Restrictive covenant: interpretation of permitted use of land
3 July 2015
Royal Mail Estates Ltd v Pridebank Ltd  EWHC 1540 (Ch)
The land was subject to a restrictive covenant stipulating that the land could be used for certain Post Office purposes or planning use classes “or housing and purposes ancillary” to those identified uses “including offices and housing”. The wording of the covenant was found to allow use of the land for housing.
Planning permission was granted for a mixed use residential development, with permission for retail units, offices, restaurants, sports facilities and a school.
A restrictive covenant contained in a transfer between the Royal Mail Estates Limited (the purchasers) and the British Gas Corporation (the original owner) stipulated the following:
“Not to use the property or any part thereof for uses other than as a parcels construction office and mechanical letter office telephone exchange or for other Post Office operational purposes or for uses falling within clauses 3, 4 and 10 of the Town and Country Planning (Uses Classes) Order No.1385 of 1972 (“the Use Classes Order”) or housing and purposes ancillary to Post Office operation uses or to the said classes 3, 4 and 10 including offices and housing".
"Not to use the property or any part thereof for office development, except as ancillary to the uses permitted in the foregoing clause”.
The claimant sought a declaration that the restrictive covenant permitted use of the land for residential purposes, on the basis that it was clearly intended to embrace housing, as a use to which the site might be put.
The issue was whether the first use of the word “housing” in the covenant was intended to be a standalone exception which entitled the claimant to use the land for that purpose, or whether it was bound up with the other words of the covenant and therefore limited to housing ancillary to Post Office operational uses or to classes 3, 4 and 10 of the Uses Classes Order.
The claimant’s application was granted: the court found that the covenant permitted use of the site for residential purposes in whole or in part or with or without the other permitted uses referred to in the covenant. The words “or housing” were found to operate as a stand-alone alternative use that was permitted by the clause in the transfer. The following words “and purposes ancillary to…” were regarded by the court as permitting some additional use to that stand-alone use allowed by the clause. In the judge’s view, the word “housing” at the end of the clause would be otiose if it had not been intended that housing was to be a standalone provision.
When imposing restrictive covenants relating to use of a property each permissible use should be set out as a separate section to avoid any potential confusion.
This article was written by Emma Humphreys. For more information please contact Emma on +44 (0)20 7203 5326 or email@example.com.