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Covenants - the need for precise wording |
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The ambiguous wording of restrictive covenants can cause problems for developers and potential buyers of land. The following cases highlight the importance of the need for precise drafting of covenants.
Jarvis Homes Ltd v Marshall and another [2004] EWCA Civ 839
Background
The Court of Appeal recently considered whether a covenant not to use a property other than as a "private residence only" prevented a developer from constructing a roadway through the land leading to a residential development.
Facts
A developer contracted to purchase a property which neighboured property owned by Mr and Mrs Marshall. A 1964 conveyance on the property contained a restrictive covenant.
The covenant stipulated that:
- the land was not to be used for the erection of more than "one 2-storey private dwelling-house with necessary outbuildings and garage; and
- the land or any buildings there or erected at any time in the future could not be used "for any trade business or manufacture but will use the same as a private residence only".
Mr and Mrs Marshall’s property had the benefit of the covenant.
Subject to the granting of planning consent, the developer agreed to purchase the property with the intention of demolishing the house, building another house and a road through the garden as an access route to a neighbouring residential complex. Mr and Mrs Marshall objected on the grounds that the construction of a roadway would breach the restrictive covenant. The Court at first instance found in favour of the developer on the grounds that only a building could be used as a private residence and therefore that the covenant did not restrict the construction of a roadway. The reasoning was on the basis that the words "the same" was understood as referring to "any building" and therefore did not limit the use of the rest of the land. Mr and Mrs Marshall appealed.
Decision
The Court of Appeal found in Mr and Mrs Marshall’s favour and interpreted the wording of the restrictive covenant more widely than the court at first instance. The Court of Appeal considered the intention of the parties in imposing the covenant. They took the view that the proprietor was permitted by the covenant to use the land for all residential activities. It was agreed this might include the erection of a private dwelling house but not to use a considerable part of the land as a roadway to provide access to neighbouring properties.
‘A private dwelling house’ - What does this mean?
In Martin v David Wilson Homes Limited [2004] the court had to consider what the term ‘a private dwelling house’ meant. The case concerned a covenant given by the purchaser of land which stated that the purchaser must not: "use or permit or suffer any buildings erected thereon or on any part thereof to be used for any other purpose than as a private dwelling house either with or without garages and other necessary outbuildings".
Did this mean a limit on the number of houses which could be built or did it simply relate to the manner in which the properties could be used?
Lord Justice Buxton was of the view that the expression "a" did not necessarily imply that only one property could be built as "a" is an article and not a number. The usual way to refer to use was ‘use as a private dwelling house’, and therefore a limitation on the number of houses could not be implied. The judge considered the other covenants which had been given by the purchaser in reaching his conclusion.
The Court disagreed with the recent case of Crest Nicholson Residential (South) Limited v McAllister [2003] where the same point was considered and where it was decided that the term "a" could imply singular meaning.
These cases demonstrate the need to give careful consideration to the wording and drafting of restrictive covenants. In summary a restrictive covenant should be negative in nature, be clear in exactly what is restricted (specifying a minimum or maximum number if appropriate to the covenant), but should not be drafted so widely to be contrary to public policy.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2004. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.
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September 2004 |
