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Developers and their neighbours
5 February 2009
Developers and their neighbours crossed swords in a couple of
cases in 2008. In January, the High Court in Risegold Limited v
Escala Limited dismissed a developer’s claim that it was
entitled to a right of entry onto adjoining land to assist the
redevelopment of its property. The Court of Appeal, however,
reversed the decision in October. In November, another High Court
decision in Dennis and Others v Davies ruled that a
proposed development would be in breach of a covenant against
nuisance and annoyance, but we don’t yet know whether this will be
appealed. In each case, it is likely that the courts’ decision was
not what the original lawyers, who negotiated the documents, had in
mind. Both cases have important implications for determining the
suitability of sites for development, and for drafting standard
boilerplate clauses in property transactions.
Risegold Limited v Escala Limited
R wanted to redevelop its property which had the benefit of a
right to enter E’s adjoining property for 'maintenance, repair,
rebuilding or renewal'. Briefly, the argument between the parties
was that R believed this right was wide enough to cover
redevelopment but E said that it wasn't. R won on appeal because
the Court held that 'rebuilding' meant more than just the
reconstruction of the existing building. This was too literal an
interpretation and produced consequences that were not sensible
(each of the Judges provided their own example) and were unlikely
to have been within the reasonable contemplation of the original
parties to the Deed that created the right. The fact that the right
also allowed 'renewal' simply reinforced the point. Interestingly,
the Court gave judicial approval to the argument by Counsel for R,
that the phrase 'maintenance, repair, rebuilding or renewal'
appeared to have a 'crescendo' effect with each word having a
different and wider meaning that its predecessor.
Draftsmen should take note. If you want to make sure that
something is or isn't to be allowed, spell it out in clear
unequivocal terms and remember that, if the Court ever looks at
your drafting, it will look at every word. The developer 'got out
of jail' here and this decision may help other developers in a
similar position, but the case would never have come to Court if
the original draftsman had either included the word 'redevelop', or
made it clear that redevelopment was not to be included.
Dennis and Others v Davies
Mr Davies wanted to extend his property which was on an estate
of similar properties, most of which enjoyed a view over the River
Thames. Some of Mr Davies' neighbours objected to the development,
primarily because they felt it would obscure their views and they
sought to rely (amongst other arguments) on what is a fairly
standard restrictive covenant affecting many residential estates,
not to do “anything of whatsoever nature that may be or become a
nuisance or annoyance to the owners or occupiers for the time being
of the Estate.”
The Court found in favour of the neighbours, deciding that the
loss of view for three of them would be significant and that this
would amount to a breach of the covenant. The test was an objective
one, to be judged by robust and common sense standards which the
Judge laid down in a series of questions:
- Would reasonable people, having regard to the ordinary use of
the claimants' houses for pleasurable enjoyment, be annoyed and
aggrieved by the extension?
- Would the extension raise an objection in the minds of
reasonable men and be an annoyance within the meaning of the
covenant?
- Would the extension reasonably trouble the mind and pleasure,
not of a fanciful person or of a skilled person who knows the
truth, but of the ordinary sensible English inhabitant of the
claimants' houses?
Each case must be judged on its own merits but, in this
instance, there is no doubt that the river view played an important
part in the Judge's decision. Unless this decision is overturned on
appeal, it will give a headache, not only to developers, but also
to home owners looking to build an extension. This is especially so
as the covenant is a common one which follows standard wording and
which, until now, has rarely been challenged when documents are
being drafted and agreed.
Draftsmen may now want to consider whether they should be
looking to modify this apparently harmless clause so that it will
not have as wide ranging an effect as the Court has currently
decided that it does.
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