Lawntown Ltd v Camenzuli and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Richards,Lord Justice Lawrence Collins,Lord Justice Gage |
| Judgment Date | 10 October 2007 |
| Neutral Citation | [2007] EWCA Civ 949 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2007/0118 |
| Date | 10 October 2007 |
[2007] EWCA Civ 949
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE MAYOR'S AND CITY OF LONDON COUNTY COURT
(His Honour Judge Marr-Johnson)
Case No. 5LB07445
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Gage
Lord Justice Richards and
Lord Justice Lawrence Collins
Case No: B2/2007/0118
Paul Oakley (instructed by Messrs Paul Smith & Co) for the Appellants
Philip Coppel (instructed by Messrs Lane & Partners) for the Respondents
Hearing date: 27 July 2007
Judgement
Nos. 5 and 7 Heathdene Road form a pair of semi-detached houses each originally designed for occupation as a single family dwelling-house. They are located in an area of south-west London known as the Streatham Lodge Estate, where most of the properties are of a similar character. The appellants are a married couple who own and live in no.5. The respondent is a property development company (“Lawntown”) which purchased the freehold of no.7 in April 2004 and soon afterwards began work with a view to converting the property into flats. That gave rise to objections from the appellants and other neighbours. Conversion into flats faced two legal obstacles: first, that it did not have planning permission; secondly, that it was prohibited by restrictive covenants to which the property was subject.
The first obstacle was overcome when in due course the local planning authority, the London Borough of Lambeth, granted planning permission for change of use of the property from a single dwelling-house to two self-contained flats. Lawntown sought to overcome the second obstacle by an application to the county court under s.610 of the Housing Act 1985 for a variation of the restrictive covenants so as to permit the conversion into flats. The appellants were appointed to represent all those with an interest in opposing the application. His Honour Judge Marr-Johnson allowed Lawntown's application and varied the restrictive covenants so as to allow the conversion for which planning permission had been obtained.
Although the judge refused permission to appeal, permission was granted subsequently by Underhill J, who also ordered that the appeal be transferred to the Court of Appeal pursuant to CPR 52.14, on the basis that there was no guidance on the exercise of the court's discretion under s.610 of the 1985 Act and this court might wish to give such guidance.
The legislative framework
Section 610 of the 1985 Act, as amended, reads as follows:
“610.(1) The local housing authority or a person interested in any premises may apply to the county court where –
(a) owing to changes in the character of the neighbourhood in which the premises are situated, they cannot readily be let as a single dwelling-house but could readily be let for occupation if converted into two or more dwelling-houses, or
(b) planning permission has been granted under Part III of the Town and Country Planning Act 1990 (general planning control) for the use of the premises as converted into two or more separate dwelling-houses instead of as a single dwelling-house,
and the conversion is prohibited or restricted by the provisions of the lease of the premises, or by a restrictive covenant affecting the premises, or otherwise.
(2) The court may, after giving any person interested an opportunity of being heard, vary the terms of the lease or other instrument imposing the prohibition or restriction, subject to such conditions and upon such terms as the court may think just.”
The section derives from s.27 of the Housing, Town Planning &c Act 1919, but the court was originally empowered to act only in circumstances where the equivalent of s.610(1)(a) was satisfied. The provision was carried forward on the same basis into s.163 of the Housing Act 1936. The court's power was then enlarged, so as to be exercisable in like manner in circumstances equivalent to those now set out in s.610(1)(b), by s.11 of the Housing Act 1949. The provisions were brought together without any change of substance in s.165 of the Housing Act 1957, which was then carried forward into s.610 of the 1985 Act.
As the wording of s.610 and the statutory history make clear, subss.(1)(a) and (1)(b) provide alternative bases for an application to the court. The application in this case was made under subs.(1)(b). It is common ground that the statutory preconditions for the application were satisfied. What is in issue is the resulting exercise of the court's power under s.610(2).
The terms of s.610 may be contrasted with those of s.84 of the Law of Property Act 1925 which confers a power on the Lands Tribunal to discharge or modify restrictive covenants in defined circumstances. Section 84(1) of the 1925 Act, as amended, reads:
“84.(1) The Lands Tribunal shall (without prejudice to any concurrent jurisdiction of the court) have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction on being satisfied –
(a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete; or
(aa) that (in a case falling within subsection (1A) below) the continued existence thereof would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impede such user; or
(b) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction … have agreed, either expressly or by implication, by their acts or omissions, to the same being discharged or modified; or
(c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction;
and an order discharging or modifying a restriction under this subsection may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award under one, but not both, of the following heads, that is to say –
(i) a sum to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification; or
(ii) a sum to make up for any effect which the restriction had, at the time when it was imposed, in reducing the consideration then received for the land affected by it.”
Subs.(1A) provides that subs.(1)(aa) authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Lands Tribunal is satisfied that the restriction, in impeding that user, either (a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them, or (b) is contrary to the public interest; and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification. Detailed further provisions concerning the scope and exercise of the power are contained in subss. (1B) to (11). The section is applied by subs.(12) to leaseholds with a term of more than 40 years.
There is a substantial body of case-law giving guidance on the application of s.84 of the 1925 Act. By contrast, there are very few reported cases on s.610 of the 1985 Act. In particular, our attention has been drawn to only one that is relevant to the exercise of the power under s.610(2), namely Sarum Trust Ltd v Duke of Westminster [1953] CPL 86. That case was decided under s.163 of the 1936 Act and s.11 of the 1949 Act. It concerned an application by lessees for variation of the terms of their lease so as to permit further subdivision of the premises. The county court judge dismissed the application, on the grounds that the landlord's interests elsewhere might be affected if the application were granted, by leading to further applications of a similar kind; that the landlord's objection to an increase of density of the population was reasonable; and that there would be no advantage to the public in making the variation. On appeal, it was submitted on behalf of the lessees that where planning permission had been granted the court should vary the terms of the lease, its discretion being limited to how, and on what terms and conditions, the planning permission should be carried out. The Court of Appeal dismissed the appeal, holding that the general subject-matter of s.163 of the 1936 Act was against the contention that “may” in the section should be construed as “shall”, and that the judge had been entitled to come to the conclusion he had reached.
In its subsequent incarnation as s.165 of the 1957 Act, the provision was the subject of comment by the Law Commission in its report dated 21 March 1985 on Codification of the Law of Landlord and Tenant—Covenants Restricting Dispositions, Alterations and Change of User (HC278). At para 9.5 the Commission stated:
“Section 165 of the Housing Act 1957 applies to freehold as well as to leasehold land and is designed to provide relief against covenants in so far as they would prevent the conversion of larger houses into two or more smaller dwellings. The purpose which it seeks to fulfil has more to do with housing than with anything else and it is in the context of housing law, rather than the law of landlord and tenant, or land law, that it should be...
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