courts had placed too much
significance on the impact of s.79. It had become common ground in the House
of Lords that so far as relevant to the issue to be decided (a qualification
which may be important),
" ... it does no more than render it unnecessary in the description of the
parties to the conveyance to add after the respondent's name: "his executors
administrators and assigns," and after Tophams' name: "and their successors in
title." This can really have little or no weight in considering the liability
of Tophams' assigns in relation to a restrictive covenant affecting land."
The first of these two sentences seems to be describing the joint effect of
s.78 and s.79. It raises the interesting possibility (on which neither side
based any submission) of cutting the knot of the question "where in clause 3
are the statutory words to be read in ?" with the answer "not in clause 3 but
after the words `hereinafter called the Company' in the sixth line of the 1962
conveyance" (but that solution might raise new problems). The second sentence
is one that I find very difficult to understand, since the liability of
Tophams' assigns was not an issue.
39. Lord Wilberforce's first observation (at p.81) was that s.79 did not have
the effect of causing Tophams' covenants to run with the land, but merely
extended the scope of Tophams' covenants. In the context in which that
observation was made, it is unexceptionable. Section 79 is concerned with only
one of the three basic conditions which have to be satisfied if the burden of a
restrictive covenant is to run with the land. Lord Wilberforce was not
concerned with the issue discussed in paras 30 to 35 above. Powell v
Hemsley was cited in the House of Lords (and is indeed referred to in the
speech of Lord Wilberforce at p.86), but on a quite different point, that is
this court's approval of part of what Lopes LJ said in Hall v Ewin
(1887) 37 Ch D 74, 82.
40. Lord Wilberforce's second observation (at p.82) was as follows (referring
to the judgment of Russell LJ in this court, [1965] Ch at p.1199),
"And, lastly, Russell LJ refers briefly to Section 79 of the Law of Property
Act 1925 `for what it is worth'. This is very little, in my view, since it is
not concerned with imposing covenants on the land or on purchasers, but with
the liability of the covenantor."
I do find this observation quite puzzling, but I think it must be taken in the
same context as what had preceded it. Section 79 is concerned with simplifying
conveyancing by creating a rebuttable presumption that covenants relating to
land of the covenantor are intended to be made on behalf of successors in
title, rather than be intended as purely personal. That is a necessary
condition, but not a sufficient condition, for making the burden of the
covenants run with the land.
41. There remains Morrells' appeal against the judge's dismissal of the claim
against the City Council. These proceedings have been conducted with
commendable speed but in the course of them some procedural niceties have been
overlooked. Morrells' claim form issued on 15 March 2000 claimed against the
City Council an injunction restraining it from permitting any of the purchasers
to commence any development on the Minchery Farm site in breach of the
covenant. Since seeing the conditional development agreement and the degree of
involvement by the City Council which it discloses, Morrells wishes to obtain
permission to amend and widen its claim.
42. The Part 24 application was made on 20 March by the purchasers, but notice
of the application was given to the City Council. The City Council did not
make its own Part 24 application but Ms Purkis was instructed to attend the
hearing before Lloyd J. She put in a skeleton argument and appeared at the
hearing. The judge reserved judgment overnight and on Friday 9 June gave the
judgment of which we have an approved transcript. We do not however have any
transcript (approved or unapproved) of the discussion after judgment in which
the judge decided, in exercise of his case management powers, to dismiss the
claim against the City Council also, a decision which is reflected in his order
(sealed on 14 June). It does not appear that the question of any amendment of
the claim against the City Council was raised on 9 June. Mr Sydenham has now
formulated an amendment to the claim form (but not to the particulars of
claim).
43. On the material before him on 9 June, the judge was entitled to come to
the view that the claim against the City Council, as then formulated, had no
real prospect of success, and to exercise his case-management powers as he did.
But in all the circumstances as I have described them I think it would be
unfair not to give Morrells an opportunity of amending its claim in the light
of what has now been disclosed. I express no view at all as to the prospect of
success of an amended claim; this court was not taken far into the complexities
of the conditional agreement.
44. Mr Cherryman indicated that although his client would prefer not to have
to start new proceedings, that course would not be unduly onerous so long as
they were not liable to be struck out as an abuse of process. Since four of
the five defendants are (subject to any further appeal) ceasing to be parties,
and reformulation of the claim against the City Council will probably require
quite extensive amendments, I consider that the better course would be to leave
the judge's order undisturbed but to express the clear view (as I do) that new
proceedings by Morrells against the City Council would not, in all the
circumstances, be an abuse of process.
45. For these reasons I would dismiss this appeal.
Sir Ronald Waterhouse:
46. I agree.
Lord Justice Schiemann:
47. I agree that this appeal ought to be dismissed.
48. As to the appeal in relation to Oxford City there is nothing which I wish
to add to the reasoning of Robert Walker LJ.
49. So far as the appeal in relation to the other respondents is concerned, I
incline to approach s.79 as being concerned not with the substance of any
covenant but rather with the persons who are burdened by it. I thus have some
hesitation in accepting, as did the judge and as does Robert Walker LJ, that
s.79 permits the modification of clause 3(a) so as to insert, not merely the
words which I have italicised, but also the words which I have emphasised and
so as to make it read "The Vendors their successors in title and the persons
deriving title under them hereby covenant with the Company as follows ...
that the Vendors their successors in title and the persons deriving title
under them will not at any time hereafter permit ... ".
50. In relation to contrary intention being expressed, I consider that the
approach of Pennycuick J quoted by Robert Walker LJ, in his paragraph 18 is the
correct approach. When examining the question of intention, I find it helpful
to compare the Conveyance as executed and a notional conveyance assumed to have
been modified by s.79 (either in the narrow manner which I tend to prefer or in
the wider manner which appealed to the Judge) and then to consider whether the
notional conveyance is manifestly at variance with the intention revealed in
the executed conveyance.
51. Whether the notional conveyance takes the form postulated by the Judge or
that postulated by me, I consider that it is manifestly at variance with the
intention revealed in the executed Conveyance. That being so, it is not
necessary for me to express a concluded view on the question on which I
instinctively differ from those whose experience in this field exceeds mine.
Order: Appeal dismissed with appellant to pay the costs of each
respondent. Leave to appeal to the House of Lords.
(Order does not form part of approved judgment.)
BAILII:
Copyright Policy |
Disclaimers |
Privacy Policy |
Feedback |
Donate to BAILII
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/226.html
