R v Westminster City Council and another, ex parte Leicester Square Coventry Street Association Ltd

Restrictive covenants — Decision to grant 999-year lease to London Electricity Board — Construction of underground electricity substation — Judicial review — Whether construction would breach covenants — Whether covenants enforceable — Whether failure to consider duty to uphold covenants — Whether disposal ultra vires local authority’s powers — Application for judicial review failedThis was an application for the judicial review of a decision of the respondent local authority to grant a 999-year lease of land in and under Leicester Square, London, for the construction of an underground electricity substation. The applicant association contended that the respondents’ freehold interest in the square was subject to the burden of a restrictive covenant against building works imposed in a conveyance of 1874; they also submitted that the benefit of the covenant was annexed to the ownership of the dominant land and the owner of that land could enforce the covenant. In deciding to dispose of the lease for a purpose that would necessarily amount to breach of the covenant, it was submitted that the respondents had failed to consider their duty to uphold the covenant and that their power to grant the lease under the Local Government Act 1972, section 123, was proscribed by section 131. Section 131(1) provides that a local authority has no powers under the 1972 Act to dispose of land “in breach of any … covenant … which is binding upon them …”. Held The application was refused. It was clear from the language of the covenant that the burden was intended to run with the land; the same language showed that the benefit was annexed to the covenantee’s land in accordance with established principles. Once annexed, the benefit of the covenant would have passed with the title of the benefited land and, subject to notice, the burden passed through the dispositions to bind the respondents’ interest. However, the restrictive covenant of 1874 related to the use of the land and not to its disposal. Although the construction of the electricity substation would be a breach of the covenant, the grant of the 999-year lease would not itself be a breach. The breach of the covenant would be caused, not by the respondents, but by the London Electricity Board. Section 131 of the 1972 Act excepted from the enabling power in section 123 the disposal of interests in land in breach of covenant; it did not prohibit the post-disposal use of land in breach of covenant. Accordingly, there was nothing to prevent the respondents from disposing of their land irrespective of the purpose or underlying obligation of the disposal. The respondents were entitled to use their power in section 123 to grant the intended lease. Lawrence v South County Freeholds Ltd [1939] Ch 656 considered. David Mole (instructed by Osmond Gaunt & Rose) appeared for the applicants; John Colyer QC and John Furber (instructed by the solicitor to Westminster City Council) appeared for the first respondents; and Nigel Jones (instructed by the solicitor to the London Electricity Board) appeared for the second respondents.