Surrey County Council and Another v Bredero Homes Ltd

JurisdictionEngland & Wales
Judgment Date07 April 1993
Judgment citation (vLex)[1993] EWCA Civ J0407-7
Docket NumberNo. CHANF 92/0241/B
CourtCourt of Appeal (Civil Division)
Date07 April 1993
County Council of Surrey & Anor
Bredero Homes Ltd.

[1993] EWCA Civ J0407-7

(Mr. Justice Ferris)

Before: Lord Justice Dillon Lord Justice Steyn and Lord Justice Rose

No. CHANF 92/0241/B





SIR WILLIAM GOODHART, Q.C. and MR. B. WEATHERILL (instructed by Messrs. Howell Jones & Partners) appeared on behalf of the Appellants.

MR. C. RIMER, Q.C. and MR. N. PEACOCK (instructed by Messrs. Turner Kenneth Brown) appeared on behalf of the Respondents.


( )


This is an appeal by the plaintiffs, the Surrey County Council and the Mole Valley District Council, against a decision of Mr. Justice Ferris given on the 21st November, 1991, after the hearing of issues directed by an earlier order. By his decision the learned Judge awarded the plaintiffs nominal damages only against the defendant, Bredero Homes Ltd., for breaches of virtually identical positive covenants contained in transfers by the plaintiffs to the defendant of certain land in Surrey in 1981.


The facts are straight forward and not in dispute. I can take them from the judgment of the learned Judge.


In 1980, the Surrey County Council and the Mole Valley District Council were respectively the registered proprietors with absolute title of two adjoining parcels of land lying to the west of the Ridgeway Fetcham at Leatherhead in Surrey. The total area of the two parcels was some 12.33 acres. The land had originally been acquired by the Councils or their predecessors for road purposes but, by 1980, it was no longer required for these purposes and the two Councils decided to act together in offering the entire site for development as a housing estate.


The defendant made an offer which included a purchase price of £1 1/2 million. This led to a contract, dated 26th November, 1980, between the two plaintiffs as vendors and the defendant as purchaser. This contract was completed by two transfers both dated 2nd January, 1981 -one being by the Mole Valley District Council and the other by the Surrey County Council. The transfer made by the Mole Valley District Council contained a covenant by the defendant with that Council: "To commence the development of the land hereby transferred in accordance with the planning permission issued by Mole Valley District Council, reference MO/80/1214 and dated 11th December, 1980, within six months from the date hereof and thereafter to diligently pursue the development of the land hereby transferred to its completion complying with the said planning permission".


The transfer by the Surrey County Council was in substantially the same terms. The planning permission MO/80/1214, there referred to,


"the first planning permission", was granted on the application of the defendant. It provided for the development of the land, i.e. both parcels taken together, by the erection of 72 detached bungalows and houses in six different designs according to a layout as shown in certain drawings.


The defendants started work on the development in accordance with the first planning permission. There were certain minor alterations by way of modification of that planning permission but these do not matter.


A bit later, however, the defendant applied for and obtained, on the 29th June, 1983, from the Mole Valley District Council as the planning authority, a planning permission which has the effect of raising the total number of dwellings to be built on the estate from 72 to 77, the main changes being a reduction in the number of four bedroom houses and an increase in the number of three bedroom houses —the size and arrangement of plots being amended, but the layout of roads and verges remaining unchanged. This planning permission, the "later planning permission", was given the reference number MO/83/0368 and it related to 3.64 acres of the land.


The defendant then completed the development of those final 3.64 acres in accordance with the later planning permission and not, as had been covenanted, in accordance with the first planning permission.


The plaintiffs object to the development of the final 3.64 acres, in accordance with the later planning permission, not on planning grounds, but on the grounds that the later permission enabled the defendant to build 77 rather than 72 houses and bungalows on the two adjoining parcels. There is no objection on planning grounds, not surprisingly, since it was the Mole Valley District Council which granted the later planning permission.


The objection is on the ground that it is a more profitable planning permission for the defendant than the first planning permission because more houses can be built. As a legal basis it is said by the plaintiffs and conceded by the defendant that in building 77 houses in all under the later planning permission, rather than 72 under the first planning permission, the defendant has acted in breach of the covenants in the transfers.


The plaintiffs therefore seek damages. They have never sought an interim injunction to restrain the defendant from developing the land otherwise than in accordance with the first planning permission. They never sought an injunction at the trial requiring the defendant to pull down the completed houses. They recognized that there was never any practical possibility of such an injunction being granted. There was a formal amendment of the relief sought at the trial to raise in form a claim for an injunction, but that was not pursued. The plaintiffs have merely sought damages which have been described as "damages at common law", as opposed to "damages in equity under Lord Cairns' Act". The plaintiffs accept that they have not suffered any damage at all of the nature of damage to adjoining property owned or occupied by them. What they claim as damages is essentially the profit made by the defendant by breaking the covenants and building 77 houses and not just 72 —or, since the defendants wish to be modest in their demands in putting forward a somewhat revolutionary development of the law of damages, such a part of the profit as would reflect the reasonable premium that the defendant should have paid them for contractual permission by way of relaxation of the covenants to build the 77 houses rather than 72.


Indeed, the plaintiffs say, and I have no reason to doubt, that their sole purpose in imposing the covenants at all —to commence and pursue the development to its completion in accordance with the first planning permission —was that the defendant would have to apply for and pay for a relaxation if it wanted to build anything more.


It is of course clear that had the contracts been worded otherwise there could have been provision for the payment by the defendant of an additional price of a specified amount or fixed by an appropriate formula for each extra house or bungalow, if they or their successors in title built more than 72 houses or bungalows on the land within a specified period, but that is not the contract that was made.


In putting forward the claim for damages with which we are concerned, the plaintiffs rely very strongly on the decision of Mr. Justice Brightman in Wrotham Park Estate Co. Ltd. -v- Parkside Homes Ltd. [1974] 1 W.L.R, 798, to which I shall have to come.


The starting point, however, in my judgment is that the remedy at common law for a breach of contract is an award of damages and damages at common law are intended to compensate the victim for his loss, not to transfer to the victim, if he has suffered no loss, the benefit which the wrong-doer has gained by his breach of contract. Thus it is stated in Chitty on Contracts, 26th Edition, Volume 1, paragraph 1771:

"Damages for a breach of contract committed by the defendant are a compensation to the plaintiff for the damage, loss or injury he has suffered through that breach".


Similarly Viscount Haldane, Lord Chancellor, said in British Westinghouse Electric Company Ltd. -v- Underground Electric Railways Company of London Ltd., [1912] A.C., 673 at 689:

"The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach".


Lord Wilberforce said, in Johnson -v- Agnew [1980] A.C, 367 at 400H:

"The general principle for the assessment of damages is compensatory".


Each of these three statements is accompanied by a statement to the effect that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. That follows the wording of the statement of the rule of the common law by Baron Parke in Robinson -v- Harman [1848] 1 Ex. 850 at 855. That rule has been referred to in argument in the present case as the "conventional" rule.


Sir William Goodhart, Q.C., for the plaintiffs, has pointed out that the conventional rule is not of universal application in that there are cases in which the plaintiff is awarded not what is required to place him in the same situation as if the contract had been performed, but what is required to recoup to him the expenditure which he has incurred which has been wasted because the contract has not been performed; see, for instance, Wallington -v- Townsend, [1939] Ch., 588, and Anglia Television Ltd. -v- Reed, [1972] 1 Q.B., 60.


The principle is still compensation for loss. The difference is merely that there are cases where the contract has so palpably not been performed at all that it would be unreal to assume that it had been performed and impossible to calculate damages on such an unreal assumption.


Every student is taught that the basis...

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