England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
HHJ SIMON BARKER QC sitting as a Judge of the High Court
IBM30277

		Royal Courts of Justice Strand, London, WC2A 2LL
		18th July 2013

Lord Justice Mummery:

Introductory summary

1. In this restrictive covenant case the appeal from an order made by HHJ Simon Barker QC dated 10 September 2012 raised two points:

(a) Statutory annexation-whether the covenant is unenforceable, because the land intended to be benefited by the covenant cannot be easily or fully ascertained as to situation or extent for the purposes of s.78(1) of the Law of Property Act 1925; and

(b) Breach-whether the operation of a school on the burdened land, as proposed by the appellant Foundation and opposed by the representative respondent residents living nearby, would be a source of traffic nuisance and annoyance in breach of covenant.

2. After a 9 day trial the judge dismissed claims by the Foundation for a precautionary declaration under s. 84(2) of the Law of Property Act 1925 that restrictive covenants contained in a conveyance dated 29 October 1931 (the 1931 Conveyance) and burdening 44 acres of the Foundation's land were not for the benefit of "the Vendor's adjoining or adjacent property." Parts of the land retained by the vendor under the 1931 Conveyance are owned by residents represented by the respondents. Their properties are within the land edged green on the Claim Form plan and are situated nearby.
3. The judge also refused to grant a declaration that the proposed development of school buildings and an access road on existing school playing fields and the operation of the proposed school on the burdened land would not be a breach of the covenant.
4. Permission to appeal was refused by the judge, but was granted by Lewison LJ on 16 October 2012.
5. At the end of the hearing the court indicated that it would give judgments in writing on the breach point before deciding whether it was necessary to hear oral argument from the parties on the s.78(1) point. I will refer to the judgment below and the written submissions on that point as part of the general background to the proceedings and to this appeal.

Background facts

The covenant

6. The vendor under the 1931 Conveyance was Sir Thomas White's Charity for the benefit of the City of Coventry (the Vendor). The purchaser was the Foundation, then known as the Bablake School Foundation. The land acquired, now known as Bablake Playing Fields, Coundon, Coventry, consisted of 51.224 acres of farm land. Between 1938 and 1972 about 6.3 acres to the north east were sold off. About 2.6 acres of that were developed as housing and 4.6 acres as the site of Christ the King Catholic Junior School. The Foundation's land, which is unregistered and edged red on the Claim Form plan, has been used as sports playing fields with associated structures that include a dwelling, all-weather playing surfaces and floodlighting. It is inside an area bounded by Norman Place Road, Duncroft Avenue, Hollyfast Road and Scots Lane.
7. In the 1931 Conveyance the Foundation (described as "the Purchasers") entered into a restrictive covenant:-

i) " And the Purchasers do hereby for themselves and their successors in title and to the intent and so as to bind not only themselves personally but also all further owners and tenants of the property hereby conveyed or any part thereof and to bind such property into whosesoever hands the same may come covenant with the Vendors and their successors in title in manner [sic] following that is to say…That no house or other building erection or structure already erected or hereafter to be erected upon the land hereby conveyed or any part thereof shall at any time be erected used or occupied for the purposes of or as a Club Inn Hotel Public House Beerhouse or place for the sale of ale beer wines spirits or other intoxicating liquors to be consumed on or off the premises nor shall the said land or any building erection or structure already erected or hereafter to be erected thereon be used for the sale of fried fish or for any noisy noxious or offensive trade business pursuit or occupation or for any purpose which shall or may be or grow to be in any way a nuisance damage annoyance or disturbance to the Vendors and their successors in title or lessees or tenants or which may tend to depreciate or lessen the value of the Vendors adjoining or adjacent property and the Purchasers and their successors in title shall not sell or permit to be sold on any part of the land hereby conveyed any intoxicating liquors wines ale beer or spirits."

8. That unparagraphed and unpunctuated covenant must be construed as a whole. The verbal torrent is intimidating. The process of breaking it down into its parts sharpens the focus of its purpose and main features.
9. First, the covenant opens with specific restrictions on the erection, use or occupation of buildings for certain purposes (club, pub etc) or for the sale and/or consumption of certain items (drink). The details do not matter, as they do not apply in the case of a school.
10. Secondly, the covenant broadens into a restriction on the use of the land or any building for the sale of fried fish or for any noisy, noxious or offensive trade, business, pursuit or occupation. The details do not matter, as they do not apply in the case of a school.
11. Thirdly, and more generally, the covenant prohibits the use of the burdened land "for any purpose which shall or may be or grow to be in any way a nuisance, damage, annoyance or disturbance to the Vendors and their successors in title …or which may tend to depreciate or lessen the value of the Vendors' adjoining or adjacent property…" In this appeal the objections to the proposed development are based on the apprehended nuisance, annoyance or disturbance arising from the increase in traffic to and from the proposed school at certain times of weekdays in term time (the "school run") and its feared effects on the respondents' enjoyment of their properties.
12. Finally, in its closing words, the covenant reverts to the drink problem and prohibits its sale on any part of the land.
13. The restrictions are thus broadly aimed at banning use and occupation for specified purposes and activities taking place on the burdened land.
14. The objections at the forefront of the appeal are not directed at activities on the burdened land: they are directed at traffic on the public highway in the vicinity of burdened land and how that might affect the respondents: increases in the familiar urban plague of parking, noise, obstruction and congestion. Those third party, term-time activities of parents driving their children to and from school are at the beginning and end of the school day, do not take place on the burdened land at all and are outside the effective control of the Foundation, which owns and occupies it and will run the school.
15. To complete the story of the covenant, it was registered at HM Land Charges Department on 31 October 1931. The Vendor retained farm land known as Moat House Farm to the north of the burdened land. Retained land was sold in 1935 to Thomas Cooksey Jnr for housing. Each respondent is the owner/occupier of a house built on part of the former farm land retained by the Vendor.

Planning consent and proceedings

16. On 30 March 2010 the Foundation obtained planning consent to build a new junior school on a very small part of the burdened land currently used as school playing fields, but without loss of any of the current sports facilities there. The proposed independent school will be created by merging the existing Bablake Junior School and the Bablake Preparatory School, so that it will in due course be able to accommodate up to 400 students aged between 3 and 11. The development includes a single and 2 storey building with car parking, access road and vehicle drop off point. The development cost will be about £9.9m.
17. A local resident objected to the planning application. After the Foundation's solicitors had sent a circular letter to over 1,000 owners or occupiers of properties close to their land in March 2011 a number of them claimed the benefit of the covenant and contended that the construction and operation of the proposed school would constitute a breach of it. That prompted the Foundation to take the prudent precaution of declaratory proceedings.
18. The Foundation accepts that the 1931 land including the development land is burdened by the covenant and that, in any event, it is bound as original covenantor. The argument is about whether the respondents are entitled to the benefit of the covenant and whether the Foundation's proposals would result in a breach of covenant.

The judgment

19. The judge declined to make either declaration.

Benefit of the covenant

20. The judge found that the benefited land was easily ascertainable from the 1931 Conveyance and extrinsic evidence. It was the Vendor's land to the north and north east of the land conveyed. It was permissible to look outside the 1931 Conveyance to identify the benefited land. It was easy to do that in this case. The fact that there might be other land, which it was intended would benefit from the covenant, but could not be easily ascertained, did not prevent the court from identifying land entitled to the benefit of the covenant.

Breach of covenant

21. The judge described the respondents' contention that the covenant prohibited the erection of the school on the burdened land as "hopeless": [55]. He also accepted the Foundation's contention that the covenant "was not intended to prohibit the Development or the operation of the School": [66]. He rejected objections based on the design of the school, its impact on the view from the respondents' properties and its impact in depreciating or lessening the value of their properties. Those points are not pursued on appeal.
22. The judge declined to make the alternative declaration of non-breach on account of the prohibition of nuisance, annoyance or disturbance and focused on the traffic to and from the school. He posed the following question for decision:-

"94. The question for me is whether the sensible person would consider that the traffic attending the School, that is the noise, parking and obstruction and congestion caused by such traffic, is a use of [the burdened] land for a purpose which shall or may be or may grow to be in any way a nuisance of annoyance?"

23. He concluded that:-

"115. Taken in the round the traffic issues (noise, parking and obstruction and congestion) caused by the operation of the School are such that they shall or may be or grow to be a nuisance or annoyance. Although it is not necessary for me to do so, I make this finding on the balance of probabilities having regard to all the evidence in this case."

24. In other words the operation of the proposed school, as distinct from the process of building it, would be a source of nuisance or annoyance, or would grow into such through the activities of third parties using the public highway, affecting, in particular, those living on Norman Place Road and Duncroft Avenue.
25. The judge reviewed the detailed evidence on the issue of traffic nuisance and annoyance.

Parking/obstruction

26. The judge found a number of properties use their front gardens for off-street parking. Nuisance or annoyance would occur in the potential obstruction of access to residents' off-street parking as a result of the actions of inconsiderate drivers. The judge said that he was satisfied that the prospect of obstruction occurring to a number of covenantees was a "realistic likelihood." He rejected the contention that the incidence of delinquent parking was exaggerated as a risk, which was not removed by law enforcement action.

Noise

27. The judge found that there would be a "noticeable increase" in the traffic noise above an already noisy threshold.

Congestion

28. Relying on the evidence of the respondents' traffic management expert the judge found that there would be increased congestion on Norman Place Road and Hollyfast Road. The respondents would have concerns about it. They were already busy roads.

Foundation's submissions

Benefit of covenant

29. In its skeleton argument the Foundation accepted that the judge identified the correct legal principles in his judgment, but submitted that he fell into error in applying them to the facts and was wrong to conclude that the land intended to be benefited from the covenant was easily ascertainable starting with the 1931 Conveyance. The principles were most recently discussed in the judgment of Chadwick LJ in Crest Nicholson Residential (South) Limited v. McAllister [2004] 1 WLR 2409. It is also accepted that extrinsic evidence is admissible to identify precisely the land intended to benefit, provided that there is something in the conveyance itself defining the land. The error of the judge was in accepting the submission of the respondents' counsel that it was a matter of fact and degree whether the land intended to benefit was easily identifiable. The land is either easily identifiable or it is not.
30. The position here was that there are no express words identifying the benefited land. Only the burdened land is referred to. The benefited land ("the Vendor's adjoining or adjacent land") is not easily ascertainable or capable of being ascertained for the purposes of s.78(1) of the Law of Property Act 1925 as to situation or in extent, whether from the terms of the 1931 Conveyance or from extrinsic evidence: Crest Nicholson Ltd v. McAllister [2004] 1 WLR 2409 at [33].
31. Moat House Farm relied on by the respondents and the land beyond are not referred to in the 1931 conveyance or identified in any plan. The respondents relied on abstracts of title and a plan attached to the claim form. The judge erred in finding that there was or may be other land retained by the Vendor in 1931, which was intended to have the benefit of the covenant.

Breach of covenant

32. As the judge accepted, nothing in the covenant expressly prohibits the Foundation from building the school on the burdened land or from operating a school on it.
33. The Foundation had made the point to the judge below that the traffic issues raised by the respondents were not based on activities of the Foundation or on activities taking place on the burdened land: they were based on third party activities taking place on the public highway over which the Foundation had no control. The judge's findings were in relation to highway activities, but the covenant is only concerned with what is done on the burdened land and its impact on the benefited land. The increased congestion and so on is not something that takes place on the burdened land.
34. Moving to the test for establishing a nuisance or annoyance to the respondents, the judge accepted that it was as described in Tod-Heatly v. Benham (1889) LR 40 Ch D 80. That case was of a covenant in a lease against carrying on certain specified offensive trades or doing any act in or upon or about the premises "which shall or may be or grow to the annoyance, nuisance, grievance, or damage" [of the lessor or the inhabitants of the neighbouring or adjoining houses]. The leasehold premises were used for the purposes of a hospital for the treatment of outpatients with infectious or contagious diseases.
35. Whether something was a nuisance or not in breach of covenant was determined by the views of ordinary reasonable sensible people as to the risks of nuisance and annoyance on the evidence before the court, not on the fanciful apprehensions of sensitive persons, or by reference to what was a common law nuisance causing pecuniary damage. The object of the covenant is to give the person benefited special protection from things to which he has reasonable objections as interfering with the enjoyment of his property. In that case a breach of covenant was found not on the basis that the hospital was a nuisance, but on the basis that there was a reasonable apprehension of risk of infection and of interference with the enjoyment of their houses for ordinary purposes.
36. In this case the judge failed, it was argued, to apply that test correctly. There was no evidence of how the traffic congestion would impact on the use and enjoyment of the relevant properties. In the absence of such evidence it was not possible for the judge to assess whether the complaints were those of reasonable people.
37. In assessing whether there was a nuisance or annoyance the judge also failed to have regard to the principle of "give and take" in a built-up area: see Southwark London Borough Council v. Mills & Ors [1999] 3 WLR 939. On the limited evidence before the judge the traffic issues generated by the proposed school were ordinary incidents of lawful use of the highway and would only be live issues for part of the time 5 days a week for 38 weeks of the year. That would not be a nuisance or annoyance within the meaning of the restriction. Norman Place Road and Duncroft Avenue are busy roads in an urban area. The alleged nuisance was confined to traffic issues, as illustrated by a DVD of traffic movements at the existing Bablake school: increased noise (noticeable), parking, obstruction of those with off-street parking and congestion (no specific findings save for delays).
38. On the specific traffic issues the Foundation made detailed points on the evidence and on the judge's treatment of it.

Parking/obstruction

39. Before turning to the Foundation's submissions on parking and obstruction I summarise the respondents' case on this issue. It was that the traffic generated by the operation of the proposed school would result in cars parking along Norman Place Road and Duncroft Avenue, which would prevent residents from parking outside their homes and potentially block residents' cars parked on the pavement and those who have off-street parking on their properties.
40. The Foundation submitted that there was no evidence of the incidence of off-street parking on Norman Place Road or Duncroft Avenue or of dropped kerbs or of blocking parking in front gardens. The only evidence was that there were some identified properties that had off-street parking. That was not dealt with by the two traffic management experts who gave evidence. The risk of obstructing off street parking was not specifically explored in the evidence.
41. The Foundation said that the restriction does not protect the residents against lawful parking by members of the public. Residents have to take their chance with others who wish to park on the highway. The only parking issue addressed by the judge was that of inconsiderate drivers, who blocked access by residents with off-street parking.
42. The Foundation also said that the judge erred in finding that the parking issues, including in particular off-street parking, constituted a nuisance, annoyance or disturbance within the meaning of the covenant.

Noise

43. The judge made no findings on the impact on the use and enjoyment of the properties of the increase in noise, which an expert said would increase by 50% on the hypothesis that 400 extra vehicles would pass the junction of Norman Place Road and Duncroft Avenue within 15 minutes. There was, however, no evidence to support that hypothesis. As the judge found, they were already noisy busy roads. The judge was wrong to find that there would be an increase in noise that would constitute a nuisance or annoyance within the meaning of the covenant.

Congestion

44. The judge made no specific findings of fact to support his conclusion of increased congestion so as to constitute a nuisance or annoyance within the meaning of the restriction. The respondents' traffic management expert conceded in cross examination that the increased traffic would result in delays measured in seconds rather than minutes. No findings were made about the impact of the congestion on those living in Norman Place Road or Hollyfast Road.
45. In sum the Foundation's case on the traffic evidence was that it did not add up to more than inconvenience and did not establish a risk of nuisance and annoyance in the future.

Respondents' submissions

Burden of covenant and enforceability

46. As explained in their skeleton argument the respondents' position on the benefit point is that the burden of proof is on the Foundation to show that, on the balance of probability, the covenant does not benefit the adjoining land belonging to the respondents.
47. The respondents submitted that the covenant is annexed to their land and that s.78(1) of the 1925 Act applies. They are successors in title to the land retained by the Vendor after 1931 and which was sold to Mr Thomas Cooksey Jnr for housing in 1935. The area of the dominant land is easily identifiable as the land sold to Mr Cooksey: see Marquess of Zetland v. Driver [1939] Ch 1 at pp.8 and 10. External evidence is admissible for that purpose: Crest Nicholson Residential (South) Ltd v. Mc Allister ]2004] 1WLR 2409 at [45]. It is not necessary to define the whole area of the dominant land, which could be identified with sufficient clarity by reference to the 1931 conveyance and extrinsic evidence; see [49]. The judge was entitled to conclude that the 1931 Conveyance, together with the extrinsic evidence, enabled him to ascertain the extent of the benefited land sold to Mr Cooksey: see [45] and [46].
48. Alternatively, the respondents submitted that the Foundation is the original covenantor and knew, or ought to have known, the extent of the benefited land when the 1931 Conveyance was executed. The Foundation is not entitled to say that it does not know the terms agreed by it in 1931, or that it would be oppressive for it to be bound by the 1931 Conveyance unless the respondents tell them what was agreed. On the respondents' case they only have to show that they own land that has the benefit of the covenant and that the Foundation as original covenantor agreed to that covenant for its land.

Breach of covenant

49. The burden of proof is on the Foundation to show that the proposed development will not constitute a breach of the covenant. The respondents did not pursue on appeal the contention rejected by the judge that the actual construction of the school would breach the covenant. They argued that the operation of the school would cause nuisance and annoyance to people owning land in the area edged green. They have reasonable concerns about nuisance and annoyance and are backed by experts. The covenant protects them against annoyance and nuisance near their homes. Five local schools in the surrounding area are already causing problems. An additional school with children arriving by bus and car would exacerbate existing problems with parking, noise, congestion and obstruction.
50. It was submitted that the judge was best placed after hearing all the evidence to reach a conclusion on the point whether a reasonable person would consider the operation of the school a nuisance and an annoyance to owners/occupiers in the area of Norman Place Road and Duncroft Avenue. The judge was entitled to take into account the possibility that problems may grow in the future. The judge cited and correctly applied the relevant law as laid down in Tod-Heatley. The operation of a school inevitably involved the arrival of parents, children, traffic, congestion, noise and other issues associated with a school. The proposed school would bring cars and buses to the area of the burdened land that served as the drop-off point.
51. On a view of the area the judge saw for himself, as well as from witnesses and traffic experts and a DVD, the cumulative effect of the difficulties that would arise with accessing parking areas, blocking residents' cars that normally park on the verge in Norman Place Road and where there were off-street parking spaces and dropped kerbs. The parking arrangements devised by the Foundation within the school grounds would be inadequate to cope with the demand for parental and bus parking. The result would be a situation which the respondents did not have to put up with in the future, having regard to the broad, sweeping terms of the covenant.

Discussion and conclusions

General

52. I am left with a sense of unease that the concentration of the parties and the judge on the detailed evidence and argument about traffic issues, along with several other grounds of objection which are no longer pursued, swamped the more legally significant aspects of the case on breach. The result was to divert attention away from key contextual points, such as the purpose and scope of the covenant. Questions of construction arise, which affect the relevance and impact of the evidence on the question of breach.

Breach of covenant

53. I do not agree with the judge's conclusion on anticipated breach of the covenant. The practical effect of the judge's approach was that the use and occupation of part of the burdened land for the proposed school would be a breach of covenant, even though there was no express prohibition against the building or operation of a school on the burdened land.
54. The judge correctly recognised and held that the covenant does not expressly prohibit the building of the proposed school on the burdened land nor does it expressly prohibit the operation of the school as such: see [66]. The consequence of the judge's later approach to the relevance and impact of the evidence on the traffic issues contradicts his own earlier conclusion. If correct, it would be impossible to operate a school on the burdened land without breaching the part of the covenant relating to nuisance and annoyance.
55. Children go to school during term time, which is about 38 weeks a year. On week days they have to get to school in the morning and they usually go home mid-afternoon. Some children live close by and walk to school. Some of them go by bike. The rest from further away have to travel by car or bus. That will increase traffic noise, obstruction and congestion at peak times in the morning and in the afternoon.
56. In a general kind of way all regular traffic in a residential area is a nuisance and annoyance. It is said that that is the private law protection afforded by this special covenant, and that the judge was right to find for the respondents, even if, for practical purposes, the result is that the operation of the proposed school is prevented by, though not expressly prohibited by, the covenant.
57. In my view, the covenant was not aimed at prohibiting third party traffic movements on the public highway, any more than it was aimed at preserving an open space or a pleasant view for local residents. In 1931 traffic was not the problem that it now is, affecting practically every member of the public. Traffic considerations are now essentially a matter for the Highways Authority, which has to perform the difficult public function of accommodating the interests of local residents in reasonable conditions of peace and quiet and of the general public in being able to drive private cars, or commercial vehicles, or to use a bus service, or to use the public highway for cycling or walking on.
58. I recognise that prohibition on nuisance or annoyance caused by traffic or by traffic increase could be specially covered by a restrictive covenant. The important point is that this covenant is directed at prohibiting activities that take place on the burdened land. That is the designated zone in which certain activities are prohibited by the covenant. The residents' objections based on potential traffic nuisance and annoyance are not to prohibited activities that will take place on the burdened land, but to increased traffic on nearby roads causing obstruction, congestion and noise which may affect the people living there.
59. It is true that the increase in traffic at certain times of the day in term time and the familiar traffic problems of congestion, obstruction and noise would have a connection with the proposed school on the burdened land. Although I see force in Mr Denehan's criticisms of the thinness of the judge's findings on various aspects of traffic nuisance, I do not find them sufficient to undermine the judge's overall conclusion at [115] about the potential of noise, parking, obstruction and congestion for nuisance and annoyance in the future. In my judgment, however, that is not the source of the nuisance or annoyance to which this covenant is directed. The source of the traffic nuisance and annoyance objected to is the lawful use of the public highway by the general public, not the taking place or carrying out of any prohibited activity on the burdened land. The covenant is aimed at activities on the burdened land as the source of the nuisance, such as fumes or smell or noise from an offensive trade or business, which may spread from and beyond the boundaries of the burdened land into the local neighbourhood.
60. This case is distinguishable from Tod-Heatly. In that case the activity sought to be prevented was taking place on the burdened land itself. i.e the activity of the hospital in collecting on the burdened land people with contagious or infectious diseases. The plaintiffs' apprehension was about the consequences for inhabitants in the immediate neighbourhood from the carrying on of that activity on the burdened land. It was, the court held, not an unreasonable apprehension. It was caught by the width of the anti-nuisance covenant without the plaintiffs having to establish that the hospital was itself a nuisance at common law. In this case the claimants' apprehension is not about the activity of the school as such on the burdened land. It is about traffic issues on the public highway that do not go to the activities of the Foundation on the burdened land or its user of it.

Result

61. I would allow the appeal on the breach of covenant point and grant the declaration on that point sought by the trustees. In those circumstances it is unnecessary for the court to decide the s.78(1) point or to hear any further oral argument.

Lord Justice McCombe

62. I agree.

Lord Justice Beatson

63. I also agree.