Private housing estate — Estate governors controlling management scheme — Application for consent to build garage refused — Whether refusal unreasonable — Arbitrator holding that consent unreasonably refused — High Court holding correct test being whether in all the circumstances a reasonable estate manager might have withheld consent — Case remitted to arbitrator
In 1974 the court made an order under section 19 of the Leasehold Reform Act 1967 approving a scheme for Dulwich College Estate. It conferred on the estate governors powers of management over the estate on which there were about 4,000 privately-owned houses. Of those some 3,000 were enfranchised so that the freeholds belonged to the respective householders and not the estate governors. One of the enfranchised properties was a detached house, 33a Allyn Park. The owners wished to build a two-car detached garage at the front of their house. They obtained planning permission, but under the management scheme they also needed the written approval of the estate governors — such approval not to be unreasonably withheld. The owners applied twice for consent, but it was refused. The scheme contained an arbitration clause pursuant to which an arbitrator was appointed in this case. He held that the proposed garage would be visible from beyond the boundaries of the property so that consent was needed. However, he further held that the governors’ refusal was unreasonable. As the question had arisen on the estate before, the governors wanted a ruling from the High Court. They agreed to pay the owners’ costs of an application to the court in any event and the owners consented to an appeal against the arbitrator’s decision.
Held The case was remitted to the arbitrator for further consideration.
1. Under the scheme the governors must not withhold consent arbitrarily. They might do so only if it was reasonable. The issue whether consent was being unreasonably withheld was one of fact; but the touchstone to be applied when seeking an answer was whether the conclusion might have been reached by a reasonable man in the circumstances.
2. Decisions on future development of the estate remained with the estate governors. That conformed to the statutory prerequisite for a scheme of management under section 19(1) of the 1967 Act. But the powers of management retained by the governors were subscribed by an overriding requirement of reasonableness. There would be instances where different minds quite reasonably might reach different conclusions on whether a particular type of development was reasonable or whether it would be likely to preserve desirable amenities. On those matters the decision was entrusted to the estate governors so long as they kept within the bounds of reasonableness. That gave the governors a degree of control over the estate not out of proportion to that required for the purpose of preserving the amenities of the estate for the common benefit in accordance with section 19(5).
3. In deciding whether a refusal of consent was reasonable the test was not whether the arbitrator himself in all the circumstances would consider it desirable for the relevant permission to be granted, but whether a reasonable estate manager could in all the circumstances have refused the claimant’s application.
4. It was impossible to be sure what would have been the arbitrator’s conclusion if he had correctly directed himself in what his approach should be. Accordingly, the matter had to be remitted to him for further consideration.
Terence Etherton QC and Timothy Dutton (instructed by Lovell White Durrant) appeared for Dulwich Estates Governors; John McDonnell QC (instructed by Compton Carr) appeared for the respondents.
