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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 developers 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 dont 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 Es 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 wasnt. 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 isnt 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 Judges 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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