Restrictive covenants in Victorian scheme of development–Mutual covenants arising under deed executed in 1895–Co-operative scheme between ‘mutual covenantors’ administered by a committee originally set up by 53 tradesmen for the acquisition, lotting and subdivision among themselves of an estate in Northumberland–Deed contained a system of restrictive covenants entered into by the mutual covenantors inter se–Successive committees had carried on the administration of the scheme until the present day–Plans for any building had to be approved by a majority of the committee, the object being to preserve the character and amenity of the estate by withholding or granting approval and imposing appropriate conditions–Plaintiffs in present proceedings were successors in title to part of an original holding within the scheme, subsequently subdivided and now reduced to half an acre on which plaintiffs wished to build themselves a house–Plaintiffs’ plans had been rejected by committee on several occasions without reasons given–Plaintiffs sought a declaration that consent to their proposals had been unreasonably withheld and that in consequence they were entitled to proceed without consent–Preliminary questions were (1) whether there was an implied term that approval of plans should not be unreasonably withheld and (2) whether it was incumbent on the committee (represented by the defendants) to give reasons for their refusal–Held by Millett J that the answers to both questions must be in the negative and that the plaintiffs’ declaration must accordingly be refused–There was no general principle of law that where a contract required the consent of one party to be obtained by the other such consent was not to be unreasonably refused–A dictum by Brightman J (as he then was) in Wrotham Park Estate Co Ltd v Parkside Homes Ltd, which appeared to be to the contrary effect, was distinguishable as relating to covenants imposed by a common vender who was selling off parts of an estate piecemeal–In the present case the mutual covenantors were bound by the decision of the committee provided that it was given honestly and in good faith and not for any improper purpose–Further, there was no legal duty on the committee to give reasons for their decisions–The remedy of a disappointed owner was to requisition a general meeting of the mutual covenantors under provisions in the deed and try to persuade a majority to reverse the committee’s decision
The following cases are referred to in this report.
Londonderry’s Settlement, Re [1965] Ch 918; [1965] 2 WLR 229; [1964] 3 All ER 855, CA
Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798; [1974] 2 All ER 321; (1973) 27 P&CR 296
In these proceedings the plaintiffs, Ernest Edward Roy Price and Myra Price, successors in title to part of lot 32 in the original co-operative scheme, and now entitled to some half an acre only of the lot, sought answers in their favour to preliminary questions with a view to challenging the decision of the present committee administering the scheme refusing the plaintiffs consent to the erection of a house on the remaining land — The defendants, W E Bouch and eight others, were sued personally and as representing the committee of the Painshawfield Batt House and Birches Nook Estate.
M J Henty (instructed by Ingledew Botterell Roche & Pybus, of Newcastle upon Tyne) appeared on behalf of the plaintiffs; Miss Sheila M C Cameron QC and K Lindblom (instructed by Wilkinson Marshall Clayton & Gibson, of Newcastle upon Tyne) represented the defendants.
Giving judgment, MILLETT J said: I have before me two preliminary questions of law arising from a deed of mutual covenant dated May 30 1895. That deed established a co-operative scheme on the part of 53 Victorian tradesmen for the acquisition, lotting and subdivision among themselves for building purposes of an estate in Northumberland. The deed contained restrictive covenants entered into by the mutual covenantors inter se as part of the scheme of development, to be administered by a committee appointed by the mutual covenantors or their successors in title. The questions which I am required to answer concern the extent of the committee’s powers under the deed of mutual covenant.
The deed described the parties thereto as ‘the mutual covenantors’ and defined that expression to include the heirs and assigns of each of the mutual covenantors. It contained covenants on the part of each of the mutual covenantors for himself, his heirs and assigns with the others and each of the others of them, their and each of their heirs and assigns.
I need read only two of the clauses of that deed: clause 3 is in the following terms:
Where it is thought desirable to obtain the consideration or wishes of the mutual covenantors on any subject affecting the enjoyment or ownership of the said land or in connection therewith or to appoint or discharge a secretary a treasurer and other officers a meeting shall be called of which not less than two clear days’ notice in writing shall be given at the request of any two or more of the mutual covenantors by their secretary or if there shall at the time be no secretary or he shall refuse or neglect to act on the request within seven days of its being made to him a meeting may be called by any two or more of the mutual covenantors and at every meeting nine votes shall form a quorum. At such meetings each of the mutual covenantors shall have one vote and no more except where hereinafter it is otherwise stated. Any vote may be given by proxy properly appointed in writing if notice of the appointment of such proxy be presented to the secretary or chairman of the meeting before the time fixed for its commencement or during the meeting.
Clause 14 is in the following terms:
A majority of the mutual covenantors may at any duly convened meeting fix the position of building lines on any part of the estate and no dwelling-house, coal house, hen house, cow byre, stable, piggery, greenhouse or any other building whatever shall be built, erected or set up upon the land lying between the said building line and the road or roads abutting upon each lot and such majority may appoint a committee of not less than nine members chosen from the mutual covenantors whose duty it shall be to inspect plans of dwellinghouses and other buildings proposed to be erected and no dwelling-house or other building shall be erected unless the plans thereof have first been submitted to and approved by a majority of such committee. The position of the said building lines shall be drawn subject to any modification therein that may be determined upon by a majority of votes at any duly convened meeting |page:180| which shall be held before the 31st day of December 1895. Only self-contained dwelling-houses shall be erected upon the estate and no house shall be built in flats nor occupied by more than one family at one and the same time.
The rest of that rather long clause need not be read. It prohibits any building erected on any of the lots being used for purposes which a 19th-century draftsman would have regarded as being detrimental to the estate and the clause even provided that not more than two pigs should at any one time be kept on any holding save with the permission of the majority of the mutual covenantors, a provision which I take to be for the amenity of the estate rather than the comfort of the pigs.
Since 1895 many of the original lots have been further subdivided, some of them several times, and I am told that there are now nearly 300 plots in different ownership. Successive committees have been elected from among themselves by the original mutual covenantors and their successors in title, who hold an annual general meeting every year and proceed to elect one-third of the committee each year. Thus for 90 years the stipulations in the deed of mutual covenant have formed a private, local law, democratically administered by a committee elected by a majority of the owners of land comprised in the estate, the committee itself having an express power to act by a majority. It is conceded for the purpose of the present application that the present committee is the lawful committee established by the deed of mutual covenant and has the powers conferred on it by that deed. It must, I think, follow from that concession that the present plot-owners who elect them are the mutual covenantors within the meaning of the deed and may exercise the powers conferred on them by that deed.
In 1911, Nevill J granted a declaration that under the covenant contained in clause 14 of the deed of mutual covenant the committee were justified in refusing to pass plans in consequence of objection to the position of the proposed building. That declaration was made in an action between the secretary of the committee, who claimed the right under clause 14 to represent all the mutual covenantors and their successors in title, and a plot-owner who wished to build, or had built, in defiance of the committee’s decision. I need not consider whether that judgment binds the present plaintiffs, because I am in any event persuaded by the learned judge’s reasoning that the object of clause 14 was to enable the committee to preserve the character and amenity of the estate by withholding or granting approval, or by imposing proper conditions on the grant of approval, and that they might properly take into consideration any matter, such as the precise location of any proposed new building, which might affect the character or amenity of the estate.
Lots 32 and 33, comprising some 10 acres in all, were originally taken by a Mr James Johnson Weighell. The plaintiffs are his successors in title to part of lot 32, which was subdivided in 1914. In 1982 the plaintiffs further subdivided their land and sold part, together with the house standing on that part and known as Beech Hurst, but they retained some half an acre, and now wish to build themselves a new house upon that retained land. With that in view the plaintiffs duly prepared building plans and submitted them to the committee for approval. They were rejected on the ground that they failed to conform to certain guidelines which the committee had recently, with the approval of the plot-owners, laid down for the development of the estate and as a guide to future applicants for approval. The plaintiffs submitted amended plans on two further occasions. On each occasion they were rejected without reasons.
The plaintiffs wish to discover the nature of the committee’s objections so that they may, if possible, meet them and, if not, challenge them. They have, therefore, brought proceedings for a declaration that, the committee’s approval having been unreasonably withheld, they are entitled to proceed without it.
In those circumstances two preliminary questions of law have been formulated and argued before me. They are: (1) whether, as alleged in para 4 of the amended statement of claim, it is an implied term of stipulation 14 of the deed of mutual covenant, dated May 30 1895, that approval of plans shall not be unreasonably withheld; (2) whether it is incumbent on the defendants to give reasons for their refusal to approve a building plan submitted to them.
To some extent these questions concealed the true nature of the dispute between the parties. It became evident from the submissions of counsel for the plaintiffs that it was suspected that their application was refused on the grounds of density and it was submitted that, since clause 14 of the deed of mutual covenant contained no provisions as to density, this would be an improper ground for their refusal. Although this is not a question which is strictly before me, I ought to observe that, in my view, this is a consideration which, on any view, the committee could properly take into consideration, for the reasons given by Nevill J.
There is no general principle of law that, whenever a contract requires the consent of one party to be obtained by the other, there is an implied term that such consent is not to be unreasonably refused. It all depends upon the circumstances of the particular contract. In Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 2 All ER 321 the restrictive covenants were in the form of an absolute prohibition against building without the consent of the covenantee. In one case, however, the covenant was qualified by the addition of the words ‘such consent not to be unreasonably refused’. Brightman J (as he then was) said that these words would in any event have been implied, as counsel for the covenantee had conceded. There, however, the covenants were imposed not as part of a building scheme or scheme of development, but by a common vendor as he sold off the estate piecemeal, and they were enforceable not by the mutual covenantors but by the common vendor and his successors in title. I am prepared to assume, without in any way deciding, that, in such circumstances, a term is to be implied that consent shall not be unreasonably refused. That, however, was a very different case from the present.
In the present case the decision to approve the plans or not is vested not in a common vendor or his successors in title but in the mutual covenantors themselves, who have delegated the decision to a majority of a committee elected by themselves. It was conceded that the committee had a duty to inspect and consider any application submitted to them, to reach a decision themselves and not to delegate it to others, and to act honestly and in good faith and not for some improper or ulterior purpose. It was also accepted that, if the committee took into account irrelevant considerations or failed to take into account relevant considerations, or reached a perverse decision such that no reasonable committee could possibly reach, then their decision could be impugned, for it would be ultra vires. This, however, was not enough for the plaintiffs. They insisted that the committee must act reasonably and that they must give reasons for their decision, so that it could, if necessary, be challenged, when the court would adjudicate and decide, in the light of the evidence, whether those reasons were justified.
If this were the case the result would be most unfortunate and one which the original parties to the deed of mutual covenant are most unlikely to have intended. Control would be removed from the committee and vested ultimately in the court, which would be called upon to adjudicate, presumably on the basis of expert evidence, on the very question which the parties had created their own domestic tribunal to decide. The committee, whose members are voluntary and unpaid, and with no resources of its own, would be forced to seek professional advice and incur substantial expense in seeking to uphold its own decisions. It was submitted to me that the threat of litigation could be used as a means of bringing pressure on the committee to grant approval which they would otherwise refuse. I doubt that, if only for this reason: if a term is to be implied that approval is not to be unreasonably refused, then, in the circumstances of the present case, a corresponding term must be implied that it is not to be unreasonably granted, with the consequence that a neighbour with the benefit of the covenant could challenge any unreasonable grant of approval.
In my judgment, the mutual covenantors are equally bound by the decision of the committee, whether it be a decision to grant or refuse approval, and they are so bound, provided only that it is given honestly and in good faith and not for some improper purpose. Where the required consent is that of an individual who is free to consult his own interests exclusively, a provision that such consent must not be unreasonably refused is often included in order to prevent consent being withheld arbitrarily, or capriciously, or from improper motives. If that is the only effect of including such a provision, its implication in the present case is unnecessary; while, if it goes beyond that, it produces consequences which are unlikely to have been intended by the parties and is an implication which, in my judgment, ought not to be made.
Consequently, I answer the first question in the negative.
The answer to the second question really follows from the first. In Re Londonderry’s Settlement [1965] Ch 918 at p 936, Salmon LJ said:
The settlement gave the absolute discretion to appoint to the trustees and not
to the courts. So long as the trustees exercise this power with the consent of persons called appointers under the settlement and exercise it bona fide with no improper motive, their exercise of the power cannot be challenged in the courts — and their reasons for acting as they did are, accordingly, immaterial. This is one of the grounds for the rule that trustees are not obliged to disclose to beneficiaries their reasons for exercising a discretionary power.
That applies with equal force to the present case. Moreover, the committee are a domestic body with a general discretion to exercise and no clearly defined issue to determine. In any given case there may be several different reasons which lead different members of the committee to the same conclusion. The majority of the committee may not all agree for the same reasons, and no single reason may command majority support. If the committee were bound to give reasons, they would in practice have two decisions to make, first, whether to grant or refuse approval, and, second, what reasons to give; and they would be well advised to take legal advice before making the second decision.
It may be appropriate, and will normally be convenient, for the committee to give reasons for their decision, if only because a failure to give any reason at all may lead to the inference that there is no good reason to give. But even a landlord who is not entitled to refuse consent unreasonably is not bound to give reasons for his refusal, and I cannot find that there is any legal duty on the committee to do so.
Accordingly, I answer the second question also in the negative.
In my judgment, the remedy of a disappointed owner, who does not challenge the honesty or good faith of the committee, but who wishes to challenge their decision, is not to invoke the jurisdiction of the court but to requisition a general meeting of the mutual covenantors under clause 3 of the deed and to seek to persuade a majority of them either to pass a vote of no confidence in the committee or to reverse the committee’s decision.
Declarations made accordingly answering questions in favour of defendants, with costs against plaintiffs.
