Restrictive covenants contained in 1962 transfer – Alterations or change of use to claimant’s building not permitted without consent of transferor – Whether defendant having right to give or withhold consent as current owner of land benefited by covenants – Claimant seeking declaration that consent of original transferor required – Claim allowed
The claimant and defendant owned neighbouring properties in the City of London. Both sites had in the past been owned by the Port of London Authority (PLA); the defendant’s property was the PLA’s former headquarters. The claimant’s land, which comprised an office building, was subject to restrictive covenants for the benefit of the defendant’s land contained in a 1962 transfer from the PLA to the claimant’s predecessor in title. Those covenants provided that alterations to any building on the transferred site should not be made unless detailed plans and elevations had previously been approved in writing by “the Estate Officer for the time being of the Transferor” and that the building should not be used for any purpose other than as offices and a car park without the previous written consent of “the Transferor”. The transfer defined “the Transferor” as the PLA. The covenants were expressed to run with the land and affect successors in title of the parties to the transfer.
The claimant wished to demolish the office building and construct a hotel in its place. It obtained the approval of the PLA’s property director, as the modern equivalent of the estate officer, for the alterations and the change of use. The defendant maintained that it, and not the PLA, had the right to give or withhold consent as the owner for the time being of the land benefited by the covenant. The claimant brought proceedings for a declaration that, on the correct interpretation of the 1962 transfer, the defendant had no right to insist that its consent should be sought. The defendant contended that such an interpretation of the covenants would lead to commercial absurdity, and that the word “Transferor” should be interpreted to include successors in title.
Held: The claim was allowed.
On its face, the transfer defined “Transferor” to mean only the PLA. The draftsman had made express reference to successors in title elsewhere in the transfer where they were intended to be included. In those circumstances, there was no room for an implication, under section 78 of the Law of Property Act 1925, that “the Transferor” included successors: Mahon v Sims [2005] 3 EGLR 67; [2005] 39 EG 138 distinguished. Moreover, the reference to approval of plans by “the Estate Officer” for the time being of the transferor, in circumstances where the PLA had employed a person with that title at the time of the transfer, indicated that the consent of the PLA was required. The property director was the person who now fulfilled the estate officer’s role; in any event, given that the estate officer was an employee who could be directed to give approval, the reference to him did no more than indicate that the plans had to be approved by the PLA.
There could be a commercial purpose in the vendor of land retaining for itself the right to give consent to alterations or changes of use and not giving that right to its successors in title: Howard Pryor v Christopher Wren Ltd unreported 24 October 1995 and Crest Nicholson Residential (South) Ltd v McAllister [2002] EWHC 2443 (Ch); [2003] 1 EGLR 165 considered. It was relevant in that context that the PLA’s retained land had comprised two separate plots, one of which it had contemplated continuing to occupy for a considerable time. The covenants fulfilled the requirement of touching and concerning land, since they benefited the retained land of the PLA identified in the transfer. Departing from the literal wording of the covenants was unnecessary in the instant case. The “Transferor” meant the PLA alone, and the claimant was entitled to its declaration.
Guy Fetherstonhaugh QC (instructed by Herbert Smith) appeared for the claimant; Katharine Holland (instructed by Denton Wilde Sapte) appeared for the defendant.
Sally Dobson, barrister
