Decision Nº LP 25 2011. Upper Tribunal (Lands Chamber), 28-05-2013
| Jurisdiction | UK Non-devolved |
| Judge | Sir Keith Lindblom, President |
| Date | 28 May 2013 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LP 25 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2013] UKUT 0210 (LC)
UTLC Case Number: LP/25/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
RESTRICTIVE COVENANT – discharge or modification – Law of Property Act 1925, s.84(1)(b) – preliminary issue – “without prejudice” correspondence – whether agreement between the parties
IN THE MATTER OF AN APPLICATION UNDER SECTION 84 OF THE
BY
CLEARWATER PROPERTIES LIMITED
Re: Land and Buildings on the West side
of New Road
Burntwood
Before: Sir Keith Lindblom, President
Sitting at: 43-45 Bedford Square, London, WC1B 3AS
on 27 March 2013
Jonathan Upton, instructed by Charles Russell LLP, solicitors for the applicant
Tom Weekes, instructed by Adcocks Solicitors, solicitors for the objector
© CROWN COPYRIGHT 2013
The following cases are referred to in this decision:
Winter v Traditional & Contemporary Contracts Ltd [2007] EWCA Civ 1088
Stockport Metropolitan Borough Council v Alwiyah Developments (1986) 52 P. & C.R. 278
Re University of Westminster’s Application [1998] 3 All E.R. 1014, C.A.
Re Child Brothers Ltd’s Application (1959) 10 P. & C.R. 71
Re Robinson’s and O’Connor’s Application (1965) 16 P. & C.R. 106
Re Hopcraft’s Application (1993) 66 P. & C.R. 475
Re O’Reilly’s Application (1993) 66 P. & C.R. 485
Re Cornick’s Application (1994) 68 P. & C.R. 372
Re Graham’s Application LP/83/2005 (unreported)
Re Graham’s Application [2008] EWCA Civ 1503
RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG (UK Production) [2010] 1 W.L.R. 753
South Shropshire District Council v Amos [1986] 1 W.L.R. 1271
India Rubber, Gutta Percha and Telegraph Works Co Ltd v Chapman (1926) 20 BWCC 184, C.A.
Rush & Tompkins Ltd v Greater London Council [1989] A.C. 1280
Tomlin v Standard Telephones and Cables Ltd [1969] 3 All E.R. 201
Framlington Group Ltd v Barnetson [2007] EWCA Civ 502
Unilever Plc v Procter & Gamble Co [2000] 1 W.L.R. 2436
DECISION ON A PRELIMINARY ISSUE
Introduction
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This case is before the Tribunal for a decision on a preliminary issue. The preliminary issue arises in an application by Clearwater Properties (Cannock) Limited (“the applicant”) under section 84(1)(b) of the Law of Property Act 1925 (“the 1925 Act”) for an order to discharge a restrictive covenant burdening land that it owns in Lichfield. The sole objector to the application is Lichfield District Council (“the District Council”).
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The applicant is the freehold owner of land on the west, east and south-east sides of New Road, Burntwood, in three parcels, registered under title numbers SF372966, SF517041 and SF168659 (“the restricted land”). The restricted land forms part of the Mount Road Industrial Estate, an industrial area developed in the late 1950s, parts of which are now occupied by various businesses and industries. The industrial estate was originally owned in its entirety by the District Council. As plots on it were sold off, the District Council imposed covenants, both positive and restrictive, in the conveyances.
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By a deed dated 1 October 2007 made between (1) the District Council, (2) the applicant, (3) D.H. Haden Limited, (4) Burdale Financial Limited and (5) AIB Group (UK) Plc the District Council released the restricted land from certain restrictive covenants imposed by the original conveyances (as subsequently varied), and the applicant entered into a new covenant (“the 2007 covenant”) for the benefit of adjoining land owned by the District Council. The 2007 covenant states:
“[The applicant] hereby covenants with [the District Council] and its successors in title for the benefit of [the adjoining land owned by the District Council] not to use [the restricted land] for any purpose other than one falling within any of Use Classes B1, B2 or B8 of the Town & Country Planning (Use Classes) Order 1987 and for no other purpose whatsoever”.
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The applicant contends that in 2011 the District Council expressly agreed in correspondence with it that the 2007 covenant would be discharged, and that the compensation should be assessed if it could not be agreed. The District Council rejects that contention. It insists that it has never agreed to the discharge of the 2007 covenant. It denies that its correspondence with the applicant shows such an agreement, because the parties could not agree on the level of compensation.
The preliminary issue
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By an order dated 8 November 2012 the then President (Mr George Bartlett Q.C.) ordered that the following issue was to be determined as a preliminary issue at a preliminary hearing:
“Whether there has been agreement between the parties for the purposes of section 84(1)(b) of the [Law] of Property Act 1925”.
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At the hearing of the preliminary issue the applicant was represented by Mr Jonathan Upton, the District Council by Mr Tom Weekes. For the applicant evidence was given in the witness statement of its director, Mr Alvin Lindley, dated 25 September 2012. The District Council’s evidence was given in the witness statement of Mr Andrew Wilkinson, a chartered surveyor employed by the Valuation Office Agency in Stoke-on-Trent, dated 9 August 2012, and the witness statement of John Brown, the District Council’s Land and Property Manager, dated 24 August 2012. The parties agreed that it was not necessary for the Tribunal to hear oral evidence at this stage. I saw no reason to take a different view.
The facts
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The essential facts are agreed. They are recorded in outline in the agreed statement of facts and issues prepared by the parties for the hearing of the preliminary issue. In the light of that statement and the evidence the parties have produced I find the following facts.
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In or about July 2009 the applicant began negotiations with the District Council seeking the release of the 2007 covenant so that the restricted land could be developed for housing. The negotiations were conducted throughout on a “without prejudice” basis, in correspondence that the parties have both been content for the Tribunal to see.
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The negotiations fell into three distinct phases.
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The first phase continued until March 2011. In this period there were both oral and written negotiations between the applicant and Mr Wilkinson on behalf of the District Council.
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On 18 July 2009 Mr Wilkinson wrote to Mr Lindley, recalling that in 2007 agreement had been reached between the applicant and the District Council “to amend the covenants” on the land. Mr Wilkinson asked whether the applicant wanted to pursue the negotiation of “terms for the removal of the covenants in their entirety”. On 8 September 2009, in a letter headed “WITHOUT PREJUDICE AND SUBJECT TO CONTRACT”, Mr Wilkinson indicated the terms he was “prepared to recommend” to the District Council, including the release of the covenants on payment to the District Council of the sum he specified (namely £700,000). This was not acceptable to the applicant. On 29 September 2009 Mr Lindley replied to Mr Wilkinson, saying that “[in] the light of the history and circumstances” it was “difficult to understand” Mr Wilkinson’s valuation. Unless Mr Wilkinson had “a significant change of heart” the applicant was likely to have to pursue an application to remove the covenants. Mr Lindley said that, on a without prejudice basis, the applicant would be “prepared to consider a nominal sum to avoid unnecessary delays, time and costs”. Mr Wilkinson wrote again to Mr Lindley on 5 February 2010 and on 11 November 2010 inviting him to discuss a payment for the release of the covenants, on the basis that they were enforceable, on the financial terms set out (£700,000 in the letter of 5 February 2010 and £560,000 in the letter of 11 November 2010). In a letter dated 17 November 2010 Mr Lindley responded to Mr Wilkinson’s letter of 11 November 2010, asking him to substantiate his valuation. He said there were clearly “areas which require clarifying before we are able to come close to agreement”. On 17 March 2011 Mr Wilkinson replied to Mr Lindley’s letter of 17 November 2010, proposing a different figure for the release of the covenants (namely £275,000), in view of the proposed allocation of the site for residential development in the District Council’s Local Development Framework.
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In parallel with those exchanges there was correspondence between the applicant and the District Council as local planning authority.
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On 13 July 2009 the District Council’s Principal Development Plans Officer, Ms Elizabeth Boden, wrote to the applicant “[as] an owner of land at Mount Road Industrial Estate”. She explained that in formulating the Local Development Framework for the period to 2026, the District Council was “considering existing and proposed land uses in the District”. Mount Road Industrial Estate was “currently identified as an existing industrial area where business, general industry, storage and distribution uses are protected”. Earlier in 2009, however, the District Council had published the Core Strategy Preferred Options consultation document. This had put forward the District Council’s “suggested...
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