The owners of property at the foot of a steep hill in Hampstead have failed in a renewed bid to secure an injunction preventing permission being granted for their neighbours at the top to build a substantial basement extension.
Sir Victor and Lady Sylvia Blank had appealed against a high court judge’s refusal to grant an injunction preventing the Hampstead Garden Suburban Trust from approving Scott and Melissa Franklin’s plans to carry out extensive works at their hilltop home at 2 Green Close, NW11, including a first-floor extension on both wings of the house, a new garage, the conversion of an existing garage, and a single-storey basement under part of the rear garden intended to contain a new playroom, wine cellars, a plant room, and a swimming pool.
Sir Victor and Lady Sylvia fear that the basement extension might affect the movement of groundwater through the hill in a way that could have an adverse effect on their property at the foot of the hill at 3 Green Close. Sir Victor’s company, Shebelle Enterprises, which holds the lease of number 3, sought an injunction restraining its landlord, the Hampstead Garden Suburban Trust, from granting consent for the excavation of soil or the building of a basement at 2 Green Close until steps have been taken, including the receipt of a basement impact assessment and suitable proposals to address the concerns raised by the proposed works.
But, last year, Henderson J rejected Shebelle’s case, ruling that the covenant was trumped by a scheme of management for the area, made with statutory authority in accordance with the provisions of the Leasehold Reform Act 1967, and approved by the high court in 1976.
Today, Kitchin LJ dismissed its appeal, finding that the words of the covenant could not fetter the exercise of the Trust’s powers under the scheme.
At the outset of his decision, Kitchin LJ said: “Shebelle owns a neighbouring property under the terms of a lease from the trust which contains a covenant for quiet enjoyment. It fears that the development will cause substantial damage to its property and contends that by granting consent for the development the trust will be acting in breach of that covenant.
“In broad outline, the trust responds that its powers of control over the contested development are derived from a statutory scheme and that their proper exercise for the public good cannot constitute a breach of the covenant. The judge agreed with the trust and I believe he was right to have done so.”
He said that the suburb is recognised across the world as a fine example of English 20th century domestic architecture and planning. It extends over 800 acres and contains some 5,000 properties.
He said that the central issue on the appeal was whether the proper and bona fide performance by the trust of its duties and obligations under the Scheme of Management can amount to a breach of the covenant for quiet enjoyment in the lease.
While he said that he did not suggest that in 1931 the parties to the lease anticipated for one moment the coming into force of the 1967 Act and the various rights it conferred, he found that that does not mean that the operation of the covenant must be considered without regard to it.
The question, he said, was: what should reasonable parties be taken to have intended by the words used, in the circumstances as they were, in relation to this event which they did not foresee?
He continued: “I think the answer to this question is tolerably clear. I do not think that reasonable parties would have thought that the proper and bona fide performance by the trust of its duties under an arrangement such as the scheme could amount to a breach of the covenant for quiet enjoyment.
“I do not believe that the proper performance by the trust of its public duties under the scheme amounts in some way to taking away with one hand what has been given to Shebelle with the other. Nor does it amount to a substantial derogation from the grant or a substantial interference with Shebelle’s rights under the lease.
“To the contrary, it amounts to the performance in the public interest of its duty, sanctioned by the high court under a statutory scheme, to preserve the character and amenities of the suburb, and as such is entirely consistent with the agreement embodied in the lease.
Though the trust is not a public body, he said that it is exercising powers which have been approved by the high court under a statutory scheme, and it is doing so for the public good.
He added: “I do not believe that reasonable parties to the lease should be taken to have intended by the words of the covenant that it could be applied to prevent or fetter the proper and bona fide exercise by the trust of its powers under the scheme.”
Jonathan Seitler QC had argued on Shebelle’s behalf that Sir Victor fears that the imminent works will “substantially damage” the property he lives in with his family. He said: “The learned judge at first instance did not question those concerns and described them as ‘very real’. However, he rejected the application for an interim injunction on the ground that the respondent, the Hampstead Garden Suburb Trust, has been a custodian of the public interest since 1974 and that the covenant for quiet enjoyment granted to the appellant’s predecessor in title in 1931 should not in those circumstances be taken to circumscribe the powers and duties associated with that role.”
But he argued that the judge erred in construing a 1931 lease by reference to the subsequent Leasehold Reform Act 1967, and wrongly treated the trust as if it was a public body.
He said that his clients did not seek to “stop the Franklins’ work in its tracks”, merely to ensure that the trust follows a rational, fair and informed process before giving consent to works which, he said, are capable of creating “widespread damage”.
Shebelle Enterprises Ltd v The Hampstead Garden Suburb Trust Ltd Court of Appeal (Arden, Kitchin and McCombe LJJ) 25 March 2014
Jonathan Seitler QC (instructed by Berwin Leighton Paisner LLP for the appellant
Tom Weekes (instructed by Lee Bolton Monier-Williams) for the respondent
