England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/06/2009

Mrs Justice Proudman:

1. These two actions were tried together. Many of the facts are common to both actions. The proceedings concern land in Stevenage, used or to be used for healthcare purposes. The claimant operates a psychiatric hospital on its land. Greenswan Consultants Limited (which I shall call "Greenswan") intends to use its land as a nursing home. The Herts Partnership NHS Trust owns nearby land, Elizabeth Court and Victoria Court, also in use for health care purposes. All these parcels were originally comprised in a larger holding owned by a Mr and Mrs Gates. Trustees for the Gates family still retain a large tract of land (which I shall call "the Gates land" and is registered title no HD 334439) for agricultural purposes.
2. One action ("the roadway action") concerns a distributor road which replaced an existing way primarily for agricultural purposes and which did not provide proper access to either the claimant's or the defendants' land. The claimant claims an indemnity from Greenswan in respect of the cost of construction of part of the road serving the claimant's psychiatric hospital. Greenswan counterclaims damages and injunctions in relation to the manner in which the claimant's works were carried out.
3. In the other action ("the second action"), the claimant claims rectification of the register on the basis that Greenswan's land is bound by a restrictive covenant against use as a facility for the provision of mental health care. In the alternative, the claimant claims damages for breach of covenant by the first defendant Pineriver Consultancy Limited ("Pineriver") which contracted to include the covenant in the relevant transfer.
4. In the second action Greenswan and Pineriver (referred to compendiously as 'the defendant' in their pleadings) counterclaim damages for alleged breach of contract in being denied access to connect the foul drainage system on their land. They have also amended their claim with the permission of the Court to claim rectification.
5. Pineriver and Greenswan are both companies operated by Mr Mohammed Raja, who appeared in person to represent them. Mr Raja unfortunately became seriously ill and was hospitalised during an adjournment of the trial and the further hearing had to be adjourned for some months as a result. Thereafter both sides put in written closing submissions, and there has therefore been delay in bringing this action to a conclusion.
6. The defence in the second action denies that both Greenswan and Pineriver are controlled by Mr (or Mr and Mrs) Raja, relying on involvement by a Mrs Mason in Pineriver. Mr Raja owns 35% of the issued shares in Pineriver, his wife owns 35% and Mrs Mason owns 30%. Mr Raja owns 50% of the issued shares in Greenswan and his wife owns the other 50%. Mr Raja is the managing director of both Greenswan and Pineriver and constantly referred to his control of them in the course of addressing the court and cross-examining witnesses. Indeed he did not in his submissions distinguish between himself and the companies and he expressly departed from his former case that any meaningful distinction could be drawn between Pineriver and Greenswan. It was plain that Mr Raja does in fact exercise complete control over both companies. Although I heard no evidence from Mrs Raja, Mrs Mason was a witness and her evidence did not in my judgment detract from that finding. In addition she was evidently content for Mr Raja to represent and bind Pineriver for all the purposes of the proceedings.

The history

7. Pineriver acquired a parcel of registered land, title no HD 420508, which I shall call "the C land", from Mr and Mrs Gates in December 2002. The transfer granted rights of way along a way (the site of the distributor road) leading from the main road, Graveley Road, to the C land. It is common ground that Mr and Mrs Gates retained the site of the way. The part of the way giving access to Elizabeth Court and Victoria Court is maintained by the NHS Trust and remains a private roadway.
8. On 13^th April 2004 Mr and Mrs Gates contracted to sell the parcel to the north of the C land (title number HD 433954, which I shall call "the D land") to Greenswan. The original proposal, as will appear, was that the D land would be transferred to Pineriver, but that proposal changed shortly before contract. Greenswan's title to the D land was registered on 3^rd September 2004.
9. In the Transfer dated 20^th July 2004 to Greenswan of the D Land, Greenswan entered into the following covenant ("the roadway covenant"):

"Within one year of the date hereof:

to construct an internal distributor road to the then current standard for adoption to include highway drainage over the land shown coloured blue on the Plan being 6.1 metres in width and with two 1.8 metre wide footways between the existing distributor road running from the B197 Graveley Road, and the southern boundary of the Property the construction thereof to be monitored and approved by the Highway Authority and evidence of that approval to be produced to the Transferor on completion of construction…"

The covenant contained a proviso ("the Proviso") as follows:

"…THAT if the Transferee does not carry out the several works…then at the Transferor's absolute discretion the Transferor may carry the same out and the Transferee shall indemnify the Transferor for the full cost thereof."

10. On 11^th May 2004 Pineriver exchanged contracts for the sale of the C land to the claimant. Clause 12 of the contract provided that the provisions of the agreement should not merge on completion. The contract incorporated the Standard Conditions of Sale (4th edition) as varied by certain special conditions. Clause 13.1 provides:

"The seller will in the transfer of the property covenant with the buyer for the benefit of the Property not to use the adjoining land (which the seller has contracted to purchase (shown in red on the attached plan)) as a facility for the provision of mental health [sic] and the seller shall not object to the buyer obtaining any further planning consents relating to the property for the provision of mental health care now or in the future."

Clause 3.3 provides:

" the buyer will in the transfer of the Property reserve to the seller or writer with or without workman [sic] to enter upon the Property at any time during the period of 80 years from the date hereof ... to connect to the foul water system laid or to be laid in or under the land hereby transferred in such position as may be agreed between the parties so as not to restrict the Development of the Property for the purpose intended by the Buyer and thereafter to enjoy the free and uninterrupted passage and running of soil and water from and to the land lying to the north and owned by Greenswan Consulting Ltd subject to a payment of a fair proportion of the cost incurred in laying, cleaning, maintaining and repairing the same and subject to any person exercising this right causing as little physical interference as possible and making good any damage caused to the property by virtue of the exercise of these rights."

11. The claimant's title to the C land was registered on 14^th June 2004. The claimant commenced construction of its hospital on site in February 2005. It had retained Queensborough Project Management Limited ("Queensborough") to manage the project. Queensborough received its instructions from Mr Darren Lewis, the claimant's director of projects. Willmott Dixon were the contractors retained for the construction work.
12. I am told that the claimant became subject to the obligation, on acquiring the C land, to lay the first 10 metres of the 100 metre construction of the road. The provisions imposing the obligation were not analysed at the trial, but it was common ground first, that the claimant was so obliged and, secondly, that there was no express agreement as to the order in which the 10 metres and the 90 metres should be constructed.
13. On 24^th August 2005, Mr and Mrs Gates transferred a further strip of land along the north eastern boundary of the C land (now comprising HD 444997 and to which I shall refer as "the red strip") to the claimant, such transfer being perfected by registration on 19^th September 2005. The way which is the subject matter of the roadway action also affords access from Graveley Road to the C land via the red strip. That transfer expressly transferred the benefit of the roadway covenant to the claimant,

"…with the intention that the Transferor and the Transferee may jointly or severally enforce the Roadway Covenants for the benefit of the Gates Land [the C land] and/or [the red strip]."

The benefit of the Proviso was also transferred,

"…with the intention that the Transferee may (but shall not be obliged to) carry out the works specified in the Roadway Covenants and recover the costs from the owner for the time being of the [D] land"

The claimant gave Greenswan notice of assignment of the roadway covenants (and notice requiring compliance therewith) on 20^th September 2005.

The roadway action

14. I accept Mr Davies's submission on behalf of the claimant that although the assignment of the benefit of the roadway covenants did not comply with s. 136 of the Law of Property Act 1925, because (Mr and Mrs Gates also retaining the right to enforce the covenant) it was not absolute, it was nevertheless an effective assignment for the purposes of s. 78 of that Act, which operated to annex the covenant to every part of Mr and Mrs Gates's retained land: see Federated Homes v. Mill Lodge Properties Limited [1980] 1 WLR 594. Thus the benefit of the covenant passed to the claimant as a successor in title to part of the land owned by Mr and Mrs Gates, notwithstanding that it was also enforceable by the owners of the Gates land.
15. Greenswan did not take any steps to construct the distributor road by 20^th July 2005 (or later in compliance with the notice I have mentioned) in accordance with the covenant in the Transfer of the D land, despite innumerable promises and despite repeated requests from the claimant to do so.
16. The arrangement with Mr Raja had been that he would supply the claimant with his plans and costs for the 90 metres which he was obliged to construct so that it would ensure that the 10 metre stretch which it was to build had the same specifications. However even after several meetings, Mr Raja did not show any sign of starting the works and did not produce any plans. The documents show that the claimant became increasingly concerned that the failure to build the road would delay its project. In order to try and progress the matter the claimant at its own expense supplied Mr Raja with information: topographical details, road geometry information, details of service contract providers and various other records and advice. In February 2005 the claimant decided to build the 10 metre section without waiting for Mr Raja's road drawings. It commissioned drawings and plans for the purpose. Work commenced in March 2005 and the 10 metre section was completed. The contemporaneous documents show that as the spring and summer of 2005 wore on Mr Raja still showed no signs of starting the project. He did not even detail his development plans which made it impossible for the claimant to align the plans to ensure that the two developments did not interfere with each other.
17. The documents show that by September 2005 the claimant had been told that unless the road was constructed very shortly Willmott Dixon would not be able to complete the construction project in due time. Accordingly, the claimant instructed Willmott Dixon to build the road. Work on the road started on 20^th October 2005 and was completed some weeks later. In the first action the claimant claims the cost from Greenswan in accordance with the right of recovery in the Transfer of the D land.

Greenswan's defences to the roadway action

18. Mr Raja advanced a number of defences on behalf of Greenswan. I will deal with them in turn.
19. First, he maintained that Greenswan was at all times willing to build the road and that, by starting work itself, the claimant denied Greenswan the ability to do so. He claims that his architect was instructed to assemble a project team, including civil engineers. However, he was unable to produce any written instructions or evidence of such instructions, and he had no technical drawings to support his assertion. The only plans he produced were plans relating to an application for modified planning permission and were very far from the kind of drawings necessary to found the building of the road.
20. Mr Raja sought to explain the absence of technical drawings by contending that the proper approach would have been to strip out the existing roadway first and then design the new road. However, he produced no expert evidence to support this assertion, merely saying that he had greater expertise in road building than the claimant's contractors who in fact built the road. Mr Raja's experience is in the nursing home sector and he has no professional building qualifications. By contrast, the specifications for the road which was in fact built were drawn up by Whitbybird Limited, a company of specialist structural engineers. Mr Raja relied on a meeting (and various faxes) between Mr Hancock (Willmott Dixon's construction manager), Mr Hallifax (Greenswan's project manager) and Greenswan's groundwork team as showing that Greenswan was ready to start work on the road on three days notice. I do not accept that this was the case, for the reasons I have given.
21. In any event, as I have found, the claimant contemplated that Greenswan would in fact construct the road and it was only when it became evident that it was not going to do so that the claimant, in order to avoid costly delays in its development, itself exercised the right to build the road.
22. Secondly, Mr Raja asserted that Greenswan did not have to reimburse the claimant as the road had not been built to adoptable standard in accordance with the covenant, leading to adoption of the road as a highway. It is common ground that the distributor road has not been adopted and that the plans were not submitted to the Local Authority for this purpose. The claimant's evidence (which Mr Raja did not challenge with any contrary evidence) was that all that would be needed to make the road suitable for adoption was road lighting and kerbs for pedestrians.
23. However, if the Gates Trustees were not bound by the outcome of the roadway action Greenswan was potentially exposed to further liability at the suit of the owners of the Gates land. Greenswan could thus have applied for a stay of the roadway action although it did not in fact do so. Over the principal adjournment the claimant entered into an agreement with the Gates Trustees avoiding the risk of such double jeopardy. Greenswan has been released from potential liability for failing to build the distributor road to an adoptable standard.
24. As I understood Mr Raja's submission, his complaint as to the standard of the road was that he was exposed to action by the Gates Trustees because the road was not built to a sufficiently high standard to comply with the covenant. Since the Gates Trustees have released him from the possibility of double jeopardy that argument is not now open to him.
25. In so far as the argument is raised as an independent defence, the evidence was that the cost of the road which the claimant seeks to recover is less than if it had been completed to adoptable standard. The road was built to a design prepared by specialist surveyors and which took account of planning and other legal requirements. The detailed plans and drawings for the road were supplied to Mr Raja and he did not object to them at any stage. As the claimant and the Gates Trustees are satisfied with the road as it is, the rest of the road used by the NHS is still a private road and Mr Raja has not shown any good reason why the road has to be of the higher standard, Greenswan cannot in my judgment deny the right to recovery on this ground.
26. Thirdly, Mr Raja contended that the claimant was required to build the first 10 metres of the road before building the rest of it and that it did not do so.
27. I find as a fact that the first 10 metres was completed with the exception of a tarmacadam topcoat in March 2005, well before expiry of the year fixed for completion of the roadway. I accept the evidence of Mr Langedijk (formerly of Queensborough) that it is standard practice not to put on the top layer of the road until the end of a building project of this nature. The reason is to avoid the necessity for re-laying the road after heavy use by construction traffic. The road was in my judgment navigable and was in fact navigated by the construction traffic. There was ample evidence to this effect.
28. The defendants' oral evidence in both actions came from Mr Raja and the defendants' other witnesses Mr Hallifax and Mrs Mason. Where their evidence conflicts with that of the claimant's witnesses I unhesitatingly accept the claimant's witnesses' version. All of the claimant's witnesses gave detailed evidence which was inherently cogent. On the other hand, the statements of Mrs Mason and Mr Hallifax were in large measure copied verbatim from Mr Raja's statement, complete with identical grammatical errors. When challenged with this, they persisted in their account, ludicrous in the circumstances, that they had personally and independently produced their statements in their own words. They continued so to persist even though, under cross-examination, they were unable to explain the meaning of some of the phrases used.
29. I would add that I have been taken to nothing which would establish that the claimant had any liability to build the 10 metres of the road before Greenswan started work. Indeed, Mr Raja watered down his contention that it was so liable in his closing submissions which assert that either the claimant was obliged to build the 10 metres first or both parts of the road had to be built simultaneously. His contention appears to be based on the physical constraints of the land, such as the curvature of the road. However, as I have found that the 10 metres was in fact built in March 2005 and that Greenswan was not ready to start work even by September 2005, the contention has no force in any event.
30. Mr Raja asserted that the claimant wilfully obstructed Greenswan's efforts to fulfil its obligations under the roadway covenant (and indeed the furtherance of its building project) by refusing access to the roadway. However, the evidence of the witnesses, supported by the documentary evidence, was that it was Mr Raja, not the claimant, who was uncooperative. Mr Raja was offered a key to the security and safety gates at the site but did not take up the offer. E-mails support the claimant's account of its attempts to align site activities and afford access on a proper basis.
31. The main thrust of Mr Raja's argument at trial was that the claimant deliberately obstructed his access to the site of the road, consciously intending to build the road itself in order, so he said, to build it in a way which accommodated the claimant's land but not Greenswan's land. I accept the claimant's witnesses' account (supported by the contemporaneous documentation) that the claimant formed no such motive and that it gave Greenswan every opportunity to proceed with construction of the road.
32. Mr Raja's principal grievance is that the road was built too low to provide convenient access to the D land which is set at a higher level. It is unmeritorious to take this point by way of defence as Greenswan has always known about the level of the road from the plans which were sent to Mr Raja. In any event there is convincing evidence that the road was built within the constraints of the existing road and such matters as the position of a drainage culvert and the position of overhead cables. A letter from EDF Energy warned the claimant that it was required by Electricity at Work Regulations and Health and Safety Guidance documentation to build the road at a level which provided adequate safety clearances from overhead power cables. Mr Raja says that he has had to build a retaining wall to prevent slippage and also move his entrance. However, the bank at the boundary of the D land is not a consequence of how the road was built but part of the topographical background to the development. Similarly, Mr Raja cannot in the circumstances complain about having to adjust his means of access. Additionally, his case that he had to move the access point because of the way in which the road had been built was unconvincing. There was some evidence that he may have needed to move the entrance for other reasons such as the position of the cables.
33. In any event, the roadway covenants were taken to accommodate the Gates Land, out of which the claimant's land was carved, and not Greenswan or the D land.
34. In conclusion, I find that on taking an assignment of the roadway covenants from Mr and Mrs Gates the claimant became entitled to build the road and seek an indemnity from Greenswan for the costs of so doing. Mr Raja did not challenge the claimant's case on quantum in evidence.

Greenswan's counterclaim in the roadway action

35. Mr Raja adduced a great deal of evidence in the form of photographs to the effect that the claimant's contractors trespassed on the D land by moving boundary marker pegs and by tipping spoil onto it for which damages and rent should be paid. He asserted that there were some 200 instances of tipping. I have examined the photographs in some detail but, try as I might to understand Mr Raja's interpretation, they do not in my judgment show that the large mounds of spoil to which he refers were indeed on Greenswan's land. He says that the claimant's own witness accepted by reference to one of the photographs that one large mound was on the D land. However in my judgment Mr Raja has failed to discharge the burden of proof on this issue. I observe that the claimant leased a portion of the Gates land specifically for tipping purposes so that it had no need to tip large mounds on to the D land instead.
36. Additionally, Mr Raja's claims that the construction of the nursing home has been delayed as a result of tipping are unsubstantiated, and he has produced no documentary or expert evidence to corroborate them. His claim that he has incurred significant expense in clearing up after the claimant is likewise unsupported by documentary evidence.
37. In the past few days I have received documents from the parties showing that there is a boundary dispute between the Gates Trustees and Greenswan and that the Gates Trustees have brought proceedings in the Hitchin County Court to resolve it. Those proceedings were commenced in June 2008 and are still current. The claimant submits that if the Gates Trustees succeed in that action the alleged tipping would have been on the Gates Trustees' land and not on land belonging to Greenswan. However I have found against Greenswan on this issue in any event.
38. The claimant accepts that there were two trespasses through tipping of spoil by the water board and by sub-contractors, although it asserts that it arranged and paid for removal of the spoil when complaint was made. As far as I can judge, such instances were on what is undisputed D land rather than land the subject of the boundary dispute in Hitchin County Court. In the circumstances I have mentioned, it seems to me that only nominal damages could be awarded for these trespasses, or, in the alternative, restitutionary damages (to reflect the claimant's gain) which can be awarded without proof of loss. In either case the damages will be very small indeed.
39. As to the allegation about the pegs, there was no reason for the claimant's workmen to move professionally marked boundaries and I find that Greenswan has not discharged the burden of proving that they did.
40. Accordingly, I propose to give judgment for the claimant on the claim in the roadway action and dismiss the counterclaim, save for an award of minor damages in respect of the admitted trespasses.

The second action

41. Special condition 13.1 of the contract whereby the claimant contracted to purchase the C land from Pineriver ("the C contract") provided for a restrictive covenant in the agreed terms to be included in the transfer on completion. It was not so included and no such covenant was noted against the title to the D land. Indeed the covenantor Pineriver had not contracted to purchase the adjoining land. It was Greenswan that had done so.
42. The negotiations for the C contract were conducted between Mr Wallis of Michael Cullen & Partners (solicitors for Pineriver who were also acting for Greenswan on its purchase of the D land) and Mr Rangeley of Rangeley & Co, the claimant's conveyancing solicitors. The evidence, both documentary and oral, established that not only Rangeley & Co but also Michael Cullen & Partners contemplated that the D land would be purchased in the name of Pineriver rather than Greenswan and their negotiations about the C land proceeded on that basis. Michael Cullen and Partners acted on the purchase of the D land and must have been aware of the substituted purchaser. A letter dated 8^th March 2004 from that firm to Mr and Mrs Gates's solicitors shows that the identity of the purchaser changed at about that time. It seems that as instructions were always received from Mr Raja, no proper distinction was made between him and his companies or between the companies themselves. Indeed Mr Rangeley said in evidence that he was unaware of the existence of Greenswan. Curiously, though, whereas Clauses 3.1, 13.2 and 14 of the C contract state that Pineriver was to be the owner of the D land, Clause 13.3 specifically refers to the D land being owned by Greenswan.
43. It is evident that a mistake was made in the C contract through an oversight on the part of both firms of solicitors. It was important to the claimant to ensure that the D land could not be used for a facility that was intended to compete with its own undertaking. The purpose of the covenant would have been manifest to all concerned, including Mr Raja on behalf of Greenswan.
44. The claimant seeks rectification of the register under paragraph 3 of schedule 4 to the Land Registration Act 2002 on the basis that either (a) Greenswan has by lack of proper care caused or substantially contributed to the mistake, or (b) it would for some other reason be unjust for the alteration not to be made.
45. The pleaded defence to the restrictive covenant claim is that Pineriver and Greenswan are different entities under different ownership so that Greenswan is not bound by clause 13.1 of the C contract. However, as I have said, Mr Raja abandoned this argument at trial, going so far as to assert that he had never seriously relied upon it. Greenswan has not in fact competed with the claimant's business and Mr Raja says that it has no intention of doing so. That assurance provides insufficient comfort for the claimant, as it needs a covenant binding on a third party after a sale of the D land.
46. Mr Raja, in his turn, has amended the counterclaim to seek rectification of the register as to Greenswan's right to connect to the foul sewer under the claimant's land in addition to damages for the claimant's alleged failure to allow him to do so. The claimant does not dispute that Greenswan has rights of foul drainage, although it does dispute the measure and quantum of damage claimed and says that there must be mutuality of any remedy with its claim about the restrictive covenant.
47. It was evident that both the defendants and the claimant regard the issues of the restrictive covenant and of the foul drainage covenant as interdependent. The claimant's evidence was that it was content to enter into clause 13.3 of the C contract on the basis that it was afforded the benefit of clause 13.1. I infer Mr Raja's attitude to be that he considered that the claimant was being unreasonable in relation to the drainage issue and that he would therefore, as a negotiating tool, be difficult in relation to the restrictive covenant.
48. At the last oral hearing of this matter both sides assured me of their goodwill in relation to the subject matter of the second action, and by the end of the trial there appeared to be no issue between them. Mr Raja informed the Court that Greenswan was prepared to sign a Deed of Covenant in the form provided by the C contract. The parties appeared to be in agreement as to the point at which drainage connection should be made. I therefore believed that there was no obstacle to a settlement of the second action before judgment. Indeed, for the same reason, Mr Davies did not (although Mr Raja did) produce written closing submissions about the second action. However I now understand that the parties have been unable to reach agreement. Each side blames the other for this but it is inappropriate for me to investigate the merits. Instead, I have to reach a decision on the second action on the basis of the evidence presented at trial.

The restrictive covenant

49. The first issue is as to the mistake made about the parties to the restrictive covenant. The C contract was made between Pineriver and the claimant, in which Pineriver was wrongly described as purchasing the D land and entered into the restrictive covenant in that capacity. As Greenswan was the true purchaser of the D land, no amendment to the C contract between the claimant and Pineriver could, on the face of it, have resulted in an effective restrictive covenant from the owner of the D land. However, as I have said, Mr Raja was at all times aware of the fact that the owner of the D land was being required to give a covenant in those terms and was also aware that the C contract purported to give it. There was no evidence that terms of purchase of the D land reflected the fact that it was to be unburdened by covenants. On the contrary, if the mistake had been noticed in time the claimant would not have purchased the C land without a covenant from Greenswan and Greenswan would as certainly have given it. Mr Raja conceded at trial that he has complete control of Greenswan and Pineriver and that for present purposes there is no meaningful distinction between them. Mrs Mason has no legal interest in Greenswan, the company sought to be burdened by the covenant, in any event.
50. Mr Raja's concession seems to me to draw all the teeth from his original argument that the D land is unaffected by the restrictive covenant because Greenswan did not give the covenant. In my judgment Greenswan contracted to buy the D land with knowledge of the claimant's requirement for the covenant and acquired the title to the D land with knowledge of the fact that Pineriver had by then purported to covenant in respect of the D land. In all the circumstances Greenswan, through Mr Raja and through its solicitors, contributed to the mistake, namely that Mr Raja did not enter into the contract in his capacity as director of Greenswan as well as of Pineriver. Moreover it seems to me that for Greenswan to rely on the doctrine of separate legal personality, thus taking advantage of the mistake of the claimant, would cause an injustice. I am therefore in principle prepared to order rectification pursuant to paragraph 3 of Schedule 4 of the Land Registration Act 2002.

The drainage covenant

51. This covenant reserves to Pineriver the right to enter and connect to the foul water system laid under the claimant's land and thereafter to have an easement of drainage for the benefit of the D land. However, the covenant is limited by the provision that the connection is to be:

"in such position as may be agreed between the parties so as not to restrict the Development of the Property for the purpose intended by the Buyer".

52. This is in my judgment more than a mere agreement to agree; it is susceptible to an objective determination as to what is a suitable position for the accommodation of the D land which will not restrict the development of the C land. However, it is that provision which has caused all the difficulty as the parties have been unable to agree on anything. The case was not pleaded on the basis that the court should determine where the connection should be. Greenswan and Pineriver at first merely claimed damages for breach of the covenant, being the loss of profit in relation to the nursing home caused by a failure to allow it to connect up its foul drainage system. Now, as a result of amendment, they seek rectification of the register of the claimant's title so as to permit connection in accordance with a plan produced by the defendants.
53. It emerged at trial that the claimant had denied Mr Raja access to its land and had constructed its drains in a way that meant that direct connection to the point most convenient to Greenswan (as opposed to laying a separate drain) would be at best difficult and at worst impossible. On the face of it, therefore, the claimant appeared to be in breach of covenant.
54. However, the totality of the evidence showed a different picture. Mr Raja was approached on several occasions during the claimant's building works to provide details of Greenswan's drainage needs and relevant plans so that provision could be made for them while the claimant was carrying out its building works. There was also a question as to whether the public sewer could cope with the flow from both developments, and, again, Mr Raja was asked to provide relevant information. He did not provide the information sought, and the claimant therefore continued building the drains to its own specification.
55. Thereafter there were many months of negotiation between the parties through their solicitors about entry into a deed incorporating the restrictive covenant. The claimant had grave concerns as there were rumours that Mr Raja was considering a sale to a healthcare company which might wish to build a mental hospital on site. Access to the claimant's land was then denied. As I have said, the claimant regarded the question of the drainage and the question of the covenant as interdependent.
56. However, when this action was begun in January 2008 the claimant wrote to the defendants informing them that access would be granted for connection purposes provided that:

the claimant was given four weeks notice of the works,

a plan or schedule of the works was provided and would be subject to approval by the claimant's surveyor at Greenswan's expense,

evidence was provided that a reputable contractor would carry out the works and that it had put all method statements and standard health and safety requirements in place,

evidence was provided that there was adequate insurance provision and

Greenswan would agree to reimburse the claimant for costs and expenses incurred as a result of the works (a sum, specified by the claimant's surveyor, to be held on account to cover such costs until they could be properly assessed).

Neither the agreement nor any of the information sought was forthcoming and access to connect therefore continued to be denied.

57. The claimant did deny access and it did lay the drains in the position most favourable to it. However, it did not do so without regard to the defendants' rights. Bearing in mind the requirement for agreement and for not interfering with the claimant's development, it was reasonable for the claimant to impose conditions on access. In my judgment therefore it is doubtful whether the claimant was in breach of covenant at all.
58. Even if it was on the basis that connection under the strict terms of the covenant may not now be possible, the counterclaim ignores the requirement for the defendants to mitigate their loss. It is trite law that a party must take all reasonable steps to mitigate loss consequent upon the other party's wrong, and cannot recover damages for any loss which he could have avoided but has failed, through unreasonable action, to avoid.
59. Mr Raja and his companies have been provided with many opportunities to make a suitable foul drainage connection to Greenswan's premises but have refused to do so, sometimes on the basis that the claimant must first give up its claim to the deed of covenant or vacate its protective registration of a notice against the D land, sometimes because Mr Raja did not accept that the claimant's terms for access were reasonable.
60. In all these circumstances, while I confirm that the defendants have good continuing rights under Clause 13.3 of the C contract (and nothing I have found detracts from those rights, which are in any event substantially admitted by the claimant) in my judgment they have failed to mitigate their loss and cannot claim damages for the breaches claimed.
61. I should add that Mr Raja has not proved, as he asserts, that the reason the nursing home has not been opened is attributable (or solely attributable) to the failure to connect the foul water drainage. Indeed the claimant has submitted that Greenswan's pleadings in the Hitchin County Court action are inconsistent with the assertions in this action. The claimant says that Greenswan there claims that the delays in financing and opening the nursing home were caused by problems of title attributable to wrongful action on the part of the Gates Trustees. I accept Mr Raja's rebuttal that the two sets of pleadings are not inconsistent. However it appears that Mr Raja is continuing to assert in the County Court action that some of the delays in financing and opening the nursing home were caused by the Gates Trustees, a matter which did not emerge during the course of this trial.
62. I am also not prepared to make any order for specific performance or rectification. Mr Raja submits in effect that I should direct the position in which the drainage connection point should be, but I am not prepared to do that, even if I were able to do so (which I am not) on the evidence before me.
63. I therefore propose to dismiss the counterclaim and to give the claimant judgment on the claim in the second action.