Milebush Properties Ltd v Tameside Metropolitan Borough Council

This appeal raises a point of some interest on the availability, in private law proceedings between non-contracting parties, of a declaration on the meaning and effect of a planning obligation in a deed made pursuant to provisions in the planning legislation.

Section 106 of the Town and Country Planning Act 1990 (the 1990 Act) governs the enforcement of “planning obligations” entered into “by agreement or otherwise” by any person interested in land in the area of a local planning authority. The obligations, in what are commonly called “s.106 agreements”, are “enforceable to the extent mentioned in subsection (3)”, which provides that:-

“(3)

Subject to subsection (4) a planning obligation is enforceable by the authority identified in accordance with subsection (9)(d)-

(a)

against the person entering into the obligation; and

(b)

against any person deriving title from that person.”

I underline two features of the statutory framework governing the extent of enforceability of a s.106 obligation: first, the subject matter of enforcement is described as “a planning obligation”; and, secondly, the planning authority is identified as the person by whom that obligation is enforceable against the person entering into the obligation, or that person’s successor.

Subsection (9) provides that a planning obligation may not be entered into except by an instrument executed as a deed conforming to certain specified requirements. Those requirements are satisfied in this case.

This s106 agreement is dated 15 February 1991. It was entered into between the Local Planning Authority, Hillingdon Borough Council (Hillingdon), which is also the Highway Authority, with developers of a freehold office development on the site, London & Metropolitan Estates Limited and Traffichold Limited. A condition of the planning permission required the construction of a service road. The objective was to provide access for the rear servicing of the High Street properties as part of Hillingdon’s pedestrianisation proposals for Uxbridge High Street.

The development, including the service road subject to the s.106 agreement, was acquired by Tameside Metropolitan Borough Council (Tameside) on 18 August 2000 as an investment for its pension fund. Tameside’s involvement in the development is as an investor, not as a Planning or Highway Authority. It is common ground that, having derived title from the developers and to the extent provided for in s.106, Tameside can be obliged by Hillingdon to perform the planning obligation in the material clause in the s.106 agreement, as amended, (clause 3.5) for the grant of a right of way over a service road to be constructed on the freehold land now in Tameside’s ownership.

The land in question is situated at the rear of properties in High Street, Uxbridge. The properties are referred to in the agreement and in this judgment as “the Authorised Properties.” They include 276-280 High Street owned by Milebush Properties Limited (Milebush), the appellant. They are used for commercial and residential purposes and include a covered shopping arcade.

The s.106 agreement was amended by a Supplemental Agreement dated 29 October 1997 inserting the new clause 3.5, which is at the heart of the case. The amended agreement will be called “the Principal Agreement” in this judgment. Clause 8.7 of the Principal Agreement provided that, in the event of any dispute arising between the parties in respect of any matter the subject of the agreement, the same should be referred to a Chartered Surveyor agreed by the parties (with a procedure, in default of agreement, for the outside appointment of a surveyor), who was to act as an expert and not as an arbitrator.

The dispute between the parties to the appeal centres on the construction of clause 3.5 of the Principal Agreement. The parties have been unable to reach agreement on the nature and extent of the right of way to be granted over the service road to provide access for the rear servicing of the Authorised Properties. It would be a mistake to think of this as a run-of-the-mill dispute about a right of way. (Gale on Easements was cited in argument, but does not help to resolve this case).The complication in the legal landscape lies both in s.106 itself and in the fact that these proceedings have not been brought, as contemplated in s106, by Hillingdon as the Planning Authority. Quite the contrary: the proceedings have been brought against Hillingdon by Milebush, which was not a party to the Principal Agreement, and also against Tameside, which was not a party to the Principal Agreement. However, no separate relief was claimed against Hillingdon, who objected that it ought not to have been joined in that action at all. The judge concluded that the reason for the joinder of Hillingdon was an attempt to ensure that it was bound by the judgment on the construction of the planning obligation that Milebush hoped to obtain against Tameside, but, as the judge held, that course was not open to Milebush. He made an order that Milebush pay Hillingdon’s costs on an indemnity basis.

For its part Tameside does not dispute, as such, the binding nature of the planning obligation relating to the service road. Its case is that (a) by virtue of s.106(3) of the 1990 Act, Milebush is not entitled to take private law proceedings against it for a declaration on the construction of a planning obligation unenforceable by it and (b) as a matter of construction, the rights over the service road under clause 3.5 are not of the kind claimed by Milebush.

On the construction issue the essential question is whether Milebush is correct in its contention that the right of way to be granted under clause 3.5 covers a pedestrian emergency exit from the rear of the Authorised Properties. Tameside is willing to grant a right of way over the service road to Milebush in more limited terms. In correspondence and in this action Milebush says that the proposed terms are “too restrictive.” It asserts that the terms set by Tameside should be amended to confer a wider form of right of way than Tameside is prepared to grant.

The dispute was brought before Arnold J last year in the private law proceedings by Milebush against Tameside and Hillingdon for declarations that Tameside “is obliged to grant to the Claimant [Milebush] the rights of way referred to in clause 3.5 of the Principal Agreement...” and “As to the extent of the rights of way.” Tameside applied for summary judgement dismissing the claim. In his judgment [2010] EWHC 1022 (Ch) the judge held that it was unnecessary in the circumstances to consider that application. By his order dated 13 May 2010 he simply dismissed the action. He did so for two main reasons, both of which are covered by his grant of permission to appeal. On both points Milebush contends that the judge’s decision was wrong in law.

First, Arnold J rejected the construction of clause 3.5 advanced by Milebush in relation to the pedestrian emergency exit from the rear of its property via the service road. He held that other points in dispute concerning the locking of a security gate and the hours during which the service road could be used were not matters for the determination of the court at all, as they are covered by the provision in the Principal Agreement for determination by an expert in the event of a dispute between Tameside and Hillingdon and there was no such dispute.

Secondly, he accepted Tameside’s submission that it was not, in any event, an appropriate case for declaratory relief under CPR r.40.20. Having referred to s106 and a line of authorities on the court’s discretion to grant a declaration, the judge accepted Tameside’s submission it would be an inappropriate and pointless exercise for the court to make the declaration sought by Milebush.

In brief, Tameside’s point is that s106 provides for the enforcement of planning obligations at the instance of the Local Planning Authority: it does not provide for enforcement by a non-party beneficiary of the planning obligation, which is what Milebush claims to be.

Further, subject to judicial review, Hillingdon has the power, in order to further its planning objectives, to release Tameside from the planning obligation to it under clause 3.5, or not to enforce that clause in whole or in part, or to enter into an arrangement with Tameside to vary it. That power was inconsistent with the proper exercise of the court’s discretion to grant a declaration as to the construction of clause 3.5. Arnold J concluded:-

“ 58. …Milebush claims no private law right enforceable against either Tameside or Hillingdon. It seeks declaratory relief against Tameside on the footing that it is directly affected by the interpretation placed upon the Principal Agreement. But why should the court grant Milebush a declaration against Tameside in circumstances where, even if Milebush was right on the construction of clause 3.5 as it presently stands, Hillingdon would retain a discretion not to enforce, or to vary, clause 3.5? It would be a pointless exercise. Counsel for Milebush had no real answer to this point.”

The provision of a service road at the rear of the Authorised Properties was prompted by Hillingdon’s pedestrianisation of Uxbridge High Street and the consequent loss of vehicular access to them via the High Street.

The material terms of clause 3.5 under which the right of way over the service road was to be granted were “in fee simple with or without vehicles to inure in perpetuity….over the Service Road for the benefit of the Authorised Properties for the purpose of obtaining access for servicing the rear of those properties only and in accordance with the terms of this clause…” and under 3.5.2 “upon such reasonable terms as may be imposed by the Developer.”

The service road was completed in about 2004/2005. The development was first occupied in about March 2008. A security gate was installed. It was kept locked. Access to the part of the service road beyond the gate is controlled by a security guard. Parts of the High Street were fully pedestrianised in stages over the years. Other parts, including those adjacent to the Authorised Properties, were subject to strict traffic controls. By May 2009 vehicular access to the Authorised Properties via the High Street was materially restricted.

Following Hillingdon’s service of a notice on it Tameside wrote to Milebush on 21 May 2009 stating that it was prepared to grant it a right of way pursuant to clause 3.5.2.of the Principal Agreement on terms and conditions stated in the letter. The terms and conditions were that the right could not be used as a pedestrian emergency exit or for any purpose other than allowing access and egress to service the rear of Milebush’s properties (i.e. loading and unloading of goods); that it could only be used between the hours of 7.30 am and 6 pm Monday to Friday; and that access would be controlled by the operation of the security gate on the service road.

Those terms and conditions did not suit Milebush. It contended that Tameside was not entitled to impose those conditions on the grant of the right of way. Milebush principally seeks a right of way in order to provide a pedestrian emergency exit for a restaurant and wine bar and/or other of its High Street properties.

The judge decided the question of construction of clause 3.5 first. Having decided it in favour of Tameside, he could simply have refused the relief claimed by Milebush on the ground that Milebush had lost the substantive issue of construction.

However, the question of discretionary declaratory relief was fully argued and the judge ruled on it. The judge held that it was not the sort of case for the exercise of the court’s discretion. Questions of relief are commonly decided after the court has ruled on the substance of the dispute. The judge was not invited to make a preliminary ruling on the availability of a declaration in this case. The course taken by the judge is not open to objection. He had heard full argument from each side on construction and relief. Both sides wanted a decision on each point. In those circumstances and in view of the possibility that a different view might be taken on appeal, it was sensible for the judge to decide both issues.

It is also sensible for this court to decide both issues. If the court agrees with the judge on the declaration issue, it would theoretically be possible to dismiss the appeal without deciding the construction issue. But that course would have the unfortunate consequence that Milebush would be left with rulings on construction, which it says are wrong, but which would give rise to an issue estoppel between it and Tameside in other proceedings.

I will depart from the order followed by the judge and take the declaration issue first. It raises a general point to which the legal argument has been principally directed.

On the appeal against the ruling that this is not an appropriate case for declaratory relief, I have a preliminary comment about the role of this court.

This appeal is against a decision of the judge in the exercise of his discretion. He did not decline jurisdiction. Under the heading “The appropriateness of declaratory relief” he took account of various factors relating to the claim by Milebush for a discretionary on the footing that it was directly affected by the construction placed by Tameside on clause 3.5.

The discretionary factors considered by the judge in that section of his judgment (paragraphs 47 to 58) were that, as was conceded, Milebush was not a party to the Principal Agreement and could not enforce clause 3.5 against Tameside as a private law right (e.g by specific performance of an obligation to make the grant of the easement). The judge also said that s.106 did not provide for enforcement of a planning obligation by a beneficiary of that obligation, such as Milebush, providing instead for the enforcement of the planning obligation by the planning authority itself (i.e Hillingdon); that Milebush was not claiming any public law right against Tameside; that Hillingdon had the power to further its planning objectives by deciding to release, or not enforce, or to vary clause 3.5; and that in those circumstances the grant of the declaration claimed would be a pointless exercise.

This court, as is well known, does not interfere with the judge’s discretion, unless it is established that he acted on a wrong legal principle, or if, for some other reason, his decision was plainly wrong.

I agree that the judge’s conclusions on the questions of construction in this case were correct and that to that extent the appeal should be dismissed. However, I wish to say something about the form of procedure that was adopted in this case and in particular about whether this is a case in which it would have been appropriate for the court to grant declaratory relief of the kind sought by the appellant, Milebush Properties Limited (“Milebush”).

The agreement between the original developers and Hillingdon Borough Council (“the Council”) under section 106 of the Town and Country Planning Act 1990, which was subsequently varied to add the clauses which have given rise to these proceedings, is binding on the respondent, Tameside Metropolitan Borough Council, (“Tameside”), as successor in title by virtue of the provisions of section 106(3) and is enforceable against it by the Council. The agreement is a planning agreement and was required by the Council in order to promote plans for the pedestrianisation of part of Uxbridge High Street which would remove or significantly restrict vehicle access to various properties facing onto that road. The construction of a new service road to the rear of the properties would provide alternative access.

Under the terms of the agreement of 29^th October 1997 the developer covenanted with the Council that it would grant rights of way over the service road for the benefit of certain “Authorised properties” for the purpose of obtaining access for servicing the rear of those properties. One of the Authorised properties was 276-280 Uxbridge High Street, which is owned by Milebush. The agreement was, of course, entered into by the Council partly, perhaps even primarily, for its own benefit, in as much as it was seen as a way of countering objections to its pedestrianisation plans from owners of the properties most likely to be affected. However, Milebush and the other owners and occupiers of the Authorised properties, although not parties to the agreement, were persons for whose benefit it was made, in the sense that the grant of a right of way would provide a permanent means of access on foot and by vehicle for the purposes of providing necessary services. Indeed, it could be said that one of the main objects of the agreement was to provide them with that benefit.

Tameside, as a party to the agreement, has expressed a willingness to honour the obligation contained in the covenant and has offered to grant a right of way on certain terms. Milebush says that Tameside’s view of the scope of its obligation is too restrictive and that difference of opinion has given rise to a dispute. One question that arises on this appeal is how that dispute ought to be resolved.

Since Milebush is not a party to the agreement, it cannot enforce it directly against Tameside and since the Council is not a trustee of the obligation for the owners and occupiers of the Authorised properties, Milebush cannot bring proceedings against it to require it to enforce the covenant for its benefit. Two avenues therefore appear to be open: one is for Milebush to ask the court to resolve the issue of construction by granting a declaration; the other is for Milebush to ask the Council to require Tameside to grant a right of way in terms which it contends correctly reflect the agreement (no doubt bearing any associated costs) and, if it declines to do so, to seek judicial review of its decision. Those proceedings would give rise to two issues: whether the construction which Milebush places on the agreement is correct and whether the Council’s decision not to enforce the agreement was unlawful. Tameside would almost certainly be joined as an interested party, since it would be directly affected by the outcome.

In a case where the dispute is confined to a legitimate difference of opinion about the scope of the covenant between Tameside as prospective grantor and Milebush as prospective grantee, to engineer proceedings by way of judicial review seems to me to be unnecessarily cumbersome and not the most effective way of resolving a relatively simple dispute. It is said, however, that the court cannot grant declaratory relief in a case of this kind, or at any rate should decline to exercise its discretion in favour of doing so, either because the matter is one of public law rather than private rights, or because it would serve no useful purpose because it is possible at any time for Tameside and the Council to vary the agreement. It was the latter consideration that ultimately led the judge to refuse to grant declaratory relief in this case, an aspect of the matter to which I shall have to return at a later stage.

The jurisprudence relating to the court’s jurisdiction to grant relief by way of declaration and the circumstances in which it should be exercised has developed significantly over the last forty years. The leading authorities have already been reviewed by Mummery L.J. and I can therefore refer to them quite shortly. Although there are earlier cases which emphasise that the court cannot be asked to declare whether a particular scheme or proposed course of action is lawful or complies with some particular legislation (a proposition which I have no difficulty accepting), a convenient starting point for this purpose is Gouriet v Union of Post Office Workers [1978] A.C. 435, in which Lord Diplock at page 501D-F pointed out that the nature of the relief is a declaration of rights. He expressed the view that

“. . . a court of civil jurisdiction is concerned with legal rights only when the aid of the court is invoked by one party claiming a right against another party, to protect or enforce the right or to provide a remedy against that other party for infringement of it, or is invoked by either party to settle a dispute between them as to the existence or nature of the right claimed. So for the court to have jurisdiction to declare any legal right it must be one which is claimed by one of the parties as enforceable against an adverse party to the litigation, either as a subsisting right or as one which may come into existence in the future conditionally on the happening of an event.

. . . the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not those of anyone else.”

It is, perhaps, worth noting in passing the reference there to rights which may come into existence in the future, since it might be said in this case that, if the Council were to take steps to enforce the covenant, private law rights and obligations would come into existence in the future directly between Milebush and Tameside.

The need for there to be (in Lord Diplock’s words) a legal right which is claimed by one of the parties as enforceable against an adverse party to the litigation, led this court in Meadows Indemnity Co. Ltd v The Insurance Corporation of Ireland Plc [1989] 2 Lloyd’s Rep. 298 to refuse to grant a declaration to the claimant reinsurer as to the effect of the underlying contract of insurance, (despite the fact that its interests were affected by the outcome) on the grounds that it was not a party to the contract. Neill L.J., who gave the principal judgment, expressed some reluctance to reach that conclusion and clearly considered that it would have been beneficial to have been able to decide the issue before the court.

Tameside placed some emphasis on Attorney-General (ex rel. Scotland) v Barratt Manchester Ltd (1991) 63 P. & C.R. 179. The issue in that case was whether a planning agreement under which the planning authority and the owner of certain land agreed that it should be retained as a private open space created a public right enforceable at the suit of the Attorney-General by way of relator action. The court held that the agreement did not give rise to a public right and the limited discussion of the jurisdiction to grant declaratory relief does not take the matter any farther for present purposes. No one has suggested that the agreement in this case created a public right of the kind that can only be enforced by the Attorney-General.

Mercury Communications Ltd v Director General of Telecommunications [1996] 1 W.L.R. 48 does, however, take the matter farther. British Telecom (“BT”) held a licence for the provision of telecommunications services, clause 13 of which required it to enter into an agreement with any other regulated operators licensed to provide similar services who wished to connect into its systems and regulated, among other things, the charges that it could make for doing so. Mercury, another licence-holder, wished to enter into an agreement with BT for that purpose and negotiations began over the terms on which it should be allowed to do so. The parties agreed that the Director General as regulator should determine certain terms of that agreement if they could not themselves agree. The Director General had indicated his view of the effect of clause 13 of BT’s licence, which was critical to any determination he might be called upon to make. BT considered that view to be in accordance with clause 13, but Mercury did not. It therefore brought proceedings for a declaration as to the correct interpretation of that clause. The Director General and BT sought to strike out the proceedings as an abuse of the process of the court.

The judge at first instance (Longmore J., as he then was) refused to strike out the proceedings, but this court held by a majority (Dillon and Saville L.JJ., Hoffmann L.J. dissenting) that the proceedings were an abuse of the process. It is of interest in the context of the present case to note that Dillon L.J. reached that conclusion on the grounds that a party cannot obtain a declaration to get an abstract point decided in order to strengthen its hand in negotiations. He pointed out that there was no dispute between Mercury and BT and held that there was no ground on which Mercury could come to the court for merely declaratory relief. Hoffmann L.J. considered that the question was primarily one of procedural convenience and that since the Director General had already made clear his interpretation of clause 13, it was valuable to establish by declaration the correct basis for the continuing negotiations between Mercury and BT. Saville L.J. accepted that there was a real issue to be determined between the parties and that the question was whether it would be just to allow the proceedings to continue. He recognised that the alternative was to allow the Director to make a determination that could be challenged by judicial review (which he regarded as a time-consuming and expensive exercise for no good reason, given that the proceedings were already before the court), but thought that to entertain the proceedings was tantamount to re-writing the agreement between the parties.

The House of Lords reversed that decision. Lord Slynn, with whom the other members of the Appellate Committee agreed, rejected the suggestion that the proceedings raised a hypothetical or academic question because the Director General had already made his views clear. He considered the meaning of clause 13 to be a key element in the negotiations between Mercury and BT and thought that it was good sense for the matter to be determined at that stage in that way. In my view the decision strongly supports the conclusion that the court can, and in some circumstances will, determine a dispute relating to the construction of an instrument if both parties to the proceedings have a sufficient interest in the outcome, even if one or other is not a party to it or does not acquire any rights under it.

In re S (Hospital patient: Court’s Jurisdiction) [1996] Fam. 1 raised the question whether the court could exercise its jurisdiction to grant declaratory relief in order to determine which of two persons was entitled to have responsibility for the care of a patient who was incapable of expressing his own wishes in the matter. Although the question arose in a context far removed from that of the present case, some passages in the judgments are of importance, because, as Sir Thomas Bingham M.R. (as he then was) pointed out at page 8E, the only issue for determination by the time the appeal was heard was whether the plaintiff had sufficient standing to invoke the court’s jurisdiction to grant declaratory relief. Having reviewed a number of cases in which declaratory relief had been granted to doctors, health authorities and others in relation to the care of patients he said:

“It cannot of course be suggested that any stranger or officious busybody, however remotely connected with a patient or with the subject matter of proceedings, can properly seek or obtain declaratory or any other relief (in private law any more than public law proceedings). But it can be suggested that where a serious justiciable issue is brought before the court by a party with a genuine and legitimate interest in obtaining a decision against an adverse party the court will not impose nice tests to determine the precise legal standing of that claimant.”

Millett L.J., having referred to the passage in the speech of Lord Diplock in Gouriet v Union of Post Office Workers to which I referred earlier, said at page 21H-22C:

“Since that decision the courts have developed the jurisdiction to grant declaratory relief in a number of cases which, though distinguishable from the present, are nevertheless not altogether dissimilar to it. We have now reached a position where the court is prepared in an appropriate case to fill much of the lacuna left by the disappearance of the parens patriae jurisdiction by granting something approaching an advisory declaration. In my judgment, the passage which I have cited from Lord Diplock’s speech in the Gouriet case [1978] A.C. 435, 501 can no longer be taken to be an exhaustive description of the circumstances in which declaratory relief can be granted today. It is to be regarded rather as a reminder that the jurisdiction is limited to the resolution of justiciable issues; that the only kind of rights with which the court is concerned are legal rights; and that accordingly there must be a real and present dispute between the parties as to the existence or extent of a legal right. Provided that the legal right in question is contested by the parties, however, and that each of them would be affected by the determination of the issue, I do not consider that the court should be astute to impose the further requirement that the legal right in question should be claimed by either of the parties to be a right which is vested in itself.”

A little later at page 22H-23A he said:

“The dispute raises a justiciable issue; it concerns the legal rights of the patient; all proper parties, including the patient, are before the court; and the determination of the issue affects the rival claimants and their rights and obligations to the patient. In my judgment the court is entitled and bound to decide it.”

It is quite true that these statements of principle are found in a case that was concerned with the development of the jurisdiction to grant declaratory relief in a particular and somewhat specialised context in which it had already proved to be of great practical utility. Nonetheless, as the references to the Gouriet case show, it is no more than a branch of the original tree and I see no reason why the jurisdiction should not be invoked in a principled way in other cases where it may prove equally useful. The Mercury case was not cited to the court in In re S (it had been decided only a week earlier), but the two decisions seem to me to be entirely compatible.

Other authorities to which we were referred, including Governor and Company of the Bank of Scotland v A Ltd [2001] EWCA Civ 52, [2001] 1 W.L.R. 751, serve to demonstrate that the jurisdiction is capable of being utilised in new and unusual situations when a proper case arises. Lord Woolf, giving the judgment of the court in that case, said at page 767F-768A:

“In his first Hamlyn Lecture given in 1949, Freedom Under the Law, Sir Alfred Denning identified the challenge facing the court as being to develop “new and up-to-date machinery” (p 116). The first element of the machinery identified in the lecture was the remedy of declaratory relief. The court’s power to make a declaration (or “declaration of right”) was derived from the Court of Chancery and was originally supposed to be restricted to declaratory judgments as to existing private rights (see Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536, which sets out the early history). Sir Alfred Denning saw the need to develop its scope in order to control the abuse of executive power, and over the half-century which has elapsed since his lecture it has performed a crucial function in the emergence of the modern law of judicial review. The development of declaratory relief has not however been confined to judicial review. Doctors and hospitals have increasingly been assisted by the ability of the courts to grant advisory declarations. It was at one time thought that an interim declaration could have no practical purpose. The developments in other jurisdictions showed this was not the situation. Now the http://login.westlaw.co.uk/maf/wluk/app/document?src=doc&linktype=ref&&context=10&crumb-action=replace&docguid=I71F54A60E42311DAA7CF8F68F6EE57ABCPR acknowledge that just as interim injunctions can be granted so can interim declarations. RSC Ord. 15, r. 16 still remains part of the Civil Procedure Rules. Its transitional life is about to come to an end. The Rule Committee has approved a new rule, CPR r. 40.20, which omits any mention of “rights”. It merely states: “The court may make binding declarations whether or not any other remedy is claimed.””

In Financial Services Authority v Rourke [2002] C.P. Rep. 14 the present Master of the Rolls, then Neuberger J., held that the court had an unfettered power to grant declaratory relief whenever it is appropriate to do so, having regard to the need to do justice as between the parties and to whether to do so would serve a useful purpose.

In Feetum v Levy [2005] EWCA Civ 1601, [2006] Ch. 585 the claimants were members of a limited liability partnership which had given a counter-indemnity to a third party as part of the arrangements for securing a substantial loan to the partnership. Acting under a power given by a debenture the third party had purported to appoint administrative receivers over the partnership who under their statutory powers had required the claimants to submit a statement of affairs and to comply with certain other requests. The claimants sought a declaration that the appointment of the receivers was invalid because no event had occurred to cause the partnership’s insolvency. The defendants argued that the claimants were not entitled to obtain such relief because the declaration concerned the rights of the LLP alone. Having referred to the Gouriet case, the Meadows case, In re S and other authorities, Jonathan Parker L.J., with whom Sir Peter Gibson and Ward L.J. agreed, rejected that argument, both because the claimants were directly affected by the existence of any duty to comply with the statutory provisions and because it would not be right to refuse declaratory relief simply because the claimants were not parties to the contract whose meaning they were seeking to have clarified. The court observed that things had moved on since the Meadows case.

The last case to which I need to refer is Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387, [2010] 1 W.L.R. 318, in which the court was asked by Rolls-Royce to declare whether it would be illegal under the Employment Equality (Age) Regulations 2006 for it to include within a selection matrix for redundancy a length of service criterion that had been agreed with the union as part of two collective agreements. The court held by a majority that, although there was no immediate dispute between the parties, the point was not academic and that a decision would serve a useful purpose: see the judgments of Wall L.J. (as he then was) at 332E-333G and Arden L.J. at page 358H-359C.

Aikens L.J. dissented, primarily because he considered that, since those who might be directly affected by the use of the length of service criterion were not before the court and would therefore not be bound by the decision, a declaration would serve no useful purpose. However, his judgment contains the following summary of the principles that he considered were to be derived from the earlier cases:

“(1)

The power of the court to grant declaratory relief is discretionary.

(2)

There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant.

(3)

Each party must, in general, be affected by the court's determination of the issues concerning the legal right in question.

(4)

The fact that the claimant is not a party to the relevant contract in respect of which a declaration is sought is not fatal to an application for a declaration, provided that it is directly affected by the issue; (in this respect the cases have undoubtedly “moved on” from Meadows.)

(5)

The court will be prepared to give declaratory relief in respect of a “friendly action” or where there is an “academic question” if all parties so wish, even on “private law” issues. This may particularly be so if it is a “test case”, or it may affect a significant number of other cases, and it is in the public interest to decide the issue concerned.

(6)

However, the court must be satisfied that all sides of the argument will be fully and properly put. It must therefore ensure that all those affected are either before it or will have their arguments put before the court.

(7)

In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised? In answering that question it must consider the other options of resolving this issue.”

Although I am generally in agreement with that summary, I think, with respect, that paragraph (2) is expressed somewhat too narrowly. In the Gouriet case Lord Diplock himself recognised that the dispute could relate to rights that might come into existence in the future upon the happening of an event and in the Mercury case (which does not appear to have been cited to the court) the dispute did not directly concern the existence or scope of any private rights or obligations vested in the parties themselves. It concerned the correct interpretation of BT’s licence, a document that stood in the realm of public rather than private law, but which was central to the negotiations between Mercury and BT.

In my view the authorities show that the jurisprudence has now developed to the point at which it is recognised that the court may in an appropriate case grant declaratory relief even though the rights or obligations which are the subject of the declaration are not vested in either party to the proceedings. That was certainly the view of the court in In re S and it is also the clear implication of the observations in Feetum v Levy and the Rolls-Royce case that things have moved on since Meadows. In the Mercury case it was not considered relevant that BT had rights under the licence and it was no bar to the proceedings that Mercury did not. To that extent the position is mirrored in this case, in which Tameside has obligations under the agreement but Milebush has no rights. I can see no reason in principle why the nature of the underlying obligation should be critical, although there may well be other reasons why in the particular case a declaration should not be granted. The most important consideration is likely to be whether the parties have a legitimate interest in obtaining the relief sought, whether to grant relief by way of declaration would serve any practical purpose and whether to do so would prejudice the interests of parties who are not before the court.

In the present case the fact that the agreement is a planning agreement made for public purposes is not, in my view, of itself sufficient to preclude the court from granting declaratory relief at the suit of Milebush. As one would expect, Tameside is willing to honour its obligations, whatever they are, although it reserves the right to seek to persuade the Council to vary the agreement if on a correct interpretation its effect is wider than was supposed. It is entitled to do that, but no attempt has been made to clarify or vary the agreement as a means of disposing of the litigation, so I think one is entitled to assume that at the moment the Council is not unduly perturbed by the prospect that Milebush might succeed. The fact that Tameside is willing to honour its obligation by making a grant in favour of Milebush in accordance with the terms of the agreement means that the only thing holding up the process is an authoritative decision on the scope of that obligation. Indeed, even if Tameside and the Council are both dissatisfied with the outcome of the proceedings and wish to revise the agreement, they will be better placed to do so when they know what it means. On the face of it, therefore, it is in the interests of all concerned to know what the true scope of the obligation is. How that may most economically and effectively be determined then becomes an important question.

In my view the present proceedings for a declaration are a sensible and economical means of achieving that end. The principal objection to that course is that the obligation, being a planning obligation, exists in the public law sphere and should be enforced, if at all, only by means of proceedings for judicial review. In my view, however, that is not a good reason for the court to refuse to entertain a claim for a declaration in the circumstances of the present case. A similar objection was made in the Mercury case – see pages 56B-E – but it was rejected both by the Court of Appeal and the House. The circumstances of that case were admittedly different in so far as the dispute could be viewed as one relating to the contract between the parties, but the principle underlying the decision is that the court should be guided by considerations of justice and convenience rather than being bound by a rigid adherence to certain forms of procedure. Lord Slynn expressed this as follows at page 58A-B:

“Moreover it cannot be said here, in my view, that the procedures under Order 53 are so peculiarly suited to this dispute (as they would be in a claim to set aside subordinate legislation or to prohibit a government department from acting) that it would be a misuse of the court’s process to allow the originating summons to continue. On the contrary it seems to me that the procedure by way of originating summons in the Commercial Court is as least as well, and may be better, suited to the determination of these issues than the procedure by way of judicial review.”

In my view the same can be said in this case and I think it would be wrong to hold that the court cannot or should not entertain an action for a declaratory relief simply because the rights in question arise in the sphere of public rather than private law. Moreover, I do not think that it is entirely correct to characterise these proceedings as an attempt to enforce the agreement, in the sense that Milebush is seeking to compel the Council as a public body to take certain action. The Council has not hitherto shown any disinclination to allow Tameside to perform its obligations under the agreement and Milebush does not seek an order requiring it to take action of any kind. All it seeks is a declaration as to the meaning of the agreement. It recognises that it is dependent on Tameside’s willingness to act honourably for obtaining the practical benefit it seeks, but has reasonable grounds for thinking that Tameside will not disappoint it.

Milebush also accepts that it cannot prevent Tameside and the Council from varying the agreement and it was that possibility that led the judge to conclude that a declaration would serve no useful purpose. That led to the somewhat bizarre outcome below that the court heard argument upon and determined the issues of construction in a manner capable of giving rise to an issue estoppel binding upon Milebush, Tameside and the Council but, having done so, declined to embody its decision in the grant of a formal declaration. In my view that was a most unsatisfactory outcome. Moreover, if it were thought that no useful purpose would be served by granting a declaration as to the meaning of the agreement (a conclusion that could be drawn from the nature of the agreement itself), there was surely no point allowing the court’s time to be wasted in hearing argument about its meaning. The claim should have been struck out as an abuse of the process.

For the reasons I have given I think that there were good reasons to decide the issues of construction raised in this case and that the judge was right to entertain the proceedings. I also think that he decided the issues of construction correctly. However, in my view he was clearly wrong to hold that no useful purpose would be served by granting declarations giving formal effect to his decisions and in so far as his refusal to do so involved an exercise of discretion I consider it to have been flawed as a result of a failure to recognise and apply the correct principles of law.

I would therefore allow this appeal to the limited extent of varying the order below by granting declaratory relief in favour of Milebush that reflects the limited extent to which it succeeded before the judge on the issues of construction.

I agree that this appeal should be dismissed for the reasons given by Mummery LJ.