Sharon Shac-Yin Cheung & Anor. v Neil John Mackenzie

A reservation in a conveyance must be construed as a whole and given effect according to its distinct language and function. Where a clause separately reserves a right to deal with retained land independently of stipulated covenants and a right to allow departures from those stipulations, the latter may qualify covenants imposed by that conveyance. On its natural meaning, a power to allow a departure from restrictive covenants may encompass a waiver or release of them.

A decision construing different contractual language is not persuasive authority on the construction of the instrument before the court. The relevant question remains how a reasonable reader, with the available background knowledge, would understand the particular words used.

The claimant owned a house at 432 Selsdon Road. The first defendant owned 444 Selsdon Road, both formerly part of the Fox Farm Estate. A 1947 conveyance of No 444 imposed restrictive covenants, including a restriction to one detached dwelling house and private residential use.

The second defendant held an option to buy No 444 and had obtained planning permission for nine flats. It relied on paragraph 11 of the conveyance, under which the Governors of the former estate reserved a right to allow departures from the stipulated covenants. The Whitgift Foundation, in which the Governors’ powers had vested, had agreed in principle to a deed releasing the restrictions to the extent required for the development.

The Deputy Master declared that the covenant was enforceable by the claimant and that paragraph 11 did not permit its variation. The defendants appealed on the construction of paragraph 11.

1. Appeal allowed. The Deputy Master’s construction of paragraph 11 was incorrect. The second part of that paragraph reserved a right separate from the Governors’ right to deal with retained land without imposing equivalent restrictions.

2. The language, grammar and subject matter of the two parts of paragraph 11 showed that they had different functions. The first concerned subsequent dealings with retained, adjoining or neighbouring land. The second concerned allowing departures from these stipulations: the stipulations imposed on the purchaser of No 444 by the 1947 conveyance.

3. The court therefore rejected a reading that confined the second part to the terms of later conveyances of other estate plots. Its natural and ordinary meaning was broad enough to permit a waiver or release from the restrictions affecting No 444, including the restriction in paragraph 7.

4. That construction was commercially coherent. The estate owner could retain supervisory control and an owner seeking a permitted departure could deal with one body, rather than obtain agreement from potentially numerous persons entitled to the covenant’s benefit. The continuing approval role assigned to the Governors in paragraph 8 supported that conclusion.

5. Mayner v Payne [1914] 2 Ch 445 was not relied on. A decision on the meaning of a different contract could not provide persuasive authority for the construction of this conveyance.

6. An appropriate declaration was to be made in the defendants’ favour. The Whitgift Foundation’s reserved power could, if exercised, release the relevant obligations to the extent stated in the proposed deed.

• High Court (Chancery Appeals): Allowed the defendants’ appeal and rejected the Deputy Master’s construction of paragraph 11.
• Deputy Master: By judgment of 6 July 2022 and order of 22 August 2022, declared that No 444 was subject to the restrictive covenant and that the claimant could enforce it.