Covenant in conveyance — Consent requirement for certain building works — Preliminary issue — Whether implied term that consent not to be unreasonably withheld — Correct approach to implication of terms — Ruling in favour of claimants
The claimants owned a property, consisting of a cottage and surrounding land lying within an estate owned by the defendants. A 1972 conveyance of the property made between the parties’ predecessors in title restricted use of the property to a private dwelling-house for the occupation of a single family. It also contained a covenant prohibiting the construction of “any building or other structure other than the cottage now erected thereon” without obtaining the covenantee’s consent “to the size nature materials and colour thereof”. The claimants proposed to carry out building works that fell within the covenant, and submitted to the defendants detailed plans for approval. The defendants refused to give their consent.
In proceedings brought by the claimants, a preliminary issue was tried as to whether the covenant contained an implied term that the defendants’ consent was not to be unreasonably withheld. The claimants contended that such a term should readily be implied where a contract was expressed to prohibit some act without the consent of the other party. The defendants submitted that whether a term was to be implied would be determined by ordinary principles of contract law, so that all would depend upon the circumstances of the particular contract. They argued that a term should be implied only if the provision in question would otherwise destroy the thing granted, and that it would not destroy the thing granted – namely a plot of land with a dwelling-house to be used as a private residence for one family – if they were able to prevent any works falling within the covenant.
Held: The term contended for by the claimants was to be implied into the covenant.
Whether a party’s ability to refuse consent was to be restricted would depend upon the circumstances of the particular contract; there should be no special readiness to find such a restriction on the ability of one party to refuse consent where the contract made the giving of consent a condition to some further act: Wrotham Park Estate Co v Parkside Homes Ltd [1974] 1 WLR 798 considered. A term could be implied into a contract, not only where the absence of the term would destroy the entire consideration but also where some particular provision of the contract would be rendered nugatory. In other words, if the test were “business efficacy”, the implication could be made where some material provision of the contract, rather than the contract as a whole, would lack business efficacy: Dallman v King (1837) 4 Bing NC 105, Cryer v Scott Bros (Subury) Ltd (1988) 55 P&CR 183 and Price v Bouch (1986) 279 EG 1226 considered. Moreover, the implication of a term might be necessary for business efficacy even where the absence of the implication would not go to the destruction of the thing granted by the contract.
In the instant case, the covenant was subject to the limit contended for by the claimants; such a limit was necessary to give business efficacy to the contract. The relevant clause was in the class of regulatory covenants requiring the submission of plans for approval, and, moreover, consent was directed not to the proposed works in general but to their “size nature materials and colour” in particular. The limiting of the required consent in that way, by the express language of the covenant, was an indication that the parties did not expect the covenantee’s consent to be withheld by reference to considerations not directed at the merits of the particular proposal. The construction of the covenant contended for by the defendants could lead to extraordinary results, since, if the house were destroyed, it would be open to them to prevent any rebuilding. In such a case, in the light of the user restriction, the owners of the property would be unable to use it for any purpose whatsoever.
Michael Heywood (instructed by Morgan Cole, of Oxford) appeared for the claimants; David Hodge QC (instructed by Wood Awdry & Ford, of Chippenham) appeared for the defendants.
Sally Dobson, barrister
