City Inn (Jersey) Ltd v Ten Trinity Square Ltd

The construction of a restrictive covenant depends on the objective meaning of the instrument read as a whole and in its commercial context. Express wording referring to successors in title in one part of a transfer may support, rather than undermine, a deliberate decision not to use those words elsewhere. A covenant may reserve to the original covenantee the exclusive right to approve plans or consent to a change of use, even after that covenantee has disposed of the benefited land. The court should not rewrite clear wording merely because the consent mechanism may later be of limited practical value to successors in title. The surrounding landholding, the nature of the transaction and the parties’ likely commercial purposes are relevant to construction.

The claimant owned Mariner House and sought to redevelop it. A 1962 transfer contained restrictive covenants requiring approval of alterations and consent to a change of use. The covenants were expressed for the benefit of neighbouring properties retained by the Port of London Authority, which later sold those properties to others, including the defendant’s property, Ten Trinity Square.

The Port of London Authority approved the claimant’s plans and consented to the proposed change of use. The defendant contended that its own approval and consent were also required as successor to the owner of benefited land. The Part 8 claim therefore raised whether references to “the Transferor” meant only the named Port of London Authority or included successors in title to the benefited properties.

1. Declaration granted. On the true construction of the transfer, “the Transferor” in the relevant approval and consent provisions meant the Port of London Authority alone. The defendant had no right to insist on its consent.
2. The correct approach was the objective construction adopted in Mehon v Simms and reflected in Investors Compensation Scheme v West Bromich Building Society [1998] 1 WLR 896. The transfer had to be read as a whole, against the background reasonably available to the parties and the commercial purpose of the transaction.
3. The drafting materially distinguished between the covenant itself, which expressly referred to the Transferor and its successors in title, and paragraphs 1 and 2 of the third schedule, which referred only to the Transferor. The reference to the Transferor’s Estate Officer for the time being also indicated that approval was to be given by the named authority and its continuing office-holder.
4. The reasoning in Mehon v Simms [2005] 39 Estate Gazette Law Reports 67 was distinguishable. That case concerned a single residential property, no express reference to successors in the covenant, and other features pointing towards successors’ control. Those features were absent here.
5. Howard Pryor v Christopher Wren Ltd and Crest Nicholson Residential (South) Ltd v McAllister [2004] 1 WLR 2409 showed that consent could remain vested in an original covenantee after it had parted with the benefited land. A restrictive covenant was not conceptually inconsistent with that result. The covenant remained one benefiting identified land and enforceable against successors in title of the burdened land.