Deed of grant — Rights granted to Electricity Board on payment of capital sum — Further payment by way of compensation provided in the event of the landowner, having obtained planning permission for development, being unable to take full advantage of such permission as a result of the exercise by the board of the rights granted to it — The appellant purchased the farm which was the subject of the deed of grant and obtained a number of planning permissions for residential and office development — He then sold off parts of the farm for which planning permission had been obtained — He claimed that he had suffered a loss for which compensation was due because, owing to the presence of pylons and overhead cables, he was unable to obtain as good a price for the parts sold off as he otherwise would; he was thus unable to take full advantage of the planning permissions — Held by the Court of Appeal that Judge O’Donoghue (sitting as a judge of the High Court) was correct in rejecting the claim — The phrase ‘cannot take full advantage of the said planning permission’ could not bear the wide meaning for which the appellant contended, equivalent to ‘cannot sell the property for as high a price as could have been obtained but for the rights granted to the board’ — The compensation provision was directed to such consequences as a restriction on the density of housing development attributable to the existence of the pylons, towers and cables — It was common ground that the exercise of the board’s rights in the present case did not in fact prevent the appellant from doing anything authorised by the planning permissions — The appellant had been compensated by the capital sum he received for any diminution of value due to the exercise of the rights granted — He was not entitled to further compensation, because he was in a position to ‘take full advantage’ of the planning permissions — Appeal dismissed
No cases are
referred to in this report.
This was an
appeal by the plaintiff, Aubrey Paul Allen, from a decision of Judge
O’Donoghue, sitting as a High Court judge, rejecting the construction which the
plaintiff sought by originating summons to place on provisions for compensation
in a deed of grant in favour of the South Eastern Electricity Board, the
defendants and present respondents. The deed related to land at Southerham
Farm, Lewes, East Sussex.
Michael King
(instructed by Tuck & Mann, of Epsom) appeared on behalf of the appellant;
Edward Faulks (instructed by the solicitor to the South Eastern Electricity
Board) represented the respondents.
Giving the
first judgment at the invitation of Slade LJ, BALCOMBE LJ said: This is an
appeal from an order dated January 31 1986 of His Honour Judge O’Donoghue,
sitting as a judge of the High Court, and it raises a short question of the
construction of a deed of grant dated June 26 1978.
In 1978
certain trustees were the owners of freehold land known as Southerham Farm,
Lewes, East Sussex. In 1978 the defendant, the South Eastern Electricity Board,
erected and laid overhead and underground electric lines and towers on this
land.
I now turn to
the deed of grant and its terms. The parties were the trustee owners of the land,
who were defined as the ‘Grantors’, of the one part and the South Eastern
Electricity Board, called ‘the Board’ of the other part. It recited the seisin
of the grantors of the property in question and also recited that they had
already permitted the board to erect and lay the overhead and underground
electric lines and towers thereinafter described. Clause 1 of the deed is, so
far as material, in the following terms:
In pursuance
of the said agreement and in consideration of the sum of NINE THOUSAND SEVEN
HUNDRED AND FIFTY POUNDS now paid by the Board to the Grantors (the receipt of
which sum the Grantors hereby acknowledge) the Grantors as trustees hereby
grant unto the Board full right and liberty for the Board and its successors in
title to retain and maintain . . . inspect examine test and remove the overhead
electric lines . . . on and across the said property and the underground
electric lines . . . in and under the said property in the approximate position
indicated . . . on the Plan . . . annexed hereto.
Then there were
certain incidental rights such as the right to lop timber which might otherwise
have interfered with the overhead lines and a right to pass and repass with
vehicles in order to maintain the lines.
I need not
refer to clause 2 of the deed. Clause 3 contains certain restrictive covenants
by the grantors with the board to which I need refer only briefly:
. . . the
Grantors hereby covenant with the Board not knowingly without the previous
written consent of the Board (such consent not to be unreasonably withheld) . .
. (a) to erect any new or extend any existing dwellinghouse building or other
erection or structure within Sixty feet on either side of the overhead electric
lines . . . (b) to plant any timber or other trees within a distance of Sixty
feet on either side of the overhead electric lines, (c) to alter the level of
the ground within a distance of One hundred feet on either side of the overhead
electric lines . . . (d) to allow any vehicle machinery or plant of any
description to approach or pass under the overhead electric lines unless a
clear space of not less than Twelve feet can be and is at all times maintained
. . .
Clause 4 was a
general restrictive covenant on the part of the grantors not to do anything on
the cable route which would interfere with the underground cables. I need not
refer to clause 5, but I will read in full clauses 6 and 7, which are the
material clauses for the purposes of this case:
6 It is hereby agreed and declared that the
said sum of Nine thousand seven hundred and fifty pounds paid to the Grantors
by the Board as aforesaid shall include full satisfaction and compensation for
all damage or injury sustained or to be sustained by the Grantors or other the
owner for the time being of the said property (or any part or parts thereof) by
reason of the injurious affection of the said property (or any part or parts
thereof) by the grant of the rights and liberties hereby granted and the
exercise of the same and the imposition observance and performance of the covenants
on the part of the Grantors herein contained including (but entirely without
prejudice to the generality of the foregoing) full satisfaction and
compensation for all or any diminution in the value of the said property or any
part or parts thereof by reason of such grant exercise imposition observance
and performance.
7 It is further hereby agreed and declared that
in the event of the Grantors obtaining planning permission for residential or
industrial development of the said property or for mineral extraction thereon
the Board shall pay to the Grantors (within six months of notification of the
obtaining of such permission) compensation for the diminution in the value of
the said property attributable to the exercise by the Board of the rights and liberties
hereby granted with the consequence that the Grantors cannot take full
advantage of the said planning permission: such compensation shall be in a sum
agreed between the parties or settled by arbitration and shall take into
account such
the Grantors by the Board and of any compensation already paid under Clause 2
hereof or under this clause as shall be proper to be taken into account on the
basis that the Grantors shall not be entitled to be compensated more than once
for the same loss.
On May 30 1979
the appellant, the plaintiff in the original action, Mr Aubrey Paul Allen,
purchased Southerham Farm for £290,000 subject to the deed of grant. He then
obtained a series of planning permissions: two on September 9 1981, one in
respect of a barn authorising a change from agricultural to residential use and
the other in respect of another barn also authorising a change from
agricultural to residential use; two on May 4 1983, a further planning
permission in respect of one of the barns already mentioned for a change of use
to two dwellings and a planning permission in respect of another building for a
conversion of redundant agricultural buildings into a single dwelling with garages;
and, finally, on May 2 1984, a planning permission in respect of a building on
the land for change of use from a single dwelling to offices and parking for 17
cars. All those planning permissions were carried into effect from 1984
onwards.
The appellant
has sold off parts of the land for which those planning permissions were
granted. He estimates that, but for the existence of the pylons and the
overhead cables, he could have secured a greater purchase price for the parts
of the land which he sold off.
In those
circumstances, he issued an originating summons, asking as the primary question
whether, on the true construction of clause 7 of the deed of grant of June 26
1978 and in the events that have happened, compensation is now payable pursuant
to clause 7 by the defendant, the South Eastern Electricity Board, to the
plaintiff.
That
originating summons came before Judge O’Donoghue on January 31 1986 and he gave
judgment on the same day. He answered the question in the negative. The
argument before him was, first, that the deed of grant should be read as a
whole; second, that the words ‘full advantage of the planning permission’ were
not limited to physical implementation of the planning permission; and, third,
that since any planning permission would inevitably take account of the
existence of the pylons and the cables clause 7 would never have any effect if
it were limited to the physical implementation of the planning permission.
The learned
judge rejected these submissions and I read from the transcript of his judgment
the substance of the reasons why he rejected them, starting at the top of p 6:
In my judgment
it is clear from the form of the Deed of Grant and from the fact that the Board
was making a substantial payment (of £9,750.00) for the right to put a number
of pylons on and to suspend cables across this land that it was envisaged that
the land would thereafter be less valuable than it had been thitherto.
Approaching
the provisions of Clause 7 from this standpoint I ask myself how should the
words which the parties chose to use in that Clause be construed. Prima facie
it seems to me that the words ‘cannot take full advantage of the said planning
permission’ should be read as a whole and those words suggest to me strongly
that the parties envisaged a situation in which planning permission might
thereafter be granted for a particular purpose but could not be fully enjoyed
or given effect to (or implemented) in an actual or physical sense by reason of
the rights and privileges granted to the Board which the Board insisted upon
enforcing.
Thus it might
well frequently occur that a wayleave or similar grant is made to an
Electricity Board or other person or body by an owner of land who later obtains
planning permission for certain development, but who then finds that he is
hampered in some way from taking full advantage of such permission because the
Board chooses to require (for example) a pillar of support or a particular
means of access to one or more of its pylons, cables, substations or similar
works.
Thus I am not
convinced by the submission made by Mr King . . .
I pause there
to interpolate that Mr King appeared for the plaintiff below as he did for the
appellant plaintiff before us.
. . . that in
no circumstances would a local authority grant planning permission in a manner
which might interfere with the rights of other individuals or bodies. It seems
to me that the prime concern of a planning authority is to decide whether or
not a certain type of development should be allowed on a piece of land and not
whether any person other than the owner would be entitled to stop it whether by
restrictive covenant or by any other agreement. It is for this reason that the
provision of section 84 of the Law of Property Act 1925 as amended and similar
provisions are frequently used. Accordingly, when one considers that planning
permission could be granted for residential or industrial development or
mineral extraction on this land which development could be physically curtailed
by the Board in exercise of its rights and privileges under the Deed then it
seems to me that the most obvious and natural meaning of the words ‘. . .
cannot take full advantage of such planning permission . . .’ would be the
prevention by the Board of the owner enjoying the full physical benefit of such
planning permission in the sense of being able fully to implement it or carry
out the permitted development in full (or at all).
In such
circumstances is it right for the Court to give the words the much wider
connotation sought by the plaintiff so as to give him the right to extra
compensation for loss of a potentially higher profit which he might have
obtained on resale with planning permission (even in the case where the
development has been fully carried out in accordance with the planning permission)?
In my judgment
it would not be right to allow a grantor (or his successor in title) years
after the Grant had been negotiated and made to seek a wholly new and
additional payment by way of compensation years after the original Deed of
Grant unless the parties had agreed to such a provision in clear terms in the
original Grant itself.
In my judgment
the relevant words ‘. . . cannot take full advantage of the said planning
permission . . .’ primarily and in their ordinary meaning envisage a situation
in which the owner who later obtains planning permission is prevented in whole
or in part from enjoying or implementing that planning permission as such
in full.
In those
circumstances I can see no proper reason for construing those words in the
wider ‘economic’ sense urged by Mr King on behalf of the plaintiff.
I have read so
much of the judgment in full because I wholly agree with what the learned judge
there says and it seems to me he has put it in words which it is difficult to
improve upon. Clause 6 of the deed of grant in this case was clearly intended
to cover a diminution in the value of the land by reason of the grant of the
rights to the board and the board exercising those rights by maintaining
pylons, towers and underground cables. There is nothing in that clause to
suggest to me that the compensation was intended to be limited to a diminution
in the ‘existing use’ value of the land. Clause 7 of the deed fits in quite
naturally with this interpretation of clause 6, and the judge’s words at the foot
of page 6 and top of page 7 of the transcript seem to me to be completely
correct. I repeat that paragraph of his judgment:
It seems to
me that the prime concern of a planning authority is to decide whether or not a
certain type of development should be allowed on a piece of land and not
whether any person other than the owner would be entitled to stop it whether by
restrictive covenant or by any other agreement.
In the course
of the argument before us various examples were given to show the manner in which
clause 7 could operate. For example, outline permission for the development of
land for residential purposes might be granted. It might be either for a
particular density, so many houses per acre, or for a maximum number of houses
upon the piece of land in question. Then, to apply that in practice, there
might be an application for detailed planning permission, and the existence of
the pylons, towers and cables would mean that the land could not be developed
to the maximum density permitted by the outline permission. Another example was
a case where detailed planning permission might be given with a condition as to
landscaping. That condition might require the levelling of the ground within a
distance of 100 ft of the overhead lines. The board might refuse to consent to
the grant of such levelling under the provisions of the deed which I have read.
Therefore, in that circumstance also, the owner of the land could not take full
advantage of the planning permission granted thus again completely within clause
7.
It seems to me
that there is no need to give any further examples. I am satisfied that the
judge was right in his conclusion and for the right reasons. I would dismiss
this appeal.
STOCKER LJ
agreed and did not add anything.
SLADE LJ said:
I will briefly express my reasons for dismissing this appeal in my own words,
in deference to the argument of Mr King, who has said everything that could be
said in support of this appeal.
The question
asked by the originating summons was whether, on a true construction of clause
7 of the deed of grant and in the events that have happened, compensation is
now payable pursuant to clause 7 by the defendant to the plaintiff. The
relevant events, as set out in the plaintiff’s affidavit, are that, since the
deed of grant was executed, planning permissions have been obtained for four of
the properties referred to in that affidavit. One of them has been sold for
£109,000 and he has deposed to an estimate that, but for the presence of the
pylons and overhead cables erected by the South Eastern Electricity Board in
exercise of the rights given by the deed of grant, that property would have
fetched £125,000. He claims that compensation is payable under clause 7 on the
grounds that, in the events which have happened, there has been a ‘diminution
in the value of the said
hereby granted with the consequence that the Grantors cannot take full
advantage of the said planning permission’, within the meaning of that clause.
The crucially
important phrase in clause 7, as has appeared from Balcombe LJ’s judgment, is
the phrase ‘cannot take full advantage of the said planning permission’. The
plaintiff’s claim in substance involves reading this phrase as meaning in its
context ‘are unable to sell the said property for as high a price as the
grantors would have been able to obtain but for the exercise by the board of
the rights and liberties hereby granted’.
In my
judgment, this phrase simply will not bear this meaning. The natural and
ordinary meaning of the words is, in my judgment, ‘cannot do all those things
which are authorised by the planning permission’. I can see no sufficiently
clear context to give them any other meaning in clause 7.
The closing
words of clause 6 of the deed of grant beginning with the word ‘including’ make
plain the general intention of the parties that the sum of £9,750 payable by
the board to the grantors on the execution of the deed is intended to be
received by them in full satisfaction and compensation for any diminution in
the value of the property by reason of the grant or exercise of the rights and
liberties granted by that deed. Thus, if, on a future sale of the property,
they or their successors receive a smaller purchase price than they would have
received if the deed had not been entered into and the rights had not been
exercised, they are to receive no additional compensation. Compensation for
such diminution in value has been paid already.
The general
intention of clause 7, in my judgment, is merely to entitle the grantors or
their successors in title to additional compensation for diminution in value
if, but only if, the exercise by the board of their rights under the deed of
grant prevents the grantors or their successors in title from doing all the
things which they would otherwise be authorised to do under any future planning
permission which they may obtain. In the present case it is common ground that
neither the presence of the pylons and overhead cables referred to by the
plaintiff in his affidavit nor any other exercise by the board of their rights
under the deed of grant prevents the plaintiff from doing anything which is
authorised by the planning permission which he has obtained. In these
circumstances, in my judgment, no diminution in value of the property has
occurred in respect of which he is entitled to compensation under clause 7. He is
in a position to ‘take full advantage of the said planning permission’ in the
relevant sense.
For these
reasons and the further reasons given by Balcombe LJ and the learned judge,
with which I find myself in full agreement, I would dismiss this appeal.
The appeal
was dismissed with costs, not to be enforced without the leave of the court.
Legal aid taxation of the appellant’s costs was ordered.
