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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Jones & Anor v Oven & Anor  EWHC 1647 (Ch) (28 June 2017)
Cite as:  EWHC 1647 (Ch)
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Rolls Building, Fetter Lane,
London, EC4A 1NL
B e f o r e :
(sitting as a Judge of the High Court)
| Patricia Ann Jones
|- and -
|Timothy Paul Oven
Andrew Butler (instructed by Birkett Long LLP) for the Defendants
Hearing dates: 22, 26 and 27 June 2017
Crown Copyright ©
HHJ Paul Matthews :
1. Do the restrictive covenants entered into in 2003 apply to the Strip once transferred to the claimants?
2. Should the court order specific performance of the covenant for the retransfer of the Strip, originally entered into by the defendants' predecessors in title in 2003, and then also by the defendants in 2005?
3. If so, should specific performance only be ordered on terms that the claimants agree to use the Strip in accordance with the restrictive covenants of 2003?
4. Are the defendants in breach of contract in failing to transfer the Strip at any time since 2010?
5. If they are, have the claimants suffered any recoverable loss?
"When I put the pigs onto the 4 metres we were trespassing in a vain attempt to get things moving, it was not by way of an abuse of a licence as none had been granted nor was it ever sought, we were not brought up to be borrowers."
In the later email the second claimant said:
"Putting the pigs on the 4 metre strip was an act of trespass in the vain hope of grabbing your attention that nothing was being done and we wanted the land returned to our ownership as you were not complying with the contract."
"I have been on there once to retain a chicken. The 4 metre strip of land was due to be returned to us within 28 days of the party wall building being demolished. That was three years ago that should have been returned to us. We never pushed it, we never went for it and we stood back and we waited. The party wall had to have work carried out on it. That work was carried out and we found that a chicken had strayed onto there. I went on there. That is the only time, without consent, I went on there to get this bird back."
"The Transferor (jointly and severally) (and which expression shall include their successors in title) covenant with the Transferee (and its successors in title) set out herein such covenants to bind Title Number EX 342457 and each and every part thereof and to benefit the Property and the land comprised in Title Number EX 488252 and each and every part thereof Together With any additional land acquired by the Transferee namely: –
(a) Not to do or allow to be done on the Transferor's Retained Land anything which may unreasonably be or grow to be a nuisance or annoyance to the Transferee or its successors in title in connection with the use by the Transferee and its successors in title of the land now comprising Title Number EX 488252 and the Property and any additional or other lands acquired by the Transferee ("the Transferee's land") and "nuisance and annoyance" includes anything which materially affect the use and enjoyment of the Buyer's Land for residential purposes Provided That nothing herein shall restrict: –
(i) the use of any buildings on the Transferor's Retained Land for recreational uses ancillary to the Transferor's use and enjoyment of the dwelling house known as New Lodge Farm or the use of such buildings for commercial stabling; or
(ii) the use of any land for schooling of horses; or
(iii) the use of any land for residential purposes
(b) That there will not be at any time any storage of any materials of a noxious or offensive nature on the Transferor's Retained Land
(c) Any buildings now or hereafter located on the Transferor's Retained Land will not be used for the keeping of agricultural livestock save for equines…"
"In the event of the Buyer or its successors in title
(i) voluntarily; or
(ii) in order to comply with Planning Authority requirements and of a planning consent obtained by the Buyer and being implemented by the Buyer
demolishing that part of the barn shown edged brown on Plan A the Buyer shall at no cost to the Seller transfer to the Seller the land having a width of 4 m between the points A, B, C and D shown cross hatched black on the plan marked A within twenty-eight days of the demolition of that part of the said barn and thereafter erect a fence one metre high along the boundary between the points A and B (such fence to be of a style as the Buyer shall determine but to be stock proof) and which fence shall be thereafter maintained by the Seller. The provisions of this clause shall not merge with or become extinguished on completion."
"4. Not to cause or permit or suffer to be done in or upon the Property any act or thing which may be or become a nuisance and annoyance danger or detriment to the transfer or or owners or occupiers for the time being of other parts of the estate…"
"8. Not at any time: – 8.1. To use or to carry on from the property or any part or part thereof any trade, business or manufacture whatsoever and not to use the property for any purpose or purposes other than those incidental to the enjoyment of one single private dwelling house and outbuildings ancillary to such use…"
"15. Not to keep or permit any dog bird or animal upon or in the Property which may cause a nuisance damage or annoyance which may cause a nuisance damage or annoyance to other residents of the Estate and in the case of any reasonable and substantiated objection being notified by the Transferor to such bird dog or other animal to remove the same forthwith…"
"Prior to selling part of our land to [CCR] in 2002, we kept a mixture of cattle and horses in both the First and Second Barns, but our premises and muck heap were too close to the proposed new boundary with [CCR] for their residential development to be viable. [CCR] formulated a "partnership agreement" which enabled them to purchase the required land and associated building to make their project work and become viable for both them and ourselves…"
"10. It was in conjunction with this that we devised a plan to develop the Second Barn for commercial liveries. Our intention at that time to use the 4 m strip for commercial stabling can clearly be seen by the specific provisions of the 2002 contract which stated that 'nothing herein shall restrict the use of any buildings on the Seller's Retained Land for … commercial stabling'" (emphasis supplied).
"14. Over the past 45 years, the House of Lords and Supreme Court have discussed the correct approach to be adopted to the interpretation, or construction, of contracts in a number of cases starting with Prenn v Simmonds  1 WLR 1381 and culminating in Rainy Sky SA v Kookmin Bank  UKSC 50,  1 WLR 2900.
15. When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to 'what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean', to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd  UKHL 38,  1 AC 1101, para 14. And it does so by focussing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions. In this connection, see Prenn at pp 1384-1386 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Tangen)  1 WLR 989, 995-997 per Lord Wilberforce, Bank of Credit and Commerce International SA (in liquidation) v Ali  1 AC 251, para 8, per Lord Bingham, and the survey of more recent authorities in Rainy Sky, per Lord Clarke at paras 21-30.
16. For present purposes, I think it is important to emphasise seven factors.
17. First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision.
18. Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. That is simply the obverse of the sensible proposition that the clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning. If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve.
19. The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG  AC 235, 251 and Lord Diplock in Antaios Cia Naviera SA v Salen Rederierna AB (The Antaios)  AC 191, 201, quoted by Lord Carnwath at para 110, have to be read and applied bearing that important point in mind.
20. Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.
21. The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. Given that a contract is a bilateral, or synallagmatic, arrangement involving both parties, it cannot be right, when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.
22. Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention. An example of such a case is Aberdeen City Council v Stewart Milne Group Ltd  UKSC 56, 2012 SCLR 114, where the court concluded that 'any … approach' other than that which was adopted 'would defeat the parties' clear objectives', but the conclusion was based on what the parties 'had in mind when they entered into' the contract (see paras 17 and 22).
23. Seventhly, reference was made in argument to service charge clauses being construed "restrictively". I am unconvinced by the notion that service charge clauses are to be subject to any special rule of interpretation. Even if (which it is unnecessary to decide) a landlord may have simpler remedies than a tenant to enforce service charge provisions, that is not relevant to the issue of how one interprets the contractual machinery for assessing the tenant's contribution. The origin of the adverb was in a judgment of Rix LJ in McHale v Earl Cadogan  EWCA Civ 14,  1 EGLR 51, para 17. What he was saying, quite correctly, was that the court should not 'bring within the general words of a service charge clause anything which does not clearly belong there'. However, that does not help resolve the sort of issue of interpretation raised in this case."
"14. It is rightly accepted on behalf of the claimant that there is no provision in the Lease which expressly obliges the landlords to pay the apportioned sum to the tenant. Accordingly, it follows that in order to succeed the claimant has to establish that such an obligation must be implied into the Lease.
15. As Lady Hale pointed out in Geys v Société Générale  1 AC 523, para 55, there are two types of contractual implied term. The first, with which this case is concerned, is a term which is implied into a particular contract, in the light of the express terms, commercial common sense, and the facts known to both parties at the time the contract was made. The second type of implied terms arises because, unless such a term is expressly excluded, the law (sometimes by statute, sometimes through the common law) effectively imposes certain terms into certain classes of relationship.
16. There have, of course, been many judicial observations as to the nature of the requirements which have to be satisfied before a term can be implied into a detailed commercial contract. They include three classic statements, which have been frequently quoted in law books and judgments. In The Moorcock (1889) 14 PD 64, 68, Bowen LJ observed that in all the cases where a term had been implied, "it will be found that ... the law is raising an implication from the presumed intention of the parties with the object of giving the transaction such efficacy as both parties must have intended that at all events it should have". In Reigate v Union Manufacturing Co (Ramsbottom) Ltd  1 KB 592, 605, Scrutton LJ said that "[a] term can only be implied if it is necessary in the business sense to give efficacy to the contract". He added that a term would only be implied if "it is such a term that it can confidently be said that if at the time the contract was being negotiated" the parties had been asked what would happen in a certain event, they would both have replied 'Of course, so and so will happen; we did not trouble to say that; it is too clear'. And in Shirlaw v Southern Foundries (1926) Ltd  2 KB 206, 227, MacKinnon LJ observed that, '[p]rima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying'. Reflecting what Scrutton LJ had said 20 years earlier, MacKinnon LJ also famously added that a term would only be implied 'if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common 'Oh, of course!'.
17. Support for the notion that a term will only be implied if it satisfies the test of business necessity is to be found in a number of observations made in the House of Lords. Notable examples included Lord Pearson (with whom Lord Guest and Lord Diplock agreed) in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board  1 WLR 601, 609, and Lord Wilberforce, Lord Cross, Lord Salmon and Lord Edmund-Davies in Liverpool City Council v Irwin  AC 239, 254, 258, 262 and 266 respectively. More recently, the test of "necessary to give business efficacy" to the contract in issue was mentioned by Lady Hale in Geys at para 55 and by Lord Carnwath in Arnold v Britton  2 WLR 1593, para 112.
18. In the Privy Council case of BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 52 ALJR 20,  UKPC 13, 26, Lord Simon (speaking for the majority, which included Viscount Dilhorne and Lord Keith) said that:
'[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.'
19. In Philips Electronique Grand Public SA v British Sky Broadcasting Ltd  EMLR 472, 481, Sir Thomas Bingham MR set out Lord Simon's formulation, and described it as a summary which 'distil[led] the essence of much learning on implied terms' but whose 'simplicity could be almost misleading'. Sir Thomas then explained that it was 'difficult to infer with confidence what the parties must have intended when they have entered into a lengthy and carefully-drafted contract but have omitted to make provision for the matter in issue', because 'it may well be doubtful whether the omission was the result of the parties' oversight or of their deliberate decision', or indeed the parties might suspect that 'they are unlikely to agree on what is to happen in a certain ... eventuality' and 'may well choose to leave the matter uncovered in their contract in the hope that the eventuality will not occur'. Sir Thomas went on to say this at p 482:
'The question of whether a term should be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the court comes to the task of implication with the benefit of hindsight, and it is tempting for the court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting, but wrong. [He then quoted the observations of Scrutton LJ in Reigate, and continued] [I]t is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred ...'
20. Sir Thomas's approach in Philips was consistent with his reasoning, as Bingham LJ in the earlier case The APJ Priti  2 Lloyd's Rep 37, 42, where he rejected the argument that a warranty, to the effect that the port declared was prospectively safe, could be implied into a voyage charter-party. His reasons for rejecting the implication were 'because the omission of an express warranty may well have been deliberate, because such an implied term is not necessary for the business efficacy of the charter and because such an implied term would at best lie uneasily beside the express terms of the charter'.
21. In my judgment, the judicial observations so far considered represent a clear, consistent and principled approach. It could be dangerous to reformulate the principles, but I would add six comments on the summary given by Lord Simon in BP Refinery as extended by Sir Thomas Bingham in Philips and exemplified in The APJ Priti. First, in Equitable Life Assurance Society v Hyman  1 AC 408, 459, Lord Steyn rightly observed that the implication of a term was "not critically dependent on proof of an actual intention of the parties" when negotiating the contract. If one approaches the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting. Secondly, a term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term. However, and thirdly, it is questionable whether Lord Simon's first requirement, reasonableness and equitableness, will usually, if ever, add anything: if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable. Fourthly, as Lord Hoffmann I think suggested in Attorney General of Belize v Belize Telecom Ltd  1 WLR 1988, para 27, although Lord Simon's requirements are otherwise cumulative, I would accept that business necessity and obviousness, his second and third requirements, can be alternatives in the sense that only one of them needs to be satisfied, although I suspect that in practice it would be a rare case where only one of those two requirements would be satisfied. Fifthly, if one approaches the issue by reference to the officious bystander, it is 'vital to formulate the question to be posed by [him] with the utmost care', to quote from Lewison, The Interpretation of Contracts 5th ed (2011), para 6.09. Sixthly, necessity for business efficacy involves a value judgment. It is rightly common ground on this appeal that the test is not one of 'absolute necessity', not least because the necessity is judged by reference to business efficacy. It may well be that a more helpful way of putting Lord Simon's second requirement is, as suggested by Lord Sumption in argument, that a term can only be implied if, without the term, the contract would lack commercial or practical coherence."
Breach of contract