England and Wales Lands Tribunal

[2006] EWLands LP_33_2005 (07 April 2006)

LP/33/2005

LANDS TRIBUNAL ACT 1949

IN THE MATTER of an APPLICATION under

SECTION 84, LAW OF PROPERTY ACT 1925

BY PAUL CROMPTON Applicant

Re: Hobro Croft, Little Hobro, Wolverley,

Kidderminster, Worcs, DY14 5SZ

DECISION ON AN APPLICATION FOR COSTS

1. By an originating application dated 20 April 2005, Mr Paul Crompton ("the applicant") sought the discharge of a restrictive covenant burdening land at Hobro Croft, Little Hobro, Wolverley, Near Kidderminster, DY14 5SZ ("the application land") under grounds (a) and (c) of section 84(1) of the Law of Property Act 1925.

2. The restriction was imposed by way of a transfer between Mr Anthony Richard Dovey (the vendor) and the applicant dated 23 June 1995 in which clause 3 of the conveyance was stated to be for "the benefit and protection of the adjoining land retained by the Transferor and each and every part thereof….referred to as the Retained Land" . The relevant clause reads:

   "3(b) Not at any time to use or permit the property hereby transferred other than as a single private dwelling house and outbuildings and accommodation land supplemental thereto".

3. On 16 October 2001, the applicant had obtained full planning consent, subject to conditions, for "Change of use of existing garage and stables (with link extension) to form one dwelling; reconstruction of former access and provision of passing bay at Hobro Croft…" and discharge of the restriction was required to allow the development to proceed. A valid Notice of Objection was served by Mr Dovey on 11 July 2005.

4. In compliance with the Registrar's order dated 14 September 2005 the parties filed and served their respective experts' reports and witness statements of fact and the matter was set down to be heard at Stourbridge County Court on 1 March 2006. An application dated 6 February 2006 from the applicant's solicitors for permission to add ground (aa) and for permission to file experts' supplementary reports was refused by an order of 13 February 2006 (that order being accompanied by a letter stating the reasons for refusal). On 15 February 2006, Mr Crompton, by fax and telephone call, gave notice that he wished the application to be withdrawn due to "the services of his solicitor having been withdrawn and because of a potential legal claim [against them]".

5. On 16 February 2006 the Tribunal advised the applicant that under Rule 45(1) of the Lands Tribunal Rules 1996 all parties to an application are required to sign any notice of withdrawal. The objector's solicitors were thus informed (by letter of the same date) and their comments were sought. In their reply of 17 February, they advised that they had not previously been informed of the applicant's intentions, this being unfortunate because a conference that had been arranged with counsel for 16 February could have been cancelled. Whilst in the circumstances they were prepared to consent to the application being withdrawn, such consent would only be on the basis that the applicant be ordered to pay the objector's costs. On 20 February, the Tribunal received formal notice from the applicant's solicitors advising that they were no longer on record.

6. A copy of the objector's reply of 17 February was sent to the applicant on 24 February, and in the light of its contents he was given 14 days to comment. Mr Crompton replied on 6 March (by fax) requesting that any costs decision be delayed pending the Law Society's investigations into his former solicitors' conduct – following which it might be possible for the other party to claim on that solicitor's liability insurance. On 10 March the Tribunal wrote to the parties stating that I was minded to dismiss the application with costs awarded to the objector, and inviting the applicant to make any further representations within 7 days. Those were received on 13 March, and my order limiting the amount of costs to £1,500 plus VAT was made on 14 March and despatched to the parties the following day. However, on 16 March the objector's solicitors sent a fax stating that not only had they not had a copy of the claimant's representations, but they had also not had an opportunity to make detailed submissions on the subject. The Tribunal then provided a copy of Mr Crompton's letter of 13 March, and advised that in the circumstances I would be reconsidering the order. This I have now done, and I have considered the objector's solicitors' representations of 16 and 17 March (copies of which the Tribunal provided to the claimant) together with Mr Crompton's letter of 13 March and his further letter in response to them of 22 March.

7. The claimant submitted that having obtained planning permission for the conversion of the stables into a residential unit, and discovering the restrictive covenant that prevented its sale, he made various offers to Mr Dovey to "buy-out" the covenant. However, Mr Dovey had not responded directly, but third parties appointed by him had indicated the value to be tens of thousands of pounds. It had therefore become necessary to make an application to the Tribunal and in July 2003 he instructed his former solicitors to do so, and put them in funds to pay the requisite fees. He then briefly set out the background relating to the reasons why the originating application was not actually made until April 2005, the result of which was that, he said, "we have a serious legal issue with [the solicitors] and have involved the Law Society". Mr Crompton went on to say that "it is the actions of the solicitor to mitigate a very large potential claim against their indemnity insurance that has driven the proceedings". He said that it was not until he had spoken to counsel and had been advised that the chances of getting the restrictive covenant discharged were slim that he had a discussion with indemnity insurers and decided to withdraw the application. In the circumstances, he was requesting that any order for costs be delayed until "the Law Society has made a ruling". Mr Crompton said that he had no objection to details of the objector's costs being forwarded to his new legal advisor so that they can be included in the overall claim against his former solicitors.

8. The objector's solicitors said their client had, due to the actions of the applicant, been put to substantial costs particularly as the proceedings were not withdrawn until shortly before the hearing was due to take place. The objector had had to employ an expert, and steps had to be taken to secure the services of witnesses of fact to counter the applicant's allegations that the nature of the retained land had changed. Counsel had been consulted, a further conference had been held on 16 February and counsel had also started to prepare his skeleton argument. The costs incurred to date were very significantly more than had been arbitrarily awarded, and amounted to approximately £7,000 plus VAT. It was submitted that it was incorrect for the applicant to say that he "discovered" the restrictive covenant – both Mr Crompton and Mr Dovey were the original parties to the transfer in 1995 and therefore he would have been fully aware of it from that date.

9. It was clear, the solicitors said, that the application, when it had eventually been made, was for the purposes of protecting the applicant's solicitors rather than the applicant, and the objector had incurred significant cost as a result. There should, in the circumstances, be no reason why the objector should be deprived of any of his costs. In any event, the solicitors said, there would be no hardship on the applicant's part if his costs are being met by legal indemnity insurers.

10. In the light of the submissions I have received from both parties, I agree that the objector should not be deprived of any of the costs that he has incurred in seeking to ensure the restrictive covenant that was willingly entered into by the same two parties only 11 years ago, is not discharged. It would, in my judgment, be clearly wrong for Mr Dovey to have to finance, from his own resources, the defence of an application which may well have been ill-founded (as it appears was the advice given to the applicant by his own counsel) and which was withdrawn, at a very late stage, by the applicant. I am not persuaded by Mr Crompton's suggestion that the matter need never have come before the Lands Tribunal if Mr Dovey had responded to the offers that were made to buy-out the restriction. That the objector chose either not to respond, or to appoint others to respond on his behalf was his prerogative and, particularly bearing in mind these were the original parties to conveyance, I am not surprised that Mr Dovey was unwilling to co-operate.

11. In the circumstances, therefore, I determine that the order of 14 March 2006 be set aside and that the objector shall be awarded his costs in full, such costs, if not agreed, to be the subject of a detailed assessment by the Registrar.

    DATED 7 April 2006

    (Signed) P R Francis FRICS