England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
(HIS HONOUR JUDGE MCCAHILL QC)

		Royal Courts of Justice Strand London, WC2
		28th June 2004

Monday, 28th June 2004
1. LORD JUSTICE BUXTON: The notice of appeal in this case was one day out of time. We had a full and proper explanation and apology from the solicitors concerned. Mr Jones QC for the respondent was, in our view, properly neutral as to the application to extend time and we granted it earlier today.
2. We are told that in 1972 the Telford Development Corporation acquired an area of property known as the Donnerville Estate. Enquiries, including enquiries from the bench, have not in fact revealed what the whole extent of that estate was. We are concerned with three plots on that estate that may or may not have comprised the whole of the area that was acquired by the Development Corporation.
3. Those plots are as follows. Plot 1 was, like the other plots, sold in 1988 by the Development Corporation, in this case to a Mr Michael James Smith, who in turn sold that property to the claimant in this case, respondent to the appeal, Mr Wayne Jason Martin. A house was built on that plot, to which we will have to return.
4. Plot 2 was sold to a Mr and Mrs Eastgate. They also built a house on that plot, but there was a large area of it left which was not developed. We will have to return to that as well.
5. Plot 3 was sold to a Mrs Wilson who erected a house there called 'Montrachet'. That plot also plays a small role in these proceedings.
6. All three conveyances in respect of each plot contained the clause which is the subject of these proceedings. It is argued, and the judge accepted, that that clause restricts the purchaser, and his successors in title, to the erection of one dwelling house and one dwelling house only on the plot.
7. We were also taken to the sale contract between Telford and Mr Smith entered into on 6th April 1988, that is to say, shortly before the conveyance in respect of that plot, which was made on 16th June 1988. For present purposes clause 12 of that contract provided that the purchaser must:

"... forthwith begin and diligently proceed with the carrying out of the development of the said land by the erection at his own expense of a single private dwellinghouse..."

Completion of that dwelling house was to follow within a period of 18 months. Detailed requirements were laid down as to the approval by the Development Corporation of the house that was to be built. That house was indeed built, and it is the house in which Mr Martin now resides.

8. The present defendants, the appellants in this court, entered the picture later on. They now own part of plot 2 upon which they wish to build 12 houses, and have already built what was described as a show house, associated with the intended estate of 12 houses, on part of plot 3, plot 3 already accommodating the house 'Montrachet'. We were also told, though this consideration plays no part in the construction summons with which the court is involved, that the building on plot 2 is well advanced.
9. If the covenant with which we are concerned limits the development to one dwelling house per plot, the defendants are in breach, both in respect of their intended and partly carried through building on plot 2, and also in respect of their, as we understand it, completed building of the show house on plot 3.
10. Mr Martin claims the benefit of the restrictive covenants that were contained in the conveyances of plot 2 and plot 3. That he can claim that benefit is not conceded in these proceedings, and for my part I was not entirely clear that so far it has been pleaded, but the parties have agreed to proceed for the moment as if Mr Martin indeed has the benefit of that covenant. The question is what the covenant means.
11. The issue is as to the construction of one clause in the sixth schedule to the conveyance which contains a restriction. The restriction reads as follows:

"... not to use or permit or suffer any buildings erected thereon or on any part thereof to be used for any other purpose than as a private dwellinghouse either with or without garages and other necessary outbuildings"

12. A preliminary issue was ordered in the following terms:

"Whether the indefinite article 'a private dwellinghouse' contained in the restrictive covenant set out in paragraph 5 of the Particulars of Claim is to be construed as a limitation of number or whether the restriction is merely to be construed as being as to the manner of use."

13. For completeness, that preliminary issue should properly refer to the restrictive covenant referred to in paragraph 5 of the Particulars of Claim, not the restrictive covenants set out in paragraph 5 of the Particulars of Claim: because the recital in paragraph 5 is not wholly accurate.
14. In approaching a construction question of this sort the court will be concerned with three aspects of the issues. The first two are to some extent intertwined. They are the literal wording of the clause, and the factual matrix in which it was formulated.
15. The third aspect of the matter is any authority that binds or guides the court in matters of construction. Both Mr Jones QC and Mr Brock QC, who appears for the appellant (I should interpose that neither appeared below), properly agreed that authority did not in this case bind us, and was not likely to bind a court in any construction matter unless it was authority directly on the very clause in question. However, I will refer, at the end of the judgment, to two cases that might be thought to touch on the present matter.
16. I turn to the literal wording. It is necessary to look at not merely sub-paragraph (c) of the sixth schedule, but also the context in which it finds itself following on immediately as it does from sub-clauses (a) and (b):

"(a) Not without the consent in writing of the Corporation within a period of five years from the date hereof to erect any buildings structure or erections on or to lay any sewers or drains in the land hereby conveyed other than in accordance with plans elevations sections specifications and detailed drawings approved by the Corporation nor to alter the external parts of any such buildings structures or the external elevations thereof

(b) Not to erect any gates boundary walls and fences of any dwellinghouse erected or to be erected on the said land other than in accordance with the plans elevations sections specifications and detailed drawings approved by the Corporation and to keep all such gates boundary walls and fences in good repair and condition

(c) Not at any time to carry on or permit or suffer to be carried on the said land or any part thereof or in any building or buildings erected or to be erected thereon any trade or business whatsoever and not to use or permit or suffer any buildings erected thereon or on any part thereof to be used for any other purpose than as a private dwellinghouse either with or without garages and other necessary outbuildings"

17. I take those in turn. Sub-clause (a) is limited by time, a matter to which I shall return, and on its face clearly envisages the presence of multiple buildings, buildings being in several places referred to in the plural. If the permitted erection on the site were limited to a single dwelling house, I do not see how the clause could be drawn in those terms. It would have to refer specifically to the single dwelling house, the dwelling house limited in number by sub-clause (c). But it could not, in any event, be read as referring to a single building so limited by sub-clause (c), even overlooking the problem about the exact wording. That is because sub-clause (c) is limited or prohibits a purchaser from "not at any time" doing whatever it is that is forbidden. If the only building that is permitted is one dwelling house, it seems incoherent to limit the appearance clause, in respect of that building, to a period of 5 years. I shall return to another aspect of that argument later in the judgment.
18. Secondly, clause (b) refers to "any" dwelling house as clause (a) refers to any buildings. It was argued before the judge that the natural meaning of that was of multiple buildings or dwelling houses. That, in my view, is indeed the natural meaning.
19. It was argued below, and the argument was persisted in here, that an explanation of the expression "any dwellinghouse" referred to either the original dwelling house or any dwelling house that was erected to take its place: for instance, if there were fire, collapse (not unknown in the part of the world in which the estate is situated), or, I suppose, a change of taste requiring a different sort of dwelling from that originally erected. I quite accept that that is a possible explanation of this expression, but it is by no means the most obvious explanation, nor is it the literal explanation. And there is another reason which I shall again come to later why that argument conflicts with another argument adopted on the part of the respondents.
20. I have already referred to the difference between the periods to which clause (a) and clause (c) relate. In my judgment the explanation for that difference is easy to find. Sub-clause (a) is a planning and appearance clause. Sub-clause (c) is a user clause. The first part of that clause provides for there to be no trade or business carried on, whether on the land or in any building on the land. That reference to trade in the buildings may strictly be redundant, but one can see why it is included. As Goulding J remarked in Re Endricks' Conveyance [1973] 1 All ER 843, redundancies may sometimes serve the useful purpose of increasing clarity.
21. The second part of the clause with which we are directly concerned refers to there being no use of the buildings other than as "a" private dwelling house. Contrary to an argument that the appellants were minded to put, or at least as I understood it, in my judgement that second part of the clause reads on naturally from the first part of the clause. It is not divided from it by any punctuation, let alone stands as a new sentence, and it is most naturally to be understood as the same type of provision, and as part of a single clause, addressing the same subject matter as the first part of the clause. "Use as private dwellinghouse" is, in my judgement, a phrase that easily refers to the presence and use as such of several dwelling houses.
22. Contrary to a view expressed in one of the authorities, which again I shall come to, I do not think that the expression "a" does carry any necessary implication of singularity. "A" is an article, not a number. When, as here, one is concerned with how any particular building shall be used, a natural way of expressing that is "use as a private dwellinghouse."
23. If the draftsman had wanted to say, "Build one dwellinghouse and one dwellinghouse only", he would have needed to take at least the following steps. First, unless he was going to produce a draft that was extremely confusing, he should put that clause separately in the covenants from the user clauses. Secondly, he would have to refer to the erection of one dwelling house only, not to the use of buildings, extant or to be built. Third, he would not refer to the use of buildings in the plural.
24. That plurality is to be found in other sub-clauses of this covenant, for instance in clause (m), "not to erect construct or permit or suffer to be erected or constructed any dwelling building or other erection..." within a certain area, and elsewhere in the covenants. I would not regard that latter consideration as dispositive if it went against the natural meaning of the rest of the covenant, but it does not. It fits in very easily with the natural meaning of clause (c).
25. That, then, is the natural meaning, of the words that were used. Is that conclusion altered by any reference to the factual matrix or objectively the aim of the contract? One has to remember, when looking at issues about the factual matrix, that although reference to that matrix is not limited to cases where the words are clearly ambiguous, the first place where one expects to find the meaning of the words and the intention of the draftsman is in the words themselves. If they yield a fairly clear solution, and in my judgement these words do, then one has to pause long before concluding that at that point the draftsman has used words with a meaning that do not fit in with the objective that he was seeking to attain.
26. I turn to the three matters that have been deployed in this respect. First of all it is argued that the covenants were part of a building scheme. That is based not only upon the circumstances, but on recital (3) in the conveyance which sets out the intention of the Corporation, when selling one or more of the plots forming the estate, to covenant with the purchasers in the same terms in respect of each plot, or words to that effect. But if it is a building scheme one still has to ask: a scheme to produce what? What is intended to be produced is to be found in the covenants: so that issue takes us straight back to the question of construction.
27. Secondly, clause 12 of the sale contract, to which I have already referred. That cannot have any direct effect on this matter because it operates only between the original parties. It is not clear, and is not conceded, whether such a clause, which we have only seen set out in the contract between Telford and Mr Smith, in fact stood in the contracts with the other parties, but I am prepared for the moment to proceed on the assumption that it did.
28. The judge, however, found little to help him in respect of a pure issue of construction on that from this clause. He said this about it at paragraph 73 of his judgment:

"... I remind myself that the contract merely indicated what it was that the purchaser was obliged to do, namely build a dwelling house within eighteen months. It does not necessarily follow that, because he was required to build a dwelling house within eighteen months, there was necessarily any restriction on what otherwise could be done with that plot of land."

29. I respectfully agree. The clause cannot be used to determine the meaning or implications of the clause in the conveyance. But that clause does seem to have played a part in influencing the judge towards another aspect of what he perceived to be the matrix of these clauses. That is what I would venture to describe as the prestigious development issue. That is set out by the judge in paragraph 87.2 of his judgment. He said this:

"It is likely that what was intended here was a prestigious development. Having regard to the plans that have been put before me and the delineation of the park, it is inherently probable, in my judgment, that a prestigious development of this kind envisaged a small number of highly cherished plots. Each plot was to have a large expanse of garden which enhanced a significant dwelling house. I find that to be inherently probable."

30. Mr Jones adopts that approach and says that it is indeed inherently probable that what was intended between Telford and the original purchasers, and therefore what has been transferred to the subsequent purchasers through the covenants, is that these three plots, large as they are, should accommodate only one house of the prestigious sort that was built by Mr Smith. It is inconsistent with that objective that the plot should be further developed by the addition of extra and no doubt smaller, less prestigious, dwellings.
31. There are a number of difficulties about that argument. First, if all that was permitted was the clause 12 prestigious dwelling house, one would expect that to be reflected expressly in the covenant. One would also expect there to be set out in the covenant a more precise description of what that dwelling house was supposed to look like. There is no indication of that at all in the covenant itself.
32. Second, the obligation in sub-clause (a) of clause 6 overlaps with the obligation in clause 12 of the sale contract to erect a dwelling house only in accordance with plans approved by Telford. Mr Jones said that clause 6(a) could be explained by the possibility that matters such as garages and other ancillary buildings would be erected subsequently to the prestigious dwelling house. The difficulty I find with that argument is, firstly, the reference to "any" buildings in clause 6(a); and, secondly, the puzzle as to why, if that is the intention, the limitation in clause 6(a) is again only for five years. Why does it not adhere for the whole of the time that Telford wishes to control, or is said by the respondent to wish to control, the nature of the building on this plot?
33. Third, I have already mentioned the reference to "any" buildings. The claimant says, as we have already noted, that the word "any" refers to replacement buildings, or may do. But that immediately poses the question of why that control is limited to a period of 5 years in clause 6(a). If it was intended that not only the originally erected building but also any replacement should fulfil the alleged original purpose of a prestigious dwelling and nothing else, one would expect there to be explicit control over a period of time or for all time over any building that replaced the original building.
34. Fourth, as my Lady pointed out in the course of argument, however prestigious the building might be, and we have been told some information about at least one of the buildings that suggests a high quality of provision, the resident might well wish to have within it a granny flat, or to have in its grounds a gardener's cottage or other accommodation of that sort, completely consistent with a high-class residential single property. Mr Jones frankly accepted that his construction of clause 6(c) would prevent that happening: it prevented from the start any form of such provision in the dwelling house.
35. That, I have to say, it seems to me, is inherently improbable. As with all these arguments, the construction put by the respondents upon these parts of the covenant and contracts cannot be said to be an impossible one, but it is not nearly pressing enough, and the explanation of these anomalies is not nearly clear enough, to stand against the clear wording of the original clause. I for my part, therefore, do not get any help from the factual matrix in offsetting or illuminating the conclusion to which the words of the actual covenant drives me.
36. I turn, finally, to the question of authority. As I have already said, both sides, and particular Mr Jones, very frankly accept that there is no authority that takes us to any particular conclusion. I will mention only two cases. The first is a case in this court, Dobbs v Linford [1953] 1 QB 48. That was a case of a landlord and tenant covenant where the tenant covenanted:

"'... not to use the said premises for any purpose other than as a private dwelling-house And not to sublet or part with the possession of the premises (except as a furnished house) without the consent in writing of the landlord...'"

37. The tenant had in fact sub-let the top floor of the demised premises to the defendant as a self contained flat. This court held that the sub-letting of part of the demised premises was a breach of the covenant not to use the premises for any purpose other than as a private dwelling house.
38. Romer LJ, at page 51, set out and approved the approach of the County Court judge. He said this at page 51:

"He held that the covenant not to use the premises for any other purpose than as a private dwelling-house was an obligation on the tenant to use the premises for that purpose and for that purpose only and that it could not be said that she was complying with that obligation if she were using part of the dwelling-house as a private residence for herself, and was subletting another part to somebody else, even if that other person was using it, and was bound to use it, as a private residence.

"The ground on which the judge arrived at that conclusion was that the phrase 'a private dwelling-house' envisages the use of the whole building as one dwelling-house, and therefore it creates a conception which is broken by, or is inconsistent with, the division of the house into more than one residence."

39. Then at page 52 the Lord Justice said, just towards the bottom of the page:

"It seems to me, then, that one has to take this covenant as one finds it, and one finds that it is a covenant to use the premises for no other purpose than that of a private dwelling-house, and one finds, and it is not in dispute, that it has been used by the tenant, partly as a dwelling-house for her sub-tenant. That appears to me to be a plain breach of covenant, which is not rescued from being a breach of covenant by the conception to which I have referred, that she impliedly had the right to sublet that part of it."

Harman J placed emphasis on the fact that the covenant to use as a private dwelling house was followed by a covenant not to sub-let the whole. He held that a covenant against sub-letting of a part was already provided for in the covenant not to use otherwise than as one single dwelling house. Evershed M.R. agreed with the construction of the County Court judge.

40. There were two possible reasons why the tenant had breached the covenant. Firstly, a sub-letting for any purpose would not be a use of the premises by the tenant as a dwelling house. The whole building had to be used by her as one dwelling house. Secondly, the splitting up of the property into two dwelling houses was not the use by the tenant of a single dwelling house.
41. It seems to me that this case has not a very great deal to say about our own case, where the question is not as to the use of an extant dwelling or building, but whether more than one building can be erected, each of those buildings separately to be used as "a private dwellinghouse."
42. Dobbs v Linford was referred to and relied on in the more recent case, Crest Nicholson Residential (South) Ltd v McAllister [2003] 1 All ER 46, a decision of Neuberger J as he then was. That was a vendor/purchaser covenant where the covenant was not to use the premises, "for any purpose other than those of or in connection with a private dwellinghouse."
43. The judge held that the covenant just set out prevented the erection of more than one dwelling house on a plot. He emphasised the importance of the wording of the particular covenant and its circumstances, but expressed two general views with which, with great deference, I do not find myself able to agree.
44. The first was that the use of the indefinite article "a" connotes or may connote some form of singularity. As I have already ventured to say, I do not accept that view. The expression "a private dwellinghouse" takes its nature from its context. It does not have any fixed connotation of singularity irrespective of whatever the context may indicate.
45. Secondly, the judge indicated that it was desirable that, for the guidance of practitioners, words used in covenants should have a consistent meaning. That, of course, I would respectfully agree with. But he also expressed the view that in Dobbs v Linford at least an assumption had been made, subject of course to the context, that the expression "a private dwellinghouse" indicated the limitation of the property to one dwelling house and no more. I do not find myself able to regard Dobbs v Linford as expressing, or coming near to expressing, any form of lexical understanding of the expression "a private dwellinghouse." As I have endeavoured to say when dealing with that case, it is heavily dependent upon the circumstances of the clause, and more particularly upon the obligation as to user imposed on the tenant. But in any event, Neuberger J did not indicate that he was in any way constrained in all cases by any understanding of Dobbs v Linford because in paragraph 25 of the judgment he said this, at page 54c:

"If, as in the case before me, a plot cannot be used other than for the purposes of a dwelling house, then, as I see it, the covenant is directed to the plot as a whole. If there are two dwelling houses on the plot, then the plot, viewed as a single entity, is not being used for or in connection with 'a dwellinghouse', but for or in connection with 'two dwellinghouses'. However, where, as in Briggs' case, [that being a reference to Briggs and another v McCusker [1996] 2 EGLR 197] the covenant also extends to 'any part' of the plot or, even more, 'any buildings... thereon', it is rather easier to contend that the draftsman had in mind the notion that any building erected on the plot was either to be a dwelling house or to be used in connection with a dwelling house. I am not saying that that is the correct approach to the covenant in Briggs' case, but it does appear to me to give a real basis for distinguishing that decision."

46. Now it will be recalled that our covenant has indeed reference to "any part" of the plot and to "any buildings", the indicia that Neuberger J thought would point away from the conclusion that he reached on the clause that was before him. As is agreed, Neuberger J's approach is not binding in either direction, but certainly what he says in his paragraph 25 does nothing to support the claimant in this case.
47. For the reasons that I have set out, therefore, I am unable to agree with the view of the judge below. I would allow this appeal and subject to any submissions would substitute for the order that he made, the order prayed in the notice of appeal, that is to say:

"The answer to the preliminary issue set out in the Order dated 5th March 2004 is that the indefinite article 'a private dwellinghouse' contained in the restrictive covenant set out in paragraph 5 of the Particulars of Claim is merely a restriction as to the manner of use and is not a limitation of number of dwellings permitted upon the plot."

48. Having now read that out, I am not actually certain it is properly drafted. What I think it ought to say is not "that the indefinite article", but "that the expression 'a private dwellinghouse'". But no doubt somebody can sort that out when we get to the order itself.
49. LADY JUSTICE ARDEN: I agree with my Lord's comprehensive judgment. There are two points that I would wish to make. First, as regards the factual matrix in this case, the position is that while clearly the restrictive covenants in the conveyance should be construed against the factual matrix, the factual matrix here is incomplete. In particular the recitals to the conveyance refer to a composite development known, or intended to be known, as Donnerville Gardens and Donnerville Hall, but there is no clear evidence as to the extent of that estate. The appellant submitted to us that it included certain further plots to the north of plots 1, 2 and 3, which are the very large plots containing single dwellings at the present time, subject to the most recent development. On these further peripheral plots there was much more intensive development. But we cannot take that point into account as part of the factual matrix because it is unclear what the estate consists of.
50. Moreover, so far as the contract is concerned, this too is part of the factual matrix, but is not helpful in the construction of the restrictive covenants because clause 12, which does refer to a single private dwelling house is simply a covenant for the initial construction of a building on the plot.
51. So we have really to focus on the restrictive covenants themselves in the conveyance. One point which carries particular weight, in my judgment, is the expression, "or on any part thereof." That is to say, in the relevant part of the clause the covenant binds the purchaser, "not to use or permit or suffer any buildings erected thereon or on any part thereof to be used for any other purpose than as a private dwellinghouse either with or without garages and other necessary outbuildings".
52. The words "or on any part thereof" indicate that the draftsman was clearly contemplating buildings on separate parts of the land. Logically the words mean that each building, on each part of the land, must not be used for any purpose other than the permitted purpose, and the permitted purpose is as a private dwelling house. It must follow, as it seem to me, from the reference to any part of the land, that it is permitted to have a dwelling house on each separate part of the land.
53. This case, in my judgment, demonstrates the point my Lord has already made, namely that the indefinite article "a" may not necessarily connote singularity. The final words of the restrictive covenant merely clarify that a breach of the restrictive covenant will not occur simply because some ancillary building is a garage or necessary outbuilding.
54. Accordingly, for the reasons set out above and those given by my Lord, I too would allow this appeal.

ORDER: minute of order to be produced by counsel, costs to be agreed; costs to be referred to hearing judges if not agreed.