Royal Mail Estates Ltd v Pridebank Ltd & Ors

This is a Part 8 claim brought by the claimant, Royal Mail Estates Limited, for the determination by the court of the construction of a restrictive covenant in relation to sites known as the South London Mail Centre, 53 Nine Elms Lane, London SW8 5BB ("the site"). The freehold title of the site is registered under title number SGL169291.

Originally, the site was part of the Nine Elm Gas Works and was devolved to the British Gas Corporation by a series of orders and Acts of Parliament. The British Gas Corporation ceased to use it for the purposes of its gas business.

By a conveyance dated 27 September 1973, the British Gas Corporation transferred the site to what was then known as the Post Office. By various transfers the site is now owed by the claimant, Royal Mail Estates Limited. The site has been used for many years as a mail centre for various operations, in particular a parcels concentration office and a mechanical letter office telephone exchange. Royal Mail have decided that these uses are at an end or are coming to an end and the site is ripe for development.

The site is located in an area which was formerly defined by light industrial, and other commercial uses but, as is well known, the United States have decided to commence development and to build an embassy and gardens in the area of Vauxhall/Nine Elms/Battersea opportunity area "the "NEBOA". This has led to enormous opportunities for development, including both residential and office development. The site has planning permission for a mixture of residential development ("the development"). The development comprises a residential development with permission for a certain number of ground floor retail units, offices, cafes and restaurants, sports/community facilities, including part of a new community park (to be known as the Linear Park) and a school.

The critical covenant with which I am concerned is a restrictive covenant, clause 5, whereby the purchasers covenanted with the British Gas Corporation, in terms of the covenants set out in the fifth schedule of the transfer. Clauses 1 and 2 of Part A of the fifth schedule provide:

The references to the Town and Country Planning (Uses Classes) Order No.1385 of 1972 refers to class 3 which is use as a light industrial building for any purpose, class or which is use as a general industrial building for any purpose, and class 10 which is use as a wholesale warehouse or repository for any purpose.

The claimants contend that, on its proper construction, clause 1 permits as one of the uses, housing, and it is for that reason that it seeks a declaration from this court that use for residential purposes is within clause 1. I should add that this application is brought pursuant to section 84(2) of the Law of Property Act 1925. There is also currently a claim before the Upper Tribunal (Lands Chamber) under section 84(1) of the Law of Property Act 1925 to modify or discharge the covenant. The reason for that is that the development is a mixed used development, involving not only residential development but also additional uses in the form of retail units, offices, cafes, restaurants, sport/community facilities and a school. The application before the Upper Tribunal (Lands Chamber) is currently stayed while this action is pursued to its conclusion.

A number of defendants have been joined to this action who are described as interested parties under the order of Master Price made on 2 February 2015. They include, as the eleventh defendant, parties who may or may not have an interest in a future housing development. All the parties have been served pursuant to the order of Master Price. None of the defendants have opposed the claim for a declaration made by the claimant.

The short issue of construction for me is whether the use of the word "housing" in section 1 Part A is intended to be a stand-alone exception entitling the site to be used for that purpose, or whether it is bound up with the following words and is therefore limited to housing which is only ancillary to the purposes of Post Office operational uses or to the classes 3, 4 and 10 of the Town and Country Planning (Uses Classes) Order No.1385 of 1972.

Mr Johnson QC for the claimant has provided me with a most helpful skeleton and has advanced his arguments orally to me today and has convinced me that the section clearly is intended to embrace housing as a use to which the site might be put. It seems to me that the wording of the clause is quite clear. Before I deal more precisely with the wording of the clause, I should say that there has been no evidence before me of the background facts or the genesis of this transfer. Mr Johnson quite properly has said to me that such evidence is unnecessary because the wording is clear and the meaning can be deduced from the clear wording of the schedule. I agree with Mr Johnson and I will interpret the schedule as it appears from the clear words.

It seems to me that the way this section has been drafted indicates quite clearly that housing was one of the intended uses because it follows, first of all, the entitlement to use property for the Post Office purposes or the purposes falling within the Town and Country Planning order and then follow the words "or housing". It is therefore plain that it is a standalone alternative use that was permitted. The following words, starting with the words "and purposes ancillary…" are therefore some additional use within the alternative framework. But those additional words make it plain that for the purposes of those ancillary items, it can include offices and housing. It seems to me that the word "housing" in that context would be completely otiose if it was not intended that housing was, by itself, intended to be a standalone provision.

I am also fortified by my conclusion that section 2 of Part A of the fifth schedule does not contain a negative covenant against housing use, rather it is limited to office development.

In my judgment, it is quite clear, therefore, that the covenant does permit the use of the site for residential purposes in whole or in part and with or without the other uses of the site permitted by the covenant and I make a declaration accordingly.