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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ranson v Ranson [2001] EWCA Civ 1929 (13 December 2001)
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Cite as: [2002] 1 FCR 261, [2001] EWCA Civ 1929

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Neutral Citation Number: [2001] EWCA Civ 1929
B1/2001/1938

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE - FAMILY DIVISION
( MR JUSTICE SINGER)

Royal Courts of Justice
Strand,
London, WC2A 2LL
Thursday, 13 December 2001

B e f o r e :

LORD JUSTICE THORPE
LORD JUSTICE ROBERT WALKER
and
SIR MARTIN NOURSE

____________________

CHRISTOPHER PHILIP RANSON
Appellant
v

PENELOPE ANN RANSON
Respondent

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

MARTIN POINTER QC, JUSTIN WARSHAW and JONATHAN SMALL
(instructed by Messrs Mills & Reeve of Norwich NR2 4TJ) appeared for the appellant
BARRY SINGLETON QC, LEWIS MARKS and JONATHAN SEITLER
(instructed by Messrs Manches & Co of London WC2B 4RP) appeared for the respondent

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    THORPE LJ:

  1. On 30 July 2001 Singer J made three orders intended to terminate ancillary relief proceedings brought by Penelope Ranson against her husband Christopher. A decree nisi had been pronounced on 30 December 1999 but, as at the date of judgment, had not been made absolute. For convenience I will throughout this judgment refer to the parties as husband and wife. For the purposes of this judgment the barest summary of the relevant history will suffice. The husband is 53 and the wife 49. Both had had unsuccessful marriages prior to the commencement of their cohabitation in 1983. The husband was then a property developer and the wife had a fashion business with three retail outlets. They married on 30 August 1985 being then respectively 37 and 33 years of age. Their first child Georgia was born on 15 April 1991 and their second John (known as Joe) on 14 October 1994. At the date of his birth the family was based in New Zealand. It seems that the motive for their emigration was the avoidance of possible tax liabilities. In any event the wife was New Zealand born and had family there. The possible tax liabilities related to two separate receipts. In the 1991/92 financial year the husband had become entitled to a consultancy fee of 840K. A fee of that magnitude was unprecedented and did not recur. The second transaction may have been less influential on the decision since it was not completed until nearly twelve months after the family's removal on 4 April 1993. There was, however the sale for 12.1M of property that the husband had purchased from an alter ego company in 1992 for 7.95M. By 1998, however, the return by stages of the family to the United Kingdom was completed. The husband's liabilities to the Inland Revenue arising out of these and other transactions remain unresolved. Shortly before the family's return the husband paid 0.25M into an accumulation and maintenance trust for each of the children. Thereafter the children's needs have been fully met from the trusts. In July 1998 the husband paid the wife 100K. But the marriage was not secure. By the following spring solicitors were involved and on 1 June 1999 the wife presented a conduct petition. In the following month there was an agreement under which the husband provided 550K to buy and refurbish the property for the wife and children known as Marsh Farm. Sadly protracted and expensive litigation then developed. As well as the wife's application for all forms of ancillary relief the husband applied for residence and contact orders. Within the financial proceedings the wife sought maintenance pending suit and obtained an order at the rate of 69K per annum. On 16 June 2000 the trial was fixed to commence on 18 September with a five day time estimate before Singer J. Sadly the case very significantly overran. It resumed on 6 February and was not concluded until 23 February, the fifteenth day in court. Each side blames the other for this overrun and I am quite unable to apportion responsibility. The bare fact is that the cost to the family of the ancillary relief litigation in the Family Division amounts to 1,026,000 and there is an additional 260,000 for the Children Act proceedings. Singer J did not give judgment, reserving pending the trial of the Children Act proceedings. That trial took place in May, the husband eventually appearing in person and withdrawing before the delivery of judgment. It was not until 24 July that the judge handed down his reserved judgment in the money case. At the hand down he heard a full day of submissions upon consequential orders. He then adjourned to 30 July and in the interim the parties made further submissions in writing. On 30 July he gave his ruling on the form of the order. He then heard further submissions and gave a ruling as to the distribution of income under an order for receivership which he proposed to make. He then heard further submissions and ruled on an application for permission to appeal. He then heard final submissions and ruled on an application for a stay.
  2. The orders to reflect the reserved judgment and the subsequent rulings have been designated as Order 'A', the main ancillary relief order; Order 'B', the order appointing a receiver; and Order 'C', a confidentiality order. By a notice filed on 28 August, just within an extension granted by the trial judge, the husband sought leave to appeal Orders 'A' and 'B', save for the consensual order for child periodical payments to be satisfied out of the children's trusts. On 3 October I heard the application for permission on notice and adjourned the application to be heard by the full court with appeal to follow on 26 October. Since only a day could be found strict time limits were imposed on oral argument prior to the filing of very full and helpful skeletons by both parties on 22 October. On the following day the wife filed a respondent's notice seeking to uphold the orders below on grounds not identified by Singer J.
  3. At the outset we granted permission to appeal, conducted the oral argument within the set time limits and reserved our judgment. Before turning to counsel's submissions and to a consideration of the judgments below it is necessary to record the crucial feature of the case, which I have so far omitted from the history. The husband's acquisition from his alter ego company in July 1992 included the benefit of a development contract for a consideration of 1.8M. The contract related to a site which throughout the judgment below is referred to as Site 'B' and which was the subject of Order 'C', the confidentiality order. For the purposes of this appeal we have extended the confidentiality provision and accordingly throughout argument and judgment Site 'B' is to remain unidentified. Site 'B' is overwhelmingly the most significant asset. The valuers were agreed that with good title it was worth approximately 11.4M. Although the husband had not initially suggested in his evidence that there were title defects, a conveyancing solicitor who had acted for the husband at the most relevant stages did raise serious question marks over the title in late 1999. The origin of those defects is complicated, as is any assessment of their present impact, and I will offer only the barest summary. The site was acquired by a housing trust in 1882. The conveyance was subject to restrictive covenants, a pre-emption right and what has been described as a penalty clause should the housing trust ever use the site other than for artisan's dwellings. The conveyance had been executed pursuant to powers conferred by section 9 of the Artisans' and Labourers' Dwellings Improvement Act 1875, a statute subsequently repealed in the 1890s. One hundred years later the trust desired to redevelop the site and entered into an agreement for that purpose with the husband's company. Planning permission was obtained, but only on appeal, in 1987. The trust issued a summons to determine whether the restrictions in the 1882 conveyance still ran for the benefit of the vendor's successor in title, the London Residuary Body. On 17 July 1987 the Vice Chancellor held that the restrictions were valid and subsisting. Consequentially on 25 October 1988 the trust and the London Residuary Body entered into a deed whereby in consideration for a payment of 100K the Body released the trust from the restrictions and permitted redevelopment for up to 2,700 square metres of office space. This deed however provided for the redevelopment by the husband's company, but, before the development was completed, the husband's company ran into difficulties resulting in the husband taking on huge borrowings to enable him to purchase first the largely developed site and second the development contract for Site 'B' and also to fund the remaining works at both sites. Thus in the event the redevelopment of Site 'B' was completed by the husband and not his company and it was to the husband that the commercial site was transferred on completion. Seemingly those involved overlooked the fact that the releases achieved by the 1988 deed protected the defunct company and not the husband. The problem emerged in 1998 when the husband attempted to realise the fruits of his shrewd dealings by selling Site 'B'. A marketing exercise identified a considerable number of interested buyers but only one meaning to exchange. However that purchaser's investigation of title resulted in their withdrawal from the intended purchase. They noted that the 1988 deed limited any erection on the site to 2,700 square metres. They said that the pre-emption right had not been released because there had never been a conveyance to the husband's company. They said the option to re-purchase in the event of breach of restrictive covenant had not been released in respect of anyone other than the housing trust. Finally they said that any breach of the restrictive covenants in respect of an adjacent corner of the site that the husband was not offering for sale would jeopardise the whole. As the ancillary relief case developed the wife relied upon a valuer who was instructed to assume a clean title. Curiously the valuer instructed by the husband was not initially instructed to give much if any weight to title defects and, even at the conclusion of his evidence, the reflection of title defects that he proposed led Mr Pointer QC, for the husband, in his final submissions to withdraw reliance on his opinion. (Subsequently during the months that judgment was reserved the valuer endeavoured to advance a much reduced valuation direct to the judge but the judge, understandably, refused to admit it.) In addition to the valuation evidence the wife relied on the opinion of Mr Michael Barnes QC and the husband on the opinion of Mr Kim Lewison QC. Each wrote opinions which were effectively treated as skeletons for oral submissions which they advanced to the judge at trial. The resulting issues were complex, technical and probably never previously aired in the Family Division. They were of course crucial to the outcome. If the wife and her advisors were right here was a property with title defects that were technical rather than real constituting no impediment to a sale of the property at or approaching its full market value. By contrast if the husband and his advisors were right these were substantial and incurable defects rendering the property unsaleable at anything above a shadow of its full value and impossible to offer as security for borrowing. The defects were said to be incurable in the sense that any approach to the local authority, successors to the London Residuary Body, would alert them to breaches of covenant resulting in an option to repurchase at the 1882 consideration. The crux of the judgment in the court below is therefore the findings and conclusions on this controversy. Before analysing those conclusions I will set them in the context of the judgment as a whole. This is a manifestly careful judgment running to over 250 paragraphs in the course of which the judge made clear findings on a range of issues arising out of financial dealings throughout the period of the parties' relationship. This extensive survey led the judge to strongly critical conclusions of the husband's disclosure and integrity. Although Mr Pointer has sought to challenge these conclusions they are carefully reasoned and manifestly justifiable on the evidence. I only add that Mr Pointer further complains that the judge fortified his impressions of the husband by introducing even stronger criticisms made of the husband in the judgment in the Children Act proceedings. Mr Pointer submits that had the Children Act application and appeal preceded this appeal the judge's criticisms of the husband might have been demonstrated to be the product of a judicial bias against the husband. To ensure no possibility of unfairness, judgment on this appeal has been reserved until after listing of the Children Act application and appeal.
  4. Although rejecting the primary submission that the judge's conduct of the Children Act proceedings was such as to deny the husband a fair trial this court has criticised the judge for the frequency of his interventions and the hostile tone of some of these interventions. The court has not accepted the judge's characterisation of the husband's conduct and motives as all bad. Thus the judge's findings against the husband in the Children Act proceedings imported into the money judgment at paragraph 123 cannot influence the exercise of the section 25 discretion. However the Children Act findings were only introduced in the context of the husband's ongoing negotiations with the Inland Revenue and the separate finding as to his disclosure and integrity does not depend upon them.
  5. Nor for the purposes of this judgment do I think it necessary to refer to any of the judge's findings on any issues in dispute other than the issues relating to Site 'B'. Although Mr Pointer has criticised other aspects of the judgment in my opinion the only issues in this appeal are:
  6. i) Was the judge entitled to reach his conclusions as to liquidity and value of Site 'B' on the evidence and submissions?

    ii) Were the orders ultimately made on 30 July sufficiently consistent with and justified by those conclusions?

  7. It is therefore of the utmost importance to record the judge's findings in relation to Site 'B' and then to proceed to record the ancillary decisions made on 30 July. Under the heading Site 'B' the judge first recorded the essential background. He continued at paragraph 142:
  8. "I hope that the foregoing is not too brief nor simplistic an account of the background to the valuation problems in relation to Site 'B' with which in the context of W's application I must now grapple. I emphasise that as well as giving rise to problems of valuation they may give rise to liquidity problems, whether in terms of the saleability or the mortgageability of Site 'B'."

  9. Having referred to the submissions of Mr Barnes and Mr Lewison he then recorded what was common ground between them as follows:
  10. "It seems to me that the fact that two advocates of their degree of sophistication and experience can disagree as sharply as they did about the effect of these covenants and obligations is far more significant than any opinion I might express upon the detail of their submissions. But both in effect agreed that in the result H remains bound by the covenant not to dispose of any section of the land without first offering to sell it to LA at 1882 prices, and at risk (subject perhaps to some discretionary relieving power in the court) that in the event of a breach of covenant he might be required to sell the land back to LA at such a price.

    Both also agreed that, through oversight, the transfers from O to H in 1993 had constituted a breach of O's covenant in that O did not have TP's consent to dispose of the land to H (rather than to C Ltd), and had not first offered to resell to TP. Both counsel also agreed that notwithstanding those breaches on the part of O, both the transfer and the grant of the lease were valid and created title in H, and that LA has no remedy directly against him while he retains ownership. LA's remedy would be, or would have been, to sue O for damages for breach of contract. The measure of those damages would presumably be the difference between the 1882 price for the land and its 1993 developed value."

  11. His ultimate conclusion upon their contribution is set out in an important passage commencing at paragraph 158:
  12. "In the light of the submissions which I have heard, and the evidence of this abortive transaction, I do not believe I need to embark upon analysis of the difference of view as to law and as to effect which emerged between Mr Barnes and Mr Lewison. But I do find myself in broad sympathy with the latter's view that a purchaser would not regard the fact that the risk of effective expropriation was 'technical and unmeritorious' (in the words of Mr Barnes) as a hugely comforting safeguard against a publicly-accountable body in a position to make a huge windfall profit.

    Thus, and again without descending into the detail of the evidence which I heard, I do accept that it may be optimistic to hope that a prospective purchaser (whether institution, syndicate or private individual) and its advisers would simply fail to appreciate the significance of this extremely unusual combination of circumstances.

    Nor is it immediately apparent to me what steps, on the evidence, H could take to improve his position and that of a prospective purchaser from him, to resolve the conundrum. That having been said, I do harbour considerable suspicions that H has not disclosed the full strength of his hand on this issue. These suspicions are based in part upon the bizarre timing of the manner in which this issue achieved prominence in these proceedings, notwithstanding that Mr Wallace clearly told me how in March 1998 he had explained to H, apparently for the first time, how this property might prove unsaleable save to LA for less than 9,000.

    But the proof whether there is in fact already or potentially some practical solution to the difficulties may only emerge if and when H is obliged to realise this investment whether at a time of his own choosing or one dictated by one or more of his creditors anxious that he should meet his obligations. Meanwhile, and for valuation purposes, I am prepared to assume that there may be major difficulties in effecting a sale at the sort of market value which a property in this location, of this quality and with this security and extent of rental income would ordinarily command."

  13. The judge went on to explain why he was not prepared to accept the opinion of either the valuer called for the wife or the valuer called for the husband save for their agreed opinion as to the value with good title. Otherwise the judge held that they had not 'sufficiently addressed their minds to the obstacles in the way of the sale that the peculiarities of this holding present'. In explaining why he took that view, there is this sentence at the end of paragraph 171:
  14. "But, at the end of the day, there clearly are the potential problems about which I have heard from Mr Barnes and Mr Lewison, and no very evident way out of them which has so far emerged."

  15. Of even greater significance is paragraph 175:
  16. "If a way round these problems can be found then the parties agree a value of 11.4M, from which would need to be deducted the costs of sale and capital gains tax (assuming as I do, and nobody argued the contrary, that the Inland Revenue would either not attempt or would not succeed with an argument that this too was a trading transaction). But I feel that the evidence is not sufficient to justify me in taking the view that such a sale is achievable. Time may tell. Therefore I must find what I hope will be a fair way to value this potentially inalienable property, upon the basis that H can (unless external pressures force him to do otherwise) simply sit tight and attempt to satisfy the claims against him and his own needs from the rental income."

  17. In the following ten paragraphs the judge went on to value in capital terms the husband's right to receive rental income under the commercial tenancy. That passage concludes with paragraph 186 in these terms:
  18. "10M is for these reasons the figure which I regard as fair to include as my assessment of the value to be attributed to Site 'B' when I survey, as I shall now do, the overall value of these parties' assets and liabilities. But I will not lose sight of the fact that this amount, and indeed the potentially higher market value which it is agreed could be achieved if a way can be found through the problems, is not to be treated by me as equivalent to either liquid funds or to the proceeds of a readily realisable asset."

  19. The following sections of the judgment set out the assets and liabilities in tabular form and apply the section 25 criteria. There is then the section headed liquidity under which the judge considers the husband's ability to mortgage Site 'B' and at the same time returns to the possibility of a sale. The husband's ability to borrow is specifically introduced in these two paragraphs:
  20. "Upon the assumption that 1M is available from property sales, the next question is therefore whether Site 'B' will prove acceptable as security for borrowings. There is of course the risk that it may not, the same risks as must lead to less than total confidence that it could be sold, or sold for a price which reflects adequately the stream of income it produces.

    But, setting that problem for one moment to the side, I can consider in the light of the (I have to say, not totally helpful) evidence which I have heard whether H could service a 3M borrowing. It was primarily in relation to this aspect of his expertise that Mr Mills gave evidence. I am sorry to say that on this topic he did not seem up to the minute."

  21. The judgment then diverts to consider the cost of servicing the borrowing but nowhere does the judge consider the availability of a lender. He concludes his examination of the cost of servicing a borrowing with these important paragraphs:
  22. "The viability of this course turns upon whether H is willing and able to find a suitable lender prepared to accept Site 'B' as security for such a borrowing. Failing that, the alternatives which present themselves are either that Site 'B' is sold, or that H funds the totality of the balance of his liabilities from his income.

    If a sale could be achieved at a reasonable price upon a basis that would guarantee H immunity from suit for breach of covenant by LA, then my conclusion would likely be that in principle such a sale should be effected, if otherwise W would be made to wait unreasonably long or to encounter unreasonable difficulties to achieve satisfaction of my order. The decision to order sale or not would obviously be considerably affected by whatever alternative proposals H might at the relevant time make.

    The final alternative, it seems to me, is to consider how much W should receive from H's rental income, and how those receipts could be secured. It will also be necessary to give consideration to such questions as the allocation between lump sum instalments and cost liabilities; whether and if so at what rate interest should apply to the balance of the lump sum; and the position of H both in terms of his own living requirements and his need to meet other liabilities.

    In considering these different eventualities it must not be thought that I have overlooked the goose set loose by Coleridge J in N v N [2001] 2 FLR 69. Without wishing to over-egg the analogy, I recognise in arriving at my decision that Site 'B' may well prove unmarketable. But as against that I conclude that its ability handsomely to produce gold will continue without pause."

  23. Thereafter, following a brief passage on the law, the judgment reaches its conclusion in this brief paragraph:
  24. "Applying all the facts and considerations which I have set out the conclusion at which I arrive is that H should pay W a lump sum of 1.9M, to bring her fortune up to about 2.5M (subject to her costs liabilities, or any add-back should she be entitled to recover sufficient and do so). Upon my assessment of the asset position that would leave H worth 5.3M net, but also subject to his own and any further orders for costs."

  25. The exchanges on the 24 July put the husband on notice that the judge was expecting evidence of his compliance with the lump sum order and also that the judge was contemplating the appointment of a receiver. Accordingly Mr Pointer lodged written submissions in preparation for the hearing of 30 July. He dealt with the first issue at some length:
  26. "Sale of or loan on Site 'B'

    a. The court has enquired what steps H has taken to raise the money since the draft judgment was handed down. H points out that evidence has been given from 3 surveyors as to the problems with this property; 2 leaders have agreed that the property suffers from serious title defects; a solicitor has given evidence that Norwich Union refused to buy because of the title defects. The judgment (correctly) states that borrowing is as dependent as sale on good title. It might be thought that the evidence in this case was as full as it needed to be on this point.

    b. In fact:

    i. Since the trial Weatherall Green & Smith have been asked by H to consider the property. They have advised that it is not worth more than 4M with the defects. This report is available. The effect of a sale at that level or at up to 7M is shown on the attached table.

    ii. Since the last hearing, Weatherall Green & Smith's dedicated finance department has been asked to see if H could raise 5M on the security of Site 'B'. Their answer is that 'in our view this property would not form suitable security to the lenders who are active in the market today'. This letter is available.

    iii. H has consulted Mr Arbuckle, who has acted for him before and knows the problems. He has advised H:

    1. It would be a fruitless exercise and dangerous because it would widen knowledge of the defect within the investment and finance community.

    2. The process would take some time. Any offer would be subject to a proper valuation and a certificate of good title. Once the offer is made, H would have to sign a commitment to proceed to the next stage, including an undertaking to pay costs if the transaction did not proceed. These would be lawyers' and valuers' fees. These would be 25,000.

    c. All the above can be reduced to formal evidence if required.

    d. If required, H can pursue the question of a loan; but this is a costly exercise: as shown above."

  27. In relation to the second point Mr Pointer's submission was relatively brief:
  28. "Receiver

    H wishes to point out:

    a. The appointment of a receiver will radically alter the stance of the Inland Revenue to the negotiations (and they will definitely not agree staged payments) and his bankers (who will call in the overdraft debt secured on Site 'B'). He will not be able to borrow against Paget's Farm to which he wishes to transfer the debt.

    b. A receiver will run up huge legal and surveyors' fees re Site 'B': which will advance the state of knowledge re the marketability of that property and the impossibility of approaching the local authority not at all (cf para 5(a) above)."

  29. The submissions did not succeed. Order 'A' required the husband to pay the lump sum on 1 August 2001 together with periodical payments equivalent to 6% of the lump sum (114K per annum) payable monthly in advance from 1 August. There followed many consequential orders before a provision that the husband pay on account of the wife's costs 450K by 1 August.
  30. Order 'B' was a lengthy provision for the appointment of Mr Lobbenberg as receiver not only to receive the rents but also:
  31. "(b) to seek advice in respect of and, if appropriate, to negotiate for the release of the pre-emption rights held by the authority, and

    (c) to effect a sale of, or borrow against, Site 'B' if that proves possible."

  32. The following paragraph gave the receiver liberty 'to negotiate with the authority for the release of the pre-emption rights, to negotiate for a sale of Site 'B' .... to offer Site 'B' as security for borrowings on behalf of the husband'. The further paragraph directed the receiver to pay from the rents 25K per quarter to the husband, 70K per quarter into court (as a reservation against income tax) and the balance (which is estimated to be about 65K per quarter) to the wife. The final payment was to be applied in part satisfaction of the husband's obligations in the following order; periodical payments, interest on the costs orders, the lump sum, and finally the costs orders.
  33. I turn now to Mr Pointer's submissions. By an application to admit fresh evidence he sought to introduce the valuation referred to in paragraph five of his written submissions of 30 July. He asserted that the judge had fallen into serious factual errors, perhaps consequential upon the long delay between hearing and judgment. Specifically he said that the judge had misunderstood the submission in February that in any event the husband was vulnerable under the terms of an indemnity that he had given to the housing trust. The judge had misunderstood the basis of the liability, overlooking a letter binding both the husband personally and his company written on 15 August 1998. He had drawn the judge's attention to the error after reading the judgment handed down but the judge had brushed aside the objection. Secondly he cited the judge's erroneous summary of an aspect of the wife's evidence which he said was the plainest evidence of a bias that the judge had developed against his client. Then Mr Pointer criticised the judge's application of the section 25 criteria which in each instance revealed either discrimination or bias against the husband. Neither the application to admit fresh evidence nor the submissions which I have summarised above seem to me to have any validity and we did not call on Mr Singleton to answer them. There remain for consideration two substantial submissions. First Mr Pointer said that the judge had under-estimated the practical consequences of the husband's inability to demonstrate clean title. Alternatively he submitted that if the judge's findings on that point were sound his progress to a lump sum order of 1.9M was both unexplained and impermissible. Secondly Mr Pointer submitted that the orders that emerged from submissions on 24 and 30 July were plainly wrong. On the findings that the judge had made how could he reasonably criticise the husband for failing to advance positive proposals for raising 1.9M over the last six days of July? The husband had demonstrated his responsibility by borrowing 0.5M to house the wife. During the proceedings there was accordingly no justification for instant enforcement by receivership. Receivership is the remedy of last resort, almost unknown in ancillary relief proceedings. To loose a court official on a mission to negotiate with the local authority and to seek buyers and lenders was quite inappropriate, potentially destructive of the family's financial security and in any event certain to visit excessive costs on a family that had already spent well over 1.25M on professional fees.
  34. Mr Singleton argued his respondent's notice to the effect that the judge should have found that the title was effectively clean since any deficiencies were easily demonstrated to be without substance and deployed for the purposes of diminishing the wife's award.
  35. Of the time allotted for submissions more than half was taken up with arguments surrounding title to Site 'B'. Each side had brought in a specialist junior. On those issues I gratefully adopt the observations of my lord, Robert Walker LJ. In the end perhaps the essential issue for the judge was not what would be the outcome of litigation in the Chancery Division so much as what impact would the history have upon potential purchasers and lenders when they came to investigate the title which on the face of the land registry entry drew attention to the restrictive covenants in the 1882 deed. On the issue as to the saleability of Site 'B' I reach the conclusion that the judge was entitled to find as he did on the evidence and the submissions which he received. I consider that he was entitled to reject the extreme positions contended for by the husband and the wife respectively. However his findings are nicely equivocal, no doubt reflecting the complexity of the issue. As the paragraphs which I have cited above demonstrate, in the sphere of valuation the judge rejected the possibility of a straightforward sale saying:
  36. "But I feel that the evidence is not sufficient to justify me in taking the view that such a sale is achievable. Time may tell."

  37. Equally at the end of the section of academic valuation the judge reminded himself that his figure was not to be treated as equivalent to either liquid funds or the proceeds of a readily realisable asset.
  38. In the section headed liquidity the judge, for obvious reasons, did not repeat his earlier stated views on the problems overhanging a sale of Site 'B'. But it is only within the section on liquidity that he begins to consider the problems confronting the mortgage of the site. It is true that in paragraph 231 he equates the risks of failing to sell and the risks of failing to mortgage but when he returns to face the possibility that Site 'B' might not be acceptable security he defines only sale or retention of the income stream as available options. No criticism of that, of course, but realistically if the husband could not find a buyer he would have no better chance of finding a lender. Thus absent sale or mortgage, Hobson's choice must be to meet liabilities from the guaranteed income stream. It was precisely this option that Mr Pointer sought to illustrate with the spread sheets attached to his written submissions for the adjourned hearing on 30 July. That was of course an illustration of what the judge had referred to in paragraph 243 as 'the final alternative'.
  39. Now was the judge entitled on the evidence to include a mortgage as an optional means of discharging liabilities? Mr Pointer, when asked to identify the evidence on the issue, referred to a chartered surveyor called by the husband, Mr Arbuckle. The transcript of his evidence shows that he practised in Mayfair as a surveyor and consultant in property development. The final question asked of him in chief was whether Site 'B' was 'any good as security'. His answer was:
  40. "No. Anybody wishing to secure their loan on the property would make exactly the same enquiries as a purchaser and they would then quickly realise that they would be unable to foreclose on the property and realise the money that they needed to retire the debt."

  41. To this answer there was no cross examination. Nor did Mr Singleton, in responding to Mr Pointer's submissions, refer to this evidence or offer any riposte to Mr Pointer's submission that it precluded the judge from holding that the husband might be in a position to borrow several million pounds against the security of Site 'B'.
  42. How therefore could the judge, having discounted sale within any discernible time-scale, elect for a clean break lump sum order of 1.9M? Not by the mortgage route. If by the only alternative route, as Mr Pointer's spread sheets suggest, it would require a scheme of over ten years duration. Of course the judge suspected the husband's good faith and motivation. But the evidence and submissions giving rise to his conclusions on the title defects came essentially from others. Of course a clean break solution was highly preferable given the ill-will that the proceedings had engendered and the scale of the costs incurred. But, as the judge had summarised at the outset of his judgment, the husband offered a lump sum of 850K and the wife sought between 1.85M and 2M. The judge continued:
  43. "Both parties postulated these figures on a clean break basis, although the husband raised the question whether (if the lump sum would otherwise be larger than 850K) continuing periodical payments should be ordered."

  44. So if the judge was to validate the wife's figure and impose an obligation on the husband to raise swiftly 1M more than his asserted capability, the judge had to demonstrate some means of payment. The prospects of sale were nebulous: ('time may tell' as the judge expressed it). On Mr Arbuckle's evidence Site 'B' was not acceptable security for a major borrowing. Instalment payments funded from rental income was a very long road. The leap from the analysis of liquidity to the lump sum order is hardly explained. There is no explanation for the rejection of the husband's submission that, if his liability was assessed at over 850K, a clean break was not possible.
  45. For these reasons I consider that on the evidence the judge's discretion did not extend so far as to impose upon the husband capital liabilities of the extent that he did. Once the evidence established that the husband's only realistic option was to bide his time and continue to draw down the assured rental income, some form of periodical payments order became a leading option, however otherwise unattractive. At the very least the arguments for and against that option had to be balanced.
  46. I consider that Mr Pointer is also entitled to succeed on his second submission. What proposal could the husband advance in immediate response to the circulation of the reserved judgment given that he had at least succeeded at trial in establishing the limitations on his freeholder's ordinary capacity to sell or mortgage? Of course had the husband failed comprehensively or even substantially on that issue at trial the order for the lump sum (and even its immediate payment) might well have been justified. Otherwise the provision for almost instant payment of lump sum costs and immediate enforcement seems to me oppressive.
  47. Furthermore the delicacy required in any strategy to remove the question marks over title is a consideration that in my judgment weighed heavily against empowering a receiver in place of the husband. After all the husband has years of experience as a negotiator and dealer in this specialised market. Site 'B' represents effectively his life work as well as his pension. The future affluence of the whole family depends upon it. His first attempt to realise its proper worth having failed, he should surely be free to conduct any future venture. He is the most likely to succeed and, if anyone is to fail, spectacularly or otherwise, it had better be him. Even accepting his repugnance to pay the wife a penny more than he assesses she is due, I cannot accept that, where he stands to gain so much more from a successful outcome than she, he would cut off his nose to spite his face. In any event, any ruthless or self-destructive inclinations could be guarded by continuing orders of the court.
  48. There is another reason why I would reject the wide powers and liberties given to the receiver. The husband in his efforts would not need to assemble an elaborate and expensive professional team. He has continuous and detailed knowledge. If legal advice were needed on future developments Mr Wallace is similarly well prepared. But the receiver, if only to avoid any subsequent suggestion of imprudence, would be likely to instruct lawyers and surveyors. That likelihood is substantiated by the receiver's letter to the court of 14 September in which he seeks a relaxation on the ceiling on his charging rate (240 per hour plus VAT) to enable him to instruct a partner in Clifford Chance with a charging rate of 475 per hour plus VAT. I also note that the wife's solicitors in writing on 31 July to advise the receiver, Mr Lobbenberg, of his appointment said:
  49. "I envisage that you may wish to consult the Conveyancing Bar, the Chancery Bar, a firm of solicitors specialising in commercial property matters, valuers and chartered surveyors. You may need some accountancy support too."

  50. That sounds to me like an overture to a professional grand opera. Later sections of Mr Lobbenberg's letter reveal tasks and complexities even in relation to rent collection and distribution that are unlikely to come cheap.
  51. For these reasons I conclude that Orders 'A' and 'B' resulting from the hearings on 24 and 30 July also exceed the judge's discretionary ambit. The judge's expectation of proposals to comply in immediate reaction to the hand down judgment was unrealistic. Mr Pointer's written submissions for the adjourned hearing on 30 July should have dissuaded him as a matter of discretion from the very strong line that he adopted.
  52. Mr Pointer attacked only the judge's discretionary decision to order enforcement at the same time as payment of the lump sum. He did not specifically challenge the judge's jurisdiction so to do. Subsequent reflection has led me to doubt the court's jurisdiction. Section 1 of the Maintenance Enforcement Act 1991 confers on the High Court a variety of powers as to the means of payment of certain orders. Sub-section (1) provides:
  53. "Where the High Court .... makes a qualifying periodical maintenance order, it may at the same time exercise either of its powers under sub-section (4) below in relation to the order, whether of its own motion or on an application made under this sub-section by an interested party."

  54. The powers under sub-section (4) are either to make an attachment of earnings order or to provide for payment by standing order or by any other method requiring the debtor to give authority for payments from his account to the creditors account. The definition of 'a qualifying periodical maintenance order' does not extend to a lump sum order other than a lump sum order by instalments.
  55. This is the statutory jurisdiction to order payment and enforcement simultaneously. Since it does not extend to a lump sum order I am of the provisional view that an enlargement of the statutory power contained in the 1991 Act would be necessary to confer jurisdiction.
  56. Of course I recognise that the power to appoint a receiver derives from equitable rather than statutory powers. Rayden and Jackson on Divorce and Family Matters (17th Edition) at paragraph 34.55 says of the appointment of a receiver:
  57. "This is sometimes referred to as 'equitable execution' although it is not strictly speaking a method of execution. However, a receiver will not be appointed in the absence of special circumstances making it just and convenient to do so, where execution can be obtained in the ordinary course of law. As in the case of all equitable relief, the remedy is discretionary."

  58. Post the advent of the Human Rights Act 1998 I consider that additional restraint has been imposed on the use of an equitable power the simultaneous adoption of which seems to assume defiance before any opportunity is given for compliance.
  59. However I wish to emphasise that I differ from the judge's assessment of his discretionary ambit only at those ultimate stages. As the judge said in refusing the husband's application for permission to appeal:
  60. ".... this has indeed been in many senses an unusual and exceptionally difficult case ...."

  61. All the judge's many findings and conclusions up to his section on liquidity I support as a detailed and masterly appraisal. But in my judgment when he came to write his consequential conclusion the judge had only a realistic choice between a periodical payments order (secured or not), a lump sum order by instalments, or a combination of the two.
  62. The option of remission for retrial is unthinkable given the extent of the costs haemorrhage. This court must substitute an alternative order. The judge made no express finding on the wife's income needs since he did not contemplate making a periodical payments order. He did reject the husband's assessment of 45K per annum as well as the wife's assessment of 110K per annum. We also know that he dismissed the husband's application for the variation of the pending suit order of 69K per annum. His order of 30 July that the wife should receive periodical payments of 114K per annum pending payment of the lump sum was clearly no more than the application of 6% interest to the outstanding capital pending payment. On the basis that the wife receives child periodical payments under the consensual order of 12K per annum and a notional rental income of 5K per annum from her cottage, I would assess her periodical payments at 70K per annum. That mirrors the pending suit order and is not that far off bridging the gap between the competing submissions. But the husband is currently allowed 100K per annum out of the rents to be collected by the receiver. I see no obvious justification for his share exceeding the wife's. If the current rental income is 700K gross per annum and 432K net per annum, payment out of 140K per annum to the parties would leave a balance of 292K that might be applied to the payment by instalments of the lump sum, less of course the costs of collection and administration.
  63. If the husband's lump sum liability is discharged only by this route it is likely to take just over six years to accomplish. During that period the wife's periodical payments must be reduced proportionately to reflect each instalment received. The following equation illustrates the method of proportionate reduction:
  64. 70K x _T_

    1.9M (Where T = the sum of the payments on account)

    However throughout the husband remains under a continuing obligation to use his best endeavours to achieve payment of the whole at the earliest date and by whatever means are open to him. In the interests of the wife, if not in his own interests, he remains under a continuing obligation to use his best endeavours to achieve a sale of Site 'B'. The wife must have a charge over Site 'B' until such time as the lump sum is discharged in full. Once all the husband's financial obligations to the wife arising under the order below, as varied by this court, have been satisfied the charge will be released and there will be a reciprocal dismissal of all claims that each may have against the other whether under the Matrimonial Causes Act 1973 or the Inheritance (Provision for Family and Dependants) Act 1975.

  65. Should we retain the receiver to collect and distribute? There are obvious arguments for and against. The appointment may risk damage to the husband's financial standing. It will certainly involve a continuing drain on family funds. But that expense may save litigation costs which are plainly foreseeable if a complex financial relationship between the parties is continued over what may be many years. But the decisive consideration is that administration by an expert and independent professional acting as an officer of the court would ensure fair play in a situation where one party at least has, if only temporarily, lost the inclination to play fair.
  66. In reaching these conclusions I have not ignored Mr Singleton's argument that a denial of a clean break now might inhibit the wife's future wish to remarry. He described the wife's lump sum as the share that she has earned. However the orders that I propose do not undermine in any way her entitlement to a share of the family's assets acquired during the marriage. They only recognise the difficulties confronting the family in turning the outstandingly valuable Site 'B' into divisible cash. All other assets, other than each party's home and the wife's holiday home, are to be sold in accordance with Singer J's order. The proceeds will go towards settling the score between the parties. If and when the wife desires to remarry consideration will have to be given to any possibility of accelerating payment of her due and to what extent she should be compensated on the cessation of periodical payments for continuing delay in the payment of the balance of the lump sum then outstanding.
  67. Obviously the continuation of periodical payments may also be irksome to the husband. That will be an incentive to him to find some method of accelerating payment of the lump sum. The statutory provisions introduced by section 31, sub-sections (7A) and (7B) of the Matrimonial Causes Act 1973, give the court power to order revisions and the parties the opportunity to apply for revisions.
  68. I would therefore allow the appeal against Order 'A' to replace the lump sum provision with the combination of orders for periodical payments and lump sum by instalments indicated above. I would also allow the appeal against Order 'B' to reduce the powers and liberties of the receiver: (i) to collect all rents and to distribute the resulting receipts, after deducting provision for the husband's income tax liability thereon and his own proper charges, in making a net allowance to the husband of 70K per annum, in satisfying the wife's periodical payments order and in the payment of the lump sum of 1.9M by instalments; and, (ii) to keep accounts of his receipts and payments as well as an account of the outstanding balance of the lump sum at each year end and the application of the mechanism for reduction of the wife's periodical payments.
  69. ROBERT WALKER LJ:

  70. I have had the advantage of reading in draft the judgment of Thorpe LJ. I am in full agreement with his judgment on all the points which he addresses and I concur in the order which he proposes. The husband's title to Site B ("the property") is the only topic on which I wish to set out my own views.
  71. The 1875 Act

  72. The problems over the title to the property go back to a conveyance dated 9 February 1882 ("the 1882 deed") made under powers conferred by the Artisans' and Labourers' Dwellings Improvement Act 1875 ("the 1875 Act"). The 1882 deed and the 1875 Act were considered in depth by Sir Nicolas Browne-Wilkinson V-C in a judgment which he delivered in July 1987.
  73. The 1875 Act was described by the Vice-Chancellor as the first of the slum clearance Acts. It enabled a local authority to make a scheme defining the area to be improved, and identifying any land which was to be compulsorily acquired. Once the scheme had been approved by a provisional order and confirmed by a special Act of Parliament, the scheme was carried out, generally through the medium of a charitable body. As the Vice-Chancellor said:
  74. " in the normal case, the local authority will not itself carry out the work, save as to the street works, but will engage other persons, including bodies of trustees, to do the work and to take a conveyance or lease of the land on certain conditions."

  75. The essential point which the Vice-Chancellor had to decide was whether the conditions authorised by the 1875 Act (which by section 9 could include conditions "for the revesting of the land in the local authority or their re-entry thereon on breach of any provision in the grant or lease") were limited to conditions which would be valid under the general law (in particular, the requirements of the general law as to the effective imposition of restrictive covenants and as to remoteness of vesting).
  76. The Vice-Chancellor held that the 1875 Act authorised conditions which could not be valid under the general law. His decision was of more than academic interest because there were at the time proposals, which had reached an advanced stage, for the redevelopment of part of the property in a way which would infringe some of the conditions in the 1882 deed, if still subsisting and enforceable. The Vice-Chancellor's decision was a major obstacle to the proposals for redevelopment. The Governors of the relevant trust ("the Governors"), an unincorporated body of trustees for charitable purposes, gave notice of appeal but the appeal was compromised by a deed ("the compromise deed") dated 25 October 1988 and made between (1) the London Residuary Body ("LRB") and (2) the Governors. The 1882 deed and the compromise deed are at the centre of the problems over the title to the property.
  77. The 1882 deed

  78. After that outline sketch it is necessary to go back to the 1882 deed. The parties to it were (1) the Metropolitan Board of Works ("MBW") and (2) the Governors. It is a long and repetitive document (indeed, at one point there seems to have been an error of transcription by the repetition of about a dozen words in the typed copy filed at the Land Registry). But the general effect of the relevant part was (in the words of the Vice-Chancellor):
  79. "The lengthy covenants which I have just read in effect fall into three categories. The first is a batch of simple restrictive covenants, restricting the use by the governors of the land so as not to permit the erection or alteration of buildings and confining the use of the buildings to dwellings for artisans and labourers. Secondly, it contains a restrictive covenant restraining the governors and their successors from selling the land to anybody without the consent of [MBW] and conferring a right of pre-emption on [MBW] at a very moderate price. Thirdly, it provides that in the event of breach by the governors of any of the covenants, [MBW] has an option to repurchase."

  80. What the Vice-Chancellor referred to as a batch of simple restrictive covenants was subdivided into two by counsel in their submissions: covenants restrictive of building and covenants restrictive of user. These were designated as (A) and (B) respectively, in line with the paraphrase (it is not quite a verbatim transcription) in the schedule to the compromise deed. In the course of argument, therefore, the restrictions and provisions were referred to under four heads:
  81. (A) covenants restrictive of building;

    (B) covenants restrictive of user;

    (C) a right of pre-emption (framed as a qualified covenant against disposal without first offering the property for resale to the original vendor); and

    (D) an option for repurchase ("the penalty option") in the event of any breach of any of the preceding covenants.

    The price payable on exercise of the right of pre-emption or the penalty option was the historic 1882 cost of less than 8000 (referred to by the Vice-Chancellor, with some understatement, as a very moderate price) or a proportionate part of that sum.

  82. That is the general shape of the provisions which the Vice-Chancellor held to be valid and enforceable. There are some intricacies of wording (especially in connection with the expressions "successors or permitted assigns") but it is better to postpone discussion of those until after a summary of the compromise deed, and the questions which have been raised as to its meaning and effect.
  83. The compromise deed

  84. The deed contained numerous recitals. These referred to the 1882 deed, to the Greater London Council ("GLC") having become the successor in title to MBW, and to GLC having in 1978 entered into an agreement with the Governors for the redevelopment of the property. Phase 1 of that redevelopment had been completed but Phase 2 had been deferred. On 1 April 1986 GLC had been abolished and LRB became its statutory successor.
  85. Those recitals covered the more remote background to the bargain embodied in the compromise deed. The last six recitals explained the more immediate commercial context. LRB was to consent to part of the property ("the green land") being disposed of, developed and used for low-cost housing. In order to finance the redevelopment of the green land the Governors wished to sell two areas of freehold land ("the red lands") and to grant a 225-year lease of a further area ("the blue land"). The red lands and the blue land were to be disposed of to an identified company ("the company") which was at the time managed and partly owned by the husband. Recital (11) recited that in furtherance of the provisions of the 1875 Act LRB
  86. " has further agreed for the purpose of giving full effect to its consents referred to in recital (9) and for ensuring that the [Governors] financing arrangements referred to in recital (10) can be completed to free the red lands from the option to re-purchase contained in the [1882 Conveyance] and more particularly described in clause 4(ii) hereunder and in manner hereinafter appearing to mitigate the application of the said option to the green land in the event of there being carried on at or on the red lands any matter in breach of the said covenants and outwith the said consents but not further or otherwise."

  87. The last three recitals recorded the Vice-Chancellor's decision, the pending appeal from it, and an application which had been made to the Lands Tribunal (for discharge or modification of the restrictive covenants) but had not been pursued. These recitals (and especially recital (11) referred to above) are of course admissible as an aid to construction of the operative part of the compromise deed only if it is ambiguous. But they do help to set the deed in its commercial context.
  88. The operative part of the compromise deed contains eight clauses, followed by a schedule containing a close paraphrase of the two sets of restrictive covenants, the right of pre-emption and the penalty option. It may be helpful to give a brief summary of all eight clauses before embarking on more detailed discussion:
  89. (1) LRB, in consideration of 100,000, granted its consent to various acts mentioned in subclauses (a), (b) and (c). This consent was granted to the Governors "so that the benefit of such consent shall attach to and run with the [entirety of the] lands for the benefit of [the Governors] and [their] successors in title the owner or owners for the time being of the lands and each and every part thereof and every estate and interest therein".

    (2) The Governors covenanted with LRB to proceed with and complete the proposed development in accordance with the existing planning permission and approved plans.

    (3) LRB released the Governors from liability to proceed with Phase 2 of the earlier plan.

    (4) Clause 4 (expressed to be for the avoidance of doubt) provided (a) for the red lands and the blue land to be freed from the right of pre-emption with effect from their respective conveyance and lease to the company and (b) for the option penalty not to arise in respect of the red lands.

    (5) The Governors agreed to pay LRB's costs of and incidental to the compromise deed, and to indemnify it and its officers against all claims "arising directly or indirectly out of or in connection with the grant of this licence and consent" (with some added administration provisions).

    (6) The parties agreed to stay the appeal to the Court of Appeal.

    (7) Clause 7(a) made a relatively small amendment in the right of pre-emption, in effect substituting more modern language for the 1875 Act's dated reference to artisans' and labourers' tenements. Clause 7(b) confirmed the operation of the 1882 conveyance, except as had been provided by the preceding provisions, and except for a proviso which in effect freed the green land from being at risk under the option penalty because of anything occurring on the red lands.

    (8) The costs order made by the Vice-Chancellor was left intact.

  90. That is the general shape of the compromise deed. The most important clauses for present purposes are clauses 1, 4, and 5, and the provisions of clause 1 call for fuller description. LRB granted permanent consent ('permanent' being used as shorthand for the conveyancing formula already mentioned) to the following:
  91. (a) so far as consent was required under the first set of covenants, to (i) the erection of buildings on the red lands and the green land in accordance with the existing planning permission and (ii) "the re-erection rebuilding repair alteration extension and renewal" of any building on the red lands or the green land, but with a limit of 2,700 sq.m. for buildings on the red lands without consent, such consent not to be unreasonably withheld or delayed;

    (b) so far as such consent was required under the second set of covenants, to (i) the use of buildings on the green land as residential premises, and the letting of such premises to persons approved by the Governors (as suitable occupants for low-cost housing) and (ii) the use of buildings on the red lands as commercial or residential premises, and the charging of the red lands as security; and

    (c) so far as such consent was required under the right of pre-emption, to the conveyance of the red lands and the lease of the blue land to the company.

    Subsequent events

  92. Simultaneously with the making of the compromise deed a development agreement was made between the Governors, the company and the husband personally. The company undertook to carry out the whole of the development and the husband undertook personal liability as guarantor of the company's obligations. The development proceeded but in 1992 (shortly before the expected date of practical completion) the company was faced with a financial crisis (for reasons not connected with the development). On 2 July 1992 the benefit of the development agreement was assigned, with the Governors' consent, to the husband personally. This was an arm's length transaction. Practical completion occurred on 18 September 1992. The company was put into liquidation on 22 February 1993. The red lands, developed as commercial premises, were transferred to the husband on 30 March 1994 (under the terms of the development agreement and the assignment). They were let and they remain let at a substantial rent subject to upwards-only review at five-year intervals.
  93. In 1998 the husband tried to sell the greater part of the red lands to an institutional investor, which expressed interest at a price in excess of 10m. However that potential purchaser withdrew because of perceived problems over the title. Singer J had to form a view as to whether these problems were (at one extreme) so serious as to make the property virtually unsaleable, or (at the other extreme) were technical quibbles of no commercial significance, or whether they occupied some intermediate position capable of being quantified in terms of their depreciatory effect on the market value of the property.
  94. To assist him in this difficult task the judge had evidence from valuers, who in the event did not give him much assistance. He also had written and oral submissions from two leading counsel with experience in property matters (Mr Kim Lewison QC for the husband and Mr Michael Barnes QC for the wife) who, after some initial uncertainty about their function, addressed the judge as advocates and not as expert witnesses.
  95. Mr Barnes had in an opinion dated 30 June 2000 identified four particular points which (as recorded in an affidavit made on 10 April 2000 by Mr Adrian Wallace, a conveyancing solicitor) had troubled the institutional investor and its solicitors in 1998. These were as follows:
  96. (1) whether the consent in clause 1(a)(ii) of the compromise deed authorised comprehensive redevelopment;

    (2) whether the release of the right of pre-emption had been effective despite the fact that the red lands had never been conveyed to the company;

    (3) whether the penalty option had been released in respect of any event other than a breach of covenant by the Governors; and

    (4) whether a breach of covenant in respect of the smaller part of the red lands could imperil the whole commercial development on the larger part.

    Since Mr Barnes advised some other points have been raised, but it is best to start with these four.

  97. The point of construction on clause 1(a)(ii) can usefully be taken separately, since it does not raise any technicality. It is simply a question of interpreting the words "the re-erection rebuilding repair alteration extension and renewal" in a modern commercial document. Mr Lewison expressed the view that it was "not wholly untenable" that the words might be construed restrictively. But on any view a new building was permitted with an area of 2,700 sq.m. or such larger area as LRB or its successor should consent to, such consent not to be unreasonably withheld or delayed. Moreover the site had only just been developed; any redevelopment lay far in the future. This could not be seen as a significant defect in the title.
  98. The other three defects originally identified all arise from a rather uneven style of drafting employed in both the 1882 deed and the compromise deed. The 1882 deed is prolix and does not take advantage of the provisions of section 58 of the Conveyancing Act 1881 which had come into force shortly before. In the right of pre-emption (what was called part (C)) the words "the said sections of the said lands" are used in a context that makes it difficult to see what they are referring to. The apparent repetition is at the beginning of part (D). The 1882 deed may also reflect that at that time the state of the law as to restrictive covenants and rights of pre-emption was less fully developed.
  99. The language of the compromise deed is also rather uneven. It is not obviously defective but the draftsman has (or more likely, different draftsmen have) used different techniques while aiming at similar results. As Neuberger J said in Oceanic Village Ltd v United Attractions Ltd [2000] Ch 234,
  100. " while it is right to take into account the fact that the draftsman of the lease has departed from, or has omitted part of, a well established form of words, that will not, at least on its own, normally be a sufficient reason for not giving the words he has used the natural meaning which they would otherwise bear. The fact that the draftsman has used a different form of words in relation to two provisions of a lease concerned with the same concept, in this case the use to which land is not to be put, is also something which should be taken into account when construing either of those provisions, but, again, I do not consider that it should normally justify departing from the natural meaning of either provision.

    While it is appropriate for the court to contrast a provision which falls to be construed with a well established form of words or with the way in which another provision in the lease is drafted, it is also right for the court to bear in mind the way that leases are drafted in practice. It is well known that draftsmen of leases will frequently use many expressions where one will do: see eg per Hoffmann J in Norwich Union Life Insurance Society v British Railways Board [1987] 1 EGLR 137, 138D, F, and in Tea Trade Properties Ltd v CIN Properties Ltd [1990] 1 EGLR 155, 158A. Furthermore, draftsmen may take the wording of different clauses from different precedents and different clauses may come from different hands."

    That was said in relation to leasehold conveyancing, but it applies to the compromise deed also.

  101. Mr Barnes described the absence of any conveyance or transfer to the company as providing the strongest argument for a defective title, but as being an extremely technical and unmeritorious point. Mr Lewison said that it was difficult to see what other interpretation was available, and that it was sometimes the duty of a local authority to take technical and unmeritorious points.
  102. I prefer the view of Mr Barnes, and indeed I would be inclined to go further than Mr Barnes. The point is not only technical and unmeritorious. It is also contrary to the plain commercial purpose of the compromise deed, which was to enable the red lands to be redeveloped for commercial purposes in order to finance the redevelopment of the green land for low-cost housing. Clause 4 was stated to be "for the avoidance of doubt" but is here being relied on to create a doubt about whether a conveyance to the company was an essential precondition in clause 4(i). Instead there was a conveyance to the husband, who had always been the company's guarantor and had become the permitted assignee of the development contract.
  103. Mr Barnes treated the third and fourth points as linked and described as "almost nonsensical" the arguments that these points were serious defects. Mr Lewison said that the linguistic arguments on both points were in his favour, while conceding that a judge might take a robust view. On these points also I agree with Mr Barnes. Clause 4(ii) is a provision for the avoidance of doubt, and its reference to "breach by the Trust [that is, the Governors] of any of the covenants" is naturally read as a (not very precise) identification of the covenants, not as an extraordinary restriction of the release to a future breach by the charity (which was on the point of parting with the red lands).
  104. The judge dealt with these problems and submissions at paragraphs 135-161 of his judgment. He noted, correctly, that he could not resolve the issues in a way which would bind LRB's successor, which he referred to as LA (local authority). He recorded (in paragraph 145) that it was apparently common ground that LA's only remedy would be, or would have been, to sue the Governors for damages for breach of contract. Whether or not that was common ground, it seems to be wrong. It falls into the error of treating the Governors as if they were a corporation. They are not; they are an unincorporated body. LA has no prospect of a successful action for damages against the estates of the individual Governors who covenanted in 1882.
  105. The judge attached importance to the unchallenged evidence about the institutional investor which withdrew from negotiations in 1998. He concluded (paragraph 161) that he should assume that there might be major difficulties in effecting a sale at the level which would be expected if there were no doubt over the title.
  106. I do not think the judge can be seriously criticised for reaching that conclusion on the material put before him, although for the reasons given above I take a less serious view of the risks. Whether his order adequately reflects the problems as he saw them is another matter; on that point I agree with all Thorpe LJ's observations.
  107. In this court two new points have been raised, one on each side. Mr Pointer for the husband has criticised the judge for overlooking an indemnity entered into by the husband in a side-letter dated 15 August 1988 to the Governors. In that letter both the company and the husband personally undertook to indemnify the Governors in respect of any liability (in excess of 5000) under the covenant by the Governors in clause 5(b) of the compromise deed.
  108. Whether or not the judge overlooked this indemnity (a point touched on in paragraph 149 of the revised judgment) I am not satisfied that there is any real danger of the husband incurring any liability under the letter of 15 August 1988. He can become liable to the Governors only if the Governors are under a liability to LRB; and under clause 5(b) such a liability can arise only if there is a claim against LRB that it acted wrongly in entering into the compromise deed. LRB was a public body with a short expectation of life, operating in a climate of some political controversy. Possibly its lawyers foresaw some remote risk of a challenge to the propriety of its joining in the compromise deed (and so releasing some of the land for commercial development). The covenant in clause 5(b) looks like a precaution against a vague and dimly-perceived fear, not a protection against an imminent threat. I find it impossible to conclude that it is still of practical importance.
  109. Mr Singleton for the wife raised a new point in his respondent's notice. He argued that there was now a short answer to all the difficulties, that is that the conveyance to the husband was in breach of covenant (the right of pre-emption expressed as a covenant) and that the husband was not therefore one of the "permitted assigns" referred to in the penalty option (part (D) of the 1882 conveyance). In short Mr Singleton tried to turn what Mr Barnes had seen as the strongest argument for a defect in title into his strongest argument against a defect in title.
  110. This point was developed at some length in the skeleton argument for the wife. I mean no disrespect in not dealing with it at length. The fact that this rather paradoxical argument has now been raised for the first time suggests that it would not have convinced the solicitors acting for the prospective purchaser in 1998, and that it would not succeed in convincing others in future.
  111. I have no difficulty with the first step in the argument. The words "the Governors their successors or permitted assigns" are words chosen with some care. The Governors' successors are the charity trustees who have succeeded the original covenantors (compare the exception in parentheses at the beginning of part (C)) and permitted assigns are those to whom the charity trustees have made a conveyance with MBW's consent. This form of drafting was sometimes used in order to limit the personal liability of an original covenantor without stopping a covenant being enforceable in equity by an injunction against unauthorised assigns (see the discussion in Morrells of Oxford Ltd v Oxford United Football Club Ltd [2001] Ch 459, 470-1; this point does not depend on changes made by the Law of Property Act 1925).
  112. But I cannot follow the later steps in the argument. The submissions made on behalf of the wife appear not to give sufficient weight to the wording in the penalty option which in effect covers unauthorised assigns ("any person or persons or a body to whom or which they or any of them may contrary to the said covenant [etc]"). It is very important to note that these provisions, if enforceable at all, would be enforceable in equity and by equitable remedies (an injunction or specific performance), not by an action for damages for breach of covenant (see paragraph 71 above).
  113. However my basic reason for rejecting the new point in the respondent's notice is that it is inconsistent with what I see as the strongest argument against any serious title defect: that is, that as a matter of commercial reality the successful completion of the development of the red lands, and the handsome premium of 100,000 paid to LRB, has freed the property from any risk of near-expropriation under the 1875 Act and the 1882 conveyance. The "unauthorised assign" argument runs counter to that and could not convincingly be deployed as an alternative to it.
  114. There is a further radical argument, not raised in the respondent's notice, for dispelling any doubt about the husband's title. The effect of the Vice-Chancellor's decision was to uphold restrictions on the title which could not have been valid under the general law, and depended for their effectiveness on powers conferred by the 1875 Act. That Act was repealed in 1890 and thereafter the validity of the restrictions depended on the principle that the repeal of an Act does not generally affect accrued rights or liabilities.
  115. The purpose of the 1875 Act was to encourage slum clearance and the building and maintenance of what is now called low-cost housing. Under the compromise deed the red lands ceased (and lawfully ceased) to be used for low-cost housing. They passed outside the scope of the statutory purpose and it is doubtful whether restrictions imposed solely for that purpose could continue to be valid in relation to any part of the red lands.
  116. However that argument was not raised or tested before us and I think I must disregard it. My overall conclusion is to reject the points raised in the appellant's notice and those raised in the respondent's notice. I consider that the judge overestimated the seriousness of the doubts affecting the husband's title, but that those doubts cannot be dismissed as fanciful, if only because of what occurred in 1998.
  117. SIR MARTIN NOURSE:

  118. I agree with both judgments and with the order proposed by Lord Justice Thorpe.
  119. While I do not dissent from the view that the doubts affecting the husband's title cannot be dismissed as fanciful, if only because of what happened in 1998, I am nevertheless quite satisfied, after a careful consideration of all the objections that have been raised, that if the title were to be put in issue in proceedings between the husband and a contractual purchaser of Site 'B' it would be held to be adequate.


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