Hotchkin v McDonald & Ors [2004] EWCA Civ 519

Case No A3/2003/2413[2004] EWCA Civ 519
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT
CHANCERY DIVISION
(HIS HONOUR JUDGE RICH QC
Sitting as a Deputy High Court Judge)
Venue Royal Courts of JusticeDate Tuesday, 20 April 2004
Strand
London, WC2
B E F O R E:
LORD JUSTICE THORPE
LORD JUSTICE MUMMERY
MR JUSTICE BENNETT
Between
NEIL HOTCHKINAppellant-v-
Between
IAN McDONALDRespondentSUSAN McDONALDRespondentALLIED DUNBAR PENSION SERVICES LTDRespondent
(Computer-Aided Transcript of the Stenograph Notes ofSmith Bernal Wordwave Limited190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
MR OWEN RHYS (instructed by Bridge McFarland of Lincoln) appeared for AppellantMR ADAM CHAMBERS (instructed by Mortlake & Co of Banstead, Surrey) appeared for Respondents
J U D G M E N T

LORD JUSTICE MUMMERY:

This

[1]is an appeal with the permission of the trial judge, His Honour Judge Rich QC sitting as a Deputy High Court Judge in the Chancery Division, from his order dated 29 October 2003. He made a declaration as to the construction of an express grant of a right of way enjoyed by Mr and Mrs McDonald as the registered freehold owners of a property called the Manor House, Woodhall Spa, Lincolnshire. The right of way was over Manor House Drive, a private roadway running over adjoining land that belonged to the appellant, Mr Neil Hotchkin. We were informed by Mr Rhys at the opening of the appeal that, sadly, Mr Hotchkin died last month, but that an order has been made by the Master enabling this appeal to be continued.[2]The grant of the right of way over Manor House Drive was contained in a conveyance to the McDonalds' predecessors in title, the National Farmers' Union Trust Company Ltd. The conveyance was dated 5 April 1965 ("the 1965 conveyance"). In a schedule referred to in clause 2 of the body of the 1965 conveyance, a restrictive covenant was imposed prohibiting the use of the Manor House, except as offices with some ancillary residential tied accommodation for employees and certain uses of the Manor House for meetings and conferences of the NFU.[3]As Mr Rhys said in his submission, this is a short point of construction of the 1965 conveyance. It is therefore necessary to look at the exact wording of the parts of the conveyance which relate, first, to the grant of the right of way and, secondly, to the terms of the linked restriction in the schedule. I quote, first, from clause 1 of the conveyance. The grant of the right of way was in these terms:
" ..... a right of way over the roadway coloured Blue on the said plan for all purposes in connection with the use of property hereby conveyed authorised by Clause D in the Schedule hereto subject to the Purchaser paying a proportion according to use of the cost of repairing and maintaining the same ...... "
The schedule sets out stipulations and restrictions referred to in the purchaser's covenant in clause 2 of the 1965 conveyance. Clause (d) of the schedule - which although it is a "d" in lower case is clearly the same clause D in upper case referred to in the grant of the right of way - is in these terms:
"Not to use the property hereby conveyed for any purposes other than Offices and purposes ancillary thereto Provided that while the Purchaser is the owner of the property hereby conveyed use of the premises by the Lincolnshire Branch of the National Farmers' Union for meetings and conferences and part of the premises as living accommodation for a caretaker and one other employee of such County Branch and their respective families shall not be deemed a breach of this covenant."
As was pointed out, as the NFU have ceased to be owners of the Manor House all that part of clause (d) following the words "Provided that" ceased to have any application.[4]It is necessary to say a little more of the background before coming to the arguments on the construction of the grant of the right of way. The McDonalds are the present owners of the Manor House, having acquired it from the NFU in 1991. On 5 February 2002 they made an application to the Lands Tribunal under Section 84 (1) of the Law of Property Act 1925 for the discharge or modification of the restrictive covenant in clause 2 of the conveyance and clause (d) of the schedule, so as to permit use of part of the Manor House as holiday lettings on a commercial basis and part as a commercial health and fitness centre. Mr and Mrs McDonald contend that, if they succeed in their Lands Tribunal application, they will still be entitled to use the right of way for the altered purposes.[5]Mr Hotchkin, along with others, gave notice of objection to the application. It was contended on behalf of Mr Hotchkin that, on the true construction of the 1965 conveyance, the right of way can only be exercised for purposes connected with the specific use of the Manor House as originally authorised by the restrictive covenant in clause (d) in the schedule at the date of the 1965 conveyance. Mr Rhys said that was what the parties had bargained for. The words of clause (d) in the schedule are, he said, imported by shorthand into the grant of the right of way in clause 1 of the conveyance. They have become part of it and they remain a part of the grant, which would not be affected by any order that the Lands Tribunal might make for the modification or discharge of clause (d) of the schedule. It was submitted that the meaning of the grant cannot be altered and that the right of way cannot be enlarged by the modification or discharge of clause (d). A modified or unrestricted use of the right of way would be excessive, he said, and outside the scope of the grant made by the 1965 conveyance. He pointed out, rightly, that the Lands Tribunal has no power to vary an easement as such. The Lands Tribunal, we are told, refused an application by Mr and Mrs McDonald to amend their application to include modification of the right of way.[6]If the construction advanced by Mr Rhys is correct, then there would be no point in Mr and Mrs McDonald pursuing their application to the Lands Tribunal as, even if they succeeded in it and embarked on an authorised altered use of the Manor House, they would have no right of access to it in respect of the altered use. It is in those circumstances that the Lands Tribunal proceedings have been stayed pending the decision of the court on the right of way point raised in these proceedings.[7]I turn now to the judgment of Judge Rich, which has been criticised by Mr Rhys. The judge dismissed Mr Hotchkin's claim for a declaration that the grant of the right of way had the narrow meaning for which he contended. The judge held that the right of way could be used in connection with the use of the Manor House, if the use of the Manor House was not forbidden by the restrictive covenant. The question, the judge held, whether the use was forbidden was one which was to be answered by reference to the circumstances existing at the date when the question falls to be answered, not at the date of the 1965 conveyance. He held that, if the scope of clause (d) of the schedule is modified by order of the Lands Tribunal, then the right of way of clause 1 of the 1965 conveyance can be used in connection with the modified purposes of the Manor House.[8]For those reasons

the judge made the following declaration:

" ..... the defendants and their successors in title [the defendants being Mr and Mrs McDonald] as owners of the Manor House Woodhall Spa Lincolnshire are entitled to use the existing right of way over the Claimant's land for such purposes as may be permitted following any discharge or modification of the restriction on use of the Manor House by the Lands Tribunal."
It is against that declaration that Mr Hotchkin has appealed. Mr Rhys contended that the judge's construction of the grant was wrong. He said it should be construed by reference to circumstances existing at the date of the original grant in the 1965 conveyance and not by reference to circumstances existing at some later time, such as a date on or after which the restrictive covenant has been modified or discharged. The critical contemporaneous circumstance, he said, was the use restriction, which was incorporated into the grant from clause (d) of the schedule. He said that the construction of the grant can never change or be altered by subsequent events, such as an order of the Lands Tribunal modifying or discharging clause (d). He said that the risk run by his client that the covenant in clause (d) might be modified did not apply to the easement, even though there was a shorthand reference in easement to the restriction in the schedule. He pointed out that the judge's construction of the 1965 conveyance depended on reading into the grant the words "as from time to time may be authorised". Those words are clearly not included in the grant. Mr Rhys submitted that the overall result of the judge's construction was unfairly to impose an increased burden on Mr Hotchkin's land by allowing the roadway to be used for purposes that were outside the express purposes authorised at the time of the grant.[9]I am not persuaded by Mr Rhys's submissions that the judge was wrong to make a declaration to which I have referred.[10]I would dismiss this appeal for the following reasons: (1) This is a case of an express grant of a right of way. Its effect depends on the meaning of the language in which the grant is expressed, read in the context of the conveyance as a whole and in the circumstances surrounding the conveyance. The grant is of a right of way over a servient tenement, that is the roadway over Mr Hotchkin's land, and it is for the benefit of, and is in connection with, the lawful use of the dominant tenement, the Manor House.[11](2) I agree with the judge that in some respects the language of the grant is infelicitous, although I would not place as much reliance on that aspect of the matter as the judge did when he came to construe it. He is right in saying that there is an odd reference in the language that says the use of the Manor House is "authorised" by clause (d) in the schedule. In fact the clause in question does not "authorise" the use of the Manor House at all. What it does is to impose a general prohibition on the use of the Manor House, except as offices and ancillary conference and residential purposes. What it comes to is that there is a limited exception to a general prohibition.[12](3) The critical point is that the roadway is available as a right of way to and from the Manor House in connection with the lawful use of the Manor House. There is no dispute that the language of the grant must be construed in the light of the circumstances existing at the date when it was executed. The well known passage from the speech of Lord Hoffmann in ICS Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912 F - 913 D, was cited in Mr Rhys's skeleton argument.[13]On that approach it is possible, in my view, to arrive at a construction of the grant which makes practical sense. The starting point is that the language of the grant of the right of way makes an express link between the use of the right of way in connection with the Manor House and the lawful use of the Manor House. Mr Hotchkin's construction, however, rests not just on linking the use of the right of way to the use of the Manor House but to the use of the Manor House as fixed or frozen forever at one particular time - that is as specified in the 1965 conveyance, the date when the restrictive covenant was imposed - regardless of whether the covenant is later validly modified or discharged by order of the Lands Tribunal to permit a different lawful use of the Manor House.[14]But, as I pointed out to Mr Rhys in argument, one of the circumstances existing at the date of the imposition of the user covenant was that it may not be legally possible to fix the use of the Manor House specified in the 1965 conveyance forever and ever. The lawful use of the Manor House may change from time to time. At the date of the grant of the right of way in connection with the use of the Manor House the restriction on user - although valid and effective as regards the property and the right of way - was subject always to possibility of judicial modification under the statutory authority of Section 84 of the Law of Property Act 1925. Modifications can be obtained under Section 84, if they are justified, in the judgment of the Lands Tribunal, by changes in the character of the property or by other material circumstances and the continued existence of the restriction would impede the reasonable use of the property without securing practical benefits to other persons.[15]The statutory jurisdiction under Section 84 was not, and, indeed, could not have been, ousted by any agreement between the parties. The possibility of a non-consensual variation regarding the lawful use of the Manor House was, in my view, one of the relevant circumstances existing at the date of the 1965 conveyance, whether or not that was appreciated by the parties at the time.[16]If the user of the Manor House and the roadway giving access to it are so linked, as they are in the terms of this grant, it is unrealistic, to say the least, to suppose that the parties intended to create a situation in which the user of the Manor House could be lawfully changed without having a corresponding impact on the right of the way enjoyed in connection with it.[17](4) In my judgment the grant here is of a right of way over a roadway to and from the Manor House, but subject to a user covenant for the time being lawfully binding on the owners of the Manor House. The user covenant is capable of being modified from time to time or even discharged altogether on the application of the owner of the Manor House and against the wishes of the owner of the servient tenement. The lawful use of the right is linked to the lawful user of the Manor House. If the user of the latter is lawfully modified then the only sensible consequence that could have been contemplated by the parties to the 1965 conveyance is that the roadway could be lawfully used in connection with the purposes of the modified use of the Manor House. What sense would there be in producing a situation in which the lawful use of the Manor House could be changed without the agreement of those entitled to enforce the restriction on use, but the lawful use of the right of way could not be changed without the agreement of the servient owner who, in this case, was one of those entitled to the benefit of the covenant?[18]In my judgment, if clause (d) of the schedule is modified, then the expression in the grant "authorised by clause (d) of the schedule" will be a reference to clause (d) in the form modified by the Lands Tribunal. If the Lands Tribunal make an order discharging the restriction altogether, then the words in the grant "authorised by clause (d) of the schedule" would become redundant, because there would no longer be any restriction on which those words could operate.[19]It is for those reasons that I am satisfied that the judge made a correct form of declaration in his order. I would therefore dismiss this appeal.

MR JUSTICE BENNETT: I agree.

LORD JUSTICE THORPE: I also agree.

Order

Appeal dismissed with the costs as agreed

Cited in 1 later judgment