Transfer of land Covenant restricting building without consent Benefit of covenant Whether term limiting consent to original transferor Whether implied term requiring consent not to be unreasonably withheld Appeal allowed in part
The respondents’ predecessors in title transferred a plot of garden land to the appellants’ predecessors in title. The transfer was subject to a covenant that the land was to be used only for the purpose of a private garden and that no buildings were to be erected other than a greenhouse, garden shed or domestic garage “in accordance with plans which have been approved previously by the transferors in writing”. The appellants wanted to erect a double garage and store on part of the land. The respondents’ predecessors had not objected to the proposal, but the respondents did.
The county court held, inter alia, that, under the terms of the covenant, the respondents had the benefit of the covenant and the appellants required only their consent to proceed. Further, there was no implied term that any such consent might not be unreasonably withheld.
The appellants appealed contending that: (i) in the phrase “plans approved previously by the transferors”, the reference to “the transferors” meant the respondents’ predecessors as the original transferors, rather than the persons for the time being entitled to the benefit of the covenant; and (ii) a term should be implied that approval of plans should not be unreasonably withheld.
Held: The appeal was allowed in part.
1. On the true construction of the disputed covenant, the word “transferors” referred to the respondents as successors in title to the original transferors. That was the effect of section 78 of the Law of Property Act 1925 and reflected the express words of annexation, which made it clear (to the legally informed reader) that the benefit of the covenant was intended to run with the retained land. The court had to try to ascertain the true intention of the parties, taking an objective approach. This interpretation made better sense of the covenant than the literal meaning of “transferors” in the original deed and was reinforced by the way in which the expression “the transferors” had been used in the final agreement and declaration.
2. The covenant, by necessary implication, obliged the transferor to consider any plans in good faith with a view to their possible approval and not to withhold consent unreasonably.
Some limitations on the power to withhold approval were necessary to give the contract business efficacy. In the present context, it made no practical difference whether the implied proviso was “not to be arbitrarily or capriciously withheld” or “not to be unreasonably withheld”. It was clear that the protection of the sensibilities of the covenantee was one purpose of the covenant. It was only if no reasonable neighbour could object to the proposal that the court would be justified in overriding a decision by the covenantee to refuse approval. The application of such a test would not deprive the covenantee of the ability “to exercise firm control over any building”, but it would prevent it from acting arbitrarily or capriciously or from improper motives: Price v Bouch (1986) 279 EG 1226; Cryer v Scott Bros (Sunbury) Ltd (1988) 55 P&CR 183 and Re Jillas’ Application [2000] 2 EGLR 99; (1999) 23 EG 147 considered.
William Hansen (instructed by Duffield Stunt, of Chelmsford) appeared for the appellants; Conrad Rumney (instructed by Shoosmiths, of Basingstoke) appeared for the respondents.
Eileen O’Grady, barrister
