Stroude v Beazer Homes Ltd and others

Easements — Implied — Section 106 agreement — Agreement by estate owners A and B to construct bypass — Owner B holding land required for bypass — Whether normal canons of construction of contracts applying to section 106 agreements — Whether rights of access to construct bypass in favour of owner necessarily implicit or granted by implied term — Whether proprietary rights — Whether rights capable of protection by notice on registers

The claimant owned a significant area of agricultural land. In 1993, part of the land was allocated in the local plan for residential and commercial development. In 1995, the claimant entered into an agreement with B Ltd, whereby the latter would apply for planning permission for residential development of parts of the claimant’s land. B Ltd also agreed, inter alia, to acquire part of the land (the contract land) and was granted options to acquire further land (the option land). Its obligations were guaranteed by the second defendant. The local planning authority wanted to ensure that a bypass would be constructed as part of the development scheme. With this in mind, the first defendant, a company within the same group, contracted with C to exchange an area of the claimant’s land (the exchange land) with land owned by C (the C land). The C land was required for the route of the bypass and was physically accessible from the retained land of the claimant. In 2000, the claimant, the first defendant, and C, as the estate owner, entered into an agreement with the relevant local authorities under section 106 of the Town and Country Planning Act 1990 and sections 38 and 278 of the Highways Act 1980 (the section 106 agreement). At the same time, planning permission was granted for an extensive development scheme. The section 106 agreement contained obligations on the first defendant and the claimant to, inter alia, construct the bypass by reference to defined events. By 2002, the third defendant group of companies acquired the group of companies that included the first and second defendants and became entitled to, and bound by, their rights and obligations. The third defendant acquired the contract land from the claimant. The options under the 1995 agreement expired and the claimant retained the exchange land. Without any notification to the claimant, the first defendant then acquired the C land and became its registered proprietor. As a result of the requirements of the section 106 agreement, the claimant, and any of his successors in title, would require entry onto the C land to carry out the bypass works before the claimant’s land could be fully developed. The claimant issued proceedings claiming, inter alia, that: (i) as a co-obligor under the section 106 agreement, he was entitled to perform the obligation as against his co-obligors without having to wait to be sued by the obligee; (ii) the section 106 agreement contained an implied term entitling him, as against the first defendant, to enter the C land to construct the bypass; and (iii) his rights to enter the C land were proprietary and were not planning obligations.

Held: Declaratory relief was granted; the claimant had rights of access to the C land as against the first defendant. A section 106 agreement is a contract between the parties to it and falls to be construed according to the ordinary principles of construction; it may create rights and obligations between the relevant estate owners. The terms of the section 106 agreement imposed concurrent obligations on the claimant and the first defendant, and created a joint obligation to construct the bypass on the occurrence of the specified events. The claimant had a right to cause the bypass to be constructed as a matter of implication; it did not matter whether that conclusion had been reached as necessarily implicit or whether a term to that effect was implied by conventional rules. The claimant’s rights of access to the C land were proprietary and capable of being protected by notice on the register for the purposes of the Land Registration Act 1925.

The following cases are referred to in this report.

Ayling v Wade [1961] 2 QB 228; [1961] 2 WLR 873; [1961] 2 All ER 399, CA

Boyce v Edbrooke [1903] 1 Ch 836

Harris v Boots Cash Chemists (Southern) Ltd [1904] 2 Ch 376

Hood v Pimm (1830) 1 Coop temp Cott 280

Liverpool City Council v Irwin [1977] AC 239; [1976] 2 WLR 562; [1976] 2 All ER 39; (1976) 32 P&CR 43; [1976] 1 EGLR 53; 238 EG 879 and 963; [1976] JPL 427, HL

Mackay v Dick (1881) LR 6 App Cas 251

Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014

Stroude v Beazer Homes Ltd [2005] EWCA Civ 265

Watt v Mortlock [1964] Ch 84; [1963] 2 WLR 626; [1963] 1 All ER 388, Ch

This was a claim by the claimant, Peter Longwill Stroude, for declaratory relief against the defendants, Beazer Homes Ltd, Beazer Group Ltd and Persimmon Homes Ltd.

Gregory Hill (instructed by Marrons, of Leicester) appeared for the claimant; Timothy Fancourt QC and Edward Peters (instructed by Nabarro Nathanson) represented the defendants.

Giving judgment, Warren J said:

Introduction

[1] In the action, the claimant, Mr Peter Stroude, seeks declarations concerning his right of access to a small parcel of land that is required as part of a bypass around the village of Longstanton, Cambridgeshire.

[2] Mr Stroude is a farmer. He owns a significant amount of land around Longstanton. Some of his land was allocated for residential and commercial development in the development plan (the South Cambridgeshire district local plan) in 1993. He formed a business relationship with the Beazer group of companies, which was interested in acquiring that part of the land that had been allocated for residential development. Beazer took the lead in applying for a suitable planning permission in the expectation that it would acquire the relevant land from Mr Stroude.

[3] It was apparent from an early stage that, in order to construct the number of houses contemplated, a bypass would have to be built |page:116| around the village of Longstanton, starting at the south of the village, and then running round its western and northern sides.

History since early 1995

[4] On 24 March 1995, Mr Stroude entered into an agreement (the 1995 contract) with a company now called Beazer Homes (Bedford) Ltd (Beazer Bedford) by which Beazer Bedford agreed to apply for planning permission for residential development of the parts of Mr Stroude’s land described in that agreement as “the contract land”, “the first option land” and “the second option land”, and Mr Stroude agreed to sell the contract land to Beazer Bedford and granted it options to buy the first option land and the second option land. Beazer Bedford’s obligations were guaranteed by the company now called Beazer Group Ltd (Beazer Group), the second defendant. The option periods relating to the first option land and the second option land under the 1995 contract were extended by three supplemental agreements in December 1995, June 1996 and July 1996. The options expired in December 1997. Notwithstanding the lapse of the options, negotiations continued, as I shall explain, in relation to the purchase of the first option land and the second option land.

1995 contract

[5] I should mention some provisions of the 1995 contract:

(a) Under clause 3.1, the responsibility for pursuing a planning application is cast on Beazer Bedford.

(b) Under clause 3.3, it is provided as follows:

3.3. Negotiations with the council [CCC; See [6] below]

[Beazer Bedford] will negotiate in good faith with the council and use all reasonable endeavours to achieve the following: –

3.3.1 the dedication as public highway of such part of the council’s land as shall be required in connection with the construction of the bypass; and…

(i) Clause 6.10.1 provides for the transfer of the contract land to contain, among other matters, the grant to Beazer Bedford over Mr Stroude’s other land of such rights and easements as shall be reasonably necessary for the provision of an infrastructure of roads and services in order to carry out the residential development of the contract land pursuant to the contract land planning permission (a defined term of the 1995 contract – in effect, a suitable planning permission for residential development at a specified density).

(ii) Clause 6.10.2 provides for the exception and reservation to Mr Stroude of easements, access and services over the contract land as shall be reasonably necessary to facilitate the present use and future development of the remainder of Mr Stroude’s land.

Clauses 6.10.1 and 6.10.2 thus make provision for reciprocal rights to facilitate the development of each party’s land. But neither clause 6 nor any other provision of the 1995 contract deals with similar rights over the Cartwright land, should it be acquired by either party.

(d) It is recognised in the 1995 contract that the Cartwright land would be needed for the bypass. Clause 7.16.1 therefore allows Mr Stroude to exchange any part or parts of the first option land for any part or parts of the Cartwright land (see [6] and [9] below), notwithstanding the option that was granted to Beazer Bedford, whereupon the land acquired would form part of the first option land and become subject to the option over it, and the land transferred to Mr and Mrs Cartwright would be released from the option over the first option land.

(e) Clause 24 provides that the provisions of the 1995 contract should remain in full force and effect in so far as they remain to be performed and observed after completion of the sale and purchase of the contract land (and the first option land and the second option land, if relevant).

[6] There followed on from the 1995 contract extensive negotiations by Mr Stroude and Beazer Bedford with the local planning authority, South Cambridgeshire District Council (SCDC), and the highway authority, Cambridgeshire County Council (CCC). Negotiations were also conducted with CCC as owners of certain land to the north of the village, shown coloured red on the plan (the plan) annexed to the particulars of claim (the CCC land), and with Mr and Mrs Cartwright, who were the owners of two small triangles of land cross-hatched black on the plan, which were needed to complete the line of the proposed bypass.

[7] Those negotiations were directed towards obtaining planning permission for a scheme for the residential and business development of Mr Stroude’s land, including the contract land, and the CCC land, with associated amenities, infrastructure and landscaping. As part of the scheme, SCDC and CCC wanted to ensure the construction of a bypass around Longstanton.

[8] From around 1998, the Beazer Group changed its existing policy of trading through local subsidiaries and began to conduct all its business, including its involvement in the Longstanton project, through Beazer Homes Ltd (Beazer Homes), the first defendant.

Cartwright contract

[9] On 9 March 2000, Beazer Homes entered into an agreement (the Cartwright contract) with Mr and Mrs Cartwright to exchange some land belonging to them (the Cartwright land) for a small triangle of land (the exchange land) pointing into the Cartwrights’ retained land and close to the building on their property. The exchange land then belonged, and still belongs, to Mr Stroude. The Cartwright land comprises two triangles at the edge of the Cartwrights’ property (which I imagine is their home, but nothing turns on that). It is accessible from Mr Stroude’s adjoining property and from the Cartwrights’ retained land, but is not otherwise accessible. Its only use from Beazer Homes’ point of view was and is as part of the bypass and its associated landscaping works. It could, I suppose, be used for grazing by anyone to whom Mr Stroude or the Cartwrights were prepared to give access, but it has no other use.

[10] Subject to a condition set out in clause 15 of the Cartwright contract, the Cartwright land was to be acquired for a consideration consisting of: (i) £85,000; and (ii) a transfer to the Cartwrights of the exchange land. Completion was to be 20 working days after the contract had become unconditional. Clause 15 provided that the contract was subject to the condition precedent set out in the schedule. This was, in effect: (i) the obtaining of a suitable residential planning permission; and (ii) the acquisition by Beazer Homes of the exchange land. The parties were to co-operate and use all reasonable endeavours to discharge that condition precedent but the Cartwrights were not to act independently of Beazer Homes.

[11] Mr Stroude has always been, and remains, willing to make the exchange land available in order to satisfy the preconditions for including the Cartwright land in the line of the bypass if that is still necessary to give effect to whatever arrangements may now be in place between the Cartwrights and Beazer Homes (or any other Beazer Group company).

Formation of the section 106 agreement and related matters

[12] In the period leading up to the grant of outline planning permission, which was obtained on 16 October 2000, negotiations were also on foot with SCDC and CCC for an agreement pursuant to section 106 of the Town and Country Planning Act 1990 (the 1990 Act) and sections 38 and 278 of the Highways Act 1980 (the 1980 Act). It was a commercial imperative from the point of view of Mr Stroude and Beazer Homes that the planning permission was obtained by that date since policy changes were to come into effect that would have meant renegotiation of the planning conditions. In order to obtain release of the planning permission, an agreement under the statutory provisions that I have just mentioned had to be entered into. It was therefore in something of a last-minute rush that such an agreement (the section 106 agreement) was entered into on 16 October 2000, the same day as the grant of outline permission.

[13] Negotiations had also been in progress between Mr Stroude and Beazer Homes for a collaboration and contribution agreement in relation to the development, but they had not reached a concluded agreement by 16 October 2000 and have, indeed, not reached any agreement since then. The defendants sought to introduce those negotiations as evidence in this case about the intentions of the parties to the section 106 agreement in order to show that it was not, and never had been, their intention that the section |page:117| 106 agreement should deal with access to the Cartwright land. The Court of Appeal, upholding the decision of Rimer J, held, on 17 March 2005*, that such evidence was not admissible. There is no evidence, or at least no admissible evidence, that the parties had intended that the collaboration and contribution agreement would deal with access to the Cartwright land, let alone that it would do so exclusively, so that the section 106 agreement would have nothing to say about it. I am certainly not prepared to take judicial notice that such collaboration and contribution agreements dealing with access are the norm in developments of this sort.

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* Editor’s note: [2005] EWCA Civ 265

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[14] Accordingly, I shall approach the question of construction of the section 106 agreement and the suggested implication into it of a term concerning access to the Cartwright land without taking into account the fact that negotiations were being conducted in relation to a collaboration and contribution agreement.

[15] The section 106 agreement and the planning permission of 16 October 2000 embody a scheme for the residential and business development at Longstanton. The planning permission granted outline consent for up to 500 dwellings on Mr Stroude’s land and the CCC land. The area allocated for residential development is at the northern end of the development area. It includes the contract land, the remainder of Mr Stroude’s land to the north of the contract land (being the first option land and the second option land) and the CCC land. The proposed business park is to the southern end of the development area.

[16] The planning permission, granted, as I have said, on 16 October 2000, provides for development in three phases. It is subject to conditions. Condition 16 restricts development to 500 dwellings; condition 17 provides that no more than 100 dwellings (and no business park floorspace) shall be occupied before the completion of the interim bypass/collector road between Hatton Road and Over Road; condition 20 provides that no more than 50 dwellings shall be occupied until a scheme for the bypass (including the phasing of its construction) has been submitted and approved; and condition 21 provides that no more than 250 dwellings (and no business park floorspace) shall be occupied before the bypass has been completed.

[17] The section 106 agreement was made between (1) SCDC (2) CCC (3) Mr Stroude (4) Mr and Mrs Cartwright and (5) Beazer Homes. Although Mr and Mrs Cartwright were not, in any commercial sense, involved in the development, the Cartwright land, which they then still owned, formed part of the intended bypass and associated landscaping works so that it was necessary for them to join to ensure that all relevant landowners and their successors were bound by its relevant provisions. It is to be noted that CCC are a party both as the highway authority and as owners of the CCC land. It is also to be noted that, by this time, Beazer Homes had become the intended purchaser from Mr Stroude notwithstanding that the contracting party under the 1995 contract was Beazer Bedford. Indeed, recital 2.2 states (incorrectly) that, by the 1995 contract, Beazer Homes had agreed to buy part of Mr Stroude’s land.

Details of the section 106 agreement

[18] There are several provisions of the section 106 agreement to which I need to refer:

(a) Definitions of:

(i) “the estate owners”, being Mr Stroude, the Cartwrights, CCC and Beazer Homes – in other words, all the persons owning or interested in land required for the development (but drawing no distinction between different Beazer group companies for this purpose);

(ii) “the highway works”, meaning the construction of: (i) the bypass; (ii) an interim access road between Hatton Road and Over Road; and (iii) certain road and junction improvements;

(iii) “the highway works programme”, meaning the programme for the phased construction of the highway works set out in part III of the first schedule;

(iv) “the obligations”, being “the obligations undertaken under section 106 [of the Town & Country Planning Act 1990] in this agreement and which are set out in clause 7.4 and 7.6.3 and Parts I and III of the first schedule”. It is to be noted that not all the obligations undertaken in the section 106 agreement fall within this definition;

(v) “the planning permission”, meaning, in the event, the outline planning permission granted on 16 October 2000, including alterations, amendments and renewals of it;

(vi) “the property”, including all Mr Stroude’s land, the Cartwright land and the CCC land;

(vii) “traffic orders”, meaning the orders required to enable all the highway works to proceed made under the various statutory provisions mentioned.

(b) In order to comply with the requirements of section 106 to make planning obligations binding on successors in title to land subject to such obligations, recitals 2.1 to 2.5 state the interests of the various estate owners in the property and recital 2.6 states that: (i) the obligations (as just defined) are planning obligations within section 106; (ii) the land subject to the obligations is the property, that is to say, all of it; and (iii) SCDC are the local planning authority by which the obligations are enforceable. It also recites that CCC are, in relation to the obligations in part II of the schedule (which are not, at least expressly, within the definition of “obligations”), the local planning authority and also the local highway authority, for the purposes of the 1980 Act, for the highway works.

(c) The section 106 agreement was (see clause 3) conditional upon, and was not to have effect until, the later of: (i) the expiry of a time limit connected with any challenge to the planning permission; and (ii) the commencement of development. There was in fact a challenge by judicial review brought by a local resident. The application was refused, but continued, with appeals, until October 2002, when the House of Lords refused the resident further leave to appeal.

(d) Clause 4 stated that the section 106 agreement was made “pursuant to the provisions of section 106 and sections 38 and 278 of the Highways Act 1980 and all other powers enabling and enactments that may be relevant for the purposes of giving validity hereto or facilitating the enforcement of the obligations herein contained (which I consider includes all of the obligations as defined) with intent to bind the estate owners’ interest in the property”. By clause 4.2, covenants falling within the provisions of section 106 were deemed to be expressed to be planning obligations to which the section should apply and should be enforceable.

(e) Clause 6 is an important provision headed “Release from obligations”, a heading that is not entirely apposite. It provides, at clauses 6.1 and 6.2 as follows:

6.1 An estate owner shall not be bound by the obligations or any other covenants on his part either individually or jointly herein contained in respect of any period which shall commence after he shall have parted with his interest in the property or that part of the property to which the obligation or covenant relates (the term “interest” excluding any easement equitable interest or interest arising under any mortgage or charge or restrictive or other covenant).

6.2 [Beazer Homes] shall be bound at the date hereof only by the obligations on its part undertaken in respect solely of the land forming part of the property in which it has an interest under the provisions of the [1995 contract] with [Mr Stroude] and the [Cartwright contract] with [Mr and Mrs Cartwright].

The main purpose of this provision, I imagine, is to make clear that Beazer Homes had no responsibility in relation to the business park. It should be noted that this provision relates only to the obligations, and not to any other obligations resting on Beazer Homes under the section 106 agreement.

(f) Clause 7 is headed “The estate owners’ covenants”. It provides:

(i) At clause 7.1: “The estate owners covenant with [SCDC] (subject to the foregoing provisions of this agreement) to observe and perform the obligations”. The reference to the foregoing provisions must, I think, be to clause 6, so that the obligations of Beazer Homes are circumscribed by clause 6.2. |page:118|

(ii) Clause 7.2: “The estate owners covenant with [CCC] to observe and perform the obligations which are set out in part II to the first schedule.”

(iii) Clause 7.5: “Except in respect of [CCC’s] covenant in para 7.6.3 below, [CCC] shall not be personally liable in respect of any of the obligations but the obligations shall be binding upon successors in title of [CCC]”. In effect, the obligations (being planning obligations under section 106) are to bind the land, but not so as to render CCC themselves liable.

(iv) Clause 7.6 then provides that, in consideration of clause 7.5, CCC grant access easements to the estate owners over the CCC land for the benefit of the remainder of the property for the purposes of carrying out the highway works. In other words, the estate owners have a right to go onto the CCC land to construct the bypass. Mr Timothy Fancourt QC relied quite heavily upon this provision since the express provision for access in relation to the CCC land makes it difficult, he said, to imply such a right of access onto the Cartwright land. CCC also undertook with SCDC and the other estate owners, on completion of those of the highway works as fall on the CCC land (that is, in practice, part of the bypass), to dedicate the same as a public highway: see clause 7.6.2.

(g) Clause 10.7 provides: “Where any covenant is given herein by more than one party then subject to the provisions of clause 6.1 it shall be on the basis of joint and several liability.”

(h) Clause 11 provides that nothing contained or implied in the section 106 agreement itself shall prejudice or affect the rights, discretion, powers, duties and obligations of SCDC or CCC in the exercise of their functions as a local authority.

(i) Part II of the first schedule is headed “Highway works”:

(i) Paragraph 1 obliges the estate owners to carry out the highway works at their own expense in accordance with the highway works programme (see below) and in accordance with approved drawings and so as to connect the highway works to the public highway.

(ii) Under para 22, CCC covenant that they will use all reasonable endeavours to assist and facilitate the estate owners in carrying out those of the obligations undertaken in part II of the schedule, including not unreasonably delaying or withholding consent to design drawings and specifications relating to the highway works and co-operating with the estate owners in all respects in the execution of the highway works. It is slightly odd to see this reference to obligations (with an upper-case “O”) in part II since the definition of obligations refers only to parts I and III, not to part II.

(j) Part III of the first schedule is headed “The highway works programme”.:

(i) Under para 1, “The estate owners covenant”: (a) prior to the commencement of any development, to construct a road between points E and F shown on the plan to a standard suitable for construction traffic; and (b) prior to the occupation of 101 dwellings or prior to occupation of any premises on the business park, to complete certain of the highway works (other than the construction of the bypass).

(ii) Under paragraph 2:

The Estate Owners will

a) prepare and submit to [CCC] for its approval

i. all detailed drawings designs and specifications to enable the construction of the Longstanton Bypass

ii. all detailed drawing required to enable a stage 2 Safety Audit to be carried out on the Longstanton Bypass

prior to the occupation of 50 (fifty) dwellings

b) if the relevant approvals are received in respect of the matters described in paragraph 2(a) above and [CCC] has made and confirmed the Traffic Orders then the Estate Owners will invite tenders from suitably qualified contractors for the Longstanton Bypass and commence construction of the same within twenty weeks

c) complete the Longstanton Bypass prior to the occupation of the [sic] 251 (two hundred and fifty one) Dwellings on the Property

As to b), it is to be noted that CCC should have dealt with the traffic orders under para 22(b) of part II of the first schedule within 21 days of the issue of planning permission.

Events after October 2000

[19] Sometime in March 2001, the Persimmon group acquired the Beazer group. In September 2001, Persimmon Homes Ltd (Persimmon Homes) the third defendant, contracted to purchase the CCC land. In around May 2003, Persimmon Homes sold the CCC land to a company called West Longstanton Developments Ltd, subject to rights of access to build the bypass that are registered against the title.

[20] As at October 2000, no Beazer group company any longer had contractual rights against Mr Stroude to acquire any of his land other than the contract land. In fact, Beazer and Mr Stroude were negotiating after that time for the sale and purchase of the second and third phases, to the north of the contract land, of the part of Mr Stroude’s land allocated for the residential development under the planning permission and both sides expected those negotiations to result in an agreement or agreements to sell that land to Beazer Homes, which would then build the bypass. The sale negotiations, however, failed in around September 2002, after the Persimmon Group had acquired the Beazer group.

[21] As a result, on 6 September 2002, Mr Stroude gave notice to Beazer Bedford, as he was entitled to do, to terminate the 1995 contract. It is fair to say that, up until that time, the parties were going forward on the basis that an agreement would be reached for the acquisition of Mr Stroude’s land by Beazer/Persimmon and that the only development of the land with permission for residential development would be carried out by Beazer Homes. On 12 September 2002, Beazer Bedford waived the condition that any challenge to the planning permission should have been defeated, with the result that the sale and purchase of the contract land became unconditional. The contract land was transferred by Mr Stroude to Persimmon Homes on 23 December 2002, Persimmon Homes undertaking Beazer Bedford’s outstanding obligations under the 1995 contract. As I have said, the options over the first option land and the second option land expired so that Mr Stroude retained those parcels of land. The transfer of the contract land granted Persimmon the right to enter onto Mr Stroude’s land for the purpose of carrying out the highway works specified in paras 1(a) and (b) of part III of the first schedule to the section 106 agreement. It also reserved similar rights to Mr Stroude over the contract land. Nothing is said about entry for the purposes of constructing the bypass.

[22] On 17 September 2002, without any notice to, or discussion with, Mr Stroude or his advisers, Beazer Homes entered into a supplemental agreement (the supplemental agreement) with Mr and Mrs Cartwright by which the Cartwright land was to be transferred to Beazer Homes on or before 11 October 2002, for an initial payment of £30,000 and subject to an obligation on Beazer Homes to pay an additional £100,000 and to transfer to them the exchange land when the Cartwright contract became unconditional (that is, upon Beazer Homes acquiring the exchange land). Mr and Mrs Cartwright transferred the Cartwright land to Beazer Homes on 10 October 2002. Beazer Homes is now the registered proprietor of the Cartwright land.

[23] On 1 May 2003, Mr Stroude’s solicitor lodged a caution against the title to the Cartwright land in respect of his claimed right to enter onto that land for the purpose of constructing the bypass. By letter dated 21 May 2003, Peterborough District Land Registry gave Mr Stroude notice of an application by Persimmon plc to cancel that caution to which Mr Stroude’s solicitor objected by letter dated 9 June 2003. Following further correspondence, the land registry has concluded that the entitlement to maintain the caution ought to be resolved by proceedings in this division if they cannot be disposed of by agreement and, by its letter dated 23 August 2003, made a direction to Mr Stroude to commence these proceedings.

[24] Mr Stroude has offered, by letter dated 18 June 2003 from his solicitor to Persimmon’s company solicitor, that if Beazer Homes and Persimmon co-operate in making the Cartwright land available for building the bypass, he will transfer the freehold of the exchange land to Beazer Homes to enable it to discharge its own obligation under the Cartwright contract and the supplemental contract to transfer the freehold of the exchange land to Mr and Mrs Cartwright. Persimmon has declined to commit itself to Mr Stroude (in contrast with acknowledging its obligations to SCDC and CCC) to co-operate |page:119| in any way or to admit that Mr Stroude would have the right to enter the Cartwright land to build the bypass once the necessary approvals had been given and the traffic orders confirmed.

[25] Persimmon Homes applied for approval of reserved matters to the SCDC in August and September 2003. Consent was obtained on 22 December 2003 for the construction of 91 houses on the contract land. That consent is being implemented. The time will shortly arrive, if it has not already arrived, when the 51st house (including those built by Wimpey and Kings Oak as well as Persimmon Homes) is ready for occupation, thus making the provisions of para 2 of part III of the first schedule to the section 106 agreement matters of immediate importance.

[26] Beazer Homes, by letter dated 18 September 2003 (after the commencement of these proceedings) from its solicitor Nabarro Nathanson, confirmed that it had no objection to Mr Stroude instructing highway engineers to prepare detailed drawings, designs and specifications for the construction of the bypass and to enable a stage 2 safety audit to be carried out, subject to agreement about the costs.

Issues

[27] In the agreed case summary and statement of issues, it is stated that Mr Stroude claims an order (formulated differently from the particulars of claim) as follows:

(a) declaring (stated shortly) that Mr Stroude or any successor in title to his retained land (namely the land allocated for residential development and the development of the business park) is entitled as against Beazer Homes and its successors in title to the Cartwright land to perform the joint and several obligations of himself and Beazer, under the section 106 agreement, to construct the bypass, and for that purpose to enter onto the Cartwright land and, ultimately, procure its adoption as a highway; alternatively that there is an implied term of the section 106 agreement to that effect;

(b) restraining Beazer Homes from obstructing or interfering with that right; and

[28] Mr Stroude says that he is entitled to, and requires, that relief at the present time (and at the time at which the proceedings were commenced) because, in order to deal with his land, for instance in negotiating a sale to other potential developers, he needs to know precisely what his rights are. The defendants say that his action is premature and, indeed, that the registration of his caution was entirely unnecessary. The defendants say that there is no reason to think that the provisions of the section 106 agreement will not be observed by Beazer Homes, or its successors, as owner of the Cartwright land and no need, therefore, for the grant of the declaratory relief. The defendants have, however, declined to give any sort of undertaking to Mr Stroude to give him comfort in that respect. Having heard argument over a number of days about the meaning of the section 106 agreement and the rights of the parties to this litigation, I have no doubt that I should deal with the substantive issues that have been raised. If there is anything in the complaints made by the defendants that the proceedings were premature or that the lodging of the caution was unnecessary, those are matters that I consider can best be reflected in an appropriate costs order.

[29] The essential questions are: (a) is Mr Stroude entitled to enter onto the Cartwright land to construct the bypass; and (b) if so, when and under what circumstances? It is accepted by Mr Gregory Hill, who appeared for Mr Stroude, that such a right would not arise until the relevant approvals and confirmation of traffic orders envisaged by para 2(b) of part III of the first schedule to the section 106 agreement are in place. It is only then that there is an obligation on the estate owners to construct the bypass, and Mr Hill accepts that Mr Stroude’s right to enter the Cartwright land is exercisable only in the performance of that obligation. I proceed, therefore, on the footing that I am dealing with the position once those approvals and that confirmation are in place.

[30] Stating the position briefly, Mr Hill put the case in two ways:

(a) First, he said that, as a matter of the general law, any one of two or more persons subject to a concurrent obligation is entitled, as against his co-obligors, to perform it without having to wait to be sued by the obligee. It is not clear to me quite how far that proposition is intended to go. On the facts of the present case, I am dealing only with covenants given by the estate owners collectively by the very same clauses of a single document (although there is a dispute to which I will come later about whether the covenants are joint and several or only several). Accordingly, it is necessary for me to consider Mr Hill’s proposition only in the context of a concurrent liability that is either joint or several (or both).

(b) He also said that a term is to be implied into the section 106 agreement that Mr Stroude is entitled, as against Beazer Homes, to take all steps required, including entry onto the Cartwright land, to construct the bypass.

(c) He added that Beazer Homes has consented to the submission of the necessary plans to CCC for approval of the bypass. On receipt of such approval, and the making of the relevant traffic orders, the section 106 agreement imposes an obligation to appoint a contractor and to construct the bypass (an obligation on both Mr Stroude and Beazer Homes).

(d) He relied, further, on the provisions of the 1995 contract (now binding upon Persimmon Homes) to use all reasonable endeavours to ensure the adoption as highway of the northern leg of the bypass over the CCC land; this can be done only by ensuring that the entire bypass is constructed. So, he argued, Persimmon Homes is bound to invoke whatever relevant inter-group arrangements existing within the Persimmon group that have allowed Persimmon plc to state to SCDC and CCC that it is committed to the construction of the bypass.

(e) Finally, he argued that Mr Stroude’s rights to enter onto the Cartwright land to construct the bypass are proprietary, saying that they are not planning obligations and do not therefore give rise to a local land charge. They therefore need to be protected on the register.

[31] Mr Fancourt (for the defendants) rejected those submissions, saying that Mr Stroude is attempting to convert a planning obligation owed by Beazer Homes to SCDC and CCC into a private obligation owed to Mr Stroude.

(a) First, he submitted that Mr Hill’s first proposition in relation to concurrent obligations is wrong. Even if there were something in the proposition, it must depend upon two or more persons being liable to perform a single, joint obligation. No such implied right arises in the case of several obligations, which are necessarily distinct obligations.

(b) Second, Mr Fancourt submitted that the obligations to SCDC and CCC under the section 106 agreement, upon which Mr Hill relied, are not joint obligations but only several obligations, so that Mr Hill’s argument based upon concurrent liability does not get off the ground.

(c) Third, he said that it is not possible to imply a term into the section 106 agreement such as Mr Hill suggested. He said this for a number of reasons, the principal one being that the section 106 agreement is not intended to deal with rights of access over the Cartwright land but is concerned with matters between the estate owners (as landowners), on the one hand, and SCDC and CCC (as planning and highway authorities), on the other hand. It is neither necessary nor apposite to imply into the section 106 agreement terms enforceable as between the estate owners: it is not necessary to do so to give business efficacy to the section 106 agreement since all the necessary rights of enforcement to ensure the construction of the bypass are already vested in SCDC and CCC under the relevant legislation, and nor, he says, would the response to the “officious bystander” be to the effect “of course Mr Stroude must have access”, since he was equally likely to be told “that matter is not for this agreement; we will deal with it in due course on the sale of the further residential land”.

[32] Before turning to those submissions, I should refer to the legislation against which the section 106 agreement must be construed. |page:120|

Statutory provisions

[33] At the time of the outline planning permission, the provisions of section 106 of the 1990 Act contained a code for the creation and enforcement of what were called “planning obligations” that could be enforced by the “local planning authority”. This code gave the local authority much more flexibility in relation to control of developments than had been available through the imposition of conditions in planning consents. It provided as follows:

(1) Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation (referred to in this section… as “a planning obligation”), enforceable to the extent mentioned in subsection (3) –

(a) restricting the development or use of the land in any specified way;

(b) requiring specified operations or activities to be carried out in, on, under or over the land;

(d) requiring a sum or sums to be paid to the authority on a specified date or dates or periodically.

[34] Under section 106(3), a planning obligation is enforceable by the authority identified in accordance with section 106(9)(d) against the person entering into the obligation and any person deriving title from that person, but, under section 106(4), the relevant agreement may provide that a person will not be bound by the obligation in respect of any period during which he no longer has an interest in the land. Injunctive relief is available, under section 106(5), as one method of enforcement of a planning obligation.

[35] There are certain formal requirements: a planning obligation may not be entered into except by an instrument executed as a deed that:

(a) states that the obligation is a planning obligation for the purposes of section 106;

(b) identifies the land in which the person entering into the obligation is interested;

(d) identifies the local planning authority by whom the obligation is enforceable.

[36] In the present case, these formal requirements are dealt with in recitals 2.1 to 2.6, as to which see [18(b)] above. It should be noted that it is CCC, and not SCDC, that are the local planning authority for the purposes of the obligations contained in part II of the first schedule, whereas SCDC are the local planning authority for the purposes of the obligations (which include the obligations in parts I and III of the first schedule), although, so far as concerns the highway works, parts II and III are clearly intended to operate together and include a considerable amount of overlap. Thus, in relation to the construction of the interim access road and the bypass, CCC (as highway authority) are concerned with the aspects dealt with in part II (relating to the standard of construction and connection to other public roads) and SCDC (as planning authority) are concerned with the aspects dealt with in part III (designed to ensure that the development is not occupied until the roads are available for use, in other words to ensure that road infrastructure is in place to handle the extra people who will be living in the development).

[37] Section 38(3) of the 1980 Act gives a local highway authority power to agree with any person to undertake the maintenance of, among other things, a way that is to be constructed by that person and which he proposes to dedicate as a highway, and the way becomes a highway maintainable at public expense on such date as may be specified in the agreement. An agreement under that section may (see subsection (6)) contain such provisions as to the dedication as a highway of any road or way to which the agreement relates, the bearing of expenses etc and other relevant matters. The section 106 agreement is made pursuant to that section (and to section 278) as well as pursuant to section 106 itself: see [18(d)] above. The obligations of the estate owners under clause 7.2 and of CCC under clause 8.2, the details of which are not relevant, of the section 106 agreement fall within section 38.

Discussion

[38] Some aspects of the section 106 agreement therefore fall within section 106 of the 1990 Act and other aspects fall within section 38 of the 1980 Act. But, first and foremost, the section 106 agreement is a contract between the parties to it that, in my judgment, falls to be construed according to ordinary principles of construction. The fact that the section 106 agreement is made in the context of the statutory provisions is, no doubt, part of the factual matrix against which it has to be construed; accordingly, it should be construed, so far as possible, in a way that enables the statutory provisions to operate. But I do not consider that there are, otherwise, any special canons of construction that apply to a section 106/section 38 agreement.

[39] In particular, I do not consider that, simply because the section 106 agreement is designed to create planning and highway obligations enforceable by SCDC and CCC, in each case against the estate owners, all other matters should be dealt with separately: for instance, those that Mr Fancourt said were to be included in subsequent conveyancing documents. Nor does it follow that the section 106 agreement cannot, unless it does so expressly, also create rights and obligations as between the estate owners among themselves, as well as between the estate owners, on the one hand, and SCDC or CCC, on the other hand. Whether any such other aspects are dealt with in the section 106 agreement is, in my judgment, to be ascertained according to ordinary rules of construction and implication. No authority has been cited to me that leads me to reach a different conclusion, nor can I detect any policy considerations that should lead me to do so.

[40] There has been some dispute between the parties about whether there is any obligation at all, under the section 106 agreement, on the estate owners to SCDC or CCC to construct the bypass and, if so, when that obligation arises. Mr Hill submitted that clause 7.2 and para 1 of part II of the first schedule create an obligation to construct the bypass that is a present obligation, albeit that that obligation is not breached vis-à-vis CCC provided that the provisions of part III of the first schedule are observed. He also submitted that, once the necessary approvals have been obtained and traffic orders confirmed, there is an obligation under clause 7.1 and part III of the first schedule to commence and complete construction of the bypass. Mr Fancourt submitted that there is no obligation on the parties to construct a bypass at all since the timetable under part III is couched negatively, in the sense that the steps envisaged have to be taken only prior to the occupation of specified numbers of dwellings.

[41] As matters have turned out, I do not need to decide that question (save perhaps later, when it comes to deciding matters relating to the costs of these proceedings). This is for two reasons:

(a) First, it is accepted by the defendants that Mr Stroude is, without the concurrence of any the defendants, able to submit all the necessary plans etc to enable the construction of the bypass and detailed drawings required to enable a stage 2 safety audit to be conducted (as envisaged by para 2a) of part II) whether or not 50 dwellings are about to be, or have been, occupied. Plans have in fact now been submitted for approval, although the final design of bridge structures remains outstanding.

(b) Second, once the approvals have been obtained and traffic orders confirmed, there is then an obligation, under para 2b) on the estate owners to invite tenders for the bypass and to commence construction within 20 weeks. The defendants concede, obviously correctly, that the construction must then continue; the estate owners could not simply carry out a few minor works and then sit back and do nothing. Indeed, the invitation for tenders would inevitably contain a timetable for completion of the works that would, in practice, determine the time within which the bypass would be completed. Paragraph 2c) then contains a long-stop provision designed to ensure that the bypass is completed before additional traffic is generated to the extent entailed by the occupation of 251 dwellings.

[42] Accordingly, once the conditions set out in para 2b) of part III are fulfilled (which is likely to be some time in the first half of 2006) the estate owners (either jointly and severally or just severally) will be under a contractual obligation, to SCDC, pursuant to clause 7.1 and |page:121| para 2b) of part III to invite tenders and commence construction of the bypass. Further, it is, in my judgment, implicit that: (a) the estate owners should, following tenders, then contract with contractors for the construction of the bypass; and (b) once commenced, the construction of the bypass will continue to completion within a reasonable time; a contractual obligation to that effect is owed by the estate owners to SCDC (with an added condition that, whenever completed, not more than 250 dwellings can be occupied before completion). These obligations are planning obligations enforceable by SCDC pursuant to section 106, including by injunctive relief, preventing the occupation of more than 250 dwellings prior to completion of the bypass.

[43] Further, whatever the effect of clause 7.2 and para 1 of part II prior to the satisfaction of the conditions in para 2b) of part III, once those conditions have been fulfilled there is:

(a) first, a contractual obligation on the part of the estate owners to CCC, under clause 7.2 and para 1 of part II, to construct the bypass in accordance with the timetable and other provisions of para 2b) and c) of part III;

(b) second, a contractual obligation on the part of the estate owners to SCDC, under clause 7.1 and para 2b) and c) of part III, to commence and complete construction of the bypass.

[44] Mr Hill submitted that what is envisaged by, and is needed to comply with, clauses 7.1 and 7.2 and of parts II and III is the completion of the entire bypass, not just parts of it. That is clearly correct in the sense that, between them, the estate owners are bound to see that the bypass is completed once approvals have been obtained and traffic orders confirmed. But his submission goes further and is to the effect that each of the estate owners is liable for construction of the entirety of the bypass and is not simply responsible for that part of it that passes over his own land.

[45] I agree with Mr Hill’s submissions, subject to these qualifications:

(a) One result of clause 6.1 is that an estate owner ceases to be bound by the obligations or any other covenant once it has parted with its interest in the property. Although clause 7.1 does, but clause 7.2 does not, make the covenants contained in them respectively expressly subject to “the foregoing provisions of this agreement”, I do not consider the result of that to be, as was faintly suggested at one stage, that clause 6.1 applies only to the obligations and not to other covenants. The reason for the inclusion of those words in clause 7.1 is, I think, to cover the special position of Beazer Homes under clause 6.2.

(b) Clause 6.2 provides that Beazer Homes (ignoring the distinction between it and Beazer Bedford) is bound, even at the date of the section 106 agreement, “only by the obligations on its part in respect solely of” that part of Mr Stroude’s land subject to the 1995 contract and the Cartwright land. I find the provisions of clause 6.2 rather obscure. Beazer Homes is stated to be bound only by the obligations on its part “undertaken in respect solely of the land” in which it has an interest under the 1995 agreement and the Cartwright contract. None of the obligations relates, so far as I can see, solely to that land and to no other land; I think that the use of the word “solely” does nothing other than to reinforce the use of the word “only”. That, however, is not the only difficulty since, read literally, the only obligations binding upon Beazer Homes would be the negative requirement concerning land use and building occupation prior to construction of the various highway works. However, paras 1a), 1b) and 2 of part III of the schedule all appear to create positive obligations on the estate owners, and it seems inherently unlikely to me that Beazer Homes would not, unlike the other estate owners, be under a positive obligation to comply, for instance, with para 1a), by building the road referred to because those are all necessary for the development and, indeed, some of the road and junction works, on land to be retained by Mr Stroude, had to be, and in fact were, completed before any other works were undertaken. Be that as it may, Beazer Homes was clearly bound by the obligations in relation to the Cartwright land. Accordingly, so far as the Cartwright land is concerned, the section 106 agreement created an obligation in relation to the Cartwright land by which all the estate owners (other than CCC: see clause 7.5) were bound.

The position is complicated further by the fact that Beazer Homes was not, in fact, the purchasing party under the 1995 contract, so that recital 2.2 of the section 106 agreement is incorrect and clause 6.2 proceeds on an incorrect basis.

Whatever the true scope of the provision, I conclude that it does not qualify Beazer Homes’ obligation as an estate owner to see to the construction of the bypass in the same way as other estate owners.

(c) Under clause 7.5, CCC are not personally liable in respect of any of the obligations (other than under clause 7.6.3), although the obligations are expressed to be binding upon their successors.

[46] Mr Stroude’s case is, of course, that he (or his agent) is entitled to go onto the Cartwright land in order to construct the bypass, and he accepts, as he must, that Beazer Homes would be entitled to go onto his land for the same purpose. He points out that, if he has no such right, he would inevitably be in breach of para 2 of part III should Beazer Homes refuse access to the Cartwright land. He would face this dilemma: on the one hand, he could comply with his obligations to SCDC and CCC, in which case he would have to enter into contracts with contractors and commence construction of the bypass, but he would not be able to grant access to the Cartwright land to his contractors and would end up being in breach of contract with them. On the other hand, he could avoid putting himself in breach of contract with the contractors by declining to enter into any such contract, but he would then be in breach of contract with SCDC and CCC (either by failing to submit plans or, having submitted plans and obtained approvals, by failing to invite tenders). This, it was said, cannot be right.

Submissions on the law

[47] There is, slightly surprisingly, no authority that the researches of counsel have revealed that deal with Mr Hill’s first proposition in relation to obligors subject to concurrent liabilities. Mr Hill therefore sought to rely upon analogies.

[48] The first analogy is that of a guarantor’s quia timet right to require the principal debtor to pay off the creditor when the debt has become immediately due, although Mr Hill accepted that the analogy is “not exact or even close” as he himself puts it in his skeleton argument. However, he points out that such quia timet relief is available even if the guarantor is also liable as a principal creditor, citing Watt v Mortlock [1964] Ch 84, at p87. He also relied upon the passage in Andrews and Millett Law of Guarantees (4th ed) at 1-028, where it is stated that a guarantor may obtain relief although the principal does not want to pay and the creditor is content not to be paid. Mr Fancourt, in contrast, said that there is no case in the books where a guarantor has established a right to go onto the land of the principal to perform the obligation that the principal owes to the counter-party.

[49] The second analogy derives from the old case of Hood v Pimm (1830) 1 Coop temp Cott 280. This case is reported primarily on a question of procedure, but Mr Hill indicated a relevant point of substance that is recorded. In this case, A, B and C agreed to sell Blackacre to D and also to buy Whiteacre from D. A, B and C filed a bill for specific performance. C then “resolved not to insist on the agreement” and was made a defendant instead of a plaintiff, but specific performance was decreed despite the objection “that the argument [sic the report; but this must be a mistake for “agreement”] had been abandoned by one of the parties, who had contracted jointly with the plaintiffs”. The court’s reasoning, and the exact terms of the decree, are not reported. Nevertheless, the case is authority, it is submitted, that some only of joint contractors may enforce the counter-party’s obligations, in a form of proceeding in which they must aver and prove that they are “ready willing and able” to perform their side of the bargain. So the decision necessarily involves the proposition that some only of joint obligors may perform against the wish of a co-obligor. The claim was for specific performance, so the principle applies not merely to money obligations but to dealings with land in specie.

[50] I do not find these analogies of assistance:

(a) In the case of a guarantee, the guarantor is entitled to an indemnity from the principal if its guarantee is called upon; this is so in equity even if there is no express contract to that effect as between |page:122| principal and guarantor. There is, at the end of the day, a relationship between them that creates a direct obligation by the principal to the guarantor: the quia timet right merely enables the guarantor to pre-empt a demand on itself by forcing the principal to perform its own obligations in due time. In contrast, in the present case, the question is whether the relationship between co-obligors enables one to assert rights over the property of the other in order to fulfil their concurrent obligations even though there may be no right for one obligor directly to enforce the obligation against the other obligor.

(b) In Hood, both parties (A, B and C, on the one hand, and D, on the other) to the relevant contract were before the court. The court clearly felt able to enforce the mutual obligations to which the contract gave rise, notwithstanding that C had purported to abandon the contract. The court therefore, it seems, compelled C to fulfil his bargain. An analogy might be drawn with the present case if an obligation to construct the bypass had already arisen (because all relevant approvals and traffic orders had been confirmed) and Mr Stroude were seeking, in proceedings to which SCDC and CCC were parties, an order that Beazer Homes comply with its own obligations under the section 106 agreement. It is a very different thing for Mr Stroude to claim a right of access to enable Mr Stroude himself (or his agent, the contractor) to enter the Cartwright land to carry out his own contractual obligations to SCDC, especially where he is seeking declaratory relief in advance of such approvals and confirmation.

[51] Mr Hill also relied upon the principle that the parties to a contract must join in doing what is necessary to perform it, where their concurrence is needed, even without express words. He relied on a passage from Mackay v Dick (1881) LR 6 App Cas 251, where Lord Blackburne said, at p263:

I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on circumstances.

He also said, at p264, that the principle is “obvious good sense and justice”.

[52] This was a Scottish case, but I do not doubt that it also represents English law. Although the case concerned obligations between opposite parties, Mr Hill submitted that it is at least equally “good sense and justice” to require parties who are concurrently liable to co-operate with one another and not to permit one to hinder the other in rendering performance. There is considerable force in that submission. However, I do not think that Mackay is anything more than one particular manifestation of the more general principles concerning the implication of terms in an agreement. Indeed, that is how the case is described in Lewison: The Interpretation of Contracts (3rd ed) at 6.12, where it is said that the “formulation of the implied term in cases of this class depends (like any other implied term) on necessity”. In that context, I take heed of Mr Fancourt’s warning that it is not possible to imply a term as to co-operation merely because it would be sensible and reasonable. The law can, per Devlin J in Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014:

enforce co-operation only in a limited degree – to the extent that it is necessary to make the contract workable. For any higher degree of co-operation the parties must rely on the desire that both of them usually have that the business should get done.

[53] As to implication, Mr Hill submitted that even if his propositions concerning the rights of one obligor under a concurrent obligation are incorrect, none the less, on the facts of this case, a term should be implied into the section 106 agreement that would result in Mr Stroude (and his agent) being entitled to access the Cartwright land for the purposes of fulfilling the obligation to construct the bypass, an obligation resting on all the estate owners under that very agreement.

[54] The general principles concerning implication of terms are well established and are largely common ground. They can usefully be found set out in the current (29th ed) of Chitty on Contracts, in paras 13-001 to 13-009. Mr Hill relied particularly upon para 13-002, where it is said that:

a subsequent disagreement reveals that there are contingencies for which the parties have not provided in their express contract. The question is then whether the court can imply a term to cover the contingency which has unexpectedly emerged.

The relevance of that passage to the present case is, of course, that the parties expected, at the time of the section 106 agreement, that Beazer Homes would acquire all Mr Stroude’s residential development land and would, therefore, itself be interested in ensuring the completion of the bypass (although, in the light of Mr Stroude also being interested in the construction and completion of the bypass as the owner of the business park site, arguments about monetary contribution to the cost of construction might have arisen).

[55] The implied term for which Mr Hill contended is to the effect that Mr Stroude, Beazer Homes and their respective successors (and the same would necessarily apply to the owners from time to time of the CCC land) may cause the bypass to be built in accordance with parts II and III of the first schedule. This, he said, is because:

(a) The section 106 agreement makes no provision for who is to do the job (and there is no other agreement that fills the gap), so it is necessary to make an implication if there is to be a complete contract, reliance being placed in Liverpool City Council v Irwin [1977] AC 239* per Lord Wilberforce, at p254A-B:

The present case, in my opinion, represents a fourth category, or I would rather say a fourth shade on a continuous spectrum. The court here is simply concerned to establish what the contract is, the parties not themselves having fully stated its terms. In this sense, the court is searching for what must be implied.

(b) That is the obvious answer to the officious bystander’s question “who is to build?”.

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* Editor’s note: Also reported at [1976] 1 EGLR 53; (1976) 238 EG 879 and 963

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[56] I should, at this point, for completeness dispose of one objection that could be made to Mr Hill’s approach, which, to be fair to Mr Fancourt, is not an objection upon which he relied. It is that, if Mr Hill is correct, a position could arise under which both Mr Stroude and Beazer Homes seek to obtain tenders and to contract with different contractors. However, although that might be a theoretical possibility, it is one that can in practice be ignored, since it is highly unlikely that both: (i) each of Mr Stroude and Beazer Homes would wish to proceed with construction; but (ii) they could not agree on a single contractor. If there were a dispute, it is one that should be resolved under clause 13 (resolution of disputes) of the section 106 agreement.

[57] Mr Fancourt’s principal response to all of this was, as I have said, that Mr Hill was attempting to turn planning obligations under the section 106 agreement, which are obligations owed to SCDC and CCC, into private obligations owed by one co-obligor to another. That, he said, is an incorrect approach. Rather, the section 106 agreement is concerned only with those planning and highway obligations and has nothing to say about the rights of the estate owners among themselves.

[58] He wished to argue, in support of that conclusion, that the rights of the estate owners among themselves would be dealt with in due course, so that it is therefore impossible to imply into the section 106 agreement any mutual rights and obligations between the estate owners, for to do so would be inconsistent with that intention. For the reasons that I have already given (see [13] and [14] above), I reject that line of argument. Similarly, I reject the proposition that because the section 106 agreement is what Mr Fancourt described as a “planning agreement”, namely one concerned with regulating, pursuant to a statutory code, the rights as between landowners, on the one hand, and planning and highway authorities, on the other, it is not therefore to be construed in the same way as any other agreement and cannot be taken as dealing in any way, save as expressly stated, with the rights of the landowners among themselves. It is, as I have already said, to be construed in the same way as any other agreement, but taking |page:123| into account, I readily accept, that it was entered into against the statutory background.

[59] What Mr Fancourt certainly was entitled to rely upon includes: (i) the fact that the section 106 agreement is intended to, and does, create planning and highway obligations under the statutory codes; (ii) provisions of other agreements, in particular the 1995 contract and the Cartwright contract, were in existence at the time of the section 106 agreement, which might suggest that it was not intended to regulate certain aspects of the relationships between the estate owners and, in particular, access to their respective land; and (iii) the express provisions of the section 106 agreement itself leading to a similar conclusion.

[60] I shall return to those aspects when I turn to consider Mr Fancourt’s arguments, which are of importance principally in relation to the arguments about implied terms. But before I do so, I wish to deal with the more technical arguments surrounding Mr Hill’s propositions concerning concurrent liabilities and Mr Fancourt’s argument that the section 106 agreement creates only several, and not joint and several, obligations in respect of the construction of the bypass.

Consequence of concurrent liability

[61] It seems to me that if any rights and obligations are to be found as between co-obligors by reason of their agreeing or covenanting to do something (whether jointly or severally or both), those mutual rights and obligations arise from similar, if not identical, concepts as give rise to implied terms in contracts and other documents. At root is some concept of necessity (in contrast with reasonableness), and that is so whether one uses language such as “obvious good sense and justice” (as in Mackay) or adopts a test such as the need to give business efficacy to the agreement or the last-resort test of the officious bystander. In any given factual situation where A and B covenant together, it seems to me, therefore, unlikely to make any difference in identifying the mutual obligations between A and B whether that covenant is joint, joint and several or only several.

[62] It is of course the case, as Mr Fancourt said, that several obligations are, necessarily, distinct obligations. Clearly, if A and B agree with C, in entirely unconnected documents, to do something, that does not mean that any mutual rights and obligations arise between A and B. He submitted that if Mr Hill’s approach is correct one would find implication of terms in all sorts of surprising circumstances. For instance, contrary to Harris v Boots Cash Chemists (Southern) Ltd [1904] 2 Ch 376, one would find that, under a standard form covenant by an assignee on the assignment of a lease to observe the covenants in the lease, an assignor would have the right to enter the demised premises to ensure compliance with those covenants. Or in cases such as Ayling v Wade [1961] 2 QB 228 (where a covenant by a mesne landlord to observe the covenants in the headlease was held not to be a mere covenant of indemnity but was a covenant requiring the mesne landlord actually to perform the repairing obligations in the headlease), one would find implied rights of entry. I do not consider, however, that any difference of approach would follow at all in a case of the Harris type. That case interpreted the covenant as one of indemnity only and Mr Hill’s submissions do not lead to a different approach in the case of such standard form covenants. So far as concerns Ayling, if it is necessary for a mesne landlord to gain entry to comply with its obligations to the tenant in occupation, it is hardly likely that the court would allow the tenant to recover damages if it had refused entry to the mesne landlord to comply with its obligations; indeed, one might think that this would be a classic case for the implication of a right of access if nothing were expressed, although in Ayling there appears to have been an express licence to do so.

[63] However, returning to the example in [61] above, where A and B covenant in the same clause of a single document, the position may well be different. Indeed, the subject matter of the obligations might well be such that separate and distinct unconnected obligations would be wholly inappropriate. For example, A and B might well agree in one agreement with C to do something that requires a joint endeavour that it would not make sense for either of them to agree to do without the concurrence of the other – such as constructing a road running over land belonging to each of A and B. Whether it is appropriate for the law to impose mutual rights and obligations on A and B ought, it seems to me, to depend upon whether the obligations to C are concurrent, in the sense that each undertakes the same obligation to C by virtue of the same covenant or agreement, and not upon whether the obligation is joint rather than several. In other words, to the extent that Mr Hill’s proposition on concurrent obligations is correct at all, it should make no difference whether the estate owners’ covenants under clauses 7.1 and 7.2 are joint and several or only several.

[64] The obligations of the estate owners (other than CCC, to which different considerations apply) to CCC, under clause 7.2 and part II of the first schedule, are, in my view, concurrent in the sense just discussed. Jumping ahead, they also create, for reasons that I will give, a joint obligation on the part of the estate owners (other than CCC) to CCC. Further, I consider that the obligations owed by the estate owners to SCDC, under clause 7.1 and part III of the first schedule, are concurrent in that sense and that those provisions, too, create a joint obligation on the estate owners other than CCC to construct the bypass once the necessary approvals have been obtained and the traffic orders have been made.

Implication and necessity

[65] Having concluded that the mutual rights and obligations of those that undertake concurrent liabilities are rooted in similar concepts of necessity to those giving rise to implied terms, I do not propose to approach the construction of the section 106 agreement in the rigid, logical way that Mr Hill adopted. His approach, of course, was to argue that concurrent liabilities give rise, as a matter of law, to mutual rights permitting one obligor to exercise rights against a co-obligor requisite to enable fulfilment of their concurrent obligation; only if that is wrong does one need to consider the implication of terms according to conventional doctrine. Instead, I approach the question as one of necessity, or obviousness, as a single exercise. I return now to the factors identified in [59] above.

[66] The first factor: The fact that the section 106 agreement is intended to, and does, create planning and highway obligations under the statutory codes. For reasons that I have already given, the section 106 agreement is to be construed according to the same canons of construction as any other agreement. The mere fact that one purpose, perhaps the main purpose, of the section 106 agreement is to implement the statutory code found in section 106 (and also in section 38 of the 1980 Act) does not lead to the conclusion that it can give rise to other rights only if those rights are expressly created. However, this factor is of relevance to the implication of terms as between the estate owners, as to which see [76] below.

[67] The second factor: Provisions of other agreements. There are two aspects. The first aspect is that the 1995 agreement contains, at clause 6.10.1.1, provision for the grant by Mr Stroude of rights and easements in the transfer of the contract land to Beazer Homes “as shall be reasonably necessary in connection with the provision of an infrastructure of roads and services in order to carry out the residential development of the contract land…”. Similar provisions apply in relation to the first option land and the second option land. It is not clear whether these rights were sufficiently wide to include access to construct the bypass, although the actual transfer of the contract land to Persimmon Homes does not expressly include that right. If they were not wide enough, it can be argued that the absence of such rights in the contract for the sale and purchase of the contract land is to be explained on the basis that the parties intended to deal only with other infrastructure rights; there is no reason to think that they had any different intention when entering into the section 106 agreement, which was, after all, needed in the first place only in order to obtain the planning permission without which the sale and purchase would never become unconditional.

[68] The other aspect of the second factor is this. It was said by Mr Fancourt that there can be no implication in the section 106 agreement that Beazer Homes and Mr Stroude (whether together or separately) would have rights of access over the Cartwright land while |page:124| it remained in the ownership of Mr and Mrs Cartwright, and, that being so, the position will be no different once the Cartwright land has been disposed of by them even if that disposal is to Beazer Homes, an original party to the section 106 agreement.

[69] The first part of that argument is, I consider, correct. By the time of the section 106 agreement, Mr and Mrs Cartwright had entered into the Cartwright contract, which was, as I have said, conditional upon the acquisition by Beazer Homes of the exchange land. All the parties contemplated, at that time, that Mr Stroude would provide the exchange land to enable the Cartwright contract to be completed and the bypass to be constructed. Prior to the section 106 agreement, Mr and Mrs Cartwright’s own legal position was well secured. Their land was necessary for the construction of the bypass, but they were not obliged to part with it unless and until they received the exchange land (which was appropriate to protect and enhance their own property) and the balance of the purchase price.

[70] The effect of the section 106 agreement was, it seems to me, to jeopardise Mr and Mrs Cartwright’s legal security. This is because they, like Beazer Homes and Mr Stroude, entered into planning and highway obligations with SCDC and CCC and were thus bound, once the necessary approvals had been obtained and traffic orders confirmed, to construct the bypass. Of course, everyone expected at that time that Mr and Mrs Cartwright would in fact, in due course, transfer the Cartwright land to Beazer Homes and thus cease to have any, even theoretical, liability as a result of clause 6.1. But, in theory, a position could arise under which either of those local authorities would have the right to enter onto the Cartwright land and construct the bypass (again in theory at least, seeking a contribution to the cost of doing so from Mr and Mrs Cartwright), and that right could be exercised in circumstances under which Mr and Mrs Cartwright had no legal right to receive the exchange land or the balance of the purchase price because Beazer Homes had not acquired the exchange land from Mr Stroude (who was and is under no legal obligation to provide it).

[71] In those circumstances, it is impossible to suggest that it was an implied term of the section 106 agreement that Mr and Mrs Cartwright were obliged to allow access to the Cartwright land and this is so whether one applies a “business efficacy” test or an “officious bystander” test. Mr and Mrs Cartwright could justifiably say that it was never any part of the understanding between the parties that Mr Stroude and Beazer Homes would be entitled to come onto their land while they owned it: the entire basis of the transaction between them and Beazer Homes was that the land itself would be transferred to Beazer Homes so that rights of access would be totally unnecessary. There is no need to imply a right of access to give business efficacy to the commercial arrangements between Beazer Homes and Mr Stroude, on the one hand, and Mr and Mrs Cartwright, on the other; business efficacy would be achieved by the fulfilment of the Cartwright contract, upon completion of which Mr and Mrs Cartwright would drop out of the picture altogether. The officious bystander would, in my judgment, be unlikely to say that Mr and Mrs Cartwright should provide access. On the contrary, being a reasonable person, he would be more likely to say precisely the opposite and that access was a matter for Beazer Homes and Mr Stroude once the land exchange had been effected. Similarly, considering, as I do, that Mr Hill’s arguments based upon the existence of concurrent obligations depend, ultimately, upon a concept of necessity, I do not consider that those arguments result in Mr and Mrs Cartwright being obliged to allow access to the Cartwright land.

[72] Mr Hill, probably recognising that hurdle in his way, addressed the appropriate implied term from an entirely different perspective as set out in [55] above. The position now is that Beazer Homes has acquired the Cartwright land. By asking the question “Who is to build?”, Mr Hill deflected attention away from Mr and Mrs Cartwright and identified four choices: Beazer Homes and Mr Stroude must act jointly; Beazer Homes must do it; Mr Stroude must do it; either of them may do it. Given that starting point and asking that question, Mr Hill said (and he may well be right) that the officious bystander would say that either party may build the bypass. However, Mr Hill recognised that Mr and Mrs Cartwright would say, to use his words: “It will not be done until we have transferred [the Cartwright land], so, provided we are paid and we get the exchange land, we will go along with whatever arrangements the rest of you want to make.” Since the Cartwright land has now in fact been transferred to Beazer Homes, there is, Mr Hill said, no objection to be made by Mr and Mrs Cartwright and, as between Beazer Homes and Mr Stroude, Mr Stroude is now entitled to access in accordance with the implied term that he asserts.

[73] The third factor: The express provisions of the section 106 agreement itself. Mr Fancourt pointed out that express rights of access were granted by CCC over the CCC land to the other estate owners for the purpose of constructing the bypass. This shows, he submitted, that rights of access were not intended to be granted by the other estate owners over their own land. Mr Fancourt said in his skeleton argument:

The background to the section 106 agreement is that both Mr Stroude and Beazer Homes expected that Beazer Homes would purchase all of Mr Stroude’s residential development land and that Beazer Homes would purchase the Cartwright land and the CCC land. No doubt any mutual rights would have been expected to be dealt with, to the extent necessary, in any further contracts between Mr Stroude and Beazer Homes, as they were in the 1995 agreement.

The section 106 agreement does include the grant of rights by CCC as landowner, but that is because it was not liable to carry out the highway works itself: clause 7.5. It was therefore necessary, because not implicit, to grant rights expressly to others to enter onto the council’s land to perform the highway works: clause 7.6.1. Otherwise, if the council remained as owner of its land, it could not be compelled to build the bypass on that land. If it was obvious to all parties to the section 106 agreement that each Estate Owner had the right to go onto the others’ land to built the By-pass, this provision would not have been included.

This fact is virtually conclusive against any implication of rights of access on an officious bystander basis…

[74] It may be true that had there been further contracts between Mr Stroude and Beazer Homes, mutual rights would have been dealt with, as Mr Fancourt suggested. In practice, there would probably have been no issue about mutual rights at all since Beazer Homes would want to get on with the construction of the bypass as quickly as possible. The issue now arises, however, precisely because an unexpected situation has arisen, namely that Beazer Homes has not purchased Mr Stroude’s residential development land. What I cannot accept is that because, in the expected situation, no implied term would have been necessary, none is necessary in the unexpected situation.

[75] There is, however, some force in the argument based upon the presence of the express provisions dealing with the CCC land. If one finds an express provision for one estate owner alone to allow access to its land, it lends support, in the absence of any explanation for that provision, to the proposition that no rights of access arise for access to the land of other estate owners. If it were obvious/necessary to allow mutual rights of access all round, why include express provision in relation to the CCC land?

Conclusion on main issue

[76] In my judgment, Mr Hill was correct in his submission that Mr Stroude has the right to cause the bypass to be built in accordance with the provisions of parts II and III of the first schedule to the section 106 agreement. The presence of the concurrent obligations on Mr Stroude and Beazer Homes in the section 106 agreement, in the context of the factual matrix that I have discussed, leads me, by a process of implication, to that conclusion. It makes no difference whether one describes that as necessarily implicit, on the facts of the case, in the concurrent obligations undertaken by them as estate owners, or whether one implies a term to that effect into the section 106 agreement in accordance with conventional rules. It is, in my judgment, not an answer to that conclusion to say, as Mr Fancourt submitted, that there is simply no need to introduce such a term as between the estate owners because if there is a failure to build the bypass in accordance with the estate owners’ covenants under the section 106 agreement, SCDC and CCC themselves can enforce the covenants or, ultimately, carry out the works themselves and charge the estate owners for doing |page:125| so. That may, at the end of the day, produce a similar result, but it is hardly consistent with any concept of business efficacy. Further, the officious bystander would be likely, in my judgment, to laugh at such a proposition as being one that I – at least – think is contrary to good sense and justice. That is really the answer to implication based upon the first factor discussed above.

[77] As to the first aspect of the second factor, there is mileage for Mr Fancourt’s argument only if clause 6.1.10 of the 1995 contract was not, as a matter of construction, wide enough to entitle Beazer Homes, and later Persimmon Homes in the actual transfer, to sufficient rights of access to construct the bypass. I am far from certain that the rights were not sufficiently wide. That point was not argued before me. However, it is not necessary to consider it further because, in my judgment, even if the rights under clause 6.10.1.1 were not that wide, this second factor, whether by itself or in conjunction with other factors, does not lead to a conclusion in favour of the defendants.

[78] Let it be assumed that the rights granted were not that wide, so that Beazer Bedford and Mr Stroude did not, in the sale and purchase agreement, deal with all the rights and obligations necessary to implement the eventual planning permission. That fact is, in my judgment, no reason to reach the conclusion that the section 106 agreement does not, even by implication, deal with such rights. In relation to the 1995 agreement, the absence of such rights did not in any way make it unworkable or even lead to surprising conclusions. Further negotiations would have been necessary to enable the planning permission, if granted, to be implemented, but neither party was obliged to anyone actually to implement the planning permission. In contrast, the section 106 agreement created, on any footing, obligations that might become enforceable to carry out the highway works, including construction of the bypass, that is to say, obligations to SCDC and CCC. It is the presence of those obligations, and the consequences of a breach of them, that make the critical difference between the two situations. In my judgment, the provisions of the 1995 agreement are, in the event, of no assistance in construing the section 106 agreement.

[79] As to the other aspect of the second factor, the fact that it is not possible, for reasons that I have already given, to imply any right of access while the Cartwright land remained in the ownership of Mr and Mrs Cartwright does not mean that there can be no implied term as between Beazer Homes and Mr Stroude that has the effect, once Beazer Homes acquired the Cartwright land, of permitting access to it by Mr Stroude (subject to obtaining the necessary approvals and the making of the traffic orders). It is important to remember that Beazer Homes had, by the time of the section 106 agreement, already entered into the Cartwright contract, which therefore forms part of the factual matrix against which the section 106 agreement is to be construed. Under that contract, it was intended, as in fact happened, that Beazer Homes would acquire the Cartwright land. Against that background, I find no difficulty with the concept of an implied term that provides for a right of access to build the bypass, a right that could, of course, be exercised only once Beazer Homes had acquired the Cartwright land from Mr and Mrs Cartwright.

[80] As to the third factor, attractive as the argument is, I do not consider that, in the end, it got Mr Fancourt home. This is because the position under the section 106 agreement of CCC in relation to the CCC land was materially different from that of Beazer Homes in relation to the Cartwright land. One difference is that, at the date of the section 106 agreement, Beazer Homes did not own the Cartwright land and, for reasons already given, it could not be expected that Mr and Mrs Cartwright should be bound to give access to Mr Stroude and Beazer Homes to build the bypass. I do not think that it is correct, in those circumstances, to treat the positive inclusion of a provision creating rights over the CCC land as an indication that no similar rights should be treated as arising over the Cartwright land once it had been acquired by Beazer Homes.

[81] Another difference is that CCC did not have the same liabilities under the section 106 agreement as the other estate owners. Thus, by virtue of clause 7.5, it was not liable, under clause 7.1, in relation to the obligations, nor was it liable under clause 7.2 because it was both a covenantor and a covenantee. The development, both of the residential areas and the business park to which the planning permission relates, was a Stroude/Beazer project in which CCC was not involved. Without an express right of access, there would be no way in which Mr Stroude and Beazer Homes, even acting together, could have compelled CCC to permit the bypass to be constructed on its land and, although the effect of section 106(6) is not entirely clear, it must be open to considerable doubt whether SCDC would have had a right to go onto the CCC land to carry out the work themselves.

[82] Indeed, the inclusion of a right of access over the CCC land in the section 106 agreement supports Mr Hill’s rather than Mr Fancourt’s arguments. That right of access is granted for the benefit of the property (including the entire residential and business development areas) and is granted to “the other estate owners”. Accordingly, each estate owner (and each successor in title) would be able to rely upon the grant over the CCC land to construct the bypass: the estate owners would not, in my judgment, need to act collectively. It is consistent with that position that each estate owner should have an implied right of access to each of his co-obligors’ land for the purpose of complying with their concurrent obligation.

[83] Mr Fancourt had one further argument against a finding of a right of access over the Cartwright land. He said that it would be a fetter on the powers of the local authorities (both SCDC and CCC) if one estate owner were to have what amounts to the power to impose the construction obligations under the section 106 agreement in relation to land that it did not own and that the local authorities might not wish to see implemented. I do not consider that there is anything in this point. I see no reason why an express provision should not be included in a section 106 agreement giving one landowner a right of access to another landowner’s land; indeed, this was what was done in relation to the CCC land. If it can be done expressly, there is nothing in the “fetter” point and nothing to prevent implication of a similar term.

[84] That is enough to dispose of the main issues in the case. However, there is one point raised by Mr Fancourt that was fully argued and that I think I should deal with.

Joint or several covenants and section 82 of the Law of Property Act 1925

[85] Mr Fancourt submitted that if there were anything in Mr Hill’s concurrent obligations argument, it could apply only where the concurrent obligation was a joint obligation and the relevant obligations under clauses 7.1 and 7.2 were several.

[86] As to that, clause 10.7 tells us that where a covenant is given by more than one party, it is on the basis of joint and several liability, subject to clause 6.1, which is set out at [18(e)] above. Prima facie, the obligations of the estate owners are joint as well as several so that, in particular, Mr Stroude and Beazer Homes are jointly liable to SCDC and CCC. But that position is subject to three matters, namely: (a) the fact that the covenantors include CCC (as one of the estate owners), which are also a covenantee under clause 7.2; (b) the fact that, under clause 7.5, CCC are not personally liable in respect of the obligations (other than clause 7.6.3) and thus not personally liable under clause 7.1 in respect of the construction of the bypass; and (c) the effect of clause 6.1 in the light of the fact that two of the original estate owners (CCC and Mr and Mrs Cartwright) no longer own any land.

[87] As to the first of those matters – factor (a) – at common law, not only could a person not covenant or contract with himself, but he could not covenant or contract jointly with himself and others nor could he and others covenant or contract jointly with himself alone. Accordingly, at common law, the estate owners (that is, Mr Stroude, Beazer Homes, Mr and Mrs Cartwright and CCC) could not covenant jointly with CCC, so that, at common law, clause 7.2 could have created only several obligations notwithstanding clause 10.7.

[88] The common law position is affected by section 82 of the Law of Property Act 1925, which provides, in subsection (1):

Any covenant, whether express or implied, or agreement entered into by a person with himself and one or more other persons shall be construed and be |page:126| capable of being enforced in like manner as if the covenant or agreement had been entered into with the other person or persons alone.

[89] Accordingly, it is clear that a covenant by A with A, B and C can be enforced as though A had covenanted with B and C alone. The position in which A, B and C covenant with A is not so clear. Mr Fancourt submitted that such a covenant is not a covenant “entered into by a person with himself and others” since A, in his capacity as covenantee, has not entered into a covenant at all. It is A, B and C alone who, as covenantors, have entered into a covenant, but they have not done so with A “and others” as the section requires. Further, he submitted that this result cannot be circumvented by treating the covenant by A, B and C with A as “an agreement entered into by a person [A] with himself and one or more other persons [A, B and C]”.

[90] I do not agree with Mr Fancourt’s submissions on this point. He asked me, in effect, to read section 82(1) as though, in relation to covenants, it had said “any covenant given by a person to himself and one or more other persons shall be construed etc as if it had been given to the other persons alone”.

[91] Had there been no reference in the subsection to agreements as well as covenants, there would be considerable force in his submission. However, in relation to an agreement, the subsection does not distinguish between a joint right and a joint obligation. If A enters into a contract with B and C jointly, that contract will be likely to give rise to both joint rights and joint obligations. For instance, if A contracts with B and C jointly to sell his property P for a consideration of £X, there is a joint obligation on B and C to pay £X to A and a joint right of B and C to receive a transfer of P. If A and C happen to be the same person, at common law the contract will be void. But, for the purposes of enforcement, section 82(1) treats the agreement as made between A, on the one hand, and B, on the other hand. It is not, I think, possible to treat the “agreement”, for the purposes of that subsection, as meaning only A’s promise to B to transfer P to B (being a promise by A to himself and another), but to treat A and B’s promise to pay £X to A as void (at common law) but not saved by the subsection, leaving the law or equity to intervene in some other way to avoid the obviously incorrect result that A and B can have P without paying for it.

[92] This indicates the approach that I consider should be taken to covenants. The “covenant” being referred to is not simply the promise by the covenantor to the covenantee. Rather, the covenant is the legal relationship that arises as a result of the giving of it by the convenantor. The distinction can, perhaps, most easily be understood by making a linguistic distinction: a covenant can be given by A to B, but a covenant can also be entered into between A and B. The meaning of “covenant” in those two instances is subtly different, a difference that can be seen when one looks at the equivalent contractual position. Take the example above again. It makes perfectly good sense to say that A has given a promise to transfer P to A and B and that A and B have given a promise to pay £X to A. But it is not a normal use of language to say that either one of those promises taken by itself has been entered into between the parties. Rather, it is something larger, that is to say the overall contract containing mutual rights and obligations, which has been entered into between the parties while each separate promise has been given only by one party to the other.

[93] Accordingly, a covenant by A and B with A is enforceable under section 82(1) just as a covenant by A with A and B is enforceable. There is, one might say, a reciprocity of application of the statutory provision. Accordingly, I consider that the notes to section 82(1) in Wolstenholme & Cherry (13th ed) are correct when they say that the subsection overrules Boyce v Edbrooke [1903] 1 Ch 836, relating, among other matters, to tenants’ covenants by joint lessees, one of whom was the landlord (being the tenant for life exercising his statutory powers) and other cases. It follows that the covenants in clause 7.2 and part II of the first schedule are not prevented from being joint covenants because CCC are both a covenantor and a covenantee. Instead, the covenants will take effect as though made by the estate owners other than CCC with CCC.

[94] So far as concerns the second matter, factor (b), in [86] above, it may be that the absence of personal liability on CCC prevents the covenants under clause 7.1 by all of the estate owners, including CCC, from being joint as well as several. However, I see no reason in principle why, even if that is so, the covenant by the other estate owners, as between themselves and SCDC as covenantee, should not be joint and several. Accordingly, clause 7.1 creates a joint obligation on Beazer Homes, Mr Stroude and Mr and Mrs Cartwright either with or without CCC.

[95] So far as concerns the third matter, factor (c), in [86] above, CCC and Mr and Mrs Cartwright have ceased to be liable, by virtue of clause 6.1, under either clause 7.1 or clause 7.2. To the extent that their successors in title are liable, they are liable only to SCDC and CCC (as the relevant local authorities) under section 106(3)(b). It would, however, be wrong, I think, to describe the effect of clause 6.1 as releasing a joint covenantor from his covenant. Rather, the obligation that he enters into in the first place is defined in such a way as to come to an end when he ceases to own any relevant land. Again, I see no reason why the coming to an end of his liability in this way should have any effect upon the nature of the original obligation as between the original covenantors and the covenantee. Accordingly, I consider that the obligations of Beazer Homes and Mr Stroude under both clauses 7.1 and 7.2 remain joint and several.

[96] Even if that were wrong, I see no reason why an agreement should not be able expressly to provide that a joint and several covenant given by more than two covenantors should not retain its joint and several nature when a condition was fulfilled that brought an end to the liability of one of their number. In other words, it would have been perfectly possible for the section 106 agreement to provide that the covenants given by Beazer Homes and Mr Stroude to SCDC and CCC should remain joint and several, notwithstanding the disposal by CCC and Mr and Mrs Cartwright of their land. In my judgment, that is precisely what clause 10.7 achieves.

“Reasonable endeavours”

[97] Mr Hill had a further argument based upon the “all reasonable endeavours” obligation on Persimmon Homes, pursuant to clause 3.3.1 of the 1995 contract and its novation, to ensure the dedication as public highway of such part or parts of the CCC land as shall be required in connection with the construction of the bypass. Mr Hill said that such dedication can be achieved only once the entire bypass has been completed and that, accordingly, the obligation on Persimmon Homes extends to taking all reasonable steps to ensure completion of the entire bypass, including that part passing over the Cartwright land.

[98] Mr Fancourt had two arguments against that conclusion. First, he said that the obligation under clause 3.3.1 was satisfied by the inclusion of clause 7.6.2 of the section 106 agreement, under which CCC, so as to bind the CCC land, undertook with SCDC and the other estate owners on completion of such part of the highway works as fall on the CCC land – that is to say, the section of the bypass passing over the CCC land – to dedicate the same as a public highway. Second, he said that the structure of the Persimmon group is such that Persimmon Homes has no power to ensure that Beazer Homes constructs, or allows access to Mr Stroude to construct, that part of the bypass that passes over the Cartwright land.

[99] Mr Fancourt would succeed on this aspect of the case were either one of those arguments correct. In my judgment, both Mr Fancourt’s arguments were correct.

[100] As to the first argument, he was correct, I consider, in saying that the purpose of clause 3.3.1 was to secure, so far as possible, that the CCC land needed for the construction of the bypass would be made available for that purpose. The bypass would need to be adopted before it could be used as a bypass and, for that adoption to take place, dedication by the landowner, and acceptance of that dedication, of the bypass as a public highway would be necessary. Clause 3.3.1 required Beazer Homes to take reasonable steps to ensure that the land would be available for dedication and that the landowner would in fact dedicate it. Once the section 106 agreement had been made, there was no content |page:127| left in the obligation that the 1995 contract cast on Beazer Bedford since everything reasonable had been done to ensure dedication, in due course, by the landowner (now West Longstanton Developments Ltd). Clause 3.3.1 did not, in my judgment, require that Beazer Bedford should take steps in relation to other land (for example, using reasonable endeavours to obtain access to the Cartwright land) to bring about circumstances in which the highway authority would accept dedication. Accordingly, no obligation in this regard fell on Persimmon Homes pursuant to the novation agreement.

[101] As to the second argument, the group structure of the Persimmon group is such that Persimmon Homes has no control over Beazer Homes. They both have an ultimate parent, Persimmon plc, but Persimmon Homes has no holding, direct or indirect, in Beazer Homes. Mr Hill relied upon assurances given to SCDC that, if reserved matter approval were granted, Persimmon would ensure completion of the approved development of 91 dwellings, including public open space, a village green and ancillary works. On the basis that Persimmon Homes had given this assurance, Mr Hill said that there must exist some arrangement within the group that allowed it to do so and that that same arrangement should now be invoked to enable Persimmon Homes to ensure access for Mr Stroude to the Cartwright land. However, this argument does not stand up to examination because the assurances were given by Persimmon plc and not by or on behalf of Persimmon Homes. There is no evidence, in fact, that Persimmon Homes has any direct or indirect power or influence over Beazer Homes to cause it to allow Mr Stroude to enter onto the Cartwright land in order to construct the bypass. In my judgment, there are no reasonable endeavours that Persimmon Homes can be expected to take in relation to access to the Cartwright land.

Proprietary interest

[102] Finally, Mr Hill submitted that Mr Stroude’s rights in respect of the Cartwright land are proprietary and capable of binding that land either as an estate contract or as an equitable easement; they are not “planning obligations” within section 106(1) because they are not owed to a local authority entitled to enforce them against successors under section 106(3)(b) and (9)(d). They therefore need to be protected on the register of title (not being overriding interests). Mr Fancourt submitted that such rights as Mr Stroude may establish to go onto the Cartwright land arise out of the covenants given to SCDC and CCC and are part and parcel of the planning obligations created by the section 106 agreement. A planning obligation is protected as a local land charge under section 106(11), and there is no need, he said, for further protection on the register.

[103] Mr Hill was right, I consider, in his submission that Mr Stroude’s rights of access to the Cartwright land are not planning obligations, essentially for the reason he gave. Although it is true that those rights arise because, and only because, the estate owners have entered into concurrent obligations with SCDC and CCC, they are, none the less, separate rights enforceable by Mr Stroude and not only by SCDC and CCC.

[104] I also agree with Mr Hill that those rights are proprietary in nature – at least since the time Beazer Homes obtained a transfer of the Cartwright land; I say nothing about the position while Mr and Mrs Cartwright remained owners of the land. Conceptually, in circumstances in which it is for the clear benefit of identified property for its owner to have the right to go onto another person’s land to construct a highway (for example, to comply with a planning obligation relating to the development of that property), that right is capable, I think, of creating an easement for the benefit of that property, even though the highway, when constructed, is to be a public highway and not a private right of way serving that property. Certainly, the section 106 agreement contemplates that this is so, which is why clause 7.6 grants a right of access over the CCC land and purports to do so: (a) for the benefit of the property (other than the CCC land); and (b) so as to bind the CCC land. I do not consider that the fact that the right of access has not yet become exercisable – because the necessary approvals have not been obtained or the traffic orders confirmed – means, as Mr Fancourt submitted, that there is no interest capable of protection on the register; contingent interests in land are none the less interests: for instance, an option to purchase in the future.

[105] Mr Fancourt, however, submitted that, if Mr Stroude has an easement at all, it is not an equitable easement but a legal easement, having been granted by deed, the section 106 agreement being a deed. As such, it is an overriding interest under section 70 of the Land Registration Act 1925 (the LRA) (which was the applicable legislation at the time the caution was lodged in the present case) and therefore not, he said, registrable. Accordingly, a caution should not have been lodged. I do not agree. First of all, section 54(2) provides that a person interested in any land may lodge a caution: there is no exclusion for interests that are overriding interests. Second, section 70(3) of the LRA expressly provides for notice of an overriding interest to be entered on the register, which demonstrates that there is no difficulty in an interest being both the subject matter of a notice and an overriding interest (an aspect that also demonstrates that the interest can be the subject matter of a caution). Third, until protected by registration, an easement created by deed remains equitable.

[106] It follows that Mr Stroude’s rights were capable of protection by notice when he lodged his caution. He was entitled to lodge it, even if it is the case that Beazer Homes has at all times been, and remains, willing to comply with its obligations to SCDC and CCC. The question whether such lodging was premature does not, I consider, arise. This makes it unnecessary for me to consider a large amount of the evidence that went to the circumstances of the lodging of the caution.

Overall conclusions

[107] My conclusions, therefore, are:

(a) Mr Stroude will have rights of access to the Cartwright land for the purpose of carrying out those parts of the highway works that fall to be carried out on that land in accordance with parts II and III of the first schedule to the section 106 agreement, such rights becoming exercisable in accordance with those provisions once the necessary approvals have been obtained and the traffic orders made.

(b) Mr Stroude is entitled to have such rights protected on the register of title.

(c) Mr Stroude had, at all material times, an interest in the Cartwright land that was capable of protection by notice on the register. In the absence of such notice, he was entitled to lodge a caution in respect of it. In my judgment, there is no question of such lodging being “premature” or not.

[108] I will hear counsel on the form of order I should make to reflect the rulings in this judgment.

Declaratory relief was granted.

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