Abbey Homesteads (Developments) Ltd v Northamptonshire County Council and another
(Before Lord Justice LAWTON, Lord Justice PARKER and Lord Justice NOURSE)
Compensation for compulsory purchase — Basis of valuation of land — Appeal from decision of Lands Tribunal in favour of developers on preliminary issues — Essential question, although approached ‘through a tangle of statutory and contractual provisions’, was whether an area of 1.23 hectares, part of land which under an agreement pursuant to section 52 of the Town and Country Planning Act 1971 was to25 be ‘reserved for school purposes’, should be valued as freely available for residential development or as subject to a permanent covenant restricting its use to such purposes only — Lands Tribunal decided that the reservation did not create a restrictive covenant running with the land; that the restriction was of limited duration and did not preclude a valuation under rule (2) of section 5 of the Land Compensation Act 1961; and alternatively that if it did create a restrictive covenant it was one which should be discharged under section 84 of the Law of Property Act 1925 (an application for which had been made by the developers) — Held on appeal to the Court of Appeal that the reservation did create a permanent restrictive covenant running with the land; and that Lands Tribunal was in error in holding that the restriction ought to be discharged — The court rejected submissions that the reservation was not a negative restriction and that it was of temporary effect only — Appeal by district council allowed, the land to be valued as subject to a restrictive covenant — An appeal by the county council from a decision of the tribunal refusing it leave to be joined as an objector to the section 84 application was not challenged in the Court of Appeal, and this appeal was dismissed
This was an
appeal by case stated by the Northamptonshire County Council and the South
Northamptonshire District Council from a decision of the Lands Tribunal (V G
Wellings QC) determining certain preliminary issues in favour of developers,
Abbey Homesteads (Developments) Ltd, respondents to this appeal.
Gavin Lightman
QC, J P Whittaker and Miss Elizabeth Jones (instructed by Shoosmiths &
Harrison, of Northampton) appeared on behalf of the appellants; Martin Graham
QC, M R West and Miss B Schwehr (instructed by Dickins & Batty, of Potters
Bar) represented the respondents.
Compensation for compulsory purchase — Basis of valuation of land — Appeal from decision of Lands Tribunal in favour of developers on preliminary issues — Essential question, although approached ‘through a tangle of statutory and contractual provisions’, was whether an area of 1.23 hectares, part of land which under an agreement pursuant to section 52 of the Town and Country Planning Act 1971 was to25 be ‘reserved for school purposes’, should be valued as freely available for residential development or as subject to a permanent covenant restricting its use to such purposes only — Lands Tribunal decided that the reservation did not create a restrictive covenant running with the land; that the restriction was of limited duration and did not preclude a valuation under rule (2) of section 5 of the Land Compensation Act 1961; and alternatively that if it did create a restrictive covenant it was one which should be discharged under section 84 of the Law of Property Act 1925 (an application for which had been made by the developers) — Held on appeal to the Court of Appeal that the reservation did create a permanent restrictive covenant running with the land; and that Lands Tribunal was in error in holding that the restriction ought to be discharged — The court rejected submissions that the reservation was not a negative restriction and that it was of temporary effect only — Appeal by district council allowed, the land to be valued as subject to a restrictive covenant — An appeal by the county council from a decision of the tribunal refusing it leave to be joined as an objector to the section 84 application was not challenged in the Court of Appeal, and this appeal was dismissed
This was an
appeal by case stated by the Northamptonshire County Council and the South
Northamptonshire District Council from a decision of the Lands Tribunal (V G
Wellings QC) determining certain preliminary issues in favour of developers,
Abbey Homesteads (Developments) Ltd, respondents to this appeal.
Gavin Lightman
QC, J P Whittaker and Miss Elizabeth Jones (instructed by Shoosmiths &
Harrison, of Northampton) appeared on behalf of the appellants; Martin Graham
QC, M R West and Miss B Schwehr (instructed by Dickins & Batty, of Potters
Bar) represented the respondents.
Giving
judgment, LAWTON LJ said: This is an appeal, by way of a case stated, by the
Northamptonshire County Council (the county council) and the South Northamptonshire
District Council (the district council) from a decision of the Lands Tribunal
made on November 9 1984 whereby certain preliminary issues were decided in
favour of Abbey Homesteads (Developments) Ltd (the developers). Stripped of its
legal niceties, the appeal raises three questions. On what basis is 1.23
hectares of land at Towcester, Northamptonshire, which the county council have
compulsorily purchased from the developers, to be valued? Is the compensation to be assessed on the
basis that the land is available to the developers for residential development
or, as both the county and district councils submit, as land which was
‘reserved for school purposes’. The answers to these questions have to be
sought through a tangle of statutory and contractual provisions.
The
development plan of the county council, drawn up in the 1960s, envisaged that
the population of Towcester would increase with the inevitable result that
there would be a need for more houses, schools, open spaces and services of
various kinds. The developers saw opportunities for them in the Towcester area.
Some time before 1976 they bought 13 hectares (34.3 acres) of agricultural land
to the south-east of the Brackley Road (the A43). Between 1969 and 1975 the
developers negotiated with the county council, the then planning authority,
about the development of this land. After the reorganisation of local
government in 1976 the planning authority became the district council. The
developers negotiated with it for planning permission. The negotiations ended
on June 4 1976 with the making of an agreement pursuant to section 52 of the
Town and Country Planning Act 1971 and the grant on the same day of outline
planning permission for ‘residential development (343 units), incorporating
associated open space, a site for a primary school and local shopping
provision’.
Section 52 of
the 1971 Act provides:
(1) A local planning authority may enter into an
agreement with any person interested in land in their area for the purpose of
restricting or regulating the development or use of the land, either
permanently or during such period as may be prescribed by the agreement; and
any such agreement may contain such incidental and consequential provisions
(including provisions of a financial character) as appear to the local planning
authority to be necessary or expedient for the purposes of the agreement.
(2) An agreement under this section with any
person interested in land may be enforced by the local planning authority
against persons deriving title under that person in respect of that land, as if
the local planning authority were possessed of adjacent land and as if the
agreement had been expressed to be made for the benefit of such land.
It follows
that if the agreement was one restricting ‘the development or use of the land’
the district council could enforce it as a restrictive covenant running with
the land. The district council contended before this court that the agreement
did restrict the use of part of the land to ‘school purposes’ and, in
consequence, created a restrictive covenant running with the land which they
could enforce pursuant to section 52(2) of the 1971 Act. The developers
contended that it was not, and, even if it was, it expired with the compulsory
purchase on July 7 1983 by the county council, as the local education
authority, for the building of a primary school. Further, it was void for
uncertainty.
The agreement
recited that the developers had applied for planning permission for residential
development of the land referred to in specified planning applications and that
the district council wished to secure that the development of the land should
be in the interests of the proper planning of the area and be restricted and
regulated in accordance with the provisions of the agreement. In my judgment
the proper planning of a site as large as 34.3 acres and the building of 343
dwelling-houses on it would require the making of provision for a school to be
built and maintained and for open spaces.
Clause 1 of
the agreement was in these terms:
Pursuant to
the provisions of section 52 of the Town and Country Planning Act 1971 the
company agrees declares and covenants with the District Council that from the
date on which planning permission is granted to either of the applications the
land shall be subject to the conditions restricting and regulating the
development specified in the First Schedule hereto in addition to any
conditions or limitations subject to which planning permission may be granted
as set out in the Second Schedule together with any further conditions or
limitations imposed on any appeal by the Secretary of State for the
Environment.
Schedule 1
dealt with various planning matters such as the construction of a road and a
bridge. Para 5 provided as follows: ‘An area of 1.3 hectares adjacent to the
playing field and amenity open space areas shall be reserved for school
purposes.’
The plans
annexed to the agreement did not specify where the 1.3 hectares were to be
reserved by the developers; but the plan annexed to the outline planning permission
given the same day did so in these terms: ‘An area of 1.30 hectares in the
approximate position indicated on the deposited plan 710/2 adjacent to the
playing field open space areas shall be reserved for school purposes . . .’.
The developers can never have been in doubt as to where they were expected to
reserve land for school purposes. Mr Graham took the point on behalf of the
developers that the plan 710/2 could not be used to construe para 5 of the
First Schedule. That may be; but it makes no difference, because the developers
were entitled to build 343 houses on the site and it was for them, subject to
the terms of the outline planning permission, to decide where on the land to
reserve 1.30 hectares for school purposes.
On July 7 1983
the county council made a compulsory purchase order of 1.23 hectares stating it
was for a primary school for 245 children. On June 6 1984 it gave development
permission for the erection of a primary school and unit for 315 children. This
number was probably greater than was necessary to accommodate the children on
the developers’ estate. It was intended to accommodate children from an
adjacent housing estate as well as from the developers’ estate. In my judgment,
this fact does not affect the planning purpose which para 5 was intended to
achieve.
I should add
that on May 25 1983 the developers applied to the district council for a
certificate of alternative development. The district council granted that
certificate. The county council have appealed against the grant. That appeal
has not yet been heard and awaits the outcome of this appeal.
On September
30 1983 the developers applied to the Lands Tribunal pursuant to section 84(1)
of the Law of Property Act 1925 (as amended) for an order that the restriction
imposed by para 5 of the First Schedule to the agreement should be discharged
wholly. Two grounds were put forward. First, that there had been a change in
the character of the property because the making of the compulsory purchase
order had rendered the purpose of the restriction obsolete; and second, no one
entitled to the benefit of the restriction would be prejudiced by its
discharge.
The county
council applied to be joined as an objector pursuant to section 84(3A) of the
1925 Act as amended. The Lands Tribunal refused it leave to do so. The county
council has appealed from that26
decision, but in this court Mr Gavin Lightman on its behalf has not sought to
challenge the Lands Tribunal’s decision on that issue. Accordingly the county
council’s appeal is dismissed.
The Lands
Tribunal decided that para 5 of the First Schedule did not create a restrictive
covenant running with the land, that such restriction as it did contain was of
limited duration and in consequence as a matter of law it did not preclude a
valuation under rule (2) of section 5 of the Land Compensation Act 1961. This
meant that the 1.23 hectares should be valued without reference to the
restriction for school purposes. Alternatively the Lands Tribunal decided that
if para 5 did create a restrictive covenant running with the land it had become
obsolete because of the compulsory purchase order, the entry into possession by
the county council and the grant of authorisation of development for school
purposes. The district council have challenged all these decisions.
The
fundamental finding of the Lands Tribunal was that para 5 did not create a
restrictive covenant running with the land. The learned member, who signed the
case stated, attached importance to the absence in para 5 of any words such as
‘and shall not be used for any other purpose’ and to what he considered to be
uncertainty in the identification of the 1.30 hectares. Mr Graham adopted this
reasoning. In my judgment it is faulty. On a natural reading of para 5 and of
clause 1 of the agreement the developers covenanted with the district council
for the benefit of the land that 1.30 hectares should not be used other
than for school purposes. This covenant was just as restrictive as the seminal
one in Tulk v Moxhay (1848) 2 Ph 774 which was to keep the plot
and land forming Leicester Square Gardens as it was at the time of the
conveyance. Under para 5 all the developers had to do was to refrain from
building on the 1.30 hectares. Of course, if the identity of the land could not
be ascertained, as Mr Graham submitted it could not be, then the covenant would
not bite on any part of the 34 acres. But in this case the identity of the 1.30
hectares could be ascertained, and was intended to be ascertained, by the
developers themselves. Their outline planning permission gave them guidance as
to the area in which they were not to build houses: they were left by the
agreement and the outline planning permission to decide what land should be
reserved and this they did. Once they had done so the land was identified.
Para 5 was
unlimited in time: no period was prescribed for its duration as section 52 of
the 1971 Act allowed. Mr Graham, adopting the reason of the learned member in
the case stated, submitted that para 5, on its proper construction, was
intended to come to an end when the 1.23 acres were acquired by the county
council for school purposes, since its planning objective was then
accomplished. I do not agree. As I have already stated, para 5 was put into the
First Schedule with the object of securing the proper planning of the area. As
long as there were 343 houses on the estate there would be need for a primary
school somewhere on it. The need would be a continuing one. Proper planning for
the area would not have been achieved had the covenant allowed the county
council, or a private person, to start a school on the 1.30 acres, and then,
after a short time, close it down and use the buildings for some other purpose.
The
construction as to duration which I adjudge should be given to para 5 provides
the reason why the Lands Tribunal misdirected itself in deciding that if,
contrary to its decision on construction, para 5 did create a restrictive
covenant running with the land, it was obsolete because its planning purpose
had been achieved and in consequence its discharge would not injure the
district council. As there was a continuing need for a primary school on the
estate, any restrictive covenant running with the land which was intended to
ensure that the need could be met was one for a proper planning purpose. As, in
my opinion, para 5 did achieve a proper planning purpose, Mr Graham’s
submission that any attempt after the county council’s entry on to the 1.23
hectares to enforce it would be ultra vires is misconceived. Enforcement
would achieve a proper planning purpose.
For these
reasons I would allow the district council’s appeal and declare that para 5 of
the First Schedule to the agreement did create a restrictive covenant running
with the land and that it should not be discharged.
Agreeing,
PARKER LJ said: Section 52 of the Town and Country Planning Act 1971 empowers a
local planning authority to enter into an agreement with any person interested
in land in their area for the purpose of restricting or regulating the development
or use of the land either permanently or during such period as may be
prescribed by the agreement. (Emphasis above and hereafter is mine.)
On June 4 1976
the respondents and the district council entered into an agreement which was
not only in fact made pursuant to that section but specifically recited: (a)
that the district council was the local planning authority for the purposes of
section 52, (b) that the respondents had applied for planning permission for
residential development on their land, (c) that the district council wished to
secure that the development of the land should in the interests of proper
planning ‘be restricted and regulated in accordance with this
agreement’, (d) that for that purpose the respondents were willing to enter the
agreement ‘pursuant to the provisions of section 52 of the Town and Country
Planning Act 1971’ restricting and regulating the development of the
land in the manner hereafter appearing.
Furthermore,
the respondents by Clause 1 agreed, covenanted and declared with the district
council pursuant to section 52 that ‘the land shall be subject to the
conditions restricting and regulating the development specified in the
First Schedule’. Para 5 of that Schedule provides simply:
An area of
one point three (1.30) hectares adjacent to the playing field and amenity open
space areas shall be reserved for school purposes.
In the light
of those provisions it appears to me plain beyond all argument that it was the
common intention of the parties to restrict the development of 1.30 hectares of
the respondents’ land in the position specified on a permanent basis. It is
also clear from clause 2 of the agreement that the respondents’ covenants were
intended to bind their successors and from section 52 itself that such
covenants were intended to be enforceable by the district council also on a
permanent basis.
It is
therefore somewhat surprising to find that the respondents should have
contended that para 5 is too uncertain to be enforceable, that it is positive
and not restrictive and cannot therefore run with the land and that it is in
any event of limited duration and expires when the planning objective, namely,
the acquisition of the land for a school, has been achieved.
All three
contentions are in my judgment without foundation. The general position of the
land to which para 5 applied was readily ascertained by the map specifically
referred to in the agreement itself (see para 12 of the Second Schedule). Its
precise boundaries were, it is true, not defined, and it is said that, this
being so and there being no formula to resolve any dispute, para 5 fails for
uncertainty. I see no need for any formula, for I see no room for any dispute.
It was for the respondents to fix the precise boundaries and so long as the
area was in the position defined the district council had no right to object.
This objection fails.
Next it is
said that despite the repeated expressions of intention to restrict development
and the express provision in clause 1 that the land was to be subject to
restrictions, para 5 was positive and not intended to run with the land. It is
said to be positive because it involved a positive obligation to define the
area and reserve it. I have had some difficulty in following this argument and
I reject it without hesitation. One has only to ask the question ‘were the
respondents free to build residential houses on the land?’ to get the answer,
‘No they were not!’ If that is not restrictive I do not know what is. As to the
suggestion that the covenant was not intended to run with the land, I regard it
as being disposed of conclusively by the provisions of clauses 1 and 2, the
recitals and the provisions of section 52.
There remains
on this part of the case only the contention that the covenant was of limited
duration. The alternatives provided for by section 52 are either permanence or
for a period prescribed by the agreement. No period was prescribed in the
agreement. Permanence therefore prevails, at least unless there can be found
elsewhere in the agreement or from admissible surrounding circumstances some
cogent basis for importing a limitation. I can find none.
The
respondents’ contention that the covenant if it existed was of limited duration
is, as I understood it, based on the notion that its purpose was merely to
enable the local education authority to acquire the land for a school and
accordingly that once that authority had acquired it the covenant was spent. If
this was indeed the contention it is in my judgment misconceived. It was for
the district council to determine, as a matter of planning, where they wished a
school to be. It was and is the duty of the local education authority to secure
that there are available for its area sufficient primary and secondary schools.
It is, however, not obliged itself to provide all the schools and it is
specifically empowered by section 6(1) of the Education Act 1953 to make
arrangements for the provision of primary and secondary schools not maintained
by it. There is therefore no reason why the local education authority should
not have made arrangements with, for example, some charitable body that it
should27
purchase the land in question and provide a school. If such a body did purchase
the land but the covenant then lapsed that body would be possessed of land upon
which there was no fetter. Furthermore, even if the purchaser is the local
education authority it by no means follows that the covenant has no further
use, for such authority might, after a time, decide that in accordance with its
duties it could close down one school and wished to close down this particular
school. In such circumstances the covenant could remain of much importance to
the district council.
If then, as I
think, the covenant binds the land, what the respondents had, as soon as the
land was identified, was land subject to a permanent covenant which would
clearly affect its value in the open market. They contend, however, that it
must be valued on the basis that it could be sold on the open market free of
the covenant.
The only bases
upon which, in my view, such a contention could succeed are: (i) if the
covenant had been discharged before the acquisition of the land under the
compulsory purchase order, which it had not, or (ii) if the circumstances were
such as to justify discharge at that time.
The learned
member of the Lands Tribunal considered that it would be or would have been
appropriate to discharge the covenant and this court is asked whether he erred
in law in the grounds upon which he took that view. In my view he did. The fact
that at a particular time the owner or prospective owner of the land does not
wish to breach the covenant or may even be under a statutory duty to comply
with it does not render the covenant obsolete. In the same way the fact, if it
be a fact, that the discharge of the covenant would not at the present time
injure the district council is not to the point. It could clearly in certain
circumstances be of value to them and this being so it does not seem to me
possible to say that its discharge will not injure them.
For the foregoing
reasons as well as those appearing in the judgments of Lawton and Nourse LJJ,
which I have read in draft, I also would allow the appeal of the district
council. I agree that the appeal of the county council should be dismissed and
I agree with the order proposed.
Also agreeing,
NOURSE LJ said: The first group of questions which arise on this appeal is
concerned with the construction and effect of the section 52 agreement which
was made between the district council and the developers on June 4 1976.
Section 52 and the principal provisions of the agreement have already been
referred to in the judgments of Lawton and Parker LJJ and I need not repeat
them.
The first step
must be to construe the material condition in para 5 of the First Schedule to
the agreement. In clause 1 of the agreement, that and the other conditions
specified in the First Schedule are described as conditions ‘restricting and
regulating the development’. Accordingly, the effect of a condition requiring a
specified area to be ‘reserved for school purposes’ is that the development
must be so restricted and regulated that that area is left available for those
purposes. Where then is the specified area to be? The condition prescribes that it is to be
adjacent to the playing field and amenity open-space areas. It assumes that the
situation of those areas is already known. In order to acquire that knowledge
you must look, not at the small-scale plan attached to the agreement, but at
the one of larger scale which was attached to the developers’ application for
planning permission. That application is referred to in recital (3) to the
agreement and the plan is referred to in para 12 of the Second Schedule (see
below). Both the application and the plan are thus admissible for the purposes
of construing the agreement. On looking at the plan, you see that the site
proposed for a school is indeed adjacent to, which means close to, both areas.
It actually adjoins the open space area. It does not adjoin the playing field
area.
Condition 5
thus requires that the school site shall be close to both areas. It does not
require that it shall adjoin either of them. There is therefore some latitude
in the matter and the only real question, so far as certainty is concerned, is
how is the precise location to be determined? In my view that is not a question
which admits of any doubt. The agreement was one whereby the developers agreed
that their development of the land would be subject to certain conditions and
limitations which were required by the district council. Provided that those
conditions and limitations were observed, the developers remained masters of
the situation and could develop the land as they chose. When, therefore, you
find a condition requiring that a specified area shall be ‘reserved’ for certain
purposes, it can only mean that its location is to be determined by the
developers, subject to any requirement imposed by the district council. The
only such requirement is that it shall be close to two other designated areas.
That requirement having been imposed, the parties cannot be taken to have
intended that some different or additional requirement should be imposed,
namely that the district council is to be party to the determination of the
precise location. In my judgment the effect of condition 5 is exactly that
which it would have had if the words ‘in such position as the company shall
determine’ had been added to it.
So construed,
condition 5 cannot be void for uncertainty and the decision of this court in Bushwall
Properties Ltd v Vortex Properties Ltd [1975] 1 WLR 1649, on which
Mr Graham so strongly relied, is readily distinguishable. I should add that,
although a dispute could well have arisen as to whether the site chosen by the
developers was adjacent to the two other areas, the mere possibility of such a
dispute did not render the condition uncertain, since it was of a nature which
the court could, and would if necessary, have resolved.
The next
question is whether the obligation imposed by condition 5, which admittedly is
in form positive, is in substance positive or negative. If, as I have earlier
identified it, the effect of the condition is that the development must be so
restricted and regulated that the specified area is left available for school
purposes, the substance of it is that the development must not be carried out
so as to interfere with that requirement. That is in substance a negative and
not a positive obligation.
Then, it must
be asked, did the parties intend that condition 5 should create a restrictive
covenant whose burden was to run with the land, or did they intend that the
obligation of it should exist only in contract?
The agreement was expressed to be made pursuant to the provisions of
section 52 which, by subsection (1), empowers a local planning authority to
enter into agreements ‘for the purpose of restricting or regulating the
development or use of the land’ either permanently or for some limited period.
As to that, it is worth observing that a developer is by definition someone who
will often soon part with his interest in the land, and it is difficult to see
how its use can be permanently restricted or regulated by obligations existing
solely in contract. Moreover, as was pointed out by Lord Greene MR in Ransom
& Luck Ltd v Surbiton Borough Council [1949] Ch 180 at p 194,
the provision which is now embodied in section 52(2) is clearly designed to
overcome the normal rule that a restrictive covenant can only be enforced
against successors in title of the covenantor if it was made for the benefit of
land which is retained by the covenantee. There would be little point in that
provision if section 52(1) was not concerned, at least in part, with covenants
enforceable against successors in title of the covenantor.
In the
circumstances, the agreement having been expressed to be made pursuant to the
provisions of section 52, it seems that it must be approached in the
expectation that it may have been intended to impose one or more restrictive
covenants whose burden runs with the land. And in clause 1 it is seen that ‘the
land’ is to be subject to the conditions restricting and regulating the
development which are specified in the First Schedule. How then can it be said
that such of those conditions are as negative in substance were not intended to
run with the land, but to exist only in contract?
Mr Graham
sought to answer this question with a series of submissions, many of which
appeared necessarily to involve the proposition that an agreement made pursuant
to section 52 ought not to be construed in accordance with those principles
which govern the construction of all other contracts, but in some special way
appropriate to its planning subject-matter. Any such proposition which goes
beyond a recognition that general principles of construction will always allow
for the subject-matter of a particular contract must be firmly rejected. An
application of those general principles makes it necessary for me to mention
only one of Mr Graham’s submissions on this part of the case. He said that
since the material words in clause 1 of the agreement refer only to conditions
restricting and regulating the development of the land, and not its use, the
First Schedule conditions are shown to be concerned only with planning matters
and must therefore have been intended to exist only in contract. It is possible
that that submission might have had some force had it not been for the
immediately following words in clause 1, sc: ‘in addition to any conditions or
limitations subject to which planning permission may be granted as set out in
the Second Schedule’. Para 12 of the Second Schedule is in these terms: ‘An
area of 1.30 hectares in the approximate position indicated on the deposited
plan 710/2 adjacent to the playing field and amenity open space areas shall be
reserved for school purposes such area to be additional to that referred to in
Condition 9(b)’. The wording of that28
condition is no different from that of condition 5. I would certainly be
prepared to accept that condition 12, like the other conditions in the Second
Schedule, is concerned only with planning matters. But that reinforces, rather
than detracts from, the view that condition 5 is concerned with something else.
The learned member of the Lands Tribunal thought that the purpose of condition
5 was the same as that of condition 12 but, with respect, that does not explain
the presence of both of them, nor of the two distinct sets of words in clause
1. Reading the agreement as a whole, I am in no doubt, on general principles of
construction, that Mr Graham’s submission is incorrect and that the burden of
condition 5 was intended to run with the land.
The final
question in the first group is whether the effect of condition 5 is permanent
or temporary and, if the latter, for what period. The learned member of the
Lands Tribunal thought that it was to endure only until the planning objective
was achieved by the provision of a school site of the specified area. He did
not, I think, give any reason of his own for that view. No doubt he accepted the
argument of Mr Graham, which was to the effect that once the compulsory
purchase order had been made and confirmed the land could not be used for
anything but school purposes and the promise contained in condition 5 had
therefore been fulfilled. I believe that that argument again involves a failure
to give proper effect to condition 5 as distinct from condition 12. Section 52
expressly provides that a restriction may be either permanent or ‘during such
period as may be prescribed by the agreement’. On general principles of
construction a condition whose effect is not expressly limited must be taken to
be unlimited in point of time. Again there would be little point in having a
restrictive covenant whose burden was intended to run with the land if it was not
intended to run permanently.
For these
reasons I am of the opinion that the submissions of the district council as to
the construction and effect of condition 5 are correct. On that footing Mr
Graham raised an entirely fresh point on this appeal, with which it is
convenient to deal at this stage. His submission, as I understood it, was that
if condition 5 had the effect for which the district council contends then it
conferred on the district council a planning gain, ie a gain which could not
lawfully have been secured by conditions attached to the planning permission,
and that it was accordingly ultra vires and unenforceable. There seem to
me to be a number of conclusive objections to that submission, but I do not
think that I should take time to state them, because Mr Graham was unable to
satisfy me that the submission was one in respect of which the district council
might not have wished to adduce evidence if it had been advanced in the right
place at the right time. Mr Lightman’s consent to this point being taken at
this stage was naturally subject to that important proviso.
Having held
that condition 5 created a valid and enforceable restrictive covenant of
permanent duration, I now turn to the developers’ application to discharge it
under section 84(1)(a) or (c) of the Law of Property Act 1925. That subsection,
so far as material, provides that the Lands Tribunal shall have power to
discharge or modify a restrictive covenant on being satisfied:
(a) that by reason of changes in the character of
the property or the neighbourhood or other circumstances of the case which the
Lands Tribunal
may deem
material, the restriction ought to be deemed obsolete . . .; or (c) that the
proposed discharge or modification will not injure the persons entitled to the
benefit of the restriction.
Although on
the view there taken as to the construction and effect of condition 5 it was
unnecessary for the Lands Tribunal to express a view on the application under
section 84(1), the learned member did give an alternative decision on it in the
following terms:
it would be
my decision in the alternative, that the making and confirmation of the
compulsory purchase order, the service of the notice to treat, the entry into
possession of the land acquired by the County Council and the grant of planning
permission to it for school purposes, have rendered the restriction obsolete .
. . I would also be of the opinion that the proposed discharge would not injure
the District Council because, notwithstanding what is said in its notice of objection,
its purpose, as enshrined in the agreement, had been achieved.
With the
greatest of respect to the learned member, it seems to me that these views are
another product of the basic failure to treat condition 5 as being a
restrictive covenant of full effect and independent of condition 12.
With regard to
para (a) the obsoleteness, if it exists, must have come about by reason of
changes in the character of the property or the neighbourhood ‘or other
circumstances of the case which the Lands Tribunal may deem material’. The
general words must be construed ejusdem generis with the particular
words, and it seems to me that the matters relied on by the Lands Tribunal come
nowhere near the genus. Moreover, the test for obsoleteness is whether the
original object of the restriction can still be achieved; see Re Truman,
Hanbury Buxton & Co Ltd’s Application [1956] 1 QB 261 and Driscoll
v Church Commissioners for England [1957] 1 QB 330. In this case we are
presented with the compelling fact that not only is the original object capable
of being achieved; it is in course of actual and flourishing achievement.
With regard to
para (c), Mr Graham submitted that the persons entitled to the benefit of the
restriction are the district council who, since they are not the local
education authority, cannot be injured by the proposed discharge of condition
5. I do not think that that can be correct. It would involve too narrow a view
of the district council’s function. Moreover, I think that in a case like this,
where there is an obvious difficulty in fitting section 52(2) and para (c)
together, the persons entitled to the benefit of the restriction must be taken
to be those who benefit from the permitted use of the land which is subject to
it. They are the children who go to school there and the generations to come,
all of whom would be injured by the proposed discharge. In any event, there is
authority for the view that para (c) is only a long stop against vexatious
objections to extended user; see Ridley v Taylor [1965] 1 WLR 611
at p 622F, per Russell LJ. I certainly do not think that para (c) is a
ground on which it would be proper to discharge the restriction in the present
case.
For these
reasons, which are substantially the same as those which were advanced in the
clear and concise argument of Mr Lightman in this court, I, too, would allow
the appeal of the district council and make the declarations proposed by Lawton
LJ.
I agree that
the appeal of the county council must be dismissed.
The appeal of
the district council was allowed with costs and the appeal of the county
council dismissed with costs; directions given as to reserved costs below.
Appropriate declarations made. Leave to appeal to the House of Lords refused.
A petition
for leave to appeal was subsequently refused by the House of Lords.