Federated Homes Ltd v Mill Lodge Properties Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date29 Nov 1979
Judgment citation (vLex)[1979] EWCA Civ J1129-2

[1979] EWCA Civ J1129-2

In The Supreme Court of Judicature

Court of Appeal

On Appeal from The High Court of Justice

Chancery Division


Lord Justice Megaw

Lord Justice Browne

Lord Justice Brightman

Federated Homes Limited
Mill Lodge Properties Limited

MR. A. L. PRICE, Q. C. and MR. M. E. MANN (instructed by Messrs. Blythe Dutton Holloway, London agents for Messrs. Coffin Mew and Clover, Havant) appeared on behalf of the Appellants.

MR. M. A. F. LYNDON-STANFORD, Q. C. and MR. R. G. B. McCOMBE (instructed by Messrs. Eatons) appeared on behalf of the Respondents.


I shall ask Lord Justice Brightman to deliver the first judgment in this matter.


This is an appeal from a judgment of Mr. Mills, Q. C., sitting as a deputy High Court judge of the Chancery Division. The dispute relates to a large development site near Newport Pagnell in Buckinghamshire. This site consists of four areas of land of roughly equal size which can, for convenience, be called the red, green, pink and blue land. There were also included in the development site certain additional bits of land which I shall ignore.


The plaintiff company is now the owner of the red and the green land. The defendant company, Mill Lodge Properties Limited (which I shall call "Mill Lodge"), is the owner of the blue land. The plaintiff company claims to be entitled to the benefit of a restrictive covenant which is said to debar Mill Lodge from building more than 300 houses on the blue land. Mill Lodge is in the process of exceeding that density by building an additional 32 houses in conformity with a new planning permission which it has obtained. The judge decided against Mill Lodge and granted an injunction.


In September 1970 a company called Mackenzie Hill Limited (which I shall refer to as "Mackenzie Hill") was about to become the owner of the site. On 18th September the Buckinghamshire County Council, as planning authority acting through the Newport Pagnell Urban District Council as its agent, granted outline planning permission to Mackenzie Hill to develop the site by the provision of housing and associated amenities.


There were a number of conditions attached to the permission, of which the important ones were these.

"1. The approval of the County Council shall be obtained to the number, siting, design and external appearance of the buildings, (except the schools), and the means of access thereto before the development is commenced.

"2. This permission shall be null and void if the approval of the County Council to all the matters referred to in the last preceding condition has not been applied for in writing within three years" - i.e., by September 1973.

"4. This permission shall ensure only for the benefit of the applicants and their subsidiaries.

"5. This permission shall relate to the erection of a Church/community centre, a shopping cluster, a petrol filling station, a public house, and approximately 1,250 private residential dwellings


Condition 8 specified the rate of development, but this topic was covered in a revised form by the agreement to which I shall next refer.


On the same day as the planning permission Mackenzie Hill entered into an agreement with the Urban District Council, which has been called the phasing agreement. By this agreement the council undertook to construct roads and sewers through the site and Mackenzie Hill agreed to contribute towards the cost. Clause 7, so far as material, reads as follows (in the Clause the expression "Developers" means Mackenzie Hill and "H.l." means the development site):

"(a) If the Developers shall desire to sell the whole or any part of H.1. they shall forthwith inform the Council and the terms and conditions of such sale or sales shall include the disclosure of this Agreement to the purchasers and provisions to safeguard the Council's position under this Agreement which shall be to the satisfaction of the Council… PROVIDED that this sub-clause shall not apply to the sale of any single completed dwelling to an individual purchaser.

"(b) The Developers shall' have the right to assign the burden arid benefit of this Agreement but shall not be released from their obligations hereunder on any such assignment unless the proposed assignees shall have first furnished the Council with a Bond…"


By clause 9(a) Mackenzie Hill agreed that the rate of development should not exceed 50 houses by the end of 1970 and a further 125 houses in each of the years 1971 and 1972. The rate of development was then to be reviewed with the possibility of an increase, but not a decrease, in the rate. On that basis the development would be completed in or before the year 1980 according to whether or not the rate of development ultimately exceeded a minimum of 125 houses a year. That rate of development differed slightly from the rate laid down in the planning permission and that, no doubt, was the reason for clause 9(e) of the phasing agreement, whereunder Mackenzie Hill covenanted with the council that they would enter into an agreement under seal with the council on or before 14th December 1970 incorporating the terms of clause 9(a).


It seems to me, reading clauses 7 and 9(e), that the Urban District Council contemplated that Mackenzie Hill might not itself develop, but might part with the development in favour of someone else. Rurthermore, as it wasthe Urban District Council which had, on the same day as the phasing agreement, in its capacity as agent for the Buckinghamshire County Council, granted the planning permission to Mackenzie Hill, the planning permission ought fairly to be read in conjunction with the phasing agreement.


26th February 1971 Mackenzie Hill and its mortgagee sold and conveyed the blue land to Mill Lodge. By clause 3 the conveyance was expressed to be subject to and with the benefit of the phasing agreement. Clause 5(iv) set out the covenant which is the subject-matter of this action. It reads as follows:

"The Purchaser hereby covenants with the Vendor that…

"(iv) in carrying out the development of the 'blue' land the Purchaser shall not build at a greater density than a total of 300 dwellings so as not to reduce the number of units which the Vendor might eventually erect on the retained land under the existing Planning Consent."


There was a simultaneous conveyance of the pink land to a company called Gough Cooper (Midland) Limited (which I shall abbreviate to "Gough Cooper"). Clause 6 of the Mill Lodge conveyance provided that the blue land was sold with the braefit, so far as the same related to the blue land, of the agreements and undertakings on the part of Gough Cooper contained in the Gough Cooper conveyance. Clause 7 of the Mill Lodge conveyance contained a covenant by Mackenzie Hill with Mill Lodge expressed to be for the benefit of the blue land and every part thereof that Mackenzie Hill would not build houses on the red and the green land, with an immaterial exception, before the date on which Mill Lodge had erected or had permission from the planning authority under any revised phasing agreement to erect 300 dwellings on the blue land or 1st January 1975, whichever should happen first, but not in any event earlier than 1st January 1974.


The Mill Lodge conveyance contains no express definition of the retained land. There is, however, a reference in clause 2 to "any adjoining or adjacent property retained by the Vendor". I read "the retained land" in clause 5(iv) as meaning just that. I do not accept the submission of the respondent's counsel that the retained land included the pink land; clause 6 makes it clear that the pink land was not retained, but was being simultaneouslyconveyed to Gough Cooper. Counsel invited us to look at the contract of sale to Mill Lodge for the purpose of resolving an ambiguity as to the meaning of the retained land, but I see no ambiguity. I, therefore, conclude that the retained land means the red and the green land and the small additional areas comprised in the site, other, of course, than the blue and the pink land. To avoid confusion, I think I ought to explain that the expression "the green land" is made use of in the Mill Lodge conveyance, but it means both the red and the green land as I use those expressions in this judgment.


The Gough Cooper conveyance is not, in my view, relevant to the construction of the Mill Lodge conveyance, but it is permissible to refer to it as part of the backcloth against which the Mill Lodge conveyance was made, since the Gough Cooper conveyance is referred to in the Mill Lodge conveyance obviously intended to cover the same subject-matter as clause 5(iv) of the Mill Lodge conveyance and was in the following terms:

"The Purchaser for itself and its successors in title hereby covenants with the Vendor and its successors in title that the Purchaser shall not build on the land hereby conveyed at a greater density than a total of Three Hundred dwellings so as not to reduce the number of units which the Vendor might eventually erect on the land edged green on the said plan under the existing Planning Consent obtained by the Vendor in respect of the whole of the land edged red edged blue and edged green on the said plan."


Clause 6 of the Gough Cooper conveyance is the counterpart of and has much the same wording as clause 7 of the Mill Lodge conveyance, in effect binding Mackenzie Hill to give precedence to the purchasers, building programme in the operation of the phasing agreement.


A month later Mackenzie Hill sold and conveyed the red and the green land to William Brandt's Sons & Company Limited (which I shall call "Brandt's"). Brandt's was in fact Mackenzie Hill's mortgagee of the blue and the pink land at the time of the earlier conveyance, but nothing turns on that. The conveyance to Brandt's was dated 25th March 1971 and it contained an...

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