Constance Long Term Holdings Ltd v Cavendish (Duke Of Westminster)

In these proceedings the Claimant, the freehold owner of a Property in Chester Row, London SW1 (“the Property”) which is within the Grosvenor Estate, seeks declarations concerning the entitlement of the Defendant (“Grosvenor Estate”) to withhold consent under an Estate Management Scheme in relation to a particular aspect of work which the Claimant proposes to carry out to the Property.

The Claimant is a Guernsey company, the shares in which are held under a pension trust arrangement for Mr George Papamarkakis. In December 2009 the Claimant purchased a long lease of the Property with a view to modernising it and subsequently renting it to Mr Papamarkakis as a home for him, his wife and his two daughters.

In December 2010 the Claimant purchased the freehold of the Property from the Grosvenor Estate under legislation initially enacted in the Leasehold Reform Act 1967 (“the 1967 Act”). The 1967 Act made provision for the retention of management powers by a common landlord of an estate area for the common benefit of properties within that area. The statutory purpose of an estate management scheme was set out in section 19(1) of the 1967 Act as being:

“to maintain adequate standards of appearance and amenity and regulate redevelopment in the area in the event of tenants acquiring the Landlord’s interest in their house and premises.”

In this case the relevant scheme is the Grosvenor Belgravia Estate Management Scheme which was approved by the High Court on 5 December 1973 (“the Scheme”). The Scheme sets out covenants which bind the Claimant and the owners of the other properties covered by the Scheme. Those covenants include the following provision at clause 17 of the Scheme:

“The owner shall not make any alteration in the construction height elevation or external architectural appearance of the enfranchised Property or any part thereof nor enclose the portico (if any) thereof nor cut or alter any of the exterior or the interior load bearing walls or timbers thereof nor erect or build any additional or substituted building or erection thereon without the previous written consent of the Landlords or their Estate Surveyor (such consent not to be unreasonably withheld).”

In March 2011 PTP Architects (“PTP”) acting on behalf of the Claimant wrote to Mr Dylan Pritchard, a building surveyor in the North Belgravia Team of Grosvenor Estate, enclosing drawings showing work which the Claimant proposed to carry out at the Property, for the purpose of seeking Mr Pritchard’s view on the likelihood of consent being granted. On 18 April 2011 Mr Pritchard responded to say that Grosvenor Estate would not consent to the construction of a basement under the Property which had formed part of those proposals.

On 17 October 2011 Stephenson Harwood LLP, instructed on behalf of the Claimant, wrote two letters to Grosvenor Estate seeking written consent to proposed alterations to the Property as shown on documentation enclosed with each letter. One letter enclosed proposals which were referred to as Option A and included construction of a deep basement using a contiguous piled wall around the perimeter of the house and the back garden. The other letter enclosed a proposal, referred to as Option B, which did not include the construction of a basement but did include the construction of piles around the perimeter of the house and garden, there being an issue between the parties as to what precisely was indicated on certain drawings.

Prior to applying for consent from Grosvenor Estate, the Claimant had on 21 July 2011 also applied for planning permission for work which included the basement and the contiguous piled wall around the perimeter of the Property which formed part of Option A.

On 21 October 2011 Mr Pritchard acknowledged receipt of the applications and said that the proposals would be discussed at Grosvenor Estate’s next planning meeting which, from email exchanges, appears to have taken place on about 27 October 2011.

On 17 November 2011 Westminster City Council granted planning permission for the work which formed Option A. On the following day, 18 November 2011, Mr Pritchard sent an email to Stephenson Harwood in which he apologized for the delay in replying to the Claimant’s application and said he was in the process of formally replying to the applications. However, in that email he summarised the position in relation to the applications. In relation to Option A he said that this would not be consented to because Grosvenor Estate were of the opinion the works would cause significant nuisance to the neighbours and nearby residents and were likely to damage neighbouring properties. In relation to Option B he raised concerns about an additional vault, the floor to ceiling height of the lower ground floor, the detail of the proposed mansard roof and the details of the windows.

On 8 December 2011 Stephenson Harwood wrote to Mr Pritchard responding to those queries in relation to Option B and, in turn, Mr Pritchard replied on 13 December.

On 14 December 2011 Mr Pritchard formally responded to the Claimant’s applications. In his first letter he confirmed that Grosvenor Estate would not be giving consent to Option A, which included the construction of a basement, for the same reasons as set out in his email of 18 November 2011. He made comments on the remainder of the proposals in relation to floor to ceiling height, the mansard roof and window details. In the second letter of 14 December 2011 Mr Pritchard set out the same comments in relation to the floor to ceiling height, mansard roof and windows and stated “We are likely to favourably consider the remaining proposals.”

On 6 January 2012 Stephenson Harwood responded to Mr Pritchard’s letters, reserving their position in relation to Option A and responding to the comments made on Option B. They concluded by saying that, in the light of what they said, it appeared that the parties had agreed the terms of consent for the Option B proposal.

On 17 January 2012 Mr Pritchard responded to that letter. In relation to Option B he said he had passed copies of the correspondence to Murray Birrell who would be dealing with the application for consent to carry out alterations under the terms of the Scheme on behalf of Grosvenor Estate. He asked Stephenson Harwood to forward three sets of drawings to Murray Birrell and one set to him showing the amendments set out in Stephenson Harwood’s letter of 6 January 2012.

Following that letter, Mr David Betteridge of Murray Birrell became involved and wrote to Stephenson Harwood on 24 January 2012 saying that they would be dealing with the matter up to completion of any works which were deemed appropriate. He requested some further information, including drawings. He added the following:

“In determining whether and upon what conditions consent should be granted, we will take into account not only the proposed works themselves but also the extent and nature of recent works carried out at the Property and any current or proposed works in the vicinity. Occasionally this may mean that if approved, works may need to be phased or delayed in order not to cause unnecessary disturbance to nearby occupiers.

Please note that no works requiring consent under the terms of the management scheme are to be commenced on site until the relevant plans have been considered by Grosvenor or their agents and all relevant Conditions contained in any approval provided must be complied with.”

On 26 January 2012 PTP sent Murray Birrell three copies of a number of drawings which, as stated by Stephenson Harwood in a letter to Mr Pritchard of the same date, had been amended to reflect the amendments agreed in their letter of 6 January 2012. Discussions followed between Mr Betteridge and PTP and on 15 February 2012 Mr Betteridge wrote to Mr Pritchard enclosing a copy of a draft approval letter and associated licence for alterations for the Option B works.

On 17 February 2012 PTP wrote to Mr Betteridge following a meeting at which he had advised them of the items which were likely to form conditions precedent to any licence to alter. PTP enclosed further information in the form of two packages, Pack A and Pack B. One of the items in Pack B was a “Method Statement by Aspin Foundations Ltd, covering site set-up, piling and underpinning works”.

On 21 February 2012 Murray Birrell wrote a letter (“the conditional approval letter”) to the Claimant at Stephenson Harwood and said:

“We are in receipt of Stephenson Harwood’s letter of 6th January 2012 addressed to Grosvenor applying on your behalf for consent under the Grosvenor Belgravia Estate Management Scheme for the proposed alterations to this property. The drawings which you enclosed are numbered 47CR-GR12-03(D), 04(B), 05(B), 06(B), 07(A) and 47CR-GR22-03(C), 04(C) and 05(C) and they show details of the following works:

1.

Alterations to front and rear elevations including replacement windows and new feature glass staircase / Juliet balconies with glazed infill panels and metal railings / box planters.

2.

Creation of enlarged basement including front under pavement vault to form new habitable accommodation.

3.

Installation of new external platform lift.

4.

Installation of comfort cooling.

5.

Creation of new mansard roof at second floor level incorporating new habitable accommodation.

6.

Creation of new lightwell to front elevation including new steps, perimeter railings and 'stopping-up' of redundant vehicle crossover.

7.

Enhancement of existing rear flat roof areas including new glazed skylights.

I am pleased to tell you that, provided you comply with the conditions set out in this letter, there is no objection to the proposals. Where additional information or copies of consents are required, please send them to David Betteridge at Murray Birrell.

The conditions which follow under the heading "Conditions Precedent" must be dealt with before the work starts.

...

5(a) One copy of all structural engineering drawings and/or calculations, with a copy of each of the drawings referred to at the beginning of this letter, are to be sent to and approved by Hurst Peirce & Malcolm, Celtic House, 33 John's Mews, Holborn, London WCIN 2QL, Consulting Engineers, acting on our behalf. (Details of all previous basement excavations in the vicinity are to be included in your engineer's analysis and design. A copy of your engineer's assessment/justification is to be provided. Details must include a recent planning history including details of any previous scheme refusal).

...

I would emphasise that you must comply with each and every one of these Conditions Precedent before any work starts at the property. Unfortunately, if work starts prematurely, this will be a breach not only of the conditions of the Management Scheme but also of this approval and may lead to us withdrawing this approval.

When carrying out the works, the rights belonging to adjoining or neighbouring properties must be taken into account. It is not intended however that any term of this approval is enforceable by a third party under Section 1 of the Contracts (Rights of Third Parties) Act 1999.

...

Please contact our surveyor, David Betteridge, if you have any queries about this approval. Otherwise we look forward to hearing from you very soon not only about compliance with the Conditions Precedent but also confirming that all of the Works Conditions set out in this letter are understood and agreed.”

There are issues between the parties as to the effect of the conditional approval letter. In closing submissions Mr Guy Fetherstonhaugh QC, who appeared with Mr Adam Rosenthal on behalf of Grosvenor Estate, accepted that the letter gave consent for the Claimant to carry out certain works, subject to compliance with the conditions precedent. That reduced the issues between the parties but there are remaining issues which I deal with below as to what was actually sanctioned by this letter and as to what condition precedent 5(a) allowed Hurst Peirce and Malcolm LLP (“HPM”) on behalf of Grosvenor Estate to do by way of approval, it being accepted by Mr Fetherstonhaugh QC that approval could not be unreasonably withheld.

Following the conditional approval letter, Mr Stan Ritter of HPM contacted the Claimant’s architects, PTP, and the Claimant’s consulting structural engineers, Lucking and Clark LLP. As a result PTP sent Mr Ritter copies of drawings “which have been granted consent by Grosvenor/Murray Birrell”in the conditional approval letter.

In sending those drawings Mr Gareth Kempster of PTP added this:

“Please note that these drawings are for general arrangement purposes only and all structural elements and arrangements are shown indicatively only. These drawings should be read in conjunction with Lucking &Clark’s structural drawings.”

On 28 February 2012 Mr Ritter wrote to Mr Mike Clark of Lucking and Clark asking him to send a set of drawings and calculations so that he could carry out the review under condition precedent 5(a). In response on 2 March 2012 Mr Clark said he would send the information as soon as possible but another engineer in HPM, Mr Paine, was separately considering the appropriateness of a number of details relating to the party wall awards. Mr Clark said he would like to incorporate any changes arising from this process into the drawings and would then send the package of drawings and calculations to Mr Ritter shortly afterwards.

Mr Ritter sent an email to Mr Clark on 12 March 2012 after a conversation the week before and said that Murray Birrell were adamant that Mr Ritter should not review any proposals unless they related solely to the alterations which had received approval.

In the event it seems that the party wall awards took longer to conclude than Mr Clark had anticipated and by 15 May 2012 he had not sent drawings and calculations to Mr Ritter. On that date Mr Ritter wrote to him saying that it had come to his notice that information issued in relation to the party wall awards showed construction which had not received approval by Grosvenor Estate. He again stated that he would not review any submissions which did not conform to the approval issued by Murray Birrell on behalf of Grosvenor Estate.

In response to that email Mr Clark wrote to Mr Ritter on 16 May 2012 to explain the position. He said he had recently issued a package of information relating to Option A which was currently being reviewed by Mr Paine in HPM as part of the party wall process. He said that an alternative scheme, Option B, without a basement was the scheme that he had discussed with Mr Ritter and which he believed had received approval under the Scheme. He said he recalled that it had been agreed that until Mr Paine had completed his deliberations over Option A there was little point in putting Mr Ritter to the trouble of considering Option B, without the basement. He confirmed that Mr Ritter had not yet received a package of information relating to Option B for review.

Mr Clark then continued by saying that he appreciated that this might appear confusing but he offered the following explanation in clarification. In his evidence Mr Ritter said that he had not read this at the time.

“My Client wishes to construct a basement beneath his freehold property in accordance with the planning consent that he has received from City of Westminster. Consents necessary to carry out this work include Building Regulations Approval, Party Wall Awards and consent under the Estate Management Scheme. In order to mitigate the risk of a refusal of any one of these consents my Client has instructed me to develop two options in parallel i.e. Option A with a basement and Option B without a basement. Option B is the scheme which I believe you have been asked to review under the EMS and includes the installation of piling which could be used subsequently to construct the basement (Option A).”

Mr Clark concluded his letter by saying that once he had resolved the outstanding party wall matters for Option A he would be in a position to issue his proposals for Option B to Mr Ritter.

On 29 May 2012 Mr Clark sent Mr Ritter a copy of the architectural drawings which had been referred to in the conditional approval letter. Later that day Mr Betteridge contacted Mr Ritter for an update in relation to progress on condition precedent 5(a). Mr Ritter evidently spoke to Mr Betteridge later that day and, as a result, Mr Betteridge sent an email to Mr Ritter in the following terms:

“Further to our discussions, I require you to confirm that you are unable to carry out any further review on the proposals as they indicate a method of sub structure formation/methodology that is not in line with the extent of the approval granted.”

This led to Mr Ritter writing to Mr Clark on 30 May 2012 acknowledging receipt of the architects’ drawings and saying as follows:

“Having looked at the drawings it would seem to me that the work proposed does not require the installation of piles and could be designed and constructed in alternative (less disruptive) ways.

It is essential to the progress of this project that the terms of the Grosvenor Approval are clear and therefore could I ask you to confirm that the extended basement as shown on the architects drawings could be formed without the use of piles.”

On the same day Mr Clark wrote to Mr Paul Taylor of Northburn Associates, the project manager engaged by the Claimant and said as follows:

“His request deliberately ignores the intent of installing the piles and I am not inclined to get into this kind of dialogue. We all know Option B can be constructed without the use of piles but, equally, installing the piles does not preclude it either.

I suggest I ignore the email and get our Option B structural drawings delivered via [Stephenson Harwood] to Murray Birrell asap.”

Stephenson Harwood then sent the structural engineering drawings prepared by Lucking and Clark to Mr Betteridge on 31 May 2012. On the same day Mr Ritter, in compliance with Mr Betteridge’s email of 29 May 2012, wrote the following email to Mr Betteridge:

“I have reviewed the architects’ drawings which formed part of the "Grosvenor Approval" and am of the opinion that the piling shown on the drawings is unnecessary for the formation of the extended basement to which the approval refers. I have asked the design engineer (Mike Clark of Lucking and Clark) to confirm that the extended basement could be constructed without the use of piles but to date he has not replied.

I do not therefore feel I can review the proposals in their present form unless I receive instructions to the contrary from yourselves.”

Mr Betteridge then contacted Mr Pritchard who confirmed that he should relay Mr Ritter’s statement to the Claimant and accordingly on 1 June 2012 Mr Betteridge wrote to Stephenson Harwood saying that he had received an update from HPM in connection with their review and added:

“To this end, I am advised by Hurst Peirce & Malcolm that their review cannot be concluded as, in their opinion, the extent of piling shown on the Lucking and Clark (Design Structural Engineers) drawings is considered to be unnecessary in relation to the extent of approved works detailed in the Architects drawings listed in the aforementioned Conditioned Approval letter.

With the aim of progressing matters, Hurst Peirce & Malcolm have requested from the Design Engineer (Mike Clark of Lucking and Clark) to confirm that the extended basement could be constructed without the use of piles. To date, however, they await a reply and until this matter is resolved Condition Precedent 5 of the approval remains to be discharged.”

On 13 June 2012 Stephenson Harwood responded to Murray Birrell and said this in relation to piling:

“The Architects' drawings listed in the Conditional Approval letter dated 21 February 2012 include piling. Structural drawings were also provided with [the Claimant’s] application dated 17 October 2011 which include the use of piling. Accordingly, the scheme has effectively been approved with the use of piling in the initial approval. Furthermore, our client considers that there is no engineering reason for the use of piling not to be approved. Your client can have no legitimate objection to the use of piling.”

After further emails between Mr Betteridge and Stephenson Harwood, Stephenson Harwood wrote again to Mr Betteridge on 20 June 2012 setting out their position in relation to Option B and asking Grosvenor Estate to consider its position in relation to the piling. Mr Betteridge forwarded the letter to Mr Pritchard seeking his guidance on the position Murray Birrell had taken of not discharging the relevant condition precedent on the basis that the piling solution proposed was considered by HPM to be excessive in nature compared to the approved scheme.

Mr Pritchard then referred the matter to Mr Nigel Hughes who, at the time, was the planning and environment director of Grosvenor Estate. Mr Pritchard stated as follows in an email on 21 June 2012 at 12:17:

“As you may recall, last week I told you that they were planning to create piling under the entire building (for 'future proofing' the property to permit the sub-basement we have refused). HPM have not signed off the structural drawings for this on the basis that it is unnecessary for the works approved. MB have written twice to their solicitors making our position clear but they are challenging this (see attached letter).”

At 12:37 Mr Hughes responded to Mr Pritchard in the following terms:

“I would hold fast and not grant consent for the piling. If they challenge us under the EMS it will significantly delay their programme and from their perspective, wouldn’t seem to be a risk worth taking.”

Mr Pritchard then relayed it back to Mr Betteridge with the comments:

“Pharaoh has spoken. As it is written let it be done.”

On this basis Mr Betteridge drafted a response to Stephenson Harwood which, after approval by Mr Pritchard, he sent later on 21 June 2012. He said as follows:

“I have sought further instructions from Grosvenor on the contents of your most recent letter.

As such, the response provided does not alter that which we have provided before i.e. consent cannot be granted to the piling scheme as proposed and hence, the structural engineering review cannot be signed off. In concluding, our previous comments remain the same, that is to say, works can commence on the proviso that nothing of a structural nature is undertaken.”

Following further communications, the Claimant is proceeding with work to what is now referred to as Option C. This consists of the same work as in Option B but without the piling. If piling were to be included as an addition to the Option C work the Claimant says that the necessary process will have to be carried out from about November 2012 for it to be included as part of the current Option C work.

The Claimant commenced these proceedings by Claim Form and Particulars of Claim dated 23 July 2012. They seek declarations in the following terms:

As stated above, if the piling as shown in Option B is to be carried out as an addition to the current Option C then the process needs to commence in about November 2012. As a result the Claimant successfully applied for an expedited trial and on 2 August 2012 I gave directions leading to a trial commencing on 1 October 2012.

Those directions included directions for expert meetings, expert joint statements and expert reports. As a result the experts were able to come to a substantial measure of agreement on the main issues which were posed by the parties. This led to three expert joint statements:

As a result of the experts’ agreement it was only necessary to have limited oral evidence from Mr Woodfield, Mr Platt and Mr Redmond. While some parts of Mr Redmond’s witness statement raised matters which were not of relevance to the issues I have to deal with, I consider that all the experts provided helpful expert evidence on the issues with which I am concerned.

In relation to factual witnesses, witness statements were served and I heard evidence from Mr Papamarkakis, Mr Paul Taylor and Mr Mike Clark on behalf of the Claimants and Mr Nigel Hughes, Mr David Betteridge, Mr Stan Ritter and another resident of Chester Row, Mrs Sandra Jordan, on behalf of Grosvenor Estate.

In his first witness statement which I had considered at the hearing on 2 August 2012 Mr Papamarkakis summarised the background to the current dispute, much of it taken from the correspondence and the emails which I have referred to above. His second witness statement dealt with other excavations which have been carried out in Chester Row. Mr Taylor who, as I have said, is the Claimant’s project manager, is acting as contract administrator, contract costs consultant and CDM coordinator in relation to the works at the Property. He explained the construction team’s proposals for traffic management and the way in which it was proposed the works should be carried out. In particular he referred to the use of a crash deck to permit high level work to take place concurrently with piling works at the site. This was not something which the experts had considered. Mr Mike Clark dealt with his involvement in the applications for consent but also dealt with party wall awards, underground obstacles and supervision of the works.

Mr Hughes, who is now described as Grosvenor Estate’s Estate Surveyor by a change of job title from 1 October 2012, had the role of Estate Surveyor and under the Scheme is the person to give consent to alterations. In his witness statement he evidently took a dim view of the Claimant and the way in which the piling issue had arisen. He expressed himself in forceful terms in his witness statement although in his oral evidence he retracted a number of things he had said in that statement. In addition, whilst he evidently had involvement in late June 2012 when consulted by Mr Pritchard and probably had involvement in October 2011 when the application was first discussed, I find, on the evidence, that he was not involved in the process in May 2012. Whilst he stated in his witness statement at paragraph 30 that he was involved, in his oral evidence he thought that he was probably on holiday at the time and the documents do not show that he was involved.

Mr Hughes obviously has had long experience with Grosvenor Estate and told me that this was the first time in 39 years that there had been any challenge on the basis that consent was being unreasonably withheld under the Scheme. I shall deal with the matters which he relies on for withholding consent but, in doing so, I bear in mind what I find was his limited involvement in the process between October 2011 and June 2012. I therefore have had to be careful to consider whether his evidence relates to his current views of the situation or whether they represent matters which he considered at the time. In fact the day to day involvement of Grosvenor Estate in relation to the Claimant’s application for consent was dealt with at the time by Mr Pritchard who was not called as a witness.

Mr Betteridge gave evidence of his involvement in dealing with the Claimants’ application from the time Murray Birrell were instructed by Grosvenor Estate in January 2012. As stated above he was involved in producing the conditional approval letter and in dealing with the issues raised in relation to piling. Mr Ritter gave evidence of his involvement in dealing with condition precedent 5(a) in the conditional approval letter, as the engineer at HPM who dealt with that approval. Mrs Jordan gave evidence of the impact of the work on her property.

The Claimant contends, first, that Grosvenor Estate did approve piling as part of the Option B work when Murray Birrell issued the conditional approval letter on their behalf and that it is not now open to them to refuse consent to piling. They say that if it was not approved in the conditional approval letter then Grosvenor Estate unreasonably withheld consent for piling to be carried out as part of the Option B work both initially on 1 June 2012 and then on 21 June 2012, in response to the request for re-consideration.

The parties’ contentions essentially raise the following issues:

It is common ground that in construing the conditional approval letter the court should construe it, as it would any other document, against its background matrix of fact.

In relation to the question of whether Grosvenor Estate unreasonably withheld consent, the court has applied the same principles to schemes under section 19 of the 1967 Act, such as the Scheme, as they have applied to similar provisions in leases: See Estates Governors of Alleyns’s College of God’s Gift at Dulwich v Williams [1994] 1 EGLR 112 at 113J to 114C.

In that case Nicholls V-C summarised the correct approach to adopt in a case like this where the decision to withhold consent is challenged. He said at 114C to E:

“Thus far there was a large measure of agreement between the parties. At this point I pause to observe that if a householder and the estates governors unfortunately are at loggerheads over whether consent for a new building should or should not be given, and if proceedings are instituted in court to resolve this dispute, the issue before the court is not an issue at large as to whether consent should or should not be given. The issue before the court is whether the estates governors acted unreasonably in refusing consent. If, having heard the parties, the court finds that the estates governors' decision falls within the band of possible decisions a reasonable body of estate governors could reach, then the estates governors' decision stands. The judge would not consider the matter afresh as though the estates governors had not reached a decision. He would not stand in the shoes of the estates governors for all purposes. He would stand in their shoes only in the sense that he would be concerned to decide whether they, acting reasonably, could have refused the application. Only if the decision by the estates governors was shown to be one which no reasonable body of estates governors could reach would the disgruntled property owner succeed.”

Principles for determining whether consent has been unreasonably withheld were summarised by Peter Gibson LJ in Iqbal v Thakrar [2004] 3 EGLR 21 at [26] and [27] where he said this:

“[26]…But the principles laid down in other cases, such as cases relating to consent by the landlord to an assignment of the tenant's lease, including International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513, can be applied, with necessary changes.

(1)

The purpose of the covenant is to protect the landlord from the tenant effecting alterations and additions that could damage the property interests of the landlord.

(2)

A landlord is not entitled to refuse consent on grounds that have nothing to do with its property interests.

(3)

It is for the tenant to show that the landlord has unreasonably withheld its consent to the proposals that the tenant has put forward. Implicit in that is the necessity for the tenant to make sufficiently clear what its proposals are, so that the landlord knows whether it should refuse or give consent to the alterations or additions.

(4)

It is not necessary for the landlord to prove that the conclusions that led it to refuse consent were justified, if they were conclusions that might have been reached by a reasonable landlord in the particular circumstances.

(5)

It might be reasonable for the landlord to refuse consent to an alteration or addition to be made for the purpose of converting the premises for a proposed use even if not forbidden by the lease. But whether such refusal would be reasonable or unreasonable will depend upon all the circumstances. For example, it might be unreasonable if the proposed use was a permitted use and the intention of the tenant in acquiring the premises to use them for that purpose was known to the freeholder when the freeholder acquired the freehold.

(6)

Although a landlord will usually need to consider only its own interests, there might be cases where it would be disproportionate for a landlord to refuse consent, having regard to the effects upon it and upon the tenant respectively.

(7)

Consent cannot be refused on grounds of pecuniary loss alone. The proper course for the landlord to adopt in such circumstances is to ask for a compensatory payment.

(8)

In each case it will be a question of fact, dependant upon all the circumstances, as to whether the landlord, having regard to the actual reasons that impelled it to refuse consent, had acted unreasonably.

[27] It is also clear from the authorities and, in particular, from the judgment of May LJ in Tollbench Ltd v Plymouth City Council [1988] 1 EGLR 79, at p81F, that the court should consider two questions. First, what was the actual reason for refusing consent, which, as May LJ pointed out, is a subjective enquiry to find out what was in the mind of the landlord at the time of the refusal of consent. The second question is an objective enquiry as to whether the reason in the landlord's mind was reasonable or unreasonable.”

I consider that, with the necessary changes from landlord, tenant and lease to Grosvenor Estate, the Claimant and the Scheme, those principles are equally applicable to this case.

Finally, if I were to find that consent had been unreasonably withheld then the Claimant is at liberty to make the alterations without further consent: see Treloar v Bigge(1874) LR 9 Ex 151.

While the conditional approval letter refers to Stephenson Harwood’s letter of 6 January 2012 applying for consent and to architects’ drawings which it says were enclosed, in fact the application was made by Stephenson Harwood’s letter of 17 October 2011 which enclosed architects’ drawings and a number of other drawings and documents. The letter of 6 January 2012 was the letter which responded to Grosvenor Estate’s letter of 14 December 2011 setting out their response to the Claimant’s application made on 17 October 2011 in relation to Option B. Further, whilst architects’ drawings were enclosed with Stephenson Harwood’s letter of 17 October 2011, the architects’ drawings referred to in the conditional approval letter were those sent on 26 January 2012 having been revised to take account of the comments from Grosvenor Estate in their letter of 14 December 2011 and accepted by Stephenson Harwood in their letter of 6 January 2012.

The first paragraph of the conditional approval letter therefore condenses the process and is in fact referring to the Claimant’s application for consent made by Stephenson Harwood’s letter of 17 October 2011, as amended by their letter of 6 January 2012 to take account of the matters raised by Grosvenor Estate on 14 December 2011 and to the architects’ drawings provided by PTP to Murray Birrell on 26 January 2012 to reflect those changes.

I therefore consider that, in construing the conditional approval letter, the relevant background includes Stephenson Harwood’s letters of 17 October 2011 and 6 January 2012, Grosvenor Estate’s letter of 14 December 2011 and the architects’ drawings referred to in the conditional approval letter, sent on 26 January 2012.

The letter of 17 October 2011 enclosed “relevant documentation”. That documentation consisted of architects’ plans, structural engineering plans, and method statements from the main contractor and for open bore piling. In particular drawings 47CR-GR22-03 RevA, 04 RevA and 05 RevA showed four cross-sections through the Property each of which indicated piles located at the perimeter of the Property. I consider that the only reasonable interpretation of drawing 47CR-GR12-03 RevB which shows those sections is that some piles were being provided around the perimeter of the Property but there was no information to show the full extent of that piling. However the structural engineering drawings provided by Lucking and Clark for Option B clearly showed piles around the perimeter of the Property in both the house and the garden.

The main contractor’s method statement referred to Option B as being “Scheme excluding basement but including piling”. It referred under “piling” to the following: “form piling to garden, existing vault and lower ground floor level by appropriate experienced company”. It also referred to forming a “contiguous pile wall” and to a method statement for 330mm open bored pile in clay.

It is correct, though, that Stephenson Harwood’s letter of 17 October 2011 provided no explanation for that piling being included as part of Option B. No reference was made to piling either in Grosvenor Estate’s letter of 14 December 2011, Stephenson Harwood’s letter of 6 January 2012 or in the conditional approval letter. Instead, in the conditional approval letter reference was made to eight architects’ drawings. Those drawings, as with the drawings enclosed with the application of 17 October 2011, showed the same piling on the three revised drawings showing cross-sections, 47 CR-GR22-03 RevC, 04 RevC and 05 RevC.

The conditional approval letter referred to the eight architects’ drawings and said that they showed details of works which included under item 2 “creation of enlarged basement including front under pavement vault to form new habitable accommodation.” There was no reference to piling in relation to those items of work. The letter merely stated that “provided you comply with the conditions set out in this letter, there is no objection to the proposals.” However condition precedent 5(a) required structural engineering drawings and/or calculations to be sent to and approved by HPM and added “A copy of your engineer’s assessment/justification is to be provided.”

The Claimant submits that this letter is sufficient to give approval to the principle of piling and that consent to it could not be withheld by the approval process under condition precedent 5(a). Grosvenor Estate submit that the conditional approval gave approval to the seven identified items of work but left any matters relating to structural engineering to be approved by HPM under condition precedent 5(a) and therefore gave no approval as to how the seven items of work were to be dealt with from a structural point of view. They submit that this was a matter to be justified by the Claimant’s structural engineer and approved by the structural engineer for Grosvenor Estate.

In my judgment Grosvenor Estate is right in their contention. The conditional approval letter made no reference to piling as an element of work. Whilst I accept that the seven identified items of work contained general descriptions, they summarised the essence of the architectural scheme shown on the eight architects’ drawings. If the conditional approval letter had intended to approve the installation of piles as a separate item of work not required as part of the structure required for the seven identified items of work then that would have been an important part of the work which would have had to be expressly noted as one of the items of work. In the absence of any express reference to piling within the conditional approval letter I consider that any question of whether piling was going to be consented to depended on it being approved by HPM under the provisions of condition precedent 5(a). I therefore do not consider that the conditional approval letter gave approval in principle to piling. It neither approved nor disapproved piling but left it as a matter to be approved by HPM based on “justification” by the Claimant’s structural engineers, Lucking and Clark.

I do not consider that the piling differed in that respect from any other item of structure. The architects’ drawings also indicated sizes of floor slabs, walls, beams and structural members but evidently left the details of those items to be approved by HPM, taking account, amongst other things, of what was justified by the Claimant’s structural engineers as being necessary for the purpose of the alterations. Similarly the fact that the sections on the architects’ drawings showed piles did not mean that those piles were approved as this was a matter to be justified by the Claimant’s structural engineers and approved by HPM.

Further, as I have said, whilst piling is indicated on the architects’ drawings, the extent of that piling is only apparent from the structural engineer’s drawings. This confirms that, as would be expected, the piling is a matter for the structural engineers not the architects. The conditional approval letter gave approval to the architectural scheme contained in the eight architects’ drawings and identified in the seven items in that letter and left structural engineering matters such as piling to be dealt with under condition precedent 5(a).

It follows that I do not consider that the Claimant can rely on the conditional approval letter as giving approval in principle to piling so that the Claimant can install piling around the whole perimeter of the Property as part of the Option B works without requiring the approval of HPM under condition precedent 5(a).

As a result, as Grosvenor Estate did not give approval in principle to piling in the conditional approval letter, I now turn to consider whether Grosvenor Estate acted unreasonably in withholding consent to piling.

As stated above the conditional approval letter did not give approval in principle to piling but left all matters of structural engineering approval to HPM. It was HPM, on behalf of Grosvenor Estate, who had to consider the structural drawings and calculations and decide whether or not to give approval for the structural engineering aspects of the works under condition precedent 5(a). Therefore HPM were entitled to decide whether or not to approve the piling in the context of approving structural engineering details for the Option B works for which approval had been given in the conditional approval letter.

Mr Ritter of HPM received a set of architects’ drawings on 28 February 2012 but he said, and I accept, that he did not recall examining those drawings at the time as he expected to receive a full pack of information including structural engineer’s drawings soon afterwards and it was those engineering drawings which would have been his main focus. Mr Ritter became aware during May 2012 that his colleague, Bernard Paine, who was engaged by other parties to consider party wall matters, was reviewing a scheme with a multi-level basement which did not form part of the works which had been approved in the conditional approval letter.

He raised this with Mr Clark on 15 May 2012 and Mr Clark responded on 16 May 2012 to explain that Mr Paine was dealing with Option A as part of the party wall process, not acting on behalf of Grosvenor Estate and that it was Option B, without a basement, which had received approval from Grosvenor Estate. Mr Clark confirmed that Mr Ritter had not yet received the package of information relating to Option B. Mr Ritter did not read the rest of the explanation from Mr Clark about the reason for piling being installed as part of Option B so as to be used subsequently to construct Option A, if consent were given.

Instead it was on 29 May 2012 when Mr Clark sent Mr Ritter another copy of the architects’ drawings that Mr Ritter reviewed those and then realised that, whilst there was no basement, the drawings showed piles which appeared to be unnecessary. He then raised this in a telephone conversation with Mr Betteridge in an update on progress requested by Mr Betteridge. Mr Ritter says that he told Mr Betteridge that he could see no purpose for the piling and was concerned that it exceeded the conditional approval. Mr Ritter said that, from the information he had, he could see no reason why the lowering of the existing basement by a maximum of 1200mm could not be done by other less disruptive methods than piling and he had seen no engineering details which necessitated the use of piling.

Mr Ritter also relayed his conclusion that the work proposed did not require the installation of piles to Mr Clark on 30 May 2012 and asked Mr Clark to confirm that the extended basement shown on architects’ drawings and approved in the conditional approval letter could be formed without the use of piles. Mr Clark did not respond to that email but, in his email of 30 May 2012 to Mr Taylor, he said that Mr Ritter’s request deliberately ignored the intention of installing the piles which, of course, Mr Clark had explained to Mr Ritter in his email of 16 May 2012 but which Mr Ritter had not read. However Mr Clark concluded his email of 30 May 2012 to Mr Taylor by saying: “we all know option B can be constructed without use of the piles”.

On 31 May 2012 Mr Ritter confirmed to Mr Betteridge that, in his opinion, the piling was unnecessary for the formation of the extended basement which had been approved by Grosvenor Estate in the conditional approval letter. This was relayed by Mr Betteridge to the Claimant in his letter of 1 June 2012.

However on 20 June 2012 Stephenson Harwood wrote to Murray Birrell setting out why they considered that the refusal to consent to the piling was unreasonable. They concluded that letter by asking Grosvenor Estate to reconsider its position as a matter of urgency. Mr Hughes was then involved when the decision was made on 21 June 2012 confirming that consent would not be granted for piling. That led to Mr Betteridge’s email to Stephenson Harwood of 21 June 2012 where he said in clear terms “consent cannot be granted to the piling scheme as proposed”.

As set out in Grosvenor Estate’s closing submission it is common ground that the test to be applied regarding the withholding of consent is to examine first what reasons were in the mind of Grosvenor Estate and secondly to assess whether those reasons are ones which a reasonable person in the position of Grosvenor Estate as an estate manager could hold.

In considering what, in fact, were the reasons relied upon by Grosvenor Estate for withholding consent to the piling, one issue which arose during closing submissions was what happens if there were good and bad reasons, or as Mr Pymont QC put it on behalf of the Claimant, if it was concluded that the decision was taken with the “wrong mental attitude”. Following the hearing the parties agreed upon the approach to be taken to this issue. It was agreed that the mere presence of a bad reason in addition to a good reason would not render a refusal unreasonable, but may do so in certain circumstances.

In BRS Northern Ltd v Templeheights Ltd[1998] 2 EGLR 182 at 192M Neuberger J (as he then was) analysed the decisions of the Court of Appeal in Berenyi v Watford Borough Council [1980] 2 EGLR 38, Bromley Park Garden Estates Ltd v Moss [1982] 1 WLR 1019 and International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513 and of Peter Gibson J in British Bakeries (Midlands) Ltd v Michael Testler & Co Ltd [1986] 1 EGLR 64 and summarised the position as follows:

“In my judgment, where, as here, a refusal of consent to an assignment is based on a number of reasons, the fact that one of those reasons is bad will not normally render the refusal unreasonable, assuming that the other reasons are good. As the observation in Berenyi and British Bakeries suggests, it seems to me that, ultimately, it is a question of considering the covenant and the refusal of consent in each case. Thus, it may be clear that the bad reason is by far the most important reason, and that the purportedly good reasons were merely makeweights; or it may be that the existence of the bad reason infects or vitiates what would otherwise, in the absence of the bad reason, be a good reason. However, in the absence of such special factors, I consider that what was agreed in British Bakeries, was stated, albeit obiter and inferentially, by Slade LJ in Bromley, and appears to have been assumed in International Drilling, represents...the law....”

In British Bakeries at 64M Peter Gibson J cited the following agreed principle:

“If a landlord has a good reason and a bad reason for withholding consent, consent may nevertheless have been reasonably withheld if the good reason is sufficient reason and is not otherwise vitiated by the bad reason.”

The Claimant relies on a number of points in seeking to establish that Grosvenor Estate’s reasons for refusing consent were based on “animus” derived from Mr Hughes’ incorrect view of the Claimant’s conduct. In his witness statement Mr Hughes referred a number of times to matters which reflected the Claimant’s conduct.

In particular, on the basis of Mr Hughes’ evidence, the Claimant relies on the following as being possible reasons for the decision to withhold consent or matters which affected that decision:

It is convenient to deal with those matters now.

First, in paragraph 17 of his witness statement he refers to complaints which, he says, illustrate the point that although the Claimant’s project may be well planned and seek to follow best practice, working procedures are not always followed and were not followed by the Claimant when carrying out preliminary works in March 2011. When he was taken to relevant documents it became evident that the criticism was not established. In relation to an allegation that a trial hole dug for the Claimant had caused a neighbour’s front door to stick it was evident from an email written by Mr Pritchard on 23 March 2011 that there was nothing which had been done which could have caused movement to neighbouring properties. In relation to complaints about early starts, dirt and mess, these were responded to in an email from the architect quoting from a letter by the contractor which contended that there was no cause for complaint. Finally, there was reference to a failure to produce a schedule of condition but it was evident that, at an appropriate time, a full schedule of condition was produced. On the evidence I do not consider that paragraph 17 of Mr Hughes’ witness statement contains proper grounds of concern in relation to working procedures not being followed by the Claimant.

The second matter of conduct was contained in paragraph 20 of Mr Hughes’ witness statement where he complains about the Claimant’s request for Grosvenor Estate to respond to the Claimant’s application of 17 October 2011 within 28 days. Mr Hughes was referred to what was stated in the guide to the Scheme where it indicated that there might be a period of four to six weeks after the application for the issue of a licence. He then accepted that 28 days was a reasonable time and said that unfortunately, in this case Grosvenor Estate did not comply with it.

Thirdly, in a number of paragraphs, in particular paragraphs 22, 31 and 37 of his witness statement Mr Hughes criticises the Claimant for seeking to hide away the details of the piling in the documents “in the hope or expectation” that Grosvenor Estate would not notice them and he says that “a deliberate process to obscure the true intentions had been followed” by the Claimant.

In his evidence in cross-examination Mr Hughes accepted that the documentation presented by the Claimant with the application on 17 October 2011 in relation to Option B did indicate the full extent of piling but this had been missed by Grosvenor Estate so that the scheme being put forward under Option B was not what they thought it was. In the end he said he thought there had been a lack of communication and he accepted that Grosvenor Estate had been, in part, responsible for this.

Whilst I reject any ulterior motive or intention on the part of the Claimant, I do consider that the way in which Option B was presented by the Claimant did not make the intended purpose of the piling clear. As Mr Clark stated in his email of 16 May 2012 it was necessary for the Claimant to provide Grosvenor Estate with the clarification in that email for them to understand what was intended. It was in that email that, for the first time, it was explained that Option B included the installation of piling which could be used subsequently to construct the basement which formed part of Option A if the Claimant obtained consent to do so. Unfortunately, at that stage Mr Ritter did not read the explanation. On 20 June 2012 in Stephenson Harwood’s letter to Murray Birrell they explained the purpose of installing the piling under Option B. It seems that there may have been some informal communication earlier in June because when Mr Pritchard sent the email to Mr Hughes on 21 June 2012, a Thursday, he said that he had told Mr Hughes “last week” that the Claimant was planning to create piling under the entire building “for ‘future proofing’ the Property to permit the sub-basement we have refused.”

Therefore whilst I do not consider that Mr Hughes’ criticism of the Claimant’s conduct was justified, the correct position, as he accepted in oral evidence, was that there had been a lack of communication. The Claimant did not properly explain the purpose of the piling and Grosvenor Estate did not seek clarification. When, in May 2012, Mr Clark provided the necessary explanation, this was not passed to Grosvenor Estate because Mr Ritter did not read the email. It was therefore only in June 2012 that Grosvenor Estate became aware of that explanation. Whilst certainly initially I consider that the Claimant was primarily to blame for the lack of communication there was, as Mr Hughes said, also some responsibility on Grosvenor Estate.

Fourthly, at paragraph 39 of his witness statement Mr Hughes said he was very concerned that, if the piling were permitted, the Claimant would seek to implement the full Option A without obtaining the permission of Grosvenor Estate and would not just carry out the scheme under Option B. On the evidence, I do not consider that this concern had any basis.

Finally, in the letters of 1 June and 21 June 2012 and in paragraph 41 of Mr Hughes’ witness statement it is said that Grosvenor Estate were not prepared to grant consent to an element of works which was unnecessary for the Option B works and was only necessary to “future proof” the Property in relation to Option A for which consent had been refused.

By the time that Mr Betteridge wrote his letter to the Claimant at Stephenson Harwood on 1 June 2012, Mr Ritter had concluded that the extent of piling was unnecessary for the approved works detailed in the drawings listed in the conditional approval letter. Mr Betteridge’s letter referred to the fact that Mr Ritter had asked Mr Clark to confirm that the extended basement could be constructed without the use of piles. By that stage the explanation in Mr Clark’s email of 16 May 2012 had not been read by Mr Ritter or communicated to Grosvenor Estate.

The letter from Murray Birrell of 1 June 2012 did not, on its face, refuse consent. Rather, it communicated HPM’s view that the extent of piling was considered to be unnecessary in relation to the extent of the approved works detailed in the architects’ drawings and the fact that HPM had asked Mr Clark to confirm that the extended basement could be constructed without the use of piles and were awaiting a reply.

However, given that the piling was not necessary and that the Option B extended basement could be constructed without the use of piles, this was effectively a refusal of consent. Further, Mr Betteridge’s evidence in paragraph 20 of his witness statement was that when Mr Ritter raised concerns that a small lowering of the existing basement should not require piling and that an attempt was being made to construct a multi-level basement, Mr Betteridge raised the issue with Grosvenor Estate. He says that he was told to inform Mr Ritter that he should not be reviewing anything which went beyond what was required for the excavation and lowering of the existing basement that had been conditionally approved as part of Option B. Mr Betteridge says that Mr Ritter had told him that he could not see why piling would be required.

In my judgment, the reason for not giving consent to piling on 1 June 2012 was that Grosvenor Estate considered that piling was unnecessary based on the advice of HPM and they were not prepared to consent to inherently disruptive piling work on that basis.

In their response on 13 June 2012 Stephenson Harwood said that Option B had been approved with the use of piling and there was no engineering reason for not approving the use of piling. In reply, in an email of 15 June 2012, Mr Betteridge said that HPM’s position and, in turn, that of Grosvenor Estate, was that they were not minded to consent to the current design/type and extent of substructure formation associated with the approved works until further substantiated reasoning could be offered by Lucking and Clark. That led to the explanation in Stephenson Harwood’s letter of 20 June 2012.

By the time of that letter of 20 June 2012 seeking reconsideration by Grosvenor Estate of its position and seeking consent to allowing the piling to be carried out as part of the Option B works, Grosvenor Estate had become aware of the intention of the piling.

The reason for not giving consent in response to the letter of 20 June 2012 is contained in the email chain of the same date from Mr Betteridge to Mr Pritchard to Mr Hughes and back again. From those emails Grosvenor Estate were not giving consent to piling for the purpose of “future proofing” the Property so as to permit construction at a future date of the basement in Option A when the piling was not necessary for the approved works in Option B.

At paragraph 41 of his witness statement Mr Hughes, having been informed of the Claimant’s intentions, said this:

“I took the decision that we were not prepared to grant consent to an element of works that was unnecessary for the current proposed scheme, simply to future proof their site against a scheme for which consent had been refused.”

I consider that the reason why Grosvenor Estate refused consent when they reconsidered the matter on 21 June 2012 was that they were not prepared to grant consent to piling which was an inherently disruptive process when it was unnecessary as part of the structural engineering works necessary for the approved Option B work but was simply to “future proof” the Property by providing piling which would form part of the work to implement Option A, for which it had refused consent.

To what extent therefore was the decision of Grosvenor Estate also affected by the other matters or the “wrong mental attitude” as is submitted on behalf of the Claimant?

In analysing Mr Hughes’ evidence in his witness statement it is not always clear whether he is saying that he had various things in his mind at the time of refusing consent or whether, looking back at the matter, those are matters which he now considers are relevant to his evidence in court. It is evident that, as he said in response to a question posed by the Court, to some extent he is looking back at the position with the benefit of a full review of many documents which he had not seen at the time.

I have found that, despite what he said in his witness statement, Mr Hughes was not involved in the decision to withhold consent on 1 June 2012. He was, though, involved at the time of the reconsidered decision on 21 June 2012.

I have come to the conclusion that much of what he stated in his witness statement did not affect his decision or the decision of Grosvenor Estate at the time. Rather it was the result of a review of the documents and was intended to affect the overall credibility of the Claimant in these proceedings. I do not consider that at the time of refusing consent on 1 or 21 June 2012, the matters dealt with in paragraphs 81(1) to (4) affected those decisions. In both cases the central reason for withholding consent was the fact that the piling was not necessary and was inherently disruptive.

However in relation to the decision to withhold consent on 21 June 2012 I consider that Mr Hughes did view the Claimant as having put in an application which included piling for the purpose of Option A without stating that and he had in mind that this intention had only come to the attention of Grosvenor Estates in May 2012. I consider that the comments attributing underhand conduct to the Claimant in Mr Hughes’ witness statement expresses his evidence now but not at the time.

If Mr Hughes had held the views expressed in his witness statement in June 2012 then those would undoubtedly have formed part of the internal exchange of emails with Mr Pritchard when the question of refusal of consent was considered but they are entirely absent.

I now turn to consider whether the reasons for withholding consent were good reasons in the sense that the decision of Grosvenor Estates falls within the band of possible decisions a reasonable body of estate governors could reach.

It is common ground that the piles are not necessary to enable the remainder of the works in Option B to be carried out. However, the Claimant submits that necessity is not the relevant test because alterations to a building are rarely “necessary”. Mr Pymont QC therefore submits that it is not a good and proportionate reason for denying an applicant the right to fulfil its wishes to carry out works that they are not necessary. He submits that the Claimant wishes to carry out piling works for a good reason because it wishes to create a basement in the future and wants to keep its options open for that possibility with the least cost and inconvenience by putting piling in at this stage. He submits that it benefits not only the Claimant and subsequent owners of the Property but also neighbouring properties because any subsequent basement work would take less time and be less disruptive if the piling has already been completed. The Claimant says that it is not precluded from relying on its intention to implement Option A as a future possibility merely because at this stage it has been refused consent to Option A.

The Claimant also submits that it is unreasonable for Grosvenor Estate to refuse consent to piling on the ground that there is a risk of disruption. The Claimant relies on the following matters which have been agreed by the experts:

The Claimant submits that on this basis the piling operations will not be as disruptive as the Defendants have pleaded. They say that the additional 52 lorry movements represent only 5% more than those anticipated for the currently approved Option C and that this will have a minimal impact on neighbouring residents, the local area and traffic flow by comparison with the Option C works. In relation to noise they refer to the fact that the experts have agreed that only minor increases in noise levels will occur and that this will have minimal impact on neighbouring residents by comparison with Option C. In relation to the time which the piling works would take, the experts agreed that the piling works would take an overall program period of 12 weeks and that the works for Option B would take 7 to 9 weeks longer than the 65 weeks of the works under Option C, increasing the length by little more than 10%. The Claimant submits that in those circumstances the increase is either insignificant or of such little significance that it would be disproportionate to refuse the Claimant the advantages of carrying out the piling on that ground.

In addition, on the basis of the evidence, the Claimant says that arrangements for a crash deck to be installed would mean that they could carry out the piling works concurrently with the superstructure work, thereby eliminating any additional time to carry out the piling.

Mr Fetherstonhaugh QC submits that Grosvenor Estate reasonably refused consent on the basis of the disruptive effect of the piling works which were not necessary for the work approved in the conditional approval letter. He submits that the agreed expert evidence is that piling operations will generate the following disruptive activity:

It is accepted on behalf of Grosvenor Estate that the experts on Project Management and Contract Administration consider the extra disruption caused by piling being carried out during the other Option B works as being “minimal”. Mr Featherstonehaugh QC points out that this is on the basis that the works are properly managed and controlled.

He submits that the question for the court is whether, first, the net disruption is so trivial that it can be dismissed as something that a reasonable decision maker would not take into account at all, and if not then, secondly, whether a reasonable decision maker, having reviewed the evidence of disruption attributable to the piling operations, could reasonably withhold consent.

In my judgment, Grosvenor Estate, as reasonable estate managers, were entitled to refuse consent to the piling work proposed as part of Option B. First, Grosvenor Estate had refused permission for the Claimant to carry out Option A which included the deeper basement. That would have necessitated the contiguous piled wall round the property followed by the excavation down to basement level. When an estate manager has withheld consent to a scheme of work which would necessarily involve piling, then a decision not to allow that piling as part of a scheme which does not need piling is not, I consider, a decision which no reasonable estate governors could reach.

Secondly, whilst I accept that lack of necessity on its own may not be a ground for refusing consent, it must depend on what is being proposed. In this case, the alterations which were being proposed were essentially those set out in paragraphs 1 to 7 of the conditional approval letter. Those might not be necessary in absolute terms but that would not form a good basis on its own for refusing consent. On the assumption that piling is inherently disruptive work, which is effectively challenged on the facts here, if the proposed alterations approved in the conditional approval letter could be carried out without that piling then the fact that the piling is not necessary for those alterations would be a reason why Grosvenor Estate could reasonably refuse consent to the piling and that is not a decision which no reasonable estate governors could reach.

Thirdly, the assumption about the disruptive effect of the piling is challenged by the Claimant and I have had expert evidence about the disruptive effect of the piling in the context of the work in Option B which has been approved. The structural and civil engineering and the construction and project management expert evidence concludes that, if the works proceed as planned, the additional disruption caused by the piling operation will, in the opinion of the experts, be “minimal”. However, that is in the context of the already disruptive work which is being carried out in relation to the Option B alterations. That does not mean that, even if piling work proceeds as planned, it will not cause significant additional disruption to neighbours in a residential street who live on the Grosvenor Estate and are subject to the covenants under the Scheme. That disruption will involve 52 additional lorry movements to bring equipment and materials to the site, and remove spoil and equipment, some additional road closures, some increases in noise levels and the generation of dust.

In terms of the disruption caused by an increased duration of the overall work, whilst the experts had agreed there would be an increase of 7 to 9 weeks, there was evidence that a crash deck would be installed as part of the temporary works. That evidence was not considered by the experts and I therefore did not have detailed expert evidence about it and it had not been reviewed by the experts. Whilst I accept that a crash deck may permit work to continue at a higher level in parallel to piling work and therefore may lead to a reduction in the overall additional time required for piling, I am far from persuaded that this would eliminate the whole or a substantial part of the total extra time assessed by the experts at 7 to 9 weeks. In any event, as Mr Woodfield accepted in cross examination, when works are carried out concurrently the amount of disruption in terms of noise would be increased.

Therefore, on the expert evidence I consider that there would be significant additional disruption, even if the process of piling went according to plan. I do not think that the interests of other residents affect the position. It is said by the Claimant that they have an interest in less disruption being incurred now than would be incurred in the future in the event that consent is given later. I consider that an estate manager can reasonably look at the position now with consent not having been given rather than the position if consent were to be given. I therefore consider that, in the exercise of their estate management powers under the Scheme, Grosvenor Estate as reasonable decision takers would be entitled to withhold consent on the basis that the piling would be inherently disruptive in the way identified by the experts and that such a decision would not be a decision which no reasonable estate governors could reach.

Fourthly, the Claimant raises a contention that the interests of the Claimant in recovering the maximum rent for the longest period and the interest of Mr Papamarkakis and his family in being able to use and occupy the Property should be weighed in the balance in making a decision. In my judgment, as set out in Iqbal and as applied in Dulwich Estate v Baptiste [2007] EWHC 410 an estate manager acts reasonably in having regard only to the interests of the estate unless there is some disproportion between the benefit to the estate and the detriment to the applicant so that it was unreasonable for the consent to be withheld.

In this case I do not consider that the possibility that Option A may be carried out at a future date and that carrying out the piling at that date rather than now may reduce the loss of rent to the Claimant and the inconvenience to Mr Papamarkakis and his family is sufficient to justify the grant of consent given the interests of the other residents of the Grosvenor Estate and the additional disruption which would be caused by carrying out the piling as part of the Option B work.

Fifthly, I consider that Grosvenor Estate was justified in refusing consent to the piling as part of the Option B works because of the disruptive effect of that unnecessary work. That, in my judgment was a good reason. However, as I have stated above, when Grosvenor Estate came to reconsider the refusal of consent on 21 June 2012, one of the matters which Mr Hughes had in mind was the fact that the Claimant had put in an application which included piling but had only made the intention of piling clear in June 2012.

As I have said above, I do not consider that Mr Hughes had, at the time in June 2012, formed the “wrong mental attitude” or animus which the Claimant submits is reflected in his witness statement. On the basis of his evidence, the more extreme assertions in his witness statement were clearly made in hindsight having reviewed the documents in preparing that statement. However, Mr Hughes did in June 2012 have in mind that the true intention had only been recently disclosed by the Claimant. That, in itself, was not a good reason for withholding consent. However, I do not consider that that affected the good reason, identified above, for Grosvenor Estate refusing consent. As stated in British Bakeries, consent can be reasonably withheld if the good reason is sufficient and is not otherwise vitiated by the bad reason.

In this case the central reason for withholding consent on 1 June 2012 and on reconsideration on 21 June 2012 was the inherently disruptive process of piling when it was unnecessary as part of the structural engineering works for the approved Option B work. That, as I have held, was a good reason. The fact that Mr Hughes took account of the fact that the Claimant’s intention in relation to piling had only come to the attention of Grosvenor Estate at a late stage did not affect what was otherwise a good reason. It was not central to the reasoning and was not reflective of the “wrong mental attitude” or an animus against the Claimant. Rather, it reflected the fact that, as I have found, the Claimant was to blame for not properly making the intention of the piling clear, something identified in Iqbal at [26(3)] as being necessary for the decision of whether or not to give consent.

As a result, I have come to the conclusion that Grosvenor Estate were entitled to withhold consent to the Claimant’s proposal to include piling as part of the Option B work.

Whilst I have some sympathy for the position of the Claimant, the fact that the Claimant is subject to the Scheme means that it has limits on the work which it can carry out. In challenging the decision of Grosvenor Estate withholding consent in this case, the Claimant has to show that the decision of Grosvenor Estate did not fall within the band of possible decisions which a reasonable body of estate governors could reach. In this case I have found that the decision did fall within that band.

Accordingly, subject to any further submissions by the parties as to the wording, I propose making the following declarations:

In coming to this decision I have not and have not been asked to consider whether Grosvenor Estate reasonably withheld consent to the Option A works.