Jersey Unreported Judgments

[2009]JCA221

royal court

(Samedi Division)

19^th November 2009

Before     :

Sir John Nutting, Bt., Q.C., President; Peter D. Smith, Esq., C.B.E., Q.C.; and John V. Martin, Esq., Q.C.

 

Appeal from the orders given by the Samedi Division of the Royal Court on 29^th April, 2009, and 19^th May, 2009, concerning the servitude (restrictive covenant) contained in the contract of purchase of La Petite Croatie, the injunction restraining building works and the costs of the Royal Court proceedings.

Advocate P. C. Sinel for the Appellant.

Advocates S. J. Young and R. A. Falle for the Respondents.

judgment

martin ja:

1.        This is an appeal from a decision of the Royal Court (Commissioner Clyde Smith and Jurats) dated 29^th April, 2009, refusing an injunction to prevent the respondents from carrying out building works to the south of property owned by the appellant.  The appellant contends that the works are prohibited by the terms of a servitude in the nature of a restrictive covenant.  The principal issue in the appeal is the identification of the land affected by the servitude.  Also before us is an application by the appellant to adduce further evidence said to bear on that issue.

2.        A site plan is attached to and forms part of this judgment.

3.        The contract by which the servitude was originally created was made and passed before the Royal Court on 24^th September, 1993, and was corrected by a further contract made and passed on 1^st October, 1993.  I will call these two contracts "the Contract".  The parties were Wilbrook Investments Limited ("Wilbrook") as seller and Julie Louise Crane as buyer.  The property sold was 2 Pigneaux Farm, Princes Tower Road, St Saviour.  The servitude was in the following terms:-

"Qu'il ne pourra jamais être établi, érigé ou construire sur ladite terre que se réserve ladite Société Venderesse au Sud de ladite propriété présentement vendue aucune chose quelconque sauf avec le consentement par écrit de ladite Acquéreuse.  Etant entendu que cette restriction ne s'appliquera pas au droit de ladite Société Venderesse d'enclore sedite terre sur lesdites lignes de demarcation du Sud et de l'Ouest de ladite propriété présentement vendue comme est ci-dessus décrit".

This translates into English as follows:-

"That there may never be established, built or constructed on the said land retained by the said vendor company to the south of the said property now sold anything whatever save with the written consent of the said purchaser; it being understood that this restriction shall not apply to the right of the said vendor company to enclose its said land on the said lines of demarcation to the south and west of the said property now sold as described above".

4.        At the time of the Contract, relating to 2 Pigneaux Farm, Wilbrook was in the process of developing Pigneaux Farm and selling it in units.  It had already sold numbers 1, 3 and 5 Pigneaux Farm; and by the end of November 1993, it had also sold numbers 4 and 6.  No other units were then in the course of construction, although there are references in the documents to two further projected units, 7 and 8 Pigneaux Farm.  Wilbrook then fell into financial difficulties; and the land it had retained after the various sales (which was largely agricultural land known as Field 552) was ultimately sold by Royal Bank of Scotland International as tenant après degrèvement to the respondents, who had earlier acquired 1 Pigneaux Farm (now known as Pigneaux House).  The respondents took the retained land subject to the servitude.

5.        In September 2006, 2 Pigneaux Farm was bought by the appellant company.  The benefit of the servitude was included in the purchase.

6.        In the latter part of 2008 the respondents, having sought the appellant's permission and having been refused it, started building works on land to the south of 2 Pigneaux Farm.  The works consist of the conversion and enlargement of a derelict cottage and the provision of access and services to it.

7.        In December 2008, the appellant applied to the Royal Court for an interim injunction to restrain the building works.  The application was refused.

8.        By its judgment and Act of Court dated 29^th April, 2009, the Royal Court dismissed the appellant's claim.  It held that the site of the derelict cottage was not within the area of land that it identified as affected by the restriction.

9.        The Royal Court's reasoning was as follows.  After setting out some general principles of interpretation, it identified the matrix of facts against which the contract was to be construed.  These consisted of the contract by which Wilbrook acquired Pigneaux Farm in September 1992; the layout and appearance of Pigneaux Farm at the time of that acquisition; a planning application for 7 units made by Wilbrook in October 1992; certain clauses conferring rights on and imposing restrictions on the use of individual units, which appeared first in the contract of sale of 1 Pigneaux Farm and were replicated in substantially similar terms in the contracts relating to the other units; a consent issued in July 1992, by the Department of Agriculture and Fisheries exempting the site of the cottage and the land lying between it and what became 2 Pigneaux Farm from the requirement affecting Field 552 that it be used only for agricultural use; and an application made by Wilbrook on 6^th September, 1993, for planning permission to develop the derelict cottage as unit 7.  The Court then set out various provisions of the contract, some referring to 7 and 8 Pigneaux Farm; and, after remarking that the restriction was in unusually wide terms and recording a submission by the appellant that, whatever the limits of the affected land, the cottage was plainly south of 2 Pigneaux Farm and so on any basis covered by the restriction, it held that it was necessary for the fonds servant - the land subject to the restriction - to be precisely defined.  It rejected the appellant's suggestion that the affected land was all the land retained by Wilbrook following the contract that lay south of a line drawn due east from the northern boundary of 2 Pigneaux Farm since that interpretation, although it gave certainty to the restriction, was inconsistent with the surrounding circumstances, in particular Wilbrook's intention to develop unit 7 on the site of the cottage.  In view of that intention, the Court regarded it as inconceivable that Wilbrook intended to create a servitude that effectively prevented it from developing the cottage; and then it said this (at paragraph 47):-

"In essence, the Contract is ambiguous.  On the one hand, certain provisions make it expressly clear that Wilbrook intended to develop Numbers 7 and 8 and on the other hand a servitude was created which prohibited any development to the south of Number 2.  Because the Contract does not describe the location of Numbers 7 and 8, the ambiguity is latent and only came to light when work on the cottage commenced.  The position of Number 7 on the site of the cottage is in our view clear from the surrounding circumstances or matrix of facts and therefore it transpires that one clause of the Contract prohibits what other clauses permit".

On the basis that the ambiguity was to be resolved in favour of the fonds servant, the Court concluded that the cottage was not covered by the restriction; but, rather than hold the servitude void for uncertainty, it resorted to extrinsic evidence to resolve the ambiguity.  The evidence consisted of the file of the conveyancer who had acted both for Wilbrook and for the purchaser in relation to the Contract; and on the basis of the material contained in the file the Court concluded that the land affected by the servitude was a rectangular area running due southward from the northern boundary of 2 Pigneaux Farm to the northern wall of the cottage, but excluding the site of the track lying to the east of the cottage.

10.      The appellant attacked the Royal Court's approach and conclusions on a number of grounds.  Its primary contention was that the Court had wrongly interpreted the restriction by looking to what it believed were the intentions of the parties to the contract rather than to the proper meaning of the words actually used.  In particular, the Court's conclusion, made without regard to extrinsic evidence, that it could not have been intended that the cottage should be affected by the restriction since Wilbrook hoped to be able to develop it as unit 7 was wrong: the cottage lay to the south of 2 Pigneaux Farm, and there was no reason to exclude it from the restriction.  The complaint applied also to the use of evidence of the actual intentions of the parties to the contract: that was said to be wrong in principle, and in any event unsatisfactory because the Court had taken a view of the matter based on an incomplete investigation of the facts.

11.      Although both the judgment and the parties' written contentions devote some time to the principles to be applied in construing the Contract, it seems to me that the task is to be approached by reference to the well-known principles governing the construction of documents generally.  These principles are to be found in this jurisdiction set out in the judgment of Commissioner Page in In re Internine Trust [2005] JLR 236 at paragraph 62.  In summary, they are as follows:-

"the aim is to establish the presumed intention of the parties from the words used; but the words used must be construed against the background of the surrounding circumstances, which means the circumstances that must be taken to have been known to the [parties] at the time.  These circumstances include anything that would have affected the way in which the language would have been understood by a reasonable man, except that evidence of subjective intention is ordinarily inadmissible.  The words must also be read in the context of the document as a whole, and should so far as possible be given their ordinary meaning; but a different meaning may have to be given to them if a reading of the document as a whole and common sense so require.

12.      Additionally, however, it is necessary to have regard to the fact that what is being construed is a provision creating a servitude.  As the Royal Court correctly pointed out by reference to a passage from the commentator Domat, servitudes derogate from the ability of a landowner to use his property, and are therefore limited to what is precisely necessary for the use of the person who benefits from the servitude.  Both for this reason, and because of the general requirement of contractual certainty, it is necessary that the fonds dominant, the fonds servant and the terms of the servitude should be capable of precise definition.  The servient owner is entitled to know what he is able to do with his land.  Moreover, as this Court stated in Colesberg Hotel (1972) Limited-v-Alton Hotel Limited [2003] JLR 176, per Southwell JA:-

"One main feature of the Jersey law of servitudes is that there is a presumption in favour of the freedom of land from excessive burdens of servitudes.  Where servitudes derive their titre from a contract or deed, the effect of this presumption is that in interpreting the words of the contract or deed, in so far as there is any ambiguity, the ambiguous words are to be interpreted in favour of the freedom of the servient tenement".

13.      Before I turn to construe the contract in the light of these principles, I must deal with a contention by the appellant that the Royal Court wrongly excluded the expert evidence of a Mr Bougeard, which had been put forward as an aid to interpretation of the Contract.  Mr Bougeard is an experienced conveyancer, and his proposed evidence dealt with the way Jersey conveyances are put together and with the practice of conveyancers in 1993 of not including map references or fixing cardinal points unless it was absolutely necessary to do so.  The great bulk of his evidence, however, is taken up in explaining how he considers the restriction is to be interpreted.  In my view, the Royal Court was right to regard the former evidence as unnecessary and the latter as inadmissible.  The proper construction of the restriction is a matter of law, and expert evidence on a matter of Jersey law may not be received.  It is a matter for the Court to determine in the light of the parties' submissions.

14.      I have already set out, in paragraph 3 above, the terms of the servitude.  In order to put it in context, it is necessary to refer to certain other provisions of the contract. 

(i)        The land sold is defined by reference not only to the house, garden and yard on it, but also by reference to its position relative to boundary stones and to other adjacent properties.  Two of the boundary stones are said to be "du Sud et de l'Ouest vers le terre que se réserve ladite Société Venderesse"; and the last part of the description of the position of 2 Pigneaux Farm describes it as bounded "au reste par le Sud et au reste par l'Ouest a ladite terre que se réserve ladite Société Venderesse". 

(ii)       There are references to a right of way over a track running to the south of a communal car park, itself lying to the east of 2 Pigneaux House, and several other references to the track as being retained by Wilbrook.

(iii)      There are also several references to units 7 and 8, for example in provisions granting rights in connection with services over the common yard and the right to park on the common car park on terms as to sharing of costs.  The most important of these references for present purposes are

(a)       A clause, which follows three clauses imposing restrictions on the use of 2 Pigneaux Farm and the other units, including 7 and 8, stating:-

"Que pour eviter aucun doute les provisions des trois dernières clauses ne s'appliquerent pas à aucune partie de ladite terre que se réserve ladite Société Venderesse qu'elle pourrait vendre comme partie desdites propriétés portent les numéros sept et huit "Pigneaux Farm" et que les autorités competentes a désignée comme terre pour les usages d'agriculture et d'horticulture";

or, in English:-

"That for the avoidance of doubt the provisions of the last three clauses shall not apply to any part of the said land retained by the said vendor company which it is able to sell as part of the said properties having the numbers 7 and 8 Pigneaux Farm and the competent authorities have designated as land to be used for agriculture or horticulture".

(b)       A clause (omitted from the contract as originally passed, but inserted into the Contract by the corrective contract) stating:-

"Que ladite Société Venderesse comme propriétaire desdites propriétés portent les numéros sept et huit "Pigneaux Farm" auront le droit de garder en dessous de et à travers ladite cour ou avenue formant partie de ladite propriété présentement vendue tous et tels tuyaux, cables et conduits pour l'approvionnement d'eau, d'électricité et du telephone auxdites propriétés ...";

or, in English:-

"That the said vendor company as owner of the said properties having the numbers 7 and 8 Pigneaux Farm shall have the right to keep beneath and across the said yard or avenue forming part of the said property now sold all and such pipes, cables and conduits for the provision of water, electricity and telephone to the said properties...".

15.      The provision mentioned in paragraph 14(3)(b) subjects 2 Pigneaux Farm to servitudes in the nature of easements in favour of 7 Pigneaux Farm.  The inclusion of that provision shows that the parties intended to benefit some land.  The obvious question for the purchaser to ask, if otherwise she did not know where the benefited land was intended to be, was where 7 Pigneaux Farm was.  The Contract itself does not provide the answer; but it is supplied by the plan attached to an application for planning permission lodged by Wilbrook on 6^th September, 1993, less than three weeks before the date of the Contract.  That plan shows 7 Pigneaux Farm on the site of the derelict cottage.  The provision mentioned in paragraph 14(3)(a) refers also to land designated for agricultural or horticultural use that might be capable of being sold with 7 Pigneaux Farm.  Again, that land is not identified in the Contract; but a consent dated 3^rd July, 1992, issued by the Department of Agriculture and Fisheries shows that the whole of the development, including the site of the derelict cottage, had been released from the requirement that it be used for agriculture, leaving the rest of field 552 subject to the requirement.  These public documents, which plainly form part of the background against which the Contract was executed, are consistent in showing the site of the cottage as part of the intended development of Pigneaux Farm by Wilbrook.

16.      I can now return to the restriction.  It is described as affecting "ladite terre que se réserve ladite Société Venderesse au Sud de ladite propriété présentement vendue".  There is no plan attached to the Contract, nor any precise verbal description of the affected land.  It must, however, consistently with the words used, (i) have been mentioned before, (ii) have been retained by the vendor following the Contract and (iii) lie to the south of 2 Pigneaux Farm.  There is nothing inherently ambiguous about these requirements; and Advocate Sinel, for the appellant, submitted that there was no difficulty in their application.  He suggested that the land previously mentioned was all that retained by Wilbrook and described in the identification of the property sold (paragraph 14(1) above), and that, whether or not other land was included, the affected land extended due south of the northern boundary of 2 Pigneaux Farm as far as the southerly boundary of Field 552.  On that basis both the site of the cottage and the track were included in the affected area.  In Advocate Sinel's submission, that result was not surprising: viewed from the perspective of a purchaser of 2 Pigneaux Farm, the most likely development to the south would be on the site of the cottage, and that would be precisely what the purchaser would wish to prevent.

17.      I am unable to accept these submissions.  There is no prior adequate description of the vendor's retained land to the south: it is coupled in the parcels clause with references to retained land to the west (paragraph 14(1) above).  The Contract makes plain that the parties expected the cottage to be developed as unit 7.  The available material shows beyond doubt that what was then contemplated was that unit 7 would be on the site of the cottage.  The construction of a restriction contained in the same Contract must take account of that fact.  It cannot have been contemplated both that the site of the cottage would be developed and that development on that site would be prohibited.  That conflict is not satisfactorily resolved by reference to the possibility, inherent in the terms of the restriction, that the purchaser might consent to the development: that would make the development dependent on the satisfaction of a condition, but the easements reserved in favour of 7 Pigneaux Farm are unconditional.  Like the Royal Court, I conclude that it cannot have been the intention of the parties that the site of the cottage would be within the area affected by the restriction.  Similar reasoning applies to the site of the track giving access to the site of the cottage.

18.      That is sufficient to dispose of the appeal; but, as the Royal Court recognised, it is unsatisfactory to leave the matter in a state where the land burdened by the servitude is undefined.  As it also recognised, the conclusion that the cottage is excluded reveals a latent ambiguity in the terms of the restriction: when those terms come to be applied on the ground, it becomes clear that there are at least two possible meanings of the expression "ladite terre que se réserve ladite Société Venderesse au Sud de ladite propriété présentement vendue".  The conclusion that there was ambiguity was attacked by Advocate Sinel, on the basis that the Royal Court was falling into the trap of creating ambiguity where there was none in order to avoid the unacceptable consequences of the true construction.  I do not consider that suggestion to be justified: in fact, it seems to me that there are ambiguities even without reference to the position relating to 7 Pigneaux Farm.  It is not clear which part of 2 Pigneaux Farm forms the northern boundary of the affected land; it is not clear whether the land to the south is intended to include also land to the east and west, so long as it is also south of 2 Pigneaux Farm and was retained by Wilbrook; and it is not clear what are the east and west boundaries of the affected land.  These are real difficulties, to which there are no obvious answers, and they are capable of leading to the conclusion that the restriction fails for uncertainty.

19.      That is not a result that a court should countenance unless there is no alternative.  The servitude was intended to have meaning, and the Court should strive to give it meaning.  Once again, the Royal Court recognised this; and in the absence of any sufficient material in the Contract itself or the matrix of fact it decided to look to extrinsic evidence in an attempt to resolve the difficulty.  This it was entitled to do: a case of latent ambiguity is an exception to the rule that evidence of the parties' subjective intentions is inadmissible: see Lewison: The Interpretation of Contracts, 4th ed. (2007) at page 305 et seq.  The Royal Court nevertheless rightly approached this exercise with caution: it pointed out the necessity to have regard to the need to maintain certainty and the integrity of the Registry, and recognised that the evidence must in any event be probative. 

20.      The evidence taken into account by the Royal Court consisted, as I have already indicated, of documents from the file of the conveyancers acting for both parties on the Contract.  The first document was a letter dated 20^th September, 1993, from the purchaser's father, acting on her behalf, which contained the following passage:

"He [Mr Wilson of Wilbrook] has also said that there can be no development from the bottom of Unit 2 garden up to the walls of the derelict cottage to the south of Unit 2.Would it be possible to have this fact reinforced in the conveyance in that my permission would be necessary before structures could be erected on it, as, of course, situations can change?"

On the following day, he wrote again, saying:

"There are one or two minor points that I also need to clear  ... plus confirmation that the land to the south of the garden up to the cottage will not be built upon other than for standard garden equipment".

The next day, 22 September, he wrote once more, saying:

"The garden area to the south of the garden of Unit 2 not to be built or [sic] without permission of Unit 2"

This passage is annotated in the margin in manuscript with the word "Agreed"; and on 24 September (the day the Contract was passed) the conveyancer wrote saying "This has been added to the contract".

21.      This evidence is compelling.  In large part it emanates from the purchaser's side, and it is both internally consistent and consistent with the intention derived from the terms of the Contract itself that the site of the cottage was to be excluded.  It was nevertheless objected by Advocate Sinel that the Royal Court should not have admitted it without hearing the authors of the documents cross-examined.  I do not agree: there was no doubt about the authenticity of the documents, and they speak for themselves.

22.      Following the Royal Court's judgment, Mr Sokic, who is one of the controllers of the appellant company and lives at 2 Pigneaux Farm with his wife, conducted some investigations.  He incorporated the results in an Affidavit which formed the subject of an application by the appellant to adduce further evidence on the appeal.  The Affidavit explains that Mr and Mrs Sokic had bought 2 Pigneaux Farm in the belief that there could be no development on the land to the south of it, including the site of the derelict cottage; and it exhibits an Affidavit from Mr Wilson, the director of Wilbrook who had acted for it in relation to the Contract.

23.      I have considerable sympathy for Mr and Mrs Sokic, who found themselves in an unexpected and unfortunate position as a result of the Royal Court's decision; but their feelings, however understandable, cannot themselves provide material evidence.  It is only the evidence of Mr Wilson that is capable of being relevant; but in order to justify its admission the appellant must establish that it could not reasonably have been obtained for use at the hearing; that it would probably have an important bearing on the outcome of the case; and that the evidence is credible.  For these requirements, see Mayo-v-Cantrade [1988] JLR 173, adopting the principles set out in the well-known English case of Ladd-v-Marshall [1954] 1 WLR 1489.

24.      In my view, the appellant cannot satisfy these requirements.  It had, through its lawyers, the conveyancer's file well before the trial; and, although it would have been difficult to foresee the important part that the evidence contained in it might play, there is no doubt that the evidence of Mr Wilson could also have been obtained before the trial.  If it were on this ground alone that the appellant failed to satisfy the Ladd-v-Marshall requirements, I might for my part have been prepared to allow the evidence in; but I consider that the other requirements are not satisfied either.  Mr Wilson's evidence is summarised in paragraph 7 of his Affidavit, which is in the following terms:-

"I recall that at some point during those negotiations with MC [the purchaser's father], there may have been some discussion about limiting the scope of the restrictive covenant to an area of land lying between the derelict cottage and No 2, however negotiations continued and eventually it was agreed that the restrictions noted above would apply to the entirety of the field 552 to the South of No 2, including the derelict cottage."

This passage seems to me impossible to reconcile with the contents of the conveyancer's file.  The material from that file referred to above consists of communications in the four days up to and including the date of the Contract, whereas the timescale implied by Mr Wilson is much longer.  More importantly, he implies that it was the purchaser's father who was pressing for a wider area; whereas the letters show that all he was ever asking for was a small area to the south of 2 Pigneaux Farm.  It cannot be the case that Mr Wilson would have been offering more than the purchaser wanted.  In these circumstances, I do not consider that the material is either credible or likely to have an important influence on the outcome.  I should not, of course, be taken as suggesting that Mr Wilson is trying to mislead; but the events in question took place 16 years ago, and his recollection cannot stand with the contemporaneous documents.  I would not admit the further evidence. 

25.      On the basis of the material it had seen, the Royal Court concluded that the land affected by the restriction was a regular rectangular area running south from the northern boundary of 2 Pigneaux Farm to the northern wall of the derelict cottage.  It was influenced in its decision to take the northern boundary by the reference in the restriction to the right of Wilbrook to fence the western boundary of 2 Pigneaux Farm, which it regarded as suggesting that the land to the west but north of the southern boundary of 2 Pigneaux Farm was subject to the restriction.  I do not myself think that the indication, which was for the avoidance of doubt only, is strong enough to displace the impression that the parties would have intended the restriction to start at the southern boundary of the land that was sold.  For my part, I would regard the land affected by the restriction as running south from the southern boundary of 2 Pigneaux Farm to the northern wall of the derelict cottage, the area being bounded by the track to the east and by a notional line taken due south from the south-western corner of the southern boundary of 2 Pigneaux Farm until it intersects a notional line extended in a westerly direction along the line of the northern wall of the cottage.

Subject to that small variation, I would dismiss the appeal.

NUTTING JA:

 

I agree.

 

 

SMITH JA:

 

I agree.

Authorities

In re Internine Trust [2005] JLR 236.

Colesberg Hotel (1972) Limited-v-Alton Hotel Limited [2003] JLR 176.

Mayo-v-Cantrade [1988] JLR 173.

Ladd-v-Marshall [1954] 1 WLR 1489.

The Interpretation of Contracts, 4th ed. (2007).