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Contractual Construction - Cook v Broad: whether the requirement of consent in a restrictive covenant is carried to a vendor’s successor in title

16-January-2015
16-January-2015 8:56
in Commercial and Chancery
by Admin

Lawrence Power appeared for the Churchill family in Churchill v Temple [2011] 1 E.G.L.R. 73, [2011] 17 EG 72 Chancery Division, a landmark case stating when contractual terms had become obsolete. Mr Power argued that the proper contractual rules of construction and interpretation applied and that the objectors could not infer into the conveyance the term “and successors in title”. Furthermore, he also successfully argued that the relevant terms had to be constructed commercially as to their operation.

In the current case, in short, Mr and Mrs Cook (“the Applicants”) sought to discharge or modify restrictive covenants which affected their freehold land (“the Property”) so as to permit the re-development of their home from a two-storey to a three-storey dwelling. The ruling was handed down on 19 December 2014 and follows this article.

The original purchaser had bought the Property in 1962 from her friend, the “Vendor”, who occupied the neighbouring land. The conveyance contained covenants requiring the written consent of the “Vendor” to the erection of any buildings, fences, walls or sheds on the Property.

The two plots of land subsequently changed hands with the Applicants purchasing the property in 1999. In 2012, the Applicants were granted planning permission for their proposed redevelopment despite objections from Mr Broad, the current owner of the neighbouring land in purported exercise of rights under the covenants.

In their application before the Lands Chamber, the Applicants relied upon the grounds set out in the Law of Property Act 1925, s.84 (1) (a), (aa) and (c). As expected, their neighbour objected. The primary argument concerned ground (a), namely whether the restriction ought to be deemed obsolete.

Mr Power’s contention, for the Applicants, was that the covenant was obsolete because it required the consent of the original vendor to the proposed development, which was impossible because she was deceased, and that the term “Vendor” did not extend further than the original covenanting party. He relied upon the decision in Churchill v Temple and Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] l WLR 896 amongst others.

Mr N Rose, presiding over the application, accepted those submissions in full. He held that he could not accept that there had been an error by the draftsman in excluding the phrase “successors in title” after the inclusion of “Vendor” in the covenants and thus the term “Vendor” only meant the original covenanting vendor, now deceased. Following Churchill v Temple, Mr Rose held that the language in the covenants had to be given their literal effect.

A permanent and absolute control over the development of the Property upon the Vendor’s death was such an improbable arrangement that only clear language justified such an interpretation. The better interpretation was that on the Vendor’s death, the covenant lapsed and become unenforceable. Mr Rose concluded that it was thus obsolete and had to be discharged. See below.

As a commercial set of chambers the barristers are trained in the understanding and application of the tenets of interpretation and construction which are essential to all contracts. This is true of dispute resolution whether by litigation, arbitration or mediation. However, it is also true that parties who wish to pre-empt disputes arising from poor “cut and paste” drafting must properly focus on settling contracts that set out the actual intention of the parties. Thereby, for example; there is less chance of clauses being obsolete or clauses that limit liability being too vague to be relied upon.

© 2015 Chambers of Lawrence Power, 4 King’s Bench Walk, Temple, London, EC4Y 7DL. Tel: 020 7822 8822. www.4kbw.netemail jr@4kbw.net

 

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