Karen Reeve v Aidan Gregory McDonagh & Anor

A restrictive covenant prohibiting “additional buildings” ordinarily prevents separate buildings being erected in addition to an existing building. It does not, without clear words, prohibit the replacement, extension or enlargement of that building. The covenant must be construed from its language, context and purpose, but a restrained interpretation is appropriate where a proposed construction would impose a severe and perpetual restriction on the owner’s land.

Estoppel by deed or contract requires a clear and unambiguous statement of fact and an intention to be bound. An unexpressed assumption is insufficient unless necessarily implicit in the instrument. The section 84 costs practice is a flexible guideline. Costs remain discretionary and the ordinary rule may apply where the proceedings constitute hostile litigation.

The respondents owned Rose Cottage, which was subject to a 1958 covenant providing that no additional buildings should be erected on the retained land. They obtained planning permission to demolish Rose Cottage and construct a substantially larger replacement house.

The Deputy Master declared that the covenant did not prevent the proposed development and ordered the appellant, who owned neighbouring land with the benefit of the covenant, to pay the respondents’ costs. The appellant appealed on three grounds: construction of the covenant, estoppel arising from a 1988 deed, and costs.

The appeal concerned whether “additional buildings” included a replacement or enlargement of the existing house, whether the 1988 deed created an estoppel as to the covenant’s meaning, and whether the usual section 84 costs practice applied.

1. Construction. The appeal on construction was dismissed. The natural and ordinary meaning of “additional buildings” was buildings in addition to, or as well as, Rose Cottage. It referred to separate or ancillary structures, such as a freestanding garage or holiday cottage. It did not naturally refer to building work affecting Rose Cottage itself, including an extension or replacement building.
2. The covenant’s purpose was relevant but did not justify departing from its language. It protected sea views and prevented overbuilding on the then largely open retained land. That purpose remained capable of being served by preventing more than one building on the plot. The appellant’s construction would impose an extreme restriction on the use and value of the land. Clear and specific words would have been expected for such a result.
3. Commercial common sense could not displace the clear language merely because the covenant might operate disadvantageously in a later situation. The court also rejected the contention that the Deputy Master had relied on subjective intention.
4. Estoppel. The appeal on estoppel was dismissed. Estoppel by deed is a species of contractual estoppel. It requires a clear statement of fact in the deed or contract and an intention by the parties to bind themselves to that statement. No detrimental reliance is required, but an unexpressed assumption suffices only where it is necessarily implicit in the express terms.
5. The 1988 deed permitted specified extension and conversion works and provided that the 1958 covenant should be deemed modified. It did not contain a clear agreement as to the true meaning of “additional buildings”. It could reflect uncertainty or a desire to put the lawfulness of the works beyond doubt, rather than an agreed interpretation of the covenant. No estoppel therefore arose.
6. Costs. The costs appeal was dismissed. The section 84 costs practice is a flexible guideline, not an inflexible rule. The Deputy Master was entitled to regard the proceedings as hostile litigation precipitated by the appellant’s threatened injunction and to apply the usual rule that the unsuccessful party pays the successful party’s costs. His decision fell within the generous ambit of reasonable disagreement.

• Chancery Appeals (ChD): The appeal from the Deputy Master’s orders dated 28 April 2023 and 17 July 2023 was dismissed. The declaration in favour of the respondents and the costs order were upheld.
• Deputy Master Bowles: Declared that the 1958 covenant did not prevent the respondents from implementing the planning permission and ordered the appellant to pay the respondents’ costs.