Planning permission for Muslim centre — Restrictive covenant affecting land — Injunctive proceedings — No move for interlocutory relief — Defendants at risk pending trial — Whether application for permanent injunction should be struck out — Whether plaintiff should apply for interlocutory injunction and give cross-undertaking in damages — Section 127 of the Town and Country Planning Act 1971 referred to
In July 1987
the defendants, the trustees of a Muslim charity, were granted planning
permission to construct a community centre and mosque on an industrial estate
at Northolt. The plaintiff, a family company carrying on business on the same
estate as welders and engineers, has the benefit of a restrictive covenant
affecting the defendants’ land which provides: ‘no buildings other than a
factory or warehouse or workshop or offices shall be erected on any part’. The
plaintiff commenced proceedings contending that the defendants’ proposed
development would infringe the restrictive covenant. The plaintiff was
financially supported in the action by another
relief by way of an injunction to prevent the development because of the risk
in giving an undertaking in damages.
By motion the
defendants sought an order that the plaintiff should bear the risk of having to
compensate the defendants for any financial loss they may suffer through being
left uncertain, pending trial, as to whether they are entitled to do the act of
which the plaintiff complains. They had spent £2m on acquisition costs and were
about to go out to tender at an estimated price of £9m. The defendants
therefore applied to have the claim for a permanent injunction struck out
unless the plaintiff was willing to apply for an interlocutory injunction and
to support its cross-undertaking with adequate security.
The decision
of the Vice-Chancellor in Blue Town Investments Ltd v Higgs &
Hill plc [1990] 1 WLR 696 was distinguished. In that case the facts came as
close to constituting an abuse of process as one could without actually
crossing the line, whereas in the instant case the plaintiff’s chances of
obtaining an injunction could not be described as minimal or almost
inconceivable. It was also seriously arguable that the circumstances of the
case could not be brought within the narrow conditions for the jurisdiction
under Lord Cairns’s Act whereby the court in refusing an injunction would grant
damages instead where the damage to the plaintiff was modest. The financial
support given to the plaintiff by others did not contravene the doctrine of
maintenance so far as it has survived and was anyway irrelevant: see pp
119D-120.
to in the judgment
Blue Town
Investments Ltd v Higgs & Hill plc
[1990] 1 WLR 696; [1990] 2 All ER 897; [1990] 32 EG 49, [1990] 2 EGLR 181
Clearbrook
Property Holdings Ltd v Verrier [1974] 1 WLR
243; [1973] 3 All ER 614; (1973) 27 P&CR 430
Doherty v Allman (1878) 3 App Cas 709; 39 LT 129; 26 WR 513, HL
Kelly v Barratt [1924] 2 Ch 379; [1924] All ER Rep 503
Osborne v Bradley [1903] 2 Ch 446; [1900-3] All ER Rep 541
Richards v Revitt (1887) 7 Ch 224
Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287;
[1891-4] All ER Rep 838 CA
Motion
This was an
application by motion to have the claim for a permanent injunction by the
plaintiff to restrain the defendants’ development struck out.
Cherryman QC and Edward Davidson (instructed by Bates Wells & Braithwaite)
appeared for the applicant defendants.
Davis (instructed by Simmons & Simmons) appeared for the plaintiff.
following judgment was delivered.
HOFFMANN J: In this motion the defendants seek to add a new terror to
litigation. It is already a hazard of the English system of justice that a
plaintiff who is unprotected by legal aid cannot bring an action, however
reasonable and in good faith, unless he is willing to stake not only his own
legal costs but also those of his opponent on the outcome. Since lawyers can
seldom assure their clients that victory is certain, the risk of a ruinous bill
of costs must deter many from asserting their legal rights. In this action the
defendants want to go further and require the plaintiff to bear the risk of
having to compensate the defendants for any financial loss they may suffer
through being left uncertain, pending trial, as to whether they are entitled to
do the act of which the plaintiff complains. In the absence of an undertaking
to pay such compensation and adequate security to support it, the defendants
say that the plaintiff should be summarily debarred from trying to stop them.
In my judgment, the
will therefore be dismissed.
The defendants
are the trustees of a Muslim religious charity. In July 1987 Ealing London
Borough Council granted the trustees’ application for planning permission to
construct a community centre and mosque on an industrial estate at Northolt.
The borough council had themselves acquired the site by private treaty in
November 1986 but after the grant of planning permission sold it to the trust.
The plaintiff
is a family company carrying on business on the same estate as welders and
engineers. In the year to May 31 1989 it had a turnover of £100,000, paid its
directors a total of £13,000 in salaries, and made a net profit of £359. Its
principal asset is its premises, which its directors valued in June 1989 at not
less than £60,000. Mr Stapleton, one of the directors, says that he and his
late father were very opposed to the grant of planning permission to the
trustees because they thought that the people attending the community centre
and mosque would cause noise and additional traffic, but he did not register a
formal protest because others were doing so and he was, in any case,
pessimistic about the chances of persuading the borough council to refuse
permission.
In January
1989, however, his attention was drawn to the fact that his land appeared to
enjoy the benefit of a restrictive covenant which provided that ‘no buildings
other than a factory or warehouse or workshop or offices shall be erected on
any part’ of the site in question. On January 26 1989 he wrote to the trustees
asking for an undertaking that the development would not proceed and
threatening legal proceedings. The solicitors then acting for the trustees
replied saying that the covenant had been extinguished by a deed of release. It
is now conceded that this answer was mistaken and that the deed of release,
whatever else it may have done, did not affect the plaintiff’s rights. On
February 14, however, new solicitors wrote telling the plaintiff that ‘should
you pursue your threatened course’ it would have to give a cross-undertaking in
damages. The plaintiff had not actually said that it would move for an
interlocutory injunction, but this is what the solicitors appear to have
assumed. They went on to say that £2m had been spent on acquisition costs and
professional fees and that contracts were being put out to tender at an
estimated price of £9m. The result, they said, was that any attempt to delay
the building would lead to very substantial damages being suffered by the
trustees and ‘no doubt you will therefore not make an application lightly’.
On March 23
1989 the trustees’ solicitors wrote again saying that they had been advised by
counsel that the trustees had statutory authority to override the restrictive
covenant and that accordingly they were going ahead with the development. This
was a reference to section 127 of the Town and Country Planning Act 1971, which
now constitutes the trustees’ sole justification for being entitled to proceed.
Mr Cherryman QC, who appeared for the trustees, accepted that there was a
triable issue as to whether the section applied to this case, and I therefore
need say no more about it.
At the end of
June 1989 the site was cleared of rubbish. On July 17 the plaintiff’s
solicitors wrote saying that counsel had been instructed to issue proceedings
in which a permanent injunction would be claimed. The writ, endorsed with
statement of claim, was issued on August 11 1989. Meanwhile, the foundation-stone
had been laid on July 21. The plaintiff has not moved for interlocutory relief
because it does not want to assume the risk which would be involved in giving a
cross-undertaking in damages. It would in fact not even have been willing to
accept the cost risks in the litigation if it had not been supported by another
company, named Gallaghers, who also own factory premises on the estate.
Gallaghers apparently do not enjoy the benefit of the
opposed to the development and therefore have a common interest with the
plaintiff in the latter obtaining an injunction. For this reason they are
funding the plaintiff’s action and have, it seems, agreed to indemnify them as
to costs. They are not, however, willing to support a cross-undertaking in
damages.
The present
position is, therefore, that the trustees are not subject to any order
restraining them from proceeding with the development, but until the
plaintiff’s entitlement to a permanent injunction has been decided at the trial
and any subsequent appeal, the trustees are at risk that they may be stopped.
The trial has been fixed for October 15 1990. The trustees say that this state
of uncertainty is causing them continuing loss and unless they take the risk of
pressing ahead they will have to incur additional expense in suspending the
building contract. The delay itself is also likely to inflate the costs. There
is, as things now stand, no way in which the trustees could be compensated for
this loss if they are successful at the trial. The mere bringing of
unsuccessful legal proceedings which causes the defendants loss does not give
rise to any cause of action unless the plaintiff was malicious.
The
defendants, therefore, now apply to have the claim for a permanent injunction
struck out unless the plaintiff is willing to apply for an interlocutory
injunction and to support its cross-undertaking with adequate security. What in
effect the defendants are therefore saying is that the plaintiff should not be
allowed to proceed unless it agrees now that in the event of failure it will
compensate the defendants for any loss they had suffered as if the proceedings
had been malicious.
The
application is based on a recent decision of the Vice-Chancellor in Blue
Town Investments Ltd v Higgs & Hill plc [1990] 1 WLR 696, and Mr
Cherryman acknowledged that until he read that decision the idea of making this
application had not occurred to the defendants’ advisers. In the Blue Town
case the plaintiff had been complaining of a development which he said would
interfere with his rights of light. The Vice-Chancellor found on the affidavit
evidence that in correspondence in March 1989 the defendants had offered either
to modify their development so as to avoid such interference or to pay the
plaintiff compensation for the loss of light. The plaintiff had chosen the
latter alternative and the assessment of the compensation had been referred to
the parties’ surveyors. It appears, however, that the plaintiff was unwilling
to accept the figure on which they agreed and in September, six months later
and three months after work had commenced, it issued a writ claiming a
permanent injunction. The Vice-Chancellor said that there had been acquiescence
which made it ‘almost inconceivable’ that the plaintiff would obtain a final
injunction at the trial. He described its chances as ‘minimal’ and said that
its case was ‘thin’. But the learned judge was unwilling to strike out the
claim to an injunction, either under Ord 18, r19 or under the inherent
jurisdiction, simply on the ground that it was vexatious and bound to fail. The
burden, he said, upon a person seeking to strike out a claim was a heavy one.
Such orders should be made only in the clearest and most obvious cases and,
despite the comments which I have quoted on the plaintiff’s chances, he felt
that this burden had not been satisfied. What he did do was to give the
plaintiff the option of maintaining his claim if he was willing to apply for an
interlocutory injunction and to give the appropriate cross-undertaking in
damages. It is not entirely clear from the report whether the defendants were
willing to concede that an interlocutory injunction should be granted, and in
view of the Vice-Chancellor’s other comments on acquiescence and delay it would
seem that they might have had some grounds for opposing one, but I think it
must be assumed that the Vice-Chancellor thought that there was a realistic
prospect that the plaintiff could satisfy the
Mr Cherryman
submits that I should take a similar course here and strike out the claim to an
injunction unless the plaintiff is willing to apply for an interlocutory
injunction. In this case, however, Mr Cherryman has made it clear that he does
not concede that such an injunction should be granted. On the contrary, he
would oppose such an injunction unless the cross-undertaking in damages were
strengthened by a guarantee from Gallaghers or some other suitable security.
Mr Davis, for
the plaintiff, submits that the Vice-Chancellor had no jurisdiction to do what
he did in the Blue Town case and that I should not follow his decision.
Either the claim to an injunction should have been struck out as unarguable,
frivolous and vexatious or it should not have been struck out at all. The right
to maintain it should not have to be purchased by a cross-undertaking in
damages given in connection with an interlocutory injunction which the
plaintiff does not want. Mr Davis drew attention to the strong public policy
against denying a citizen the right to bring a bona fide claim before
the court in the ordinary way. This policy is reflected in the reluctance of
the court to strike out a claim summarily, either under Ord 18, r19 or the
inherent jurisdiction. It is equally reflected in the rule that in the absence
of malice there is no cause of action at common law for damage caused by
threats of litigation or the existence of the litigation itself. Accordingly,
Mr Davis submitted that there was no jurisdiction to impose conditions upon the
right of a litigant to prosecute his claim.
It seems to
me, with all respect to the Vice-Chancellor, that there is a great deal of
force in what Mr Davis has said. Mr Cherryman conceded that a court would have
no jurisdiction to require an impecunious plaintiff to give security for the
defendant’s costs as a condition of allowing him to proceed with an unpromising
but nevertheless arguable claim. If the claim cannot be struck out under Ord
18, r19 or the inherent jurisdiction, in accordance with established
principles, it must be allowed to proceed in the ordinary way. I cannot, for
myself, see any difference in principle between the imposition of a condition
designed to protect a defendant against loss caused through wasted legal
expense and a condition designed to protect him against loss caused by
uncertainty created by the existence of the claim.
In the Blue
Town case the Vice-Chancellor drew a parallel with the jurisdiction which
had been exercised by Templeman J, as he then was, in Clearbrook Property
Holdings Ltd v Verrier [1974] 1 WLR 243, to vacate a caution or land
charge but to entertain an application by the cautioner for an interlocutory
injunction which would also prevent the defendant from dealing with the
property but, unlike the caution or land charge, would involve the giving of a
cross-undertaking in damages. It seems to me, however, that the vacation of a
caution or land charge, which is a legal interference with the landowner’s freedom
to deal with his property, is a very different matter from denying a plaintiff
the right to make a claim in a court of justice. The mere existence of the
claim to an injunction constitutes no interference with the defendant’s
liberty. The uncertainty which it creates is no more than a necessary
consequence of the existence of a claim which has not yet been adjudicated. If
the trustees are confident of their case then they are free to ignore the claim
at their own risk, but I cannot see that the Clearbrook case provides me
with jurisdiction for transferring that risk to the plaintiff.
I am also
puzzled about the exercise of the jurisdiction in practice. The Vice-Chancellor
regarded the plaintiff’s claim as bordering on vexatious because the defendant
had a virtually unanswerable defence of acquiescence on delay. Yet he seems to
have regarded the case as suitable for the grant of an interlocutory
injunction. This is a reversal of the normal attitude of the court.
And what happens when, as here, the plaintiff is impecunious and can offer no
credible cross-undertakings? Is a poor
plaintiff struck out when a rich plaintiff’s claim would survive?
For those
reasons I must express respectful doubt as to the existence of the jurisdiction
asserted by the Vice-Chancellor in the Blue Town case, but it is
unnecessary for me formally to dissent from it, because, in my judgment, there
is a substantial difference between that case and this. It was clearly critical
to the exercise of the Vice-Chancellor’s discretion that the facts before him
came as close to constituting an abuse of process as one could without actually
crossing the line. In this case I certainly do not think that the plaintiff’s
chances of obtaining an injunction could be described as minimal or almost inconceivable.
It is not necessary for me to go into the facts but sufficient for me to say
that I think that the plaintiff has a seriously arguable case.
Mr Cherryman
submitted that this was a plain case in which, even if the covenant were being
infringed, the court would refuse an injunction and award instead a modest sum
of damages under Lord Cairns’s Act [Chancery Amendment Act 1858]. He said that
all the criteria mentioned by Smith LJ in his well-known passage in Shelfer
v City of London Electric Lighting Co [1895] 1 Ch 287 at p 322 were
satisfied, the injury to the plaintiff’s rights was small, the damage was
capable of being estimated in money, a small money payment would be adequate
compensation and the grant of an injunction would be oppressive. This was not,
said Mr Cherryman, a case within the well-known principle stated by Lord Cairns
in Doherty v Allman (1878) 3 App Cas 709 at pp 719-720, in which
the court would enforce a negative covenant without regard to whether the
plaintiff would suffer damage or injury, or the balance of convenience between
the parties. This plainly is a negative covenant, but Mr Cherryman
distinguished Doherty v Allman on the ground that the defendant
was not an original covenantor but a purchaser of the land subject to the burden
of the covenant. For this distinction, which seems to me difficult to sustain
on any rational ground, Mr Cherryman relied upon the decision of Tomlin J in Kelly
v Barratt [1924] 2 Ch 379. It is again not necessary for me to express
an opinion on the point. I would only observe that the view of Tomlin J seems
to have caused some surprise to at least two members of the Court of Appeal and
that it appears to be contrary to the views expressed by Fry J in Richards
v Revitt (1887) 7 Ch 224 at pp 226-227 and Farwell J in Osborne v
Bradley [1903] 2 Ch 446.
It is
sufficient, therefore, for me to say that it is, in my judgment, seriously
arguable that the principle in Doherty v Allman applies to this
case. Even if it does not, the authorities on Lord Cairns’s Act, and in
particular the judgment in Shelfer’s case, to which I have already
referred, make it clear that the jurisdiction to refuse an injunction and grant
damages instead ought to be exercised only in what Lindley LJ described as
‘very exceptional circumstances’. He said:
. . . the
Court has always protested against the notion that it ought to allow a wrong to
continue simply because the wrongdoer is able and willing to pay for the injury
he may inflict. Neither has the circumstance that the wrongdoer is in some
sense a public benefactor (eg a gas or water company or a sewer authority) ever
been considered as sufficient reason for refusing to protect by injunction an
individual whose rights are being persistently infringed. Expropriation, even
for a money consideration, is only justifiable when Parliament has sanctioned
it.
Again, it
seems to me, therefore, that quite apart from Doherty v Allman it
must be seriously arguable that the circumstances of this case cannot be
brought within the narrow conditions for the jurisdiction under Lord Cairns’s
Act.
Mr Cherryman’s
main submission was that the plaintiff was not bringing the action in its own
interest but on behalf of its paymaster, Gallaghers. Mr Stapleton admits, as I
have said, that he could not have contemplated bringing proceedings without
Gallaghers’ financial support. He regarded himself as representing not only his
own interests and that of Gallaghers but also those of other adjoining owners
who were opposed to the scheme, but he insisted that the plaintiff was seeking
to protect its own interests as it saw them. It had from the start been opposed
to the scheme and had contributed to a legal fighting fund set up by local
residents and industrial owners to mount resistance, unsuccessfully as it turned
out, to the application for planning permission. I see no reason to treat this
statement on affidavit as being made otherwise than in good faith. If the
plaintiff has the benefit of the covenant and does not want to allow an
infringing development I do not see that it needs any further justification for
attempting to enforce it. In my view, therefore, the financial support of
Gallaghers, which it is not suggested would contravene the doctrine of
maintenance so far as it has survived, is irrelevant. I must look at the
plaintiff’s case for a permanent injunction on its own merits and, as it
appears to me to give rise to issues which can only properly be determined at
the trial, the motion to strike out the claim for injunctive relief must be
dismissed.
Motion dismissed
with costs.
