Royal Mail Estates Ltd v Pridebank Ltd & Ors

A restrictive covenant must be construed according to its clear words where the wording provides a sufficient basis for interpretation. Where permitted uses are listed disjunctively, a use introduced by “or” may constitute a standalone alternative. Words which permit ancillary housing do not necessarily limit a separate preceding reference to housing. A covenant restricting office development does not, without clear language, create a negative covenant against residential use.

The claimant sought declarations under section 84(2) of the Law of Property Act 1925 concerning the construction of a restrictive covenant affecting the South London Mail Centre. The covenant permitted specified Post Office uses, uses within classes 3, 4 and 10 of the Town and Country Planning (Uses Classes) Order No.1385 of 1972, or housing and purposes ancillary to those uses.

The claimant proposed a mixed-use development and contended that “housing” was an independent permitted use. An application before the Upper Tribunal (Lands Chamber) under section 84(1) of the Law of Property Act 1925 to modify or discharge the covenant was stayed. The central issue was whether housing was standalone or confined to housing ancillary to other permitted uses.

1. Construction by clear language. The court accepted that no evidence of background facts or the transaction’s genesis was necessary. The wording of the covenant was sufficiently clear to determine its meaning.
2. Standalone housing use. The words permitting use for Post Office purposes or purposes within classes 3, 4 and 10 were followed by the separate words “or housing”. That drafting made housing a standalone alternative use. The subsequent words concerning ancillary purposes formed an additional part of the permitted-use framework and did not qualify the standalone housing alternative.
3. Effect of the ancillary reference. The reference to housing in the ancillary provision would otherwise be otiose if housing were not also intended to be permitted independently.
4. Office covenant. The second clause of Part A contained no negative covenant against housing. It was limited to office development.
5. Order. The covenant permitted use of the site for residential purposes, in whole or in part, with or without the other uses permitted by the covenant. A declaration was made accordingly.