Ashworth Frazer Ltd v Gloucester City Council
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CHADWICK,LORD JUSTICE WALLER |
| Judgment Date | 21 December 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J1221-73 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No : CHANI 99/0694/3 |
| Date | 21 December 1999 |
[1999] EWCA Civ J1221-73
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MR DAVID DONALDSON QC
Royal Courts of Justice
Strand, London WC2A 2LL
Lord Justice Waller
Lord Justice Chadwick
Case No : CHANI 99/0694/3
MR KIM LEWISON QC (instructed by Messrs Rowe & Maw for the Appellant)
MR NIGEL DAVIS QC and MR ANDREW WESTWOOD (instructed by Gloucester City Council for the Respondent)
Monday, 21 December 1999
This is an appeal from an order made on 24 February 1999 by Mr David Donaldson QC sitting as a Deputy Judge of the Chancery Division in proceedings between the appellant, Ashworth Frazer Limited, and its landlord, Gloucester City Council. The appeal raises a short question of some difficulty as to what, on the true construction of a lease, is the permitted use of land and buildings held by the appellant from the Council; and a question of some general importance as to the right of a landlord to withhold consent to an assignment of the unexpired term of the lease in circumstances in which it is said that the proposed assignee intends to use the demised premises for a purpose which is not permitted by the lease.
The appellant is tenant of premises which comprise part of a larger area of 14.5 acres adjacent to the old cattle market at St Oswalds Road, Gloucester. The 14.5 acre site was demised under a development lease dated 28 April 1969 for a term of 114 years from 25 December 1968. The structure of that lease – and, in particular, the provisions for rent review —suggest that it was contemplated that, upon the completion of the development, the site would be let to a number of subtenants who would occupy the industrial buildings which were to be erected upon it. In the event that did not happen. The original lessee, a development company, completed the development in accordance with the relevant covenant in the lease; but it did not sublet to those who were to occupy the several plots. Instead, and with the consent of the landlord, the development company made an assignment of each plot to the occupier of that plot. The effect was to sever the premises demised by the lease; so that the several plots became vested in the respective assignees as direct tenants of the Council, at rents which were apportioned parts of the rent reserved by the lease, but otherwise subject to the covenants contained in the lease. In particular, that part of the land demised by the 1969 lease of which the appellant is now tenant – comprising about one acre —was transferred by the development company to the appellant's immediate predecessor in title by a transfer dated 7 September 1973. The appellant's leasehold interest in that plot is now registered at HM Land Registry under a separate title number, GR46702. But, as I have already indicated, that interest is held upon the terms and covenants (save as to rent) contained in the 1969 lease.
Clause 2 of the lease contains the lessee's covenants. Sub-clause 2(iii)(a) is in these terms:
2(iii)(a) to commence within a period of one year from the date hereof and within the period of five years from the date hereof to complete the erection on the demised land fit for immediate occupation and use in a substantial and workmanlike manner with good quality materials and in conformity with all licences permissions and consents required by bye-laws regulations planning provisions orders and statutes and in conformity with detailed plans elevations sections and specifications as shall previously be approved by the City Architect … a building development for uses within Use Classes III IV or X of the Town and Country (Use Classes) Order 1963 together with all necessary roads amenity areas cattle grids fences drains and sewers (hereinafter called "the works"… )
The first question raised on the appeal is whether, as the Council contends, the covenant "to complete the erection on the demised land fit for immediate occupation and use … a building development for uses within Use Classes III IV or X of the Town and Country (Use Classes) Order 1963" imposes on the lessee an obligation to use the demised land thereafter – that is to say, after the completion of the building development and for the remainder of the term of the lease – only for uses which are within the specified Use Classes; or whether, as the appellant contends, the words "for uses within Use Classes III IV and X of the [1963] Order" are merely descriptive of the building development which has to be completed. The judge answered that question in favour of the Council. He held that the parties to the lease intended that use of the demised land be restricted, throughout the term, to uses within the specified Use Classes.
The second question arises if, but only if, the judge was correct in the answer which he gave to the first. Sub-clause 2(viii) of the lease contains a covenant against assignment by the lessee of any part of the demised land without the previous consent in writing of the Council. On 16 July 1997 the appellant applied for consent to assignment of its plot to Mountstar Metal Corporation Limited. Consent was refused by the Council on the ground that the purpose for which Mountstar intended to use the plot would be in breach of the user restriction in sub-clause 2(iii)(a) of the lease. It is said, on behalf of the appellant, that a belief that the proposed assignee will use the demised premises in breach of a user restriction is not a sufficient reason to justify a landlord in withholding consent to assign. In support of that contention the appellant relies on the decision of this court in Killick v Second Covent Garden Property Co. Ltd [1973] 1 WLR 658. The judge distinguished that decision; and held that the Council was entitled to rely on the ground for refusal of consent which it had advanced. The second question raised by this appeal is whether the judge was correct to take that view.
The first question: does sub-clause 2(iii)(a) contain a user restriction?
The Town and Country Planning (Use Classes) Order 1963 was made under powers conferred by section 12 of the Town and Country Planning Act 1962. The purpose of the Order, as clause 3(1) makes clear, is to specify classes of use such that a change of use from one use to another use within the same class shall not be deemed for the purposes of the Act to involve development of the land. Use Classes III, IV and X are described in the schedule to the Order. Use Class III is use as a light industrial building for any purpose. Use Class IV is use as a general industrial building for any purpose. Use Class X is use as a wholesale warehouse or repository for any purpose. In that context "light industrial building" and "general industrial building" together include any industrial building which is not a "special industrial building". A "special industrial building" is an industrial building used for one or more of the purposes specified in Use Classes V to IX of the 1963 Order.
It is submitted on behalf of the appellant that the phrase "for uses within Use Classes III IV or X" in the context of the requirement in sub-clause 2(iii)(a) that the lessee is to commence and complete the erection of a building development for uses within those Use Classes describes the "building development" which the lessee is required to erect. The development is to comprise buildings fit for use as industrial buildings or warehouses. It is submitted that the phrase serves that descriptive purpose; and only that descriptive purpose.
I recognise the force of that submission. It gives effect to a syntactical analysis of the words which appear in sub-clause 2(iii)(a). But, as it seems to me, it is unlikely that the parties would have thought it either necessary or apt to describe the buildings which were to be erected by reference to Use Classes III, IV and X under the 1963 Order.
It is unlikely that the parties to the 1969 lease would have thought it necessary to describe the buildings to be erected by reference to the specified Use Classes in the circumstances that sub-clause 2(iii)(a) contains the requirement that the building development is to be erected "in conformity with all … permissions and consents required by … planning provisions orders and statutes and in conformity with detailed plans elevations sections and specifications as shall previously be approved by the City Architect". It is said that the City Architect needs some point of reference from which to decide whether or not to approve the plans and specifications submitted to him – and, in that context, it is relevant that his approval is not to be unreasonably withheld – but the point of reference is provided by the planning consents which will, necessarily, have been obtained before the City Architect can be asked to approve any plans and specifications under sub-clause 2(iii)(a). Outline and detailed planning consents can be expected to define the nature of the buildings to be erected by the lessee with far more precision than a reference to Use Classes. The lease contains no obligation on the lessee to apply for planning consents, save to the extent that that is implicit in the requirement that the building development be erected in accordance with the consents required by planning legislation. The explanation may be that planning consents for the contemplated development had already been obtained For my part, I would find it a matter of some surprise if a landlord and a developer were to enter into a development lease of this nature for a term of 114 years unless there were, at the least, an...
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