Caravan park – Terms of occupation – Constructive trust – Claimants operating caravan park pursuant to terms of lease and site licence – Restriction on occupation of caravans during winter months – Prohibition on underletting or parting with possession save by way of standard licence – Claimants seeking injunction preventing defendant caravan owners from occupying outside permitted times – Defendants claiming entitlement to leases promised by claimants – Whether defendants entitled to interest by way of constructive trust – Whether illegality arising such as to bar relief – Claim dismissed
The local town council granted the first claimant a lease of a caravan park for a term of 30 years from 1989. The second claimant, a related company, held a site licence for the park granted by the district council under section 3 of the Caravan Sites and Control of Development Act 1960. The lease contained covenants by the first claimant not to: (i) use the site otherwise than as a static seasonal caravan park; (ii) underlet or part with possession save by way of a standard licence for each caravan; and (iii) permit caravans or mobile homes on the park to be occupied otherwise than between March to October inclusive, together with weekends at other times of the year and 10 days over the Christmas and New Year period. The site licence replicated the terms of the lease regarding the permitted times of occupation that it allowed occupation to continue for an additional month through November. It was a condition of the planning permission that caravans should be occupied only on the dates set out in the site licence.
The defendants had each purchased a mobile home or lodge on the site from the second claimant. The claimants applied for an injunction preventing the defendants from occupying the lodges during the day throughout the closed period, when occupation was not permitted. The defendants maintained that they had purchased the lodges on the strength of promises that the first claimant would grant them leases of their sites for a term extending up to the expiry date of the first claimant’s lease and that although they could not sleep in the lodges during the closed period, they would be able to use them during the day. They contended that, to the first claimant’s knowledge, they had sold their homes in reliance on those promises and sought declarations that they had rights in equity to be granted the promised leases on the basis of constructive trust. Issues arose as to whether the defendants could assert those rights in circumstances where that would put the first claimant in breach of its lease, the site licence and the terms of the planning permission.
Held: The claim was dismissed.
On the evidence, the defendants had purchased their lodges from the second claimant on the basis of promises made, on behalf of the first claimant, that: (i) they would become tenants of their lodges under leases; (ii) they would have security of tenure until the termination of the lease held by the first claimant and any extension of that lease or further lease; (iii) they could occupy their lodges during the day in the closed period but not overnight; and (iv) rent was to be paid quarterly in an amount that might be subject to annual increases. The case fell within the common expectation constructive trust principle, such that the defendants were entitled to relief, and the lack of a written document complying with section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 was no bar to the their claims: Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55; [2008] 35 EG 142; [2008] 36 EG 142, Taylors Fashions Ltd v Liverpool Victoria Friendly Society [1979] 2 EGLR 54; (1979) 251 EG 159 and Ramsden v Dyson (1866) LR 1 HL 129 applied. The fact that the first claimant had already acquired its lease before any agreements were reached with the defendants did not prevent a constructive trust from arising since this was not a joint venture case: Paragon Finance plc v Thakerar & Co [1999] 1 All ER 400 distinguished.
The defendants’ rights could be protected in two ways, namely by: (i) making a mandatory order for the grant of leases or licences; or (ii) granting an injunction preventing the first claimant from terminating the defendants’ rights to occupy their sites during the period of the first claimant’s lease, as extended or renewed by notice, simply by giving notice or on the ground of daytime occupation during the closed period. If it were inappropriate in the circumstances to do either, it might be open to the defendants to claim damages in lieu.
No illegality arose as an absolute bar to the defendants’ claims to relief in equity, although there were relevant potential problems as to how the court should exercise its discretion in providing relief. The security of tenure required by the defendants could be given without difficulty; if necessary, the covenant against underletting contained in the first claimant’s lease could be avoided by granting an appropriately drafted licence or other agreement falling short of a lease. Although the grant of a lease might expose the claimant to the risk of a prosecution for breaching the conditions of the site licence, contrary to section 9(1) of the 1960 Act, it could be argued that any such offence had been committed at the time the defendants were permitted to take possession of their sites without it being made a term of their occupation that the close period was excluded, such that any prosecution would now be time-barred. It was inappropriate to try to predict the outcome of any prosecution. Moreover, a solution to the problems posed by, in particular, the site licence might come about through the decisions of the district council and the town council and the outcome of a recent application to vary the planning permission. It was also inappropriate to decide how the court’s discretion should be exercised until the outcome of that application was known.
Alternative claims by the defendants for damages for misrepresentation and for harassment had no foundation and would be dismissed.
Anthony Tanney (instructed by Ellisons Solicitors, of Colchester) appeared for the claimants; Stephen Cottle (instructed by Shelter Legal Services) appeared for the first and second defendants.
Sally Dobson, barrister
