Sheffield City Council v Jackson

A purchaser exercising the statutory right to buy cannot challenge the reasonableness of a covenant included under paragraph 5 of Schedule 6 to the Housing Act 1985 after the conveyance has been executed. The statutory scheme requires the covenant and its burden to be considered when the price is assessed, and provides a separate post-completion power for the Secretary of State to discharge or modify non-compliant covenants. The contrast with provisions expressly made void confirms that an unreasonable covenant is not automatically void. A conveyance provision is not void for uncertainty where its wording can be given a sensible meaning on the evidence.

The Council sought service charges from owners who had acquired freeholds under the right-to-buy provisions of Part V of the Housing Act 1985. The conveyances required purchasers to pay reasonable contributions towards specified estate benefits, including landscaping and play areas.

At a preliminary-issue trial, Mr Justice Astill held that the covenant was not void for uncertainty but was unenforceable as unreasonable. The Council appealed. The central issues were whether reasonableness could be challenged after execution of the conveyance and whether the covenant was void for uncertainty.

1. Appeal allowed. The purchasers were too late to challenge the reasonableness of clause 5(2) after execution of the conveyances. Lord Justice Nourse treated the issue as one of statutory construction. Paragraph 5 of Schedule 6 permits only covenants and conditions reasonable in the circumstances, but the statutory scheme does not provide that an unreasonable covenant becomes automatically void after completion.
2. The service-charge burden is expressly relevant to valuation under sections 125, 127 and 128 of the Housing Act 1985. The price is assessed on assumptions including the expected service charges and the burdens attaching to the conveyance. It would be inconsistent with that scheme to permit a purchaser to obtain a price fixed on that basis and then reopen the covenant without any adjustment mechanism.
3. The contrast between paragraph 5 and provisions such as paragraphs 6, 17, 18 and 19 of Schedule 6, which expressly render specified provisions void, supported the conclusion that a covenant under paragraph 5 remains binding after execution, subject to sections 167 and 168. Those provisions give the Secretary of State power to discharge or modify a covenant that could not properly have been included.
4. Lord Justice Peter Gibson agreed. He additionally endorsed the reasoning of His Honour Judge Harrison-Hall QC in Coventry City Council v Cole, while recognising that this court’s decision in that case had not decided the present point. Sir Patrick Russell agreed with both judgments.
5. The alternative uncertainty challenge failed. The descriptions of the relevant locality, landscaping, and properties served were capable of sensible construction on the evidence. Properties outside the Council’s Jordanthorpe Estate could not be treated as served where they were not liable, or presumptively liable, to contribute.
6. The order allowed the appeal with costs of the preliminary issue in both courts. The declaration that the covenant was not void for uncertainty was confirmed, and the declaration on unreasonableness was replaced. Leave to appeal to the House of Lords was refused.

• Court of Appeal: Allowed the Council’s appeal from the preliminary-issue decision of Mr Justice Astill.
• High Court, Queen’s Bench Division: Held that the covenant was not void for uncertainty but was unenforceable as unreasonable.