GLN (Copenhagen) Southern Ltd. v Tunbridge Wells Borough Council

A restrictive covenant’s natural wording may cover the same use as a more specific prohibition. Apparent redundancy is not decisive where drafting practice and commercial common sense support that construction. Whether access over burdened land is ancillary to a prohibited use on adjoining land depends on the covenant’s wording and the facts. In a mixed-use development, the court assesses the totality of the premises served and its principal purpose, rather than isolating one cinema screen. Relative floor areas may be significant. A restrained interpretation is normally appropriate, but the covenant should not be artificially narrowed. Access serving a development whose principal purpose was retail was not ancillary to cinema use, and services benefiting the building generally were not ancillary to that use.

GLN, the owner of land including a former cinema property, sought declaratory relief concerning restrictive covenants in a transfer. The Council’s proposed alternative development included a multi-screen cinema on land outside the burdened property, but pedestrian access, a concourse, stairs, an escalator and a lift would run over the burdened property. The development also included substantial retail and residential elements.

The Deputy High Court Judge held that cinema use did not fall within clause 12.2.2(a), and alternatively that the common parts would be ancillary to cinema use under clause 12.2.2(b). GLN appealed the first conclusion and the Council cross-appealed the second. The central issues were whether cinema use fell within the broader wording and whether access, services or advertising connected with the cinema constituted associated or ancillary use.

1. Preliminary issue. The withdrawal of the Covenantees’ appeal did not make GLN’s appeal academic. The Covenantees continued to support GLN’s case and would seek to benefit from a successful appeal. The proceedings had been a joint enterprise with the Council to determine the covenant issue. Practical reality and fairness therefore justified hearing both appeals.
2. Construction of clause 12.2.2(a). Per Neuberger LJ, cinema use fell naturally within the wording referring to the principal purpose of image projection for showing whole films in an auditorium setting. The word principal identified the main purpose of the use; it did not exclude cinema use. Wall LJ initially found the contrary submission attractive but agreed that the broader paragraph could catch a use substantially amounting to a cinema.
3. Redundancy and commercial context. The fact that this construction made clause 12.2.1 substantially redundant did not justify rejecting it. Conveyances and use covenants commonly contain overlapping or superfluous language. The court considered commercial effect and common sense, applying the approach in Tea Trade Properties Ltd v CIN Properties Ltd [1990] 1 EGLR 150, Norwich Union Life Insurance v British Railways Board [1987] 2 EGLR 137 and Beaufort Developments Ltd v Gilbert-Ash Ltd [1999] 1 AC 266.
4. Ancillary use. Whether land used in connection with a purpose on adjoining premises is ancillary depends on the facts and the covenant’s wording. For a mixed-use development, the relevant comparison is with the totality of the premises served and their principal purpose, not with an individual cinema screen. Relative floor areas will often be significant, though not invariably decisive. This reasoning was informed by Co-operative Retail Services Ltd v Tesco Stores Ltd (1998) 76 P&CR 328 and Norwich Union.
5. Application and result. The common parts served six retail units, the cinema foyer and cafe, and the cinema screens. Retail use was the principal purpose by area. Their use for access to the cinema was therefore not ancillary to cinema use under clause 12.2.2(b). The covenant required a restrained rather than generous interpretation, but not an artificially narrow one. Services connected through the property benefited the building generally, not the particular cinema use, and did not breach the covenant. A cinema-dedicated advertising hoarding would be ancillary, but a general hoarding would not become ancillary merely because it included a cinema advertisement.
6. Neuberger LJ stated that both the appeal and cross-appeal should be allowed. Wall LJ expressed the result as dismissal of the appeal, and Keene LJ agreed with both reasoned judgments. The order recorded: appeal dismissed; no order as to costs; declaration wording to be amended and submitted for approval.

• Court of Appeal (Civil Division) Considered GLN’s appeal and the Council’s cross-appeal. The court determined the construction of clauses 12.2.1 and 12.2.2 and ordered amendment of the declaration.
• High Court, Chancery Division Mr Kevin Garnett QC, sitting as a Deputy High Court Judge, held that cinema use was outside clause 12.2.2(a), and alternatively that access over the burdened property would be ancillary under clause 12.2.2(b).