British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Morrells Of Oxford Ltd v Oxford United FC Ltd & Ors [2000] EWCA Civ 226 (21 July 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/226.html
Cite as: [2001] 1 EGLR 76, [2001] 04 EG 147, [2001] Ch 459, [2000] EG 96, [2001] 2 WLR 128, (2001) 81 P &CR 13, [2000] EWCA Civ 226
[New search] [Printable RTF version] [Buy ICLR report: [2001] Ch 459] [Help]
Case No: A3/2000/2380
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (LLOYD J)
Royal Courts of Justice
Strand, London, WC2A 2LL
Friday 21 July 2000
LORD JUSTICE SCHIEMANN
LORD JUSTICE ROBERT WALKER
and
SIR RONALD WATERHOUSE
- - - - - - - - - - - - - - - - - - - - -
MORRELLS OF OXFORD LTD |
Appellant | |
- and - |
||
OXFORD UNITED FC LTD & ORS |
Respondents |
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr J Cherryman QC and Mr C Sydenham (instructed by Cartwrights, Bristol BS99 7BB) for the appellant
Mr G Fetherstonhaugh (instructed by Lewis Silkin, London SW1H 0NW) for the 1st, 3rd, 4th and 5th respondents
Ms K Purkis (instructed by Legal and Corporate Services, Oxford City Council, Oxford OX1 4YS) for the 2nd respondent
Judgment
As Approved by the Court
Crown Copyright ©
LORD JUSTICE ROBERT WALKER:
1. This is an expedited appeal, with the permission of the judge, from an order of Lloyd J made on 9 June 2000. By the order the judge acceded to an application made under Part 24 of the Civil Procedure Rules by the first defendant Oxford United FC Ltd ("Oxford United") and the third, fourth and fifth defendants Firoka (Oxford Hotels) Ltd, Firoka (Oxford Leisure) Ltd and Firoka (Oxford United Stadium) Ltd ("the Firoka companies") and dismissed the claim against them by the claimant Morrells of Oxford Ltd ("Morrells"). Indeed the judge went further and also dismissed the claim made by Morrells against the second defendant Oxford City Council ("the City Council").
2. By its claim form (issued as recently as 15 March 2000) Morrells claimed injunctions to enforce a covenant entered into by the City Council in a conveyance dated 23 August 1962 ("the 1962 conveyance"). The appeal is concerned with that covenant and with the effect of section 79 of the Law of Property Act 1925 ("the 1925 Act"). The Firoka companies and Oxford United (together "the purchasers") are concerned in the case as conditional purchasers from the City Council or as prospective lessees of land which (if Morrells is right in its claim) is burdened by the covenant, and will remain burdened by the covenant even after disposal to the purchasers.
3. The background to the matter is that at the beginning of the 1960's the City Council was developing the Blackbird Leys housing estate on the south-east edge of the city of Oxford. It lies just outside the Oxford ring road between Littlemore and the Cowley motor works. The City Council wished to ensure that those who lived on the estate had community facilities, including a church, a health centre, a community centre, a youth club and a public house. The public house, the Blackbird, was to be on Blackbird Leys Road, next to the community centre and backing on to school playing fields.
4. By the 1962 conveyance the site for the public house was conveyed by the City Council (under its then style of the Mayor Aldermen and Citizens of Oxford) to Ind Coope (Oxford & West) Ltd ("Ind Coope"), Morrells' predecessor in title. Clauses 2 and 3 contained covenants on the part of Ind Coope and the City Council respectively. I should set out the opening words of the two clauses in full since much of the argument has been centred on them.
5. Clause 2 began as follows:
"The Company with intent and so as to bind so far as practicable the property hereby conveyed into whosesoever hands the same may come and to benefit and protect the Estate of the Vendors known as the Blackbird Leys Estate but not so as to render the Company liable for any breach of covenant committed after the Company shall have parted with all interest in the property in respect of which such breach shall occur hereby covenants with the Vendors that the Company and its successors in title will at all times hereafter observe and perform the restrictions following in relation to the property hereby conveyed namely ..."
6. There followed two restrictive obligations: (a) that Ind Coope would use the premises to be erected as a public house, and for no other purpose; (this was arguably also a positive covenant, to keep the public house open as a community facility, but no point has been taken on that); and (b) that it would build only in accordance with plans approved by the City Estates Surveyor. There were also three positive covenants: (c) to fence; (d) to make good any damage in connection with a drain to be laid by Ind Coope; and (e) to indemnify the City Council in respect of any non-repair of the drain.
7. By contrast clause 3 was in a much simpler form:
"The Vendors hereby covenant with the Company as follows: (a) For the benefit of the land hereby conveyed that the Vendors will not at any time hereafter permit any land or building erected thereon within half a mile radius of the land hereby conveyed which is in the ownership of the Vendors at the date of this Conveyance to be used as a Brewery or Club or licensed premises for the preparation manufacture supply sale or consumption either on or off the premises of intoxicating liquors."
There followed a positive covenant by the City Council (b) to make up and maintain roads and footpaths and to indemnify Ind Coope in respect of that liability.
8. The football ground where Oxford United play is due to be closed at the end of next season following the Hillsborough disaster and the ensuing Taylor enquiry. In 1996 planning permission was granted for the construction of a new stadium and associated leisure facilities on a site at Minchery Farm, Littlemore. This site had at all material times been owned by the City Council and it is common ground that some or all of it lies within a circle of half a mile radius from the Blackbird public house.
9. Construction of the stadium began in August 1996 but was delayed (because of lack of funding) six months later. Since then the planning permission has been revised twice and the proposals now include an hotel and a leisure centre as well as the football stadium. There is in evidence a conditional agreement dated 4 February 2000 for the development and sale of the site to which the City Council and the purchasers are parties. It shows that the City Council will become `B' shareholders in Firoka (Oxford United Stadium) Ltd and will have blocking powers over certain reserved matters, including the grant of leases. The Part 24 application made on 22 March 2000 by the purchasers was supported by a witness statement of Mr Firoz Kassam, who is a director of all four purchasers which would acquire freehold or leasehold interests in the developed site under complex provisions which it is not necessary to set out in further detail. The application was made on the basis that Morrells' claim for injunctions against the purchasers had no real prospect of success, because (a) the covenant in clause 3(a) of the 1962 conveyance would not bind the purchasers, and (b) the proposed sale by the City Council would not be a breach of the covenant.
10. In his clear and thorough judgment the judge summarised the facts and noted that he was concerned, on the Part 24 application, only with the possibility of the clause 3(a) covenant being enforced against the purchasers (although after he had delivered judgment he also dealt with the possibility of the City Council being in breach after disposal of the site to the purchasers). The Part 24 application might be a knock-out blow to Morrells but it could not be decisive in Morrells' favour, because of other points taken by some or all of the defendants, that is restraint of trade, the contention that the covenant benefits a business rather than land, waiver and estoppel.
11. The judge set out the covenants in clauses 2 and 3 of the 1962 conveyance and observed that they were in very different form. He said that simply reading clause 3(a) in its context (and apart from s.79 of the 1925 Act), he would think that it was intended to relate, and did relate, only to use (of any part of the land for the prohibited purposes) permitted by the City Council itself. I am in full agreement with the judge on that point.
12. The judge then went on to s.79 of the 1925 Act, which is headed "Burden of covenants relating to land" and is in the following terms:
"(1) A covenant relating to any land of a covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself his successors in title and the persons deriving title under him or them, and, subject as aforesaid, shall have effect as if such successors and other persons were expressed.
This subsection extends to a covenant to do some act relating to the land, notwithstanding that the subject-matter may not be in existence when the covenant is made.
(2) For the purposes of this section in connection with covenants restrictive of the user of land "successors in title" shall be deemed to include the owners and occupiers for the time being of such land.
(3) This section applies only to covenants made after the commencement of this Act."
13. The section is a sort of counterpart to s.78 of the 1925 Act (Benefit of covenants relating to land) but whereas s.78 replaced s.58 of the Conveyancing Act 1881, s.79 was new in 1925 (although s.59 of the Conveyancing Act 1881 had touched some of the same ground). Moreover s.78 contains no reference to yielding to the expression of a contrary intention.
14. It is now clear from the decision of the House of Lords in Rhone v Stephens 1994] 2 AC 310, 321-2 that s.79 did not have the far-reaching (and perhaps unexpected) effects which s.78 has been held to have. Section 79 was enacted (in the words of a note originating with Sir Benjamin Cherry, the principal draftsman of the 1925 property legislation, and now found in Wolstenholme & Cherry's Conveyancing Statutes, 13th ed, Vol 1, p.163) in order "to remove conveyancing difficulties in regard to the form of covenants". The most important of those difficulties has been identified (Megarry & Wade, Law of Real Property, 6th ed (C. Harpum) 16-016) as follows:
"The burden of a restrictive covenant will run with the covenantor's land only if the parties so intend. The effect of the section is that such an intention will be presumed unless the contrary is expressed."
On one view it achieves that result because the words which it reads into a covenant are a modified form of the traditional words used by conveyancers before 1926 (see Kemp v Bird (1877) 5 Ch D 974, 976-7): "that the said [covenantor], his heirs, executors, administrators and assigns, shall not [etc]". But that was not common ground on the hearing of the appeal. It is still not clear, as this appeal shows, just how the process of removing that difficulty was intended to operate and how far it was intended to go.
15. The judge seems to have been troubled by this point, on which he did not hear such full submissions as have been made in this court. But the judge did not find it necessary to express a final view on the point, since after discussing the authorities (and in particular Re Royal Victoria Pavilion Ramsgate [1961] Ch 581 and Sefton v Tophams [1965] Ch 1140, [1967] 1 AC 50), he came to the conclusion that the effect of importing the words indicated in s.79 would be to change the covenant in clause 3(a) of the 1962 conveyance "into something rather different or, on Mr Harper's submission, something very different". (Mr Joseph Harper QC appeared below with Mr Colin Sydenham for Morrells; the words just quoted reflect his submission on the point on which the judge expressed no final view.)
16. The outcome was that the judge acceded to the Part 24 application and dismissed the claim against all the defendants, including the City Council. Morrells has appealed to this court (Mr John Cherryman QC leading for Morrells) with an appellant's notice which runs to thirteen paragraphs but whose general contention is that the judge misconstrued the 1962 conveyance and misapplied s.79. The purchasers (appearing in this court, as below, by Mr Guy Fetherstonhaugh) have put in a respondent's notice which challenges the judge's provisional view on the point which he did not decide. The City Council (appearing in this court, as below, by Ms Kathryn Purkis) has adopted the same position, although without having put in a separate respondent's notice.
17. As I have said, I consider that the judge was right in his view that apart from the effect of s.79, clause 3(a) of the 1962 conveyance would operate as a personal covenant only. Its express terms contain no reference to successors in title to parts of the City Council's land within half a mile of the Blackbird public house, apart from the tenuous hint which might be derived from the contrast between "at any time hereafter" and "in the ownership of the vendors at the date of this conveyance". The contrast between clause 2 and clause 3 could hardly be clearer, and Mr Fetherstonhaugh has analysed the differences in detail.
18. It is therefore necessary to consider the effect of s.79. It refers to a contrary intention being "expressed", and Mr Cherryman has placed great emphasis on that word. But in Re Royal Victoria Pavilion Ramsgate [1961] Ch 581, 589, Pennycuick J said,
"But it seems to me the words "unless a contrary intention is expressed" mean rather: unless an indication to the contrary is to be found in the instrument, and that such an indication may be sufficiently contained in the wording and context of the instrument even though the instrument contains no provision expressly excluding successors in title from its operation. It can hardly be the intention of the section that a covenant which, on its natural construction, is manifestly intended to be personal only, must be construed as running with the land merely because the contrary is not expressly provided."
19. Pennycuick J found support for that approach in two decisions of this court on what is now s.62 of the 1925 Act, Broomfield v Williams [1897] 1 Ch 602 and Gregg v Richards [1926] Ch 521. Gregg v Richards (which, we were told, was not cited to the judge) is a fairly striking decision since the grant of an express right of way over a limited strip was held not to be an expression of a contrary intention excluding a larger grant. The Master of the Rolls said (at p.527) that he had to find something unequivocal if he was to conclude that a contrary intention had been expressed. It is however reasonably easy to see how s.62 of the 1925 Act operates where it applies (as Mr Fetherstonhaugh put it, it simply adds parcels) whereas the operation of s.79 is more obscure.
20. Pennycuick J's approach has been followed in some more recent cases. It should be noted that in Re Royal Victoria Pavilion Ramsgate the indications in favour of a purely personal covenant were quite strong: apart from the contrast between the wording of three consecutive clauses, there was the limited duration of the personal obligation (corresponding to the unexpired portion of a lease of the pavilion) and the character of the obligation (requiring the covenantor, which had sold the goodwill of a cinema and a theatre in the town, to "procure" that public entertainment at the pavilion of which it remained lessee was limited to occasional live performances, with no films).
21. The judge approached the possible application of s.79 by a series of steps:
"... first, to come to a view as to the meaning and effect of the clause apart from the Section, then to consider what its effect would be if there were read into it the words needed to satisfy the Section, and then to address the question whether the clause expresses a contrary intention, in the way described by Pennycuick J., so as to exclude the effect of the Section."
22. Mr Cherryman has criticised that as the wrong approach. Instead he has urged on us the approach put forward by Sargant LJ in Gregg v Richards ([1926] Ch 521, 534) (cited and followed by Cross J in Green v Ashco Horticulturist [1966] 1 WLR 889, 895):
"... I think perhaps the way to regard it may be this, to consider that in such a conveyance there is added to the parcels a printed form of words such as you find in the common form printed forms of clause, and that then if the conveyance expresses an intention to exclude, you may consider that printed form of words struck out in ink and removed from the conveyance in that way; while, if an intention is shown to limit or alter the form, the limitation or alteration being introduced in the particular conveyance would of course prevail, according to the ordinary rules of construction of such documents, over the common form which you find in the print."
Similarly Brightman LJ in Federated Homes Ltd v Mill Lodge Ltd [1980] 1 WLR 594, 606 (a case on s.78 of the 1925 Act) made a passing reference to s.79 as having "achieved no more than the introduction of statutory shorthand into the drafting of covenants".
23. Mr Fetherstonhaugh has submitted that whereas the approach put forward by Sargant LJ is appropriate for cases under s.62 of the 1925 Act which are concerned with parcels, it is not appropriate to s.79 because the recommended technique would as it were obliterate the original text, which is all that the court has to go on (apart from the admissible matrix of fact) in order to decide whether or not there is a contrary intention. There is some force in that submission, although it is possible to imagine a comparable problem under s.62 (for instance on a deed of exchange in order to rationalise boundaries; the grant one way might specify easements in detail, with the other wholly silent).
24. In this case as in many comparable cases, any description of the requisite mental process is likely to be metaphorical and inexact. The judicial mind does not in practice proceed in an orderly series of immutable choices in order to reach a conclusion on a question of construction. In practice it scans repeatedly from one point or proposition to another, often forming and rejecting provisional views in the search for the most satisfactory (or least unsatisfactory) resolution. Ultimately there is a single question to be answered, that is whether the words provisionally read in by the statute can, in the commercial context of the particular case and having regard to the words of the particular document, usefully supplement those words, or whether any extended meaning read in by those means would on a fair reading be "inconsistent with the purport of the instrument" (the expression used by Lord Evershed MR in IRC v Bernstein [1961] Ch 399, 412, which is in another line of analogous cases on s.69(2) of the Trustee Act 1925; the two lines finally met in Re Evans [1967] 1 WLR 1294).
25. Apart from the strikingly different form of clauses 2 and 3 of the 1962 conveyance the argument about contrary intention has concentrated on two main areas: commercial realities, and the degree to which consistency (or inconsistency) of style, in a legal document of a commercial character, should be taken as a significant guide to construction. On the first point Mr Cherryman has relied strongly on the commercial improbability of Ind Coope being satisfied with a covenant of a purely personal nature. Mr Fetherstonhaugh has challenged that, pointing out that Ind Coope and Morrells successively have now been protected by the covenant for 38 years, and that it is impossible to know what commercial view Ind Coope took when it bargained for the benefit of the covenant in 1962. The judge did not attach much weight to the argument based on commercial realities, and I think he was right not to do so.
26. On the second point Mr Cherryman relied on what Neuberger J said in Oceanic Village Ltd v United Attractions Ltd [2000] 1 AER 975, 981. Immediately after a citation from Kemp v Bird (1877) 5 Ch D 974, 976-7 (a case on restrictive covenants in a lease) Neuberger J said:
"In my judgment, while it is right to take into account the fact that the draftsman of the lease has departed from, or has omitted part of, a well-established form of words, that will not, at least on its own, normally be a sufficient reason for not giving the words he has used the natural meaning which they would otherwise bear. The fact that the draftsman has used a different form of words in relation to two provisions of a lease concerned with the same concept, in this case the use to which land is not to be put, is also something which should be taken into account when construing either of those provisions, but, again, I do not consider that it should normally justify departing from the natural meaning of either provision.
While it is appropriate for the court to contrast a provision which falls to be construed with a well-established form of words or with the way in which another provision in the lease is drafted, it is also right for the court to bear in mind the way that leases are drafted in practice. It is well known that draftsmen of leases will frequently use many expressions where one will do - see eg per Hoffmann J in Norwich Union Life Insurance Society v British Railways Board [1987] 2 EGLR 137 at 138 and in Tea Trade Properties Ltd v CIN Properties Ltd [1990] 1 EGLR 155 at 158. Furthermore, draftsmen may take the wording of different clauses from different precedents and different clauses may come from different hands."
27. Oceanic Village was a case about a very complex lease (of part of the old County Hall on the south bank). It was cited to the judge who noted its complexity and said of the 1962 conveyance,
"Here I have a short document with two immediately adjacent clauses on one page. Clause 2 is certainly carefully drawn, and it seems to me that clause 3 is as well, and the differences are deliberate and are intended to achieve different results."
28. My view of this appeal has fluctuated. I see force in Mr Cherryman's submissions that (if s.79 is to be excluded) a contrary intention must be expressed, and that (as the Master of the Rolls said in Gregg v Richards) it must be unequivocal. I also accept that in the process of negotiation of a commercial document all sorts of inconsistencies of style may arise to which it would be wrong to attach importance. Nevertheless I have been persuaded by Mr Fetherstonhaugh's excellent written and oral submissions that the contrast between clause 2 and clause 3 of the 1962 conveyance is too stark and too immediate to be ignored. To read into clause 3 words which are not there, but which are in clause 2, would in my view be inconsistent with the purport of the instrument.
29. That is sufficient to dispose of the appeal, so far as the purchasers are concerned (the position of the City Council is considered at the end of this judgment). But since we have had quite extensive argument and citation of authority on the point raised by the respondent's notice and since it is a point of some general interest, I will say something about it, while emphasising that my remarks are not necessary to the decision of this appeal.
30. Where it applies s.79 provides for a covenant of a particular description to be "deemed to be made by the covenantor on behalf of himself his successors in title" (including, if the covenant is restrictive, owners and occupiers for the time being) "and the persons deriving title under him or them" and "shall have effect as if such successors and other persons were expressed". There was some inconclusive debate at the hearing as to the significance of the last dozen words. It is reasonably clear that if in a conveyance of freehold land A covenants with X that no building shall be erected on Blackacre, A (by s.79) covenants on behalf of his successors in title and the others mentioned above, and (by s.78) X's successors in title will get the benefit of the covenant. A's successors in title are not bound by the covenant so as to make any of them liable in damages for breach of covenant. There is no authority for any statutory agency (although Mr Sydenham, following his leader, did make that submission). But each of the successors in title is bound in the sense of being amenable to the equitable remedy of an injunction if the covenant is breached in circumstances in which he or she is responsible.
31. That is in my view the real significance of Powell v Hemsley [1909] 1 Ch 680 (Eve J) [1909] 2 Ch 252 (CA), the facts of which were very unusual. Mr Hemsley purchased some freehold land and covenanted for himself, his executors, administrators and assigns to erect no buildings except houses of a particular description, and in accordance with plans to be approved by the covenantee or his assigns. He had himself complied with the covenant since he had not done any building and he had inserted an appropriate covenant in a building lease of the land which he granted to lessees for a term of 250 years. The lessees breached both covenants and then went bankrupt with an unapproved and half-completed house on the property. Their trustee in bankruptcy disclaimed the lease and Mr Hemsley found himself in possession again. He was sued by an assignee of the original covenantee. That was the context in which Eve J held that Mr Hemsley was not liable for the breach committed by the lessees, since it was not a continuing breach.
32. Eve J said (at p.688) that a covenant by a purchaser for himself, his executors administrators and assigns that he will or will not do a particular act is not equivalent to a covenant that he his executors administrators and assigns will or will not do that act. The decision that Mr Hemsley was not liable was upheld in this court, even though the Master of the Rolls was prepared to assume that the effect of the covenant might be different from that stated by Eve J. But the case gives no support at all for the view that if A (either expressly or by force of s.79) covenants on behalf of his successors in title that he will not build, his successor in title (B) is not amenable to an injunction if he (B) builds. It was assumed that Mr Hemsley's lessees were in breach, but they were bankrupt and no longer in possession of the property.
33. Nor do the other authorities relied on by Ms Purkis appear to me to give any support to that view. Re Fawcett & Holmes' contract (1889) 42 Ch D 150 was a case long before the enactment of s.79, and the wording of the particular covenant was unusually compelling (as Lord Esher MR noted at p.155). Bell v Norman C Ashton Ltd (1956) 7 P&CR 359 was concerned with whether the trustees of the will of the survivor of two deceased covenantees could approve departures from a building scheme. It does not state any principle relevant to this appeal.
34. Although it is always necessary to take proper account of the wording of the particular covenant under consideration, I am not persuaded by any of the authorities cited to us that there is a great gulf (or trap) between a covenant expressed in the passive voice ("no building shall be erected") and one in the active voice ("not to build" or "not to cause or permit to be built") in a case where equity's other requirements (that the covenant is restrictive in nature, and that the covenantee retains land capable of being benefited) are satisfied. (In Sefton v Tophams, discussed below, it was conceded throughout that the covenant could not be enforceable in equity against successors in title of Tophams Ltd, because Lord Sefton retained no other land capable of being benefited, which is why so much attention was focused on the precise extent of that company's obligation. Lord Sefton's boats had been burned and his lawyers had to fight on the limited ground left to them.)
35. My tentative view, therefore (coinciding, I think, with the judge's) is that section 79 (where it applies, and subject always to any contrary intention) extends the number of persons whose acts or omissions are within the reach of the covenant in the sense of making equitable remedies available, provided that the other conditions for equity's intervention are satisfied. Where a restrictive covenant is expressed in the active voice, and s.79 applies, its normal effect is not to turn "A covenants with X that A will not build" into "A and B covenant with X that A will not build". Rather it is that "A (on behalf of himself and B) covenants with X that A (or, as the circumstances may require, B) will not build" (see also Megarry & Wade, 16-037 and 16-038).
36. Sefton v Tophams [1965] Ch 1140 (Stamp J, CA) [1967] 1 AC 50 (HL) is a case which calls for careful study although it was ultimately decided on what Lord Guest called a "very short point". On that point five of the nine judges who considered the matter (including Lord Reid and Lord Wilberforce) would have decided it in favour of the Earl of Sefton, but the other four included a majority of the House of Lords and so Tophams Ltd ("Tophams") was successful. The essential point was whether the word "permit", in the third schedule to a conveyance executed in 1949 from Tophams to Capital and Counties Property Company Ltd, covered a sale for the purpose of future building development which Tophams would not, after the sale, be able to control. The House of Lords was split over how wide a meaning should be given to a personal covenant not to permit specified land to be used otherwise than for horse racing purposes: see (in the majority) Lord Hodson at p.64, Lord Guest at p.68 and Lord Upjohn at p.75 and (in the minority) Lord Reid at p.62 and Lord Wilberforce at p.83. However (as Lord Reid explained at p.61) the question whether the covenants were intended to run with the land was material as part of the commercial context in which the narrow issue of the meaning of "permit" had to be decided. It was known that Lord Sefton did not at the date of the writ own any land capable of being benefited by the covenants, but it was unclear (see at pp.81-2) whether that had been the state of affairs in 1949 also.
37. All their lordships' speeches, and in particular their (fairly cursory) references to s.79 of the 1925 Act have to be read in the light of the limited scope of what they had to decide. Attention was focused especially on a passage in the speech of Lord Upjohn at p.73, and two passages in the speech of Lord Wilberforce at pp.81-2. The judge set out the three passages in his judgment and said that Lord Wilberforce's observations made him hesitant about what would otherwise have been his view as to how s.79 operates.
38. Lord Upjohn said (at p.73) that the lower courts had placed too much significance on the impact of s.79. It had become common ground in the House of Lords that so far as relevant to the issue to be decided (a qualification which may be important),
" ... it does no more than render it unnecessary in the description of the parties to the conveyance to add after the respondent's name: "his executors administrators and assigns," and after Tophams' name: "and their successors in title." This can really have little or no weight in considering the liability of Tophams' assigns in relation to a restrictive covenant affecting land."
The first of these two sentences seems to be describing the joint effect of s.78 and s.79. It raises the interesting possibility (on which neither side based any submission) of cutting the knot of the question "where in clause 3 are the statutory words to be read in ?" with the answer "not in clause 3 but after the words `hereinafter called the Company' in the sixth line of the 1962 conveyance" (but that solution might raise new problems). The second sentence is one that I find very difficult to understand, since the liability of Tophams' assigns was not an issue.
39. Lord Wilberforce's first observation (at p.81) was that s.79 did not have the effect of causing Tophams' covenants to run with the land, but merely extended the scope of Tophams' covenants. In the context in which that observation was made, it is unexceptionable. Section 79 is concerned with only one of the three basic conditions which have to be satisfied if the burden of a restrictive covenant is to run with the land. Lord Wilberforce was not concerned with the issue discussed in paras 30 to 35 above. Powell v Hemsley was cited in the House of Lords (and is indeed referred to in the speech of Lord Wilberforce at p.86), but on a quite different point, that is this court's approval of part of what Lopes LJ said in Hall v Ewin (1887) 37 Ch D 74, 82.
40. Lord Wilberforce's second observation (at p.82) was as follows (referring to the judgment of Russell LJ in this court, [1965] Ch at p.1199),
"And, lastly, Russell LJ refers briefly to Section 79 of the Law of Property Act 1925 `for what it is worth'. This is very little, in my view, since it is not concerned with imposing covenants on the land or on purchasers, but with the liability of the covenantor."
I do find this observation quite puzzling, but I think it must be taken in the same context as what had preceded it. Section 79 is concerned with simplifying conveyancing by creating a rebuttable presumption that covenants relating to land of the covenantor are intended to be made on behalf of successors in title, rather than be intended as purely personal. That is a necessary condition, but not a sufficient condition, for making the burden of the covenants run with the land.
41. There remains Morrells' appeal against the judge's dismissal of the claim against the City Council. These proceedings have been conducted with commendable speed but in the course of them some procedural niceties have been overlooked. Morrells' claim form issued on 15 March 2000 claimed against the City Council an injunction restraining it from permitting any of the purchasers to commence any development on the Minchery Farm site in breach of the covenant. Since seeing the conditional development agreement and the degree of involvement by the City Council which it discloses, Morrells wishes to obtain permission to amend and widen its claim.
42. The Part 24 application was made on 20 March by the purchasers, but notice of the application was given to the City Council. The City Council did not make its own Part 24 application but Ms Purkis was instructed to attend the hearing before Lloyd J. She put in a skeleton argument and appeared at the hearing. The judge reserved judgment overnight and on Friday 9 June gave the judgment of which we have an approved transcript. We do not however have any transcript (approved or unapproved) of the discussion after judgment in which the judge decided, in exercise of his case management powers, to dismiss the claim against the City Council also, a decision which is reflected in his order (sealed on 14 June). It does not appear that the question of any amendment of the claim against the City Council was raised on 9 June. Mr Sydenham has now formulated an amendment to the claim form (but not to the particulars of claim).
43. On the material before him on 9 June, the judge was entitled to come to the view that the claim against the City Council, as then formulated, had no real prospect of success, and to exercise his case-management powers as he did. But in all the circumstances as I have described them I think it would be unfair not to give Morrells an opportunity of amending its claim in the light of what has now been disclosed. I express no view at all as to the prospect of success of an amended claim; this court was not taken far into the complexities of the conditional agreement.
44. Mr Cherryman indicated that although his client would prefer not to have to start new proceedings, that course would not be unduly onerous so long as they were not liable to be struck out as an abuse of process. Since four of the five defendants are (subject to any further appeal) ceasing to be parties, and reformulation of the claim against the City Council will probably require quite extensive amendments, I consider that the better course would be to leave the judge's order undisturbed but to express the clear view (as I do) that new proceedings by Morrells against the City Council would not, in all the circumstances, be an abuse of process.
45. For these reasons I would dismiss this appeal.
Sir Ronald Waterhouse:
46. I agree.
Lord Justice Schiemann:
47. I agree that this appeal ought to be dismissed.
48. As to the appeal in relation to Oxford City there is nothing which I wish to add to the reasoning of Robert Walker LJ.
49. So far as the appeal in relation to the other respondents is concerned, I incline to approach s.79 as being concerned not with the substance of any covenant but rather with the persons who are burdened by it. I thus have some hesitation in accepting, as did the judge and as does Robert Walker LJ, that s.79 permits the modification of clause 3(a) so as to insert, not merely the words which I have italicised, but also the words which I have emphasised and so as to make it read "The Vendors their successors in title and the persons deriving title under them hereby covenant with the Company as follows ... that the Vendors their successors in title and the persons deriving title under them will not at any time hereafter permit ... ".
50. In relation to contrary intention being expressed, I consider that the approach of Pennycuick J quoted by Robert Walker LJ, in his paragraph 18 is the correct approach. When examining the question of intention, I find it helpful to compare the Conveyance as executed and a notional conveyance assumed to have been modified by s.79 (either in the narrow manner which I tend to prefer or in the wider manner which appealed to the Judge) and then to consider whether the notional conveyance is manifestly at variance with the intention revealed in the executed conveyance.
51. Whether the notional conveyance takes the form postulated by the Judge or that postulated by me, I consider that it is manifestly at variance with the intention revealed in the executed Conveyance. That being so, it is not necessary for me to express a concluded view on the question on which I instinctively differ from those whose experience in this field exceeds mine.
Order: Appeal dismissed with appellant to pay the costs of each
respondent. Leave to appeal to the House of Lords.
(Order does not form part of approved judgment.)