City Inn (Jersey) Ltd v Ten Trinity Square Ltd

Where a conveyance defines a term, the defined meaning ordinarily governs each later use. The court may construe the term differently only where, against the factual background known to the parties, applying the defined meaning would produce absurdity. A construction that makes better commercial sense is insufficient. The court need not assume that the parties catered for every possible future contingency. An express reference to successors in title in one provision does not, without more, expand a defined term elsewhere. These principles apply even where a covenant would be more useful to successors than to the original party.

City Inn, the owner of Mariner House, obtained planning permission to demolish the building and redevelop the site as a hotel. The 1962 transfer from the Port of London Authority contained covenants restricting external alterations and changes of use, and referred to the consent of the Transferor. The Port of London Authority consented to the proposal, but Ten Trinity Square, the successor in title to the Authority’s neighbouring property, argued that its consent was required.

The High Court, Mr Alan Steinfeld QC sitting as a deputy judge, granted City Inn a declaration that its proposals did not require Ten Trinity Square’s consent. The appeal concerned whether Transferor meant the Port of London Authority alone or the Authority and its successors in title.

Appeal dismissed unanimously. The expression Transferor in the 1962 transfer meant the Port of London Authority alone. Ten Trinity Square, as its successor in title, therefore had no right to approve or refuse the proposed alterations or change of use under the Third Schedule.

1. A defined term should ordinarily retain its defined meaning throughout the document. The court may depart from that meaning in a particular provision only where applying it would produce absurdity in the factual background known to both parties. It is insufficient that an alternative construction would make better commercial sense (para [8]).
2. The transfer did not show that the parties contemplated the Port of London Authority leaving its headquarters or selling its neighbouring properties. It was therefore not commercially absurd for rights concerning rebuilding, archaeological objects, exposed walls, light and air, nuisance, or change of use to remain personal to the Authority. The court need not assume that contracting parties considered every possible future contingency (paras [13]-[17], [21]-[25], [31]-[33]).
3. The Third Schedule provided particularly strong textual support for the Authority-only construction. The reference to the Estate Officer could sensibly mean the officer responsible for the Authority’s estate. Elsewhere, the draftsman expressly referred to the Transferor and its successors in title, showing that successors could have been included when intended. The omission of comparable wording in the Third Schedule was significant (paras [25]-[32]).
4. Marquess of Zetland v Driver [1929] Ch 1 did not require a different result. That case involved wording limiting the benefit of a covenant while specified land remained unsold; the present transfer contained no equivalent limitation. Reading the benefit as passing to successors would also create difficulty if the Authority sold its land in separate parcels (paras [28]-[33]).

Lord Justice Wall and Lord Justice Wilson agreed with Lord Justice Jacob’s conclusion.

1. Court of Appeal (Civil Division) dismissed Ten Trinity Square’s appeal and held that the defined term Transferor meant the Port of London Authority alone.
2. High Court of Justice, Chancery Division Mr Alan Steinfeld QC, sitting as a deputy judge, had granted City Inn a declaration that its proposed external alterations, additions and change of use did not require Ten Trinity Square’s consent.