Restrictive covenant preventing use of land for “purpose of food retailing” – Burdened land forming part of site developed to provide supermarket – Burdened land being landscaped as condition of planning permission – Whether owner of land in breach of covenant – Whether burdened land being used for purpose of food retailing – Judge finding breach – Appeal allowed
In 1994 the defendant, Tesco, acquired the Gadly’s site covering some 10.5 acres at Aberdare, South Glamorgan. Part of the site, extending to about half an acre, was subject to a restrictive covenant. That part of the site, the burdened land, was situated in the centre of the whole site. The restrictive covenant was contained in a conveyance dated October 27 1988 and made between the plaintiff, as vendor, and B, a predecessor in title of Tesco, as purchaser of the other part, and stipulated that the property conveyed would not be used “for the purpose of food retailing”. Pursuant to planning permission granted in January 1994, a condition of which was a scheme of tree planting and landscaping on the burdened land, Tesco undertook a comprehensive redevelopment of the site consisting of the erection of a superstore, petrol station and car park. Neither the superstore nor the petrol station was located on any part of the burdened land, which consisted of an open area in front of the store, part of which was planted up with shrubs and upon which benches were placed for the use of shoppers and the public in general.
On completion of the development Tesco commenced trading. The plaintiff contended that Tesco was in breach of the restrictive covenant in that it was using the burdened land “for the purpose of food retailing”, and sought a declaration coupled with an injunction and damages. The judge held that: the burdened land was an integral part of the entire site; the entirety of the site was being used for the purpose of Tesco’s trading operations, the principal one of which was food retailing; and therefore Tesco was in breach of the covenant. Tesco appealed contending that the burdened land was being used as an amenity area and not for the purpose of food retailing.
Held The appeal was allowed.
1. The phrase “for the purpose of food retailing” meant “for food retailing”. Tesco had had the advantage of being able to offer the burdened land to be landscaped as part of its proposed development of the site in order to obtain planning approval and thus to obtain an advantage for food retailing elsewhere. The restrictive covenant prohibited the activity of food retailing on the burdened land itself, but did not restrict its use in order to enhance other land owned by the landowner. A restrictive covenant could not broken by complete inaction.
2. The question to be asked was not whether the land was an integral part of a single site nor whether the land was an integral part of a single site for which planning permission had been granted for retail use, but whether the burdened land itself was being used for food retailing. The fact that the whole site was being used for food retailing did not answer the question. The restrictive covenant applied only to use of the burdened land itself for, or for the purpose of, food retailing. Therefore the burdened land was not being used for the purpose of food retailing in breach of covenant.
Nicholas Patten QC and Daniel Hochberg (instructed by Berwin Leighton) appeared for the appellant; Peter Smith QC (instructed by Cobbetts, of Manchester) appeared for the respondent.
