Shebelle Enterprises Ltd v The Hampstead Garden Suburb Trust Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Kitchin,Lord Justice McCombe,Lady Justice Arden |
| Judgment Date | 25 March 2014 |
| Neutral Citation | [2014] EWCA Civ 305 |
| Docket Number | Case No: A3/2013/1389 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 March 2014 |
[2014] EWCA Civ 305
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Hon Mr Justice Henderson
[2013] EWHC 948 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
Lord Justice Kitchin
and
Lord Justice McCombe
Case No: A3/2013/1389
Jonathan Seitler QC (instructed by Berwin Leighton Paisner LLP) for the Appellant
Tom Weekes (instructed by Lee Bolton Monier-Williams) for the Respondent
Hearing date: 4 February 2014
Introduction
This is an appeal against the judgment of Henderson J dated 22 April 2013 and his consequential order whereby he dismissed the application of the appellant company ("Shebelle") for an interim injunction to restrain the respondent charity ("the Trust") from granting consent for a development of a property in the Hampstead Garden Suburb ("the Suburb") and whereby, upon the cross application of the Trust, he dismissed Shebelle's claim in its entirety.
Shebelle owns a neighbouring property under the terms of a lease from the Trust which contains a covenant for quiet enjoyment. It fears that the development will cause substantial damage to its property and contends that by granting consent for the development the Trust will be acting in breach of that covenant. In broad outline, the Trust responds that its powers of control over the contested development are derived from a statutory scheme and that their proper exercise for the public good cannot constitute a breach of the covenant. The judge agreed with the Trust and, for reasons I shall explain in this judgment, I believe he was right to have done so.
The background
The Suburb is recognised across the world as a fine example of English twentieth century domestic architecture and planning. It extends over 800 acres and contains some 5,000 properties.
The Suburb was originally developed through the vehicle of the Hampstead Garden Suburb Trust Ltd ("the Old Trust") but, with the coming into force of the Leasehold Reform Act 1967 ("the 1967 Act"), the Old Trust was wound up and, in 1968, the Trust, a company limited by guarantee and registered as a charity, was incorporated in its place. The Trust has members who must be Suburb residents and its principal object is:
"To do all things possible in order to maintain and preserve the present character and amenities of [the Suburb] … and without prejudice to the generality of the foregoing to provide therein for persons of all classes houses with gardens or situate in the near neighbourhood of gardens and open spaces."
The Trust is governed by a Council which is made up of four trustees who are elected from Trust members who have been resident in the Suburb for at least three years, and four other trustees, one appointed by each of the Royal Institute of British Architects, the Royal Town Planning Institute, the Law Society and the Victorian Society.
In 1974 the Trust sought and obtained the approval of the High Court for a Scheme of Management ("the Scheme"). The purpose of the Scheme emerges clearly from clause 1:
"1. This Scheme is made for the purpose of ensuring the maintenance and preservation of the character and amenities of the Hampstead Garden Suburb and shall extend to all enfranchised property within [the Suburb]."
Under the Scheme, the owner of any enfranchised property must comply with the terms of the Scheme Schedule which read, so far as relevant:
"1. Without the prior written consent of the Trust no garden or yard or forecourt of an enfranchised property shall be built upon nor shall the general appearance thereof be substantially altered nor any garden substantially paved over.
2. Without the consent as aforesaid no alteration shall be made to the external appearance of any building for the time being standing on an enfranchised property."
Since 1974, many of the tenants occupying houses in the Suburb under long leases have exercised their right to purchase the freeholds of their properties and thus they fall within the Scheme. Others have not and so the Trust continues to hold the freeholds of a number of leasehold properties. It is the powers of control available to the Trust under the Scheme and its obligations under these leases which lie at the heart of the current dispute.
Shebelle owns the house and land at No.3 Green Close, London NW11 under the terms of a 999 year lease dated 16 January 1931 ("the Lease"). It has sub-let the property to Sir Victor and Lady Blank under a sub-lease dated 1 April 2011 for a term of ten years from that date. The property is occupied by Sir Victor and Lady Blank and their family and it lies in the heart of the Suburb.
The Trust is the freehold owner of No.3 Green Close and lessor under the Lease. Clause 15 of the Lease contains a covenant that Shebelle may quietly hold and enjoy the premises during the term of the Lease without any lawful interruption or disturbance from the Trust. It is in conventional form and reads:
"15. The Lessees paying the yearly rent hereby reserved and performing and observing all the covenants conditions and agreements herein contained and on the Lessees' part to be performed and observed shall and may quietly hold and enjoy the said demised premises during the said term hereby granted without any lawful interruption or disturbance from or by the Lessor or the successors or assigns of or any person claiming under the Lessor."
No.3 Green Close lies at the foot of a hill. At the top of the hill, and beside No.3 Green Close, lies another property known as No.2 Green Close. This is an enfranchised property and its freeholders are Mr and Mrs Franklin.
On 29 June 2011 Mr and Mrs Franklin made an application to the Trust for consent to undertake substantial works to No.2 Green Close including the creation of a single storey basement which, so it is proposed, will house a play room, a wine cellar, a small plant room and an underground swimming pool. The basement will extend beyond the existing footprint of the house and a significant distance down the garden. If it proceeds, this development will alter the appearance of No.2 Green Close because it will include skylights opening onto the garden.
Notice of the application was served upon Sir Victor and Lady Blank, as neighbours of Mr and Mrs Franklin, and they objected, fearing that the proposed development might affect the flow of groundwater and have an adverse effect upon the structure of their home. The Trust was not sure whether any impact that the development might have upon the movement of groundwater was something that it was entitled to take into account at all in considering Mr and Mrs Franklin's application. It considered that it was at least arguable that its powers under the Scheme related to the protection of visual amenity and that only a clear demonstration that the appearance of the Suburb would be harmed would enable the Trust reasonably to withhold consent. Nevertheless it gave both Sir Victor and Lady Blank and Mr and Mrs Franklin an opportunity to make representations on the issues raised by the objection.
Sir Victor instructed solicitors to act on his behalf and they engaged an eminent geologist, Dr Haycock, and an expert hydrologist, Dr de Freitas. These experts advised Sir Victor that the proposed development lay in a geologically sensitive area and that the diversion of groundwater might have consequences for neighbouring properties; that a number of properties near by had already experienced subsidence as a result of apparently minor changes in groundwater hydrology; and that a particular investigation known as a Basement Impact Assessment should be carried out in order to identify the issues to which the development might give rise and provide an opportunity to incorporate into the development appropriate mitigation measures.
For their part, Mr and Mrs Franklin also engaged experts and in due course they were advised by Geotechnical and Environmental Associates Ltd, experts in geotechnical engineering, that any groundwater was likely to be present at a shallow depth and flowing relatively slowly and further, that it would follow a pathway around the new basement and that its flow would not be affected by the development to any significant extent. They were also advised by Chord Environmental Ltd, experts in hydrogeology, that any changes in groundwater levels around the development would remain highly localised and so there would be no effect upon No.3 Green Close or any other neighbouring properties in any event.
Mr McSweeney, a consulting engineer retained by Mr and Mrs Franklin, reviewed these various opinions and by letter of 26 October 2012 to Mr Tappin, a consulting engineer engaged by the Trust, expressed the view that mitigation measures would not be required but that should groundwater be encountered during the course of construction then this could readily be routed around or under the new basement through granular drainage routes.
By letter of 15 November 2012, Mr Tappin advised the Trust that Mr McSweeney's approach seemed reasonable. In light of that advice Mr Davidson, the Trust's architectural advisor, notified Sir Victor by email on 29 November 2012 that the Trust had received advice from its consultant engineer that the development could be built safely and without detriment to adjoining properties, so far as he could tell. Further, the character of the Suburb would not be harmed. He therefore anticipated recommending to the Trust that the...
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