Restrictive covenant – Construction – Respondents obtaining planning permission to demolish property and erect bigger house – Appellant neighbour having benefit of restrictive covenant preventing erection of additional building on site – Court finding in respondents’ favour – Appellant appealing – Whether proposed development breaching restrictive covenant – Whether respondents estopped from contending building work not precluded by covenant – Whether master erring in costs order – Appeal dismissed
The parties owned neighbouring properties in Poole, Dorset. In October 2021, the respondents obtained planning permission to demolish their property and erect a bigger house. The proposed development was substantially bigger than the original building and would occupy almost the whole of the plot.
The appellant had the benefit of a covenant contained in a 1958 transfer which stated that: “… the transferor for himself and his successors in title… hereby covenants with the transferee that no additional buildings whatsoever shall at any time be erected” on what subsequently became the respondents’ site.
On an application by the respondents under section 84(2) of the Law of Property Act 1925, a deputy master declared that the covenant did not prevent the respondents from replacing their existing house pursuant to the grant of planning permission. He ordered that the appellant should pay the respondents’ costs of the proceedings.
The appellant appealed contending that: (i) on its true construction, the proposed development would be a breach of the 1958 covenant; (ii) the respondents were estopped from asserting a construction of the covenant inconsistent with the construction “adopted and applied” by the parties’ respective predecessors in title; (iii) even if the respondents were not prevented from carrying out the proposed development, the master ought to have applied the “normal” costs rule for applications under section 84(2) of the 1925 Act.
Held: The appeal was dismissed.
(1) When construing restrictive covenants, it was both legitimate and important to determine their purpose. If the covenant was to require or prevent a particular course of action, it had to fall within the object and words of the covenant. A restrained interpretation of such a covenant was normally appropriate.
The court would often require clear words to support a construction which had an unfair result. That was justified in the case of a restrictive covenant where there was obvious potential for unfairness or prejudice to the covenantee if an overly generous interpretation was placed on the provision, which had the effect of widening the restrictions on what the covenantee could do with his land: GLN (Copenhagen) Southern Ltd v Tunbridge Wells Borough Council [2004] EWCA Civ 1279; [2004] PLSCS 214 considered.
(2) The natural and ordinary meaning of the words of the 1958 covenant, read in context, was that the covenantor, by covenanting that “no additional buildings whatsoever” should “at any time be erected on” his retained land, promised no more than that no buildings in addition to, in the sense of “as well as” the existing building, should be erected. The ordinary meaning of “additional buildings” was to convey the impression of “further” or “ancillary” structures.
If the parties had intended to preclude a substitute building, or place limits upon the size and footprint of any replacement building, or to preclude any alteration or extension of the property, one would have expected the covenant to make that clear. The use of the word “whatsoever” was designed to emphasise that there should be no more than one building on the plot.
The factual matrix made it unlikely that the parties, or reasonable people in their position, would have intended the 1958 covenant to preclude (for ever) building work of any description to the property itself.
The respondents’ construction reflected the natural and ordinary meaning of the existing words and was consistent with the purpose of the covenant, having regard to the surrounding circumstances at the time of the 1958 transfer.
(3) Estoppel by deed was based on the principle that, when a person had entered a solemn engagement by deed as to certain facts, he would not be permitted to deny any matter which he had so asserted. The averment relied upon to work an estoppel had to be certain to every intent without any ambiguity but might be contained in the recital or in any part of the deed.
The ambit of estoppel by contract and estoppel by deed was limited. It had to be possible to extract a clear statement of fact from the deed or contract together with an intention by the parties to bind themselves to that statement. An unexpressed assumption underlying the drafting of a contract or deed would only be sufficient if it amounted to an agreement which was necessarily implicit in the express terms of the deed: PW & Co v Milton Gate Investments Ltd [2004] 3 EGLR 103 and Richards v Wood [2014] EWCA Civ 327 considered.
In the circumstances of the present case, the respondents were not estopped from contending that the covenant did not preclude building work that extended beyond the envelope of the existing structure.
(4) The rule of practice was that a plaintiff seeking a declaration that restrictive covenants did not affect his property was expected to pay his own costs. He was also expected to pay the costs of any defendants who entered an appearance down to the point in the proceedings at which they had had a full opportunity of considering the matter and deciding whether or not to oppose the application. Any defendant who then decided to continue, and appeared unsuccessfully before the judge, did so at his own risk as to his own costs at that stage. Such defendant would not, however, be ordered to pay the plaintiff’s costs. The rule of practice was essentially fully consistent with the Civil Procedure Rules (CPR): University of East London Higher Education Corporation v Barking and Dagenham London Borough Council [2004] EWHC 2710 (Ch); [2004] PLSCS 291; [2005] Ch 354 considered.
Every case had to be considered on its own facts and, post CPR, the so-called rule of practice was flexible. In the present case, the master took the view that the stance adopted by the appellant was hostile and precipitated the present litigation. Accordingly, the usual costs consequences should apply under CPR 44.2(2)(a), namely that the unsuccessful party would be ordered to pay the costs of the successful party.
The question of costs was a matter for the master’s discretion. There was no proper basis on which it could be found that the master’s determination fell outside the generous ambit within which reasonable disagreement was possible: Tanfern v Cameron-MacDonald [2000] 1 WLR 1311 considered.
Charles Auld (instructed by Nalders LLP) appeared for the appellant; Tom Weekes KC (instructed by McDonaghs Solicitors Ltd) appeared for the respondents.
Eileen O’Grady, barrister
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