Town Quay Developments and Another v Eastleigh Borough Council

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLady Justice Arden,Lord Justice Waller,Lord Justice Thomas
Judgment Date26 October 2009
Neutral Citation[2009] EWCA Civ 1391
Docket NumberCase No: A3/2008/2908
Date26 October 2009

[2009] EWCA Civ 1391






Royal Courts of Justice

Strand, London, WC2A 2LL


Lord Justice Waller

Lady Justice Arden and

Lord Justice Thomas

Case No: A3/2008/2908

Eastleigh Borough Council
Town Quay Developments Ltd

Mr David Mattias QC (instructed by Eastleigh Borough Council) appeared on behalf of the Appellant.

Mr Jonathan Gaunt QC (instructed by CMS Cameron McKenna) appeared on behalf of the Respondent.

Lady Justice Arden

Lady Justice Arden:


Eastleigh Borough Council, to whom I shall refer as “EBC”, appeal against that part of the order of Etherton J (now Etherton LJ) dated 12 November 2008, which provides that, on the true interpretation of the second part of the proviso to the reservation of rights and the transfer dated 8 March 1990 (“the Transfer”) could be reasonably withheld. I will set out the terms of that reservation of rights shortly.


The respondents are the prospective developers of part of a site known as The Wildern site which abuts the A334, and that part of the land of which they are developers abuts the land which was the subject of the Transfer, which is referred to either as the neck or the transfer land. The respondents are the claimants in this action; they are the successors in title to the Botley Flour Milling Company Limited (“Botley”), which conveyed the neck to EBC by the Transfer.


The Transfer was executed in the following circumstances. Botley owned land south of the A334 and forming part of The Wildern site. Its land was to be used pursuant to planning applications for industrial purposes. For this purpose it had access on to the A334; other parts of The Wildern site were to be redeveloped as residential property by other parties. These parts of the site would be served by a distributor road to be built to the southwest of the site and subsequently called Turnpike Way. There is a history of concerns about the noise pollution and other disturbance caused to residents, or that would be caused to residents, from the industrial user of the Botley site. However, the planning applications for use of the site were put in and, as I understand it, permission was granted.


EBC entered into two Section 52 agreements with Botley in connection with its planning applications for redevelopment of its part of the site, and it appears that Botley owned another site at a place confusingly called Botley Mill some miles away. There are two Section 52 agreements, one dated 6 March 1987 and one dated 8 April 1989. In those agreements the EBC, amongst other things, acquired the right to require Botley to transfer the neck to it. EBC proposed to build the distributor road across the neck. The transfer of the neck was subject to certain reservations, and I will go directly to the transfer agreement.


The relevant reservation of rights is set out in the judge's judgment at paragraph 27:

“Exceptions and reservations

The right within the period of eighty years from the date hereof which shall be the perpetuity period applicable hereto ('the perpetuity period') to enter on the transfer land for the purpose of laying pipes cables sewers drains and other conducting media and the right thereafter to take water electricity and the appropriate services and to the passage of water and soil through the said pipes cables sewers drains and other conducting media and the right within or without vehicles at all times over the road or roads so constructed PROVIDED THAT the exercise of such rights shall be in accordance with the provisions contained in the Wildern Area Development Brief which was adopted by the Council on 24 th July 1986 and shall be subject to the consent of the Director of Planning and Development of the Council ('the Director of Planning') and PROVIDED FURTHER THAT the person or persons exercising such rights shall make good any damage caused thereby.”


It will be seen from that reservation of rights that, in addition to transferring the neck pursuant to the transfer, Botley reserved certain rights to itself and its successors, including the right to lay pipes on the neck of land and the right to enter and construct a road on the neck of land but subject in both cases to a proviso that the exercise of rights was to be in accordance with the provisions of the Wilden area development brief dated 24 July 1986 and to be subject to the consent of the director of planning and development of EBC.


It should be noted at the outset that this reservation contains no express requirement of any kind for the consent of the director of planning and development not to be unreasonably withheld. Such a provision might be thought conspicuous by its absence, especially when compared with the terms of the Section 52 agreement.


These contained at least three requirements that the consent of EBC not to be unreasonably withheld or delayed, for instance in relation to change of use from the specified uses, those being the specified uses as defined in the Section 52 agreements to the grant of planning permission and listed building consent and approval to the constitution of a new museum to be established at the other site near Botley Mill. There were also additional obligations on the council to consider matters reasonably. The Section 52 agreements set out the obligation of Botley to transfer the neck on request by EBC and set out the terms of the reservations, including the provisos, but said nothing about whether the director of planning and development had the right to refuse consent in relation to the laying of pipes and building of roads et cetera on the neck transferred to the council if he wished to do so, or whether he was to have an absolute right for that purpose or whether it was one to be reasonably exercised.


The transfer of the neck was pursuant to the Section 52 agreements but was not for a monetary consideration. Its purpose was, as I have said, to facilitate the construction of the new distributor road. It was subject to excepted and reserved rights, and that is a matter to which I need to return.


EBC now owns the land the subject of the transfer in its capacity as landowner. On 31 October 2005 EBC, in its capacity as local planning authority, refused the first claimant's application for planning permission for the redevelopment of the site formally held by Botley on the Wildern site as 184 residential units. That application contemplated the building of an access road over the transfer land, and we have been informed by Mr Gaunt, who appears for the respondents, that that was in accordance with the planning guidance issued by EBC.


The first claimant appealed against the refusal. A public inquiry was held in June 2006. Prior to the holding of that inquiry EBC wrote, on 26 May 2006, to those acting for the claimants, informing them that EBC was not prepared to grant use of the council's land to facilitate the construction of the development or access to the development in the event that planning permission was granted. The letter added that this matter might be reviewed once the issue surrounding the development of the land had been clarified.


The inspector who conducted the inquiry recommended that the appeal should be allowed and the Secretary of State accepted that recommendation by letter dated 19 October 2006. On 9 March 2007 Mr Richard Ward, head of legal and democratic services at EBC, wrote to the surveyors acting for the claimants to inform them that their proposed development did not satisfy the first proviso and that the council's chief executive did not consent to the claimants exercising any rights of access over the transfer land so that the second proviso was not satisfied either. The proceedings now before this Court were instituted on 9 July 2007 to challenge the legality of that position and to seek declarations that the claimants were entitled as of right to construct an access road to the site across the transfer land.


Before the judge there were four issues. The first issue was whether, under the first part of the proviso, the nature of the development had to correspond to that envisaged by the 1986 brief. The judge answered this question in the negative in favour of the claimants. The second issue concerned the identity of the officer who had to give or refuse consent. The judge found that the proper officer of the council to give or refuse consent, following certain reassignments of job titles and job responsibilities, was the chief executive of EBC. The third issue concerned the question whether there were any restrictions on giving the consent. The judge further found that, on the true construction of the second part of the proviso, the proper officer of EBC could not refuse consent arbitrarily or unreasonably.


The fourth issue was whether consent had in fact been refused unreasonably. The judge held that it had. He held it was irrational on the part of EBC to raise issues which had already been fully addressed in the inquiry.


This appeal is against the third issue alone. We are not concerned with any of the other issues.


On the third issue the judge gave five reasons for holding that a requirement that consent should not be unreasonably withheld on the face of the second part of the proviso; it should be implied. Firstly, he pointed out that the reservation concerned the grant of property rights. Secondly he held that the context was commercial. Botley appreciated that it could not develop its part of the land unless it had rights to connect to...

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