Thames Water Utilities Ltd (Plaintiff) v Oxford City Council and Another
| Jurisdiction | England & Wales |
| Judge | THE JUDGE |
| Judgment Date | 29 July 1998 |
| Judgment citation (vLex) | [1998] EWHC J0729-7 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No CH 1997 T 481 |
| Date | 29 July 1998 |
[1998] EWHC J0729-7
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
The Strand
London WC2
His Honour Judge Rich QC
(Sitting as a Judge of the High Court)
Case No CH 1997 T 481
MR T ETHERTON QC and NR S SEITLER (instructed by Messrs Ashurst Morris Crisp, London EC2A 2HA) appeared on behalf of THE PLAINTIFF
MR A HILL-SMITH (instructed by the Head of Legal and Committee Services, Oxford City Council, Oxford OX1 4EY) appeared on behalf of THE FIRST DEFENDANT
Wednesday 29 July 1998
By lease dated 23 June 1978 the defendant council had demised to the plaintiff's predecessor authority certain land at Blackbird Leys Farm for a term of years expiring in September 2037. On 24 May 1984 the council obtained a planning permission over land which included part of the land demised, for development in accordance with their application which was described as follows:
"Outline application for 14.6 hectares of housing (approximately 1200 dwellings) with community facilities including first school, shops, meeting hall and public house. 10.5 hectares of landscaped open space. 21.4 hectares of recreation land, which could include pitches, cricket green and golf course. 11.3 hectares of industrial land. Development to be served by new peripheral road between B480 and A423 at land south of Blackbird Leys, Minchery Farm and Littlemore, Oxford between the Watlington Road (B480) and A423 Littlemore/Sandford/Garsington."
A plan accompanying the permission indicated the broad location of the different users described in the separated sentences. Being an outline permission it was subject, amongst others, to a condition at paragraph 2(1) of the Schedule, namely that the layout of any part of the site to be developed, including roads and buildings, number of buildings, access to that part of the site and buildings and surface water drainage were to be submitted to, and approved in writing by, the local planning authority before development was commenced. Nevertheless, the permission granted in respect of the site as a whole did not, in my judgment, include a permission for recreational buildings, other than such as might be ancillary to the use of the 21.4 hectares of recreational land for open space recreation such as was referred to in the description of the permitted development. Any greater building works would require a further permission, as opposed to mere approval under the permission.
By an agreement dated 31 March 1993 between the council and the plaintiff (then called Thames), it was agreed at clause 2.3:
"In order to further facilitate the development the council and Thames have agreed inter alia that:
2.3.1 Thames will —
2.3.1.1 surrender to the council by operation of law its leasehold interest in the green land and other land."
The lands there described are shown on a plan attached to the agreement. The green land effectively coincides with the recreational land shown on the planning permission. It was further provided at clause 2.3.2.2 that the council will enter into a restrictive covenant not "during the restricted period to use (a) the green land or any part otherwise than for recreational and ancillary purposes". Other restrictive covenants were applied to the other pieces of land referred to in the agreement.
The restricted period was the period to the expiry of the term of the lease which was to be surrendered. The agreement then provided for the documentation of an exchange of land, including the transfer to Thames of the freehold of some orange land. Clause 8 provided, under the head 'Equality of Exchange':
"The mutual release of the parties' obligations under the lease in respect of the green land and the blue land and a transfer of the orange land and the brown land and the imposition of restrictive covenants shall be in the form of the documents annexed hereto which will be prepared by Thames' solicitors and executed in duplicate and completed on the completion date (as to which time is of the essence) when the council shall pay to Thames the sum of £1,500,000 … " There is then in brackets "exclusive of value added tax", but those words have been struck out. "… by way of equality for the exchange of the parties' interests in the various properties the subject of this agreement.
8.2 Thames shall not be bound to complete the documents referred to above until it has received payment of all sums payable by the council pursuant to the terms of this agreement at the time and in the manner specified by this agreement."
Thus the Deed of Exchange to which I will next refer was executed as part of the larger transaction, as was agreed in the agreement, only after the payment of the £1.5m in respect of which the provisions as to VAT had been struck out. Thus the VAT invoice, which documented the payment, is in my judgment part of the same transaction also and may be prayed in aid to construe the other documents. That invoice showed that different parts of the total site had had attributed to them different sums: the blue land, a sum of £1,481,000; whereas the green land had attributed to it an amount of £100,000 (in each case exclusive of VAT). The orange land, which was to be transferred by the council to Thames, was likewise given a total value of £100,000. It is broadly an area comparable to the area of the green land.
On behalf of the plaintiff, Margaret Wray has deposed that the invoice apportions the £1.5m. It records, she says, the amount payable for the blue land as £1,481,000 plus VAT. The site area of the green land was 53 acres, giving a value of £1,886.79 plus VAT per acre. The site area of the blue land was 30.5 acres, giving a value of £48,557.38 plus VAT per acre. Those I take to be facts which are part of the background material capable of being taken into account in the construction of the documents. She goes on to say in her affidavit that the difference in value represents the fact that the blue land was to be used by the first defendant free from any restrictions, whereas the green land was to be subject to the restrictive covenant. I think that it is a proper inference at least that the difference in price represents the difference in development value, but I do not think that I am entitled to take into account the deponent's view as to the reason for the difference, save insofar as it can be inferred from the documents.
The Deed of Exchange was executed also on 31 March 1993. It is expressed to have been made in pursuance of the terms of the main agreement and in consideration of the terms thereof, including the transfers hereinafter contained and of the sum of £1.5m. Its definition clause includes a definition of the word "development", which is the same as in the agreement — that is to say the development permitted by the 1986 agreement which the exchange of land was said by the agreement to facilitate. However, the agreement itself makes no further use of that word but, since it is made in pursuance of the terms of the main agreement, it is, in my judgment, to be construed as likewise for that purpose.
The Deed of Exchange contains a covenant by Thames, said to be for the benefit of the land, the subject of the transfer, for surrender to the council, not to use the orange land otherwise than for purposes set out in clauses 4.11 and 4.12. Those are agricultural and ancillary purposes and for sludge spreading, providing however that on the area of the orange land which is within 200 metres from the boundaries of the blue land, any such sludge spreading is carried out only with digested sludge and that the digested sludge is ploughed in on the same day that it is spread. The restriction on the manner of sludge spreading may well be said to be for the protection of the council's lands, but it is difficult to imagine how a covenant not to use otherwise than for sludge spreading can be so described.
By clause 4.3:
"The council for its part, so as to bind the green land, the red land and the yellow land in whosoever's hands the same may come, and so that the covenant shall be for the benefit and protection of the orange land and any part or parts thereof hereby covenant with Thames that the council and those deriving title from or under it will not during the restrictive period use or permit or suffer to be used —
4.3.1 the green land or any part or parts thereof otherwise than for highway or recreational and ancillary purposes." [The covenants in respect of the red and yellow land are respectively for recreational and ancillary purposes or community land with ancillary facilities and for recreational and ancillary purposes or for housing and ancillary purposes.]
Again I comment that it is difficult to see how these covenants may be said to enhance or protect Thames' enjoyment of the agricultural and sludge spreading orange land for whose benefit or protection it is said to have been taken.
It seems to me to be a necessary inference that these mutual covenants were in reality intended to give to each party a right to restrain development of the other's land, not for the purpose of the enjoyment of their own land so much as for the purpose of restraining development more valuable than had been the basis of valuation on the exchange of lands in accordance with the agreement. It is, in my judgment, in that light that the covenant in clause 4.3.1 must be construed.
In case such covenants properly construed might inhibit the use of the green land, the council resolved in March 1996 to accept a recommendation as follows:
"That the Estates Committee and Planning Committee agree that...
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