Morrells of Oxford Ltd v Oxford United Football Club Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE ROBERT WALKER,Sir Ronald Waterhouse,Lord Justice Schiemann
Judgment Date21 Jul 2000
Judgment citation (vLex)[2000] EWCA Civ J0721-6
Docket NumberCase No: A3/2000/2380

[2000] EWCA Civ J0721-6

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION (LLOYD J)

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before

Lord Justice Schiemann

Lord Justice Robert Walker and

Sir Ronald Waterhouse

Case No: A3/2000/2380

Morrells Of Oxford Ltd
Appellant
and
Oxford United Fc Ltd & Ors
Respondents

Mr J Cherryman QC and Mr C Sydenham (instructed by Cartwrights, Bristol BS99 7BB) for the appellant

Mr G Fetherstonhaugh (instructed by Lewis Silkin, London SW1H 0NW) for the 1 st, 3 rd, 4 th and 5 th respondents

Ms K Purkis (instructed by Legal and Corporate Services, Oxford City Council, Oxford OX1 4YS) for the 2nd respondent

LORD JUSTICE ROBERT WALKER
1

This is an expedited appeal, with the permission of the judge, from an order of Lloyd J made on 9 June 2000. By the order the judge acceded to an application made under Part 24 of the Civil Procedure Rules by the first defendant Oxford United FC Ltd ("Oxford United") and the third, fourth and fifth defendants Firoka (Oxford Hotels) Ltd, Firoka (Oxford Leisure) Ltd and Firoka (Oxford United Stadium) Ltd ("the Firoka companies") and dismissed the claim against them by the claimant Morrells of Oxford Ltd ("Morrells"). Indeed the judge went further and also dismissed the claim made by Morrells against the second defendant Oxford City Council ("the City Council").

2

By its claim form (issued as recently as 15 March 2000) Morrells claimed injunctions to enforce a covenant entered into by the City Council in a conveyance dated 23 August 1962 ("the 1962 conveyance"). The appeal is concerned with that covenant and with the effect of section 79 of the Law of Property Act 1925 ("the 1925 Act"). The Firoka companies and Oxford United (together "the purchasers") are concerned in the case as conditional purchasers from the City Council or as prospective lessees of land which (if Morrells is right in its claim) is burdened by the covenant, and will remain burdened by the covenant even after disposal to the purchasers.

3

The background to the matter is that at the beginning of the 1960's the City Council was developing the Blackbird Leys housing estate on the south- east edge of the city of Oxford. It lies just outside the Oxford ring road between Littlemore and the Cowley motor works. The City Council wished to ensure that those who lived on the estate had community facilities, including a church, a health centre, a community centre, a youth club and a public house. The public house, the Blackbird, was to be on Blackbird Leys Road, next to the community centre and backing on to school playing fields.

4

By the 1962 conveyance the site for the public house was conveyed by the City Council (under its then style of the Mayor Aldermen and Citizens of Oxford) to Ind Coope (Oxford & West) Ltd ("Ind Coope"), Morrells' predecessor in title. Clauses 2 and 3 contained covenants on the part of Ind Coope and the City Council respectively. I should set out the opening words of the two clauses in full since much of the argument has been centred on them.

5

Clause 2 began as follows:

"The Company with intent and so as to bind so far as practicable the property hereby conveyed into whosesoever hands the same may come and to benefit and protect the Estate of the Vendors known as the Blackbird Leys Estate but not so as to render the Company liable for any breach of covenant committed after the Company shall have parted with all interest in the property in respect of which such breach shall occur hereby covenants with the Vendors that the Company and its successors in title will at all times hereafter observe and perform the restrictions following in relation to the property hereby conveyed namely …"

6

There followed two restrictive obligations: (a) that Ind Coope would use the premises to be erected as a public house, and for no other purpose; (this was arguably also a positive covenant, to keep the public house open as a community facility, but no point has been taken on that); and (b) that it would build only in accordance with plans approved by the City Estates Surveyor. There were also three positive covenants: (c) to fence; (d) to make good any damage in connection with a drain to be laid by Ind Coope; and (e) to indemnify the City Council in respect of any non-repair of the drain.

7

By contrast clause 3 was in a much simpler form:

"The Vendors hereby covenant with the Company as follows: (a) For the benefit of the land hereby conveyed that the Vendors will not at any time hereafter permit any land or building erected thereon within half a mile radius of the land hereby conveyed which is in the ownership of the Vendors at the date of this Conveyance to be used as a Brewery or Club or licensed premises for the preparation manufacture supply sale or consumption either on or off the premises of intoxicating liquors."

There followed a positive covenant by the City Council (b) to make up and maintain roads and footpaths and to indemnify Ind Coope in respect of that liability.

8

The football ground where Oxford United play is due to be closed at the end of next season following the Hillsborough disaster and the ensuing Taylor enquiry. In 1996 planning permission was granted for the construction of a new stadium and associated leisure facilities on a site at Minchery Farm, Littlemore. This site had at all material times been owned by the City Council and it is common ground that some or all of it lies within a circle of half a mile radius from the Blackbird public house.

9

Construction of the stadium began in August 1996 but was delayed (because of lack of funding) six months later. Since then the planning permission has been revised twice and the proposals now include an hotel and a leisure centre as well as the football stadium. There is in evidence a conditional agreement dated 4 February 2000 for the development and sale of the site to which the City Council and the purchasers are parties. It shows that the City Council will become 'B' shareholders in Firoka (Oxford United Stadium) Ltd and will have blocking powers over certain reserved matters, including the grant of leases. The Part 24 application made on 22 March 2000 by the purchasers was supported by a witness statement of Mr Firoz Kassam, who is a director of all four purchasers which would acquire freehold or leasehold interests in the developed site under complex provisions which it is not necessary to set out in further detail. The application was made on the basis that Morrells' claim for injunctions against the purchasers had no real prospect of success, because (a) the covenant in clause 3(a) of the 1962 conveyance would not bind the purchasers, and (b) the proposed sale by the City Council would not be a breach of the covenant.

10

In his clear and thorough judgment the judge summarised the facts and noted that he was concerned, on the Part 24 application, only with the possibility of the clause 3(a) covenant being enforced against the purchasers (although after he had delivered judgment he also dealt with the possibility of the City Council being in breach after disposal of the site to the purchasers). The Part 24 application might be a knock-out blow to Morrells but it could not be decisive in Morrells' favour, because of other points taken by some or all of the defendants, that is restraint of trade, the contention that the covenant benefits a business rather than land, waiver and estoppel.

11

The judge set out the covenants in clauses 2 and 3 of the 1962 conveyance and observed that they were in very different form. He said that simply reading clause 3(a) in its context (and apart from s.79 of the 1925 Act), he would think that it was intended to relate, and did relate, only to use (of any part of the land for the prohibited purposes) permitted by the City Council itself. I am in full agreement with the judge on that point.

12

The judge then went on to s.79 of the 1925 Act, which is headed "Burden of covenants relating to land" and is in the following terms:

"(1) A covenant relating to any land of a covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself his successors in title and the persons deriving title under him or them, and, subject as aforesaid, shall have effect as if such successors and other persons were expressed.

This subsection extends to a covenant to do some act relating to the land, notwithstanding that the subject-matter may not be in existence when the covenant is made.

(2) For the purposes of this section in connection with covenants restrictive of the user of land "successors in title" shall be deemed to include the owners and occupiers for the time being of such land.

(3) This section applies only to covenants made after the commencement of this Act."

13

The section is a sort of counterpart to s.78 of the 1925 Act (Benefit of covenants relating to land) but whereas s.78 replaced s.58 of the Conveyancing Act 1881, s.79 was new in 1925 (although s.59 of the Conveyancing Act 1881 had touched some of the same ground). Moreover s.78 contains no reference to yielding to the expression of a contrary intention.

14

It is now clear from the decision of the House of Lords in Rhone v Stephens 1994] 2 AC 310, 321–2 that s.79 did not have the far-reaching (and perhaps unexpected) effects which s.78 has been held to have. Section 79 was enacted (in the words of a note originating with Sir Benjamin Cherry, the principal draftsman of the 1925 property legislation, and now found in Wolstenholme & Cherry's Conveyancing Statutes, 13 th ed, Vol 1, p.163)...

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