LANDS TRIBUNAL FOR NORTHERN IRELAND
LANDS TRIBUNAL & COMPENSATION ACT (NORTHERN IRELAND) 1964
PROPERTY (NORTHERN IRELAND) ORDER 1978
IN THE MATTER OF A REFERENCE
R/17/2006
BETWEEN
MR & MRS V ALAN HEWITT, MR & MRS JAMES FITZPATRICK,
MR & MRS DAMIAN MAGEE, MR & MRS MARTIN KING AND
MR & MRS TIMOTHY PALMER – APPLICANTS
AND
MRS MARION O’NEILL – FIRST RESPONDENT
DR JANE NELSON – SECOND RESPONDENT
AND LATER
MRS FIONA THOMPSON – THIRD RESPONDENT
Re: Cleaver Avenue, Cleaver Gardens & Cleaver Park, Belfast
Lands Tribunal - Mr M R Curry FRICS IRRV MCI.Arb Hon.Dip.Rating Hon.FIAVI
Index
Topic
Introduction & Procedure
Recent Reforms
Ordinary Building Schemes
Survival of Covenants after Redemption
Entitlement to Enforcement
Rent-owners’ Residual Interests
The European Convention
The Mountpellier Impediments
Similarities & Differences in Terms
Contractual Limitation to a Single Unit
Conclusions on Ordinary Building Schemes
Section 17 Building Schemes
- Covenants for the Protection of Amenities
- Dispositions in Substantially Similar Terms
- Table 1: Key Terms of Dispositions
- Conclusions on Section 17 Building Schemes
Summary
Begins at
paragraph
1
16
19
20
25
33
38
41
46
56
67
70
71
73
79
83
85
Introduction & Procedure
1.
The first Respondent, Mrs O’Neill, has planning permission to demolish a detached house, at
No. 7 Cleaver Avenue, and replace it with a pair of semi-detached houses, while the second
Respondent, Dr Nelson, of 8 Cleaver Gardens has planning permission to erect an additional
dwelling in her back garden. This is an application under Article 4 of the Property (NI) Order
1978 for a determination as to whether in the circumstances set out below, the Applicants, who
are their neighbours, would be entitled to enforce certain covenants restricting building. The
third Respondent is their ground lessor and was not a notice party at first.
2.
When this reference first came on for hearing, it became clear that the parties were focussed
only on the issue of whether any ‘ordinary building schemes’ affected the lands. However the
Tribunal drew the attention of the Applicants and the first and second Respondents to the
Ground Rents Act (NI) 2001 (“the 2001 Act”).
3.
In Northern Ireland, complex pyramid titles are a feature of residential conveyancing, especially
in the urban areas. For example, in the instant case there is an 1869 lease, a 1935 lease (the
third Respondent is stated to have acquired the lessee’s interest, by assignment) and subleases
under which the Applicants and first and second Respondents hold their premises.
4.
The primary objective of the 2001 Act is the simplification of the conveyancing process. The
scheme is to clarify titles by providing for the buying out (redemption) of ground rents. In the
terminology of the Act, residential lessees become rent-payers, while lessors become rentowners.
Rent-payers may, and in some circumstances will be compelled to, redeem their
ground rents by payment based on a fixed multiplier (which may be varied) of the rent.
Rent-
owners are compensated accordingly.
5.
But the 2001 Act also fundamentally changes the law in regard to covenants. Most covenants
do not survive redemption; but some do. In particular, in addition to preserving ordinary building
schemes, it provides for a new reciprocal entitlement to the enforcement, but only enforcement,
of certain covenants for the protection of amenities including building restrictions (‘a Section 17
building scheme’).
6.
It is fair to say that many practitioners have not regarded the effect of these changes as
straightforward. The hearing was adjourned to allow the parties to consider their positions.
7.
The Applicants subsequently decided to continue to pursue their application. The first and
second Respondents did not take part at this stage.
8.
Very helpfully, the Tribunal was provided with extracts of title (not the complete documentation)
and relevant maps. The conclusions below are based on these papers and not for example on
detailed surveys. But these seemed sufficient for present purposes.
9.
Mr Lockhart QC made submissions on behalf of the Applicants.
10.
On considering the issues, the Tribunal found it was inclined towards some reasoning and views
which were not anticipated in the submissions of Mr Lockhart QC. Around the same time the
matter became very urgent because of the impending demolition of what had been Mrs O’Neill’s
dwelling at 7 Cleaver Avenue following a sale of the property.
In these very exceptional
circumstances the Tribunal suggested that, although it had not reached final conclusions, its
then current thinking might be helpful. It suggested, and the parties accepted, that it would
provide its decision in draft form and receive further argument before reaching a final
determination. It did so and that was sufficient for Mrs O’Neill who took no further part in the
proceedings.
11.
Further submissions were received from Mr Lockhart QC on behalf of the Applicants and from
Mr David Dunlop BL on behalf of the second Respondent, Dr Nelson. For reasons that will
become apparent, it then transpired that other parties may also have an interest in the outcome
and should be put on notice of the application. The Tribunal received a written submission from
Mr Mark Orr QC on behalf of Mrs Thompson. The submissions were exchanged. In reply, Mr
David Dunlop BL endorsed the submission of Mr Orr QC, and Mr Lockhart QC made a
submission in reply to that of Mr Orr QC who made no further submission.
12.
Mr Orr QC suggested that Section 17(6) of the 2001 Act is incompatible with Protocol 1, Article 1
of the European Convention for the Protection of Fundamental Rights and Freedoms ‘the
Convention’).
13.
In considering the submissions, which urged wider or narrower interpretation according to the
issue and the conflicting interests of the parties, the Tribunal has both relied to some extent on
its own expert knowledge in considering alternative consequences and also revisited some
preliminary views.
14.
The Tribunal begins with an outline of the history of recent reforms; refers briefly to ordinary
building schemes; addresses questions of the survival of covenants after redemption; examines
questions of entitlement to enforcement, then rent-owners’ residual interests before finally
considering its views in the context of the Convention.
15.
Then, in applying its conclusions to the facts of the instant case, with ordinary building schemes
and Section 17 building schemes in mind, the Tribunal begins with a review of the terms on
which the parties hold their premises - including the ‘Mountpellier Impediments’, similarities and
differences in terms, contractual restriction to a single dwelling and ordinary building schemes.
It then turns to Section 17 building schemes, key terms of the dispositions of the parcels and its
conclusions. Finally there is a summary of the Decision.
Recent Reforms
16.
In Residential Property Law in Northern Ireland SLS 2000 Witchell summarises the legislative
history of the precursor to the relevant part of 2001 Act - the Property (NI) Order 1997:
“Proposals for major reform of land law in Northern Ireland have been on the agenda since
the late 1960s. Following publication of the Report on Registration of Title in Northern
Ireland in 1967 (‘the Lowry Report’) a Land Law Working Party was set up at Queen’s
University by the Office of Law Reform with a very wide-ranging brief. It was required to
examine all aspects of land law and the conveyancing system, with a view to producing a
comprehensive and integrated package of measures along the lines of the Birkenhead 1925
property legislation for England and Wales. The Working Party produced the Survey of the
Land Law of Northern Ireland in 1971 (‘the Survey’) containing amongst others, a scheme for
the redemption of ground rents together with draft legislation to put the recommendations
into effect.
Subsequently a Land Law Working Group was established by the Northern Ireland Office to
review the proposals in the Survey. It produced a three-volume Report in 1990 (‘the Final
Report’) with a more detailed consideration of the issues and extensive draft legislation. It
was hoped that these measures would be taken as an integrated package and enacted as
such, but that has not occurred. Aspects of the proposals in the Survey and the Final Report
are being introduced gradually, as in the Property (NI) Order 1978 and the Wills and
Administration Proceedings (NI) Order 1994, and parts of the Property (NI) Order 1997.”
17.
Since then there have been further developments. In an attempt to replace what was seen as a
complex and costly scheme for the redemption process, the Northern Ireland Assembly replaced
part of the Property (NI) Order 1997 with the Ground Rents Act (NI) 2001. More recently, in
2005 the Office of Law Reform published Discussion Paper 1/05 reviewing the operation of the
2001 Act and later the Civil Law Reform Division of the Departmental Solicitor’s Office (which
replaced OLR) published its Analysis of Responses to the paper.
18.
This Reference is not concerned with the different considerations which apply to covenants
contained in deeds made in accordance with the Property (NI) Order 1997, after the relevant
appointed day.
Ordinary Building Schemes
19.
In regard to ‘ordinary building schemes’ the Tribunal was referred to familiar material: Elliston v
Reacher [1908] 2 Ch 374; Reid v Bickerstaff 1909 2 Ch 305; Baxter v Four Oaks Properties
Limited [1965] Ch 816; Eircom NI Ltd v Brendan Dynan [2001] R/67/2000 in which Emile Elias &
Co Ltd v Pine Groves Ltd (P.C.) [1993] 1 WLR 305 was considered; Preston and Newsom’s
Restrictive Covenants 9th Ed 1998; and Witchell: Residential Property Law in Northern Ireland
2000.
Survival of Covenants after Redemption
20.
Most covenants do not survive redemption and cease to have effect. Section 16(1) of the 2001
Act provides:
“Except as provided by this section, in the following event, that is to say(a) [on redemption]; or
(b) …
all covenants concerning the land by virtue of the rent-payer’s fee farm grant or lease, or any
superior fee farm grant or lease, or any collateral instrument, cease to have effect.”
But some do. The exceptions are set out at Subsection (2):
“covenants of the following kinds continue to benefit or, as the case may be, burden the
land, that is to say-“
and at paragraph (g):
“(g) covenants for the protection of amenities or services or for compliance with a statutory
provision (or a requirement under it), including—
(i) covenants (however expressed) not to use the land for specified purposes or
otherwise than for the purposes of a private dwelling;
(ii) covenants against causing nuisance, annoyance, damage or inconvenience to
neighbours;
(iii) covenants against interfering with facilities which benefit neighbours;
(iv) covenants prohibiting, regulating or restricting building works or the erection of
any structure, or the planting, cutting or removal of vegetation (including grass, trees
and shrubs) or requiring the tending of such vegetation;”
21.
Mr Dunlop BL suggested a narrow view of those covenants that do survive. Mr Lockhart QC did
not agree and suggested that a Section 17 building scheme was a much broader concept than
the Elliston v Reacher test for the ordinary building scheme (see below). He further suggested
that Section 17 allowed a greater emphasis on the intent of the lessor to protect amenities in
land and a narrow definition of ‘amenities in land’ would defeat the purpose of the 2001 Act
which was to preserve those covenants which effectively maintained the character of an area.
As the Final Report made clear “not building on amenity land” was regarded as an amenity and
for any resident of the Cleaver area there would be little difficulty in understanding the purpose
behind the Montpellier Restriction and Prohibition.
22.
The original proposal in the Final Report was that only those covenants containing restrictions
on building on land used solely as ‘amenity land’ would survive. That is a very limited category
of land and that proposal might reasonably have been expected not to cause any great difficulty
for practitioners. Instead, after a consultation process based on the Final Report and various
drafts, an amended version of the exception was enacted as part of the Property (NI) Order
1997. The ‘amenity land user’ limitation was not adopted and the preservation of vegetation
added. The amended version was re-enacted by the Northern Ireland Assembly as part of the
2001 Act.
23.
At Section 16(2)(g) the term “protection of amenities” is coloured by a list.
It therefore
encompasses covenants affecting all land which is held subject to covenants restricting building.
There is no express or implied qualification as to location or beneficiaries. In contrast with
subparagraphs (ii) and (iii) of paragraph (g) above, the language of subparagraph (iv) does not
confine the survival of covenants restricting building to those benefiting or affecting neighbours.
All restrictions in the nature of covenants restricting building may be presumed to be restrictions
for the protection of amenities.
24.
Such covenants survive redemption and as the 2001 Act does not transfer the benefit of
covenants that survive to any other person, they remain as a residual interest of the rent-owner.
Entitlement to enforcement is a different matter.
Entitlement to Enforcement
25.
Section 17 provides for the enforceability of covenants. Subsection (4) provides:
“(4) Subject to subsection (6), a covenant to which section 16(2)(d), (e), (g), (h) or (j)
applies is enforceable by or against the same persons it would have been enforceable
by or against had the ground rent not been redeemed (and for this purpose a person
taking a conveyance of the estate in fee simple which is vested in a rent-payer
following redemption of the ground rent payable under a lease is in the same position
as an assignee of the lease would have been in had there been no redemption).”
26.
Subsection (6) then provides:
“(6) For the purposes of the enforcement of the covenants for the protection of
amenities to which section 16(2)(g) applies, after the first operation of section 16 in
respect of a parcel of any land there is to be taken to subsist (if it does not subsist
apart from this provision) a building scheme in respect of the land in which all the
persons holding parcels under dispositions in substantially similar terms from the same
rent-owner, and the successors in title of those persons, are participants, and
accordingly(a) not only do those covenants continue to be enforceable by and against the
rent-owner and his successors in title so long as he or they continue as such in
relation to any participant, but
(b) the covenants are also enforceable by and against each of the various
participants among themselves, whether or not their ground rents have been
redeemed; …”
Section 16(7) defines a Building Scheme:
‘"building scheme" means a scheme (express or implied) under which land
(whether freehold or leasehold) is divided into two or more parcels subject to
obligations which are reciprocally enforceable (whether at law or in equity)
between owners of the parcels;’
And
‘“relevant building scheme” is defined as a building scheme which includes the
land or which is taken to subsist in respect of the land by virtue of section
17(6).’
27.
So, on the first redemption of a ground rent by any person, Section 17 creates a building
scheme among all those holding parcels under dispositions in substantially similar terms from
the same rent-owner. The effects are not straightforward and, it cannot be stressed enough
that, because of the residual interest that remains with the rent-owner, participants in a Section
17 building scheme are not in the same position as participants in an ordinary building scheme.
A Section 17 building scheme is concerned only with the right to enforce covenants, if necessary
through the Courts, but that is not the same as the right to modify or extinguish covenants.
28.
Section 17 further departs from the concept of ordinary building schemes as ‘local laws’ by
classifying participants not primarily by location but instead by the similarity of the terms on
which they hold their land.
So, where a developer has created similar leases across the
province, a person in Londonderry, for example would appear to be a participant in a scheme in
Belfast (and vice versa).
As proposed in the Final Report, Section 17 relies on its
geographically wide view of potential participants being counterbalanced by the limited number
of participants for whom the restriction will be of practical benefit. But it may therefore be a
practical impossibility for a rent-payer to establish who may be entitled to enforce surviving
covenants.
29.
The 2001 Act limits any building scheme to a group “holding parcels under dispositions in
substantially similar terms”.
But actual redemption causes all covenants, apart from the
exceptions, to cease to have effect and so the terms on which the redeemed parcel is held may
be expected to differ substantially from what they were and therefore also from those of others
who previously held on substantially similar terms to the rent-payer. It seems unlikely that those
who had not redeemed and those who had would therefore qualify to be participants in the same
scheme. Also, in modern developments a mixture of types of housing is often encouraged –
perhaps apartments, town houses, semi-detached and detached houses. For sound reasons
the terms of the dispositions for different types will differ substantially and so immediate
neighbours, who held on terms that were substantially different, perhaps because the dwellings
were of different types, may not become participants with an entitlement to enforcement.
30.
Tribunal has reservations about whether the practical consequences were expected. It has
considered whether it might strain the construction so as to limit the test to covenants in force
before redemption (but these may be modified or extinguished after redemption - see later)
amenity covenants only (but these would still include differences in housing types) or land used
solely as amenity land. It has concluded that none of these constructions could be justified in
light of the language, the change from earlier proposed wording, repeated consideration given to
the legislation and the absence of any clear indication of a particular different intention by the
legislature.
31.
Mr Lockhart QC suggested that ‘substantially similar’ is a broader concept than the Elliston v
Reacher test for the ordinary building scheme -‘uniformity with some possible variation’ under
which the uniformity in the covenants imposed on all lots may point to an intention that the
covenants should be mutually enforceable. The Tribunal accepts that a greater variation in
detail is acceptable.
32.
Subsection (6) uses the terms ‘parcels’ and ‘dispositions’. The former term is commonly used to
refer to the property unit conveyed in an individual disposition. In the view of the Tribunal the
test therefore is focussed on each disposition and the parcel conveyed by it rather than holdings
assembled by more than one disposition.
Rent-owners’ Residual Interests
33.
As the rent-owner retains a residual interest, including the benefit of covenants not extinguished
by the redemption, the rent-owner retains the ability to enforce the surviving covenants and also
to modify or extinguish them by a private contractual arrangement with the rent-payer. Bending
the analogy with local laws, those who are participants in a Section 17 building scheme may
enforce such laws but not make, amend, or repeal them.
34.
Mr Lockhart QC suggested that a wider group of covenantees will have the necessary locus
standi to object to an application brought under Article 5 of the Property (NI) Order 1978 for
modification or extinguishment of covenants.
As it has done in the past, the Tribunal may be
expected to allow participants to comment as neighbours.
However, a Section 17 building
scheme would not appear to it to give participants the special interest of the beneficiaries of
covenants of an ordinary building scheme because participants’ rights are limited to enforcement
and not the continuing benefit of the residual covenants to the covenantee – the rent-owner.
35.
Mr Lockhart QC further suggested that a person contemplating a development of land can no
longer, where the provisions of Section 17(6) may apply, have the same degree of confidence or
certainty that if he pays the rent-owner to redeem the ground rent the matter is essentially
beyond challenge.
That is true because of the residual interest of the rent-owner and also, for
example, in this reference there may be others outside Cleaver West who hold parcels from the
same rent-owner on substantially similar terms to one or more of the rent-payers here and may
be participants in a Section 17 scheme. But a rent-payer may achieve certainty by extinguishing
or modifying the surviving covenants by contract with the rent-owner. The effect of that could be
to remove relevant impediments and/or create a disposition in substantially different terms.
36.
It may not be surprising if a Section 17 building scheme turns out to be less neat than a tailormade ordinary building scheme. The latter type of scheme, of course, survives the 2001 Act
and where there is a compelling need; one might expect to find one. The Tribunal appreciates
that, particularly at times of nervousness among funding institutions, rent-payers contemplating
development (perhaps the successors to those who redeemed) may be in some difficulty in
establishing whether covenants survive and the identity of the rent-owner. But that difficulty is a
matter to be addressed as an administrative issue and not sufficient to displace the
interpretation that the Tribunal has reached.
37.
The Tribunal finds general support for its conclusions in Discussion Paper 1/05 and the Analysis
of Responses. These noted the valuable residual interest of the rent-owner in the property although a rent-payer may acquire the “full title” by redemption, that “full title” may continue to be
subject to covenants. It is explained that the 2001 Act attempts to find some balance between
the interests of the rent-payer and the rent-owner and it was, therefore, considered appropriate
for rent-owners to retain the right to enforce certain covenants post-redemption. They also note
that a rent-payer may deal with surviving covenants by way of a private arrangement with the
rent-owner.
The Convention
38.
It is a requirement of Protocol 1, Article 1 of the European Convention for the Protection of
Fundamental Rights and Freedoms that any measure or law that interferes with property rights
must strike a fair balance between the demands of the community or society and the need to
protect the individual’s fundamental rights.
39.
The primary and important objective of the 2001 Act is to eliminate, in the public interest, ground
rents and thereby simplify the conveyancing process.
The degree of control given to
participants in a Section 17 building scheme is modest – it merely allows those who hold parcels
under substantially similar terms to enforce amenity covenants. The degree of adverse impact
on the rent-owner is low - it does not take away the rent-owner’s residual interest in surviving
covenants or right to deal with them. It provides for some compensation for redemption but it
does not realise the full market value of the ground rent for the rent-owner, just as it does not
provide a freehold title free from any encumbrance for the rent-payer. Discussion Paper 1/05
explains how it was set:
-
-
-
a multiplier of 9 would yield an income of approximately 11%, which was not
unfavourable, taking account of possible difficulties when collecting the rents and the
high void value;
the Act is designed to achieve the wider public policy aim of simplifying a very complex,
cumbersome and outdated conveyancing system, rather than a full and accurate
market value return for investors;
the need for a fair balance between rent-owners (be they commercial enterprises or
single rent-owners) and rent-payers;
the Trustee Act (Northern Ireland) 2001 (which also came into effect on 29 July 2002)
would provide charitable trusts with greater default investment powers (which could
yield a larger investment income than investments in Government stock).
Discussion Paper 1/05 also notes that the Convention was a consideration when arriving at a
multiplier for redemption. In the view of the Tribunal a fair balance test is satisfied.
40.
In indirect support of the Tribunal’s conclusions on the extent of the residual interest of rentowners, it also notes that any potential value that lay in rent-owners’ opportunities to extract a
sum from rent-payers for modification or extinguishment was not expressly taken into account in
arriving at a multiplier.
The Terms on which the Parties hold their Premises
The Mountpellier Impediments
41.
The residential area of the Malone Road, Belfast is one of high value. To the east of the road
there is an area of land which for convenience may be termed ‘the McMaster lands’. It extends
to some 15 acres perhaps and now includes much of Cleaver Avenue, all of Cleaver Park and
Cleaver Gardens and part of Notting Hill. To the west it is bounded partly by the Malone Road
and partly by other land (for convenience ‘Mountpellier’) fronting Malone Road.
Within the
McMaster lands there is an area (for convenience - ‘Cleaver West’) of a few acres bounded to
the north by part of Cleaver Avenue, to the south by part of Cleaver Park, to the east by Cleaver
Gardens and to the west by Mountpellier and the Malone Road.
42.
A lease of 1st July 1869 includes in the demise all the McMaster lands apart from Notting Hill.
Impediments (‘the Mountpellier Restrictions’) are applied to a broadly rectangular part of the
Cleaver West land designated by points HFACED on the map (‘Hfaced’). This is to the east and
contiguous with the Mountpellier land. The Mountpellier Restrictions restrict development within
Hfaced:
“AND ALSO shall not erect or build or permit to be erected or built more than two blocks of
semi detached villas or two detached villas …”.
43.
Hfaced encompasses all of 5 and 7 Cleaver Avenue, much of the rear gardens of 4, 6 to 12
Cleaver Gardens and substantial parts of other gardens at Cleaver Park.
44.
Within Hfaced the impediments also prohibit any building within a T shaped area (‘the
Mountpellier Prohibition’). The top of the T is a cordon 50 feet wide running north/south along
the Mountpellier boundary and the upright is a corridor 100 feet wide and running to the east
away from the mid point of the boundary for a distance of 200 feet. This is purely speculation;
but the layout suggests that it may have been expected that avenues (Cleaver Avenue and
another) would run along both the northern and southern boundaries of Mountpellier and
fronting each avenue, and immediately behind Mountpellier, there would be either a single pair
of semi detached villas or a detached villa. However the avenue to the south of Mountpellier
(Cleaver Park) is sited well away from the boundary and with dwellings between it and
Mountpellier and Hfaced. In fact Hfaced encompasses substantial parts of the gardens of 5
Cleaver Avenue, 6 and 8 Cleaver Gardens, a much smaller but significant part of the garden of
4 Cleaver Gardens, very small parts of the gardens of 7 Cleaver Avenue and 10 Cleaver
Gardens, none of 12 Cleaver Gardens and parts of other gardens at Cleaver Park.
45.
Clearly, the Mountpellier Impediments are covenants prohibiting building works and for the
protection of amenities. The amenities they were created to protect are not those of the parties
to this reference but instead almost certainly those of the Mountpellier land. But, whether or not
any parties to this reference are entitled to the benefit of the covenants, they do add to the
amenity of residents in Cleaver West by, in effect, preserving the gardens overlooked by them.
Similarities and Differences in terms
46.
A lease of 6th July 1935 includes all of what became known as the McMaster lands (by an
assignment of 29th July 1936 Joseph McMaster acquired the lessee’s interest in the demise) and
repeats the Mountpellier Impediments.
All of the 1935 lease covenants, including the
Mountpellier Impediments then are imported into subleases from the 1935 lease as follows (in
chronological order):
1. The Applicants Mr and Mrs Magee hold part of 6 Cleaver Gardens under a lease dated
7th June 1937;
2. The Applicants Mr and Mrs T Palmer hold part of 4 Cleaver Gardens under a lease
dated 15th July 1937;
3. The Respondent Dr Nelson holds part of 8 Cleaver Gardens under a lease dated 25th
July 1946;
4. The Applicants Mr & Mrs James Fitzpatrick hold 10 Cleaver Gardens under a lease
dated 21st August 1947;
5. The Applicants Mr & Mrs Martin King hold 12 Cleaver Gardens under a Lease dated
24th January 1950;
6. The Applicants Mr & Mrs V Alan Hewitt hold 5 Cleaver Avenue under a lease dated 2nd
April 1951;
7. Dr Nelson holds the remainder of 8 Cleaver Gardens (much of the rear garden) under
a Supplemental Lease dated 27th April 1951;
8. The Applicants Mr and Mrs Magee also hold the remainder of 6 Cleaver Gardens
(much of the rear garden) under a Supplemental Lease dated 27th April 1951;
9. The Applicants Mr and Mrs T Palmer also hold the remainder of 4 Cleaver Gardens
(much of the rear garden) under a Supplemental Lease dated 27th April 1951; and
10. The Respondent Mrs O’Neill holds 7 Cleaver Avenue under a lease dated 20th
December 1951.
47.
By 2nd April 1951, after the subleasing of 5 Cleaver Avenue, much of Hfaced was almost
landlocked apart from access through what became 7 Cleaver Avenue. It was, of course also
affected by the Mountpellier Restrictions (two blocks of semi detached or two detached houses)
the effect of which would reflect the actuality of the sublease of 5 Cleaver Avenue that
committed that lessee to the erection of one house. In these circumstances the lessor created
the supplemental leases that demised the rear parts of the land (much of which was affected by
the Mountpellier Prohibition) to adjoining owners, at 4, 6 and 8 Cleaver Gardens, at nominal
consideration before then subleasing 7 Cleaver Avenue.
48.
The other covenants of primary relevance may be categorised broadly as;
-
To build - positive covenants to build and to comply with a minimum standard;
-
Type restrictions - on type of building permitted; and
-
User restrictions.
A covenant within any of these categories also may contain an express upper limit to building or
such a limitation may be implied from one or more covenants and the circumstances at the time
they were created.
49.
The 1946 sublease of the Respondent Dr Nelson of part of 8 Cleaver Gardens includes
covenants:
-
To build – ‘To build … one good and substantial detached dwelling house … and to expend
in the erection of same a sum of One Thousand Five Hundred Pounds at the least’;
-
Type restrictions – ‘Not to erect … any building or erection of any kind whatsoever … other
than a detached villa …’; and
-
User restrictions – ‘Not … to use … any building or erection otherwise than as a private
dwelling house …’.
The 1951 Supplemental Lease of 8 Cleaver Gardens includes a covenant:
-
‘To perform and observe all the covenants contained in the Principal Indenture except
the covenant to erect a dwelling house’.
The siting of the proposed additional dwelling at 8 Cleaver Gardens is within Hfaced and so a
further detached house is prohibited by the Mountpellier Restriction. It also is entirely within the
Mountpellier corridor and so any building in the rear garden is prohibited by the Mountpellier
Prohibition.
50.
The 1951 sublease of the Respondent Mrs O’Neill of 7 Cleaver Avenue includes covenants:
-
To build – ‘To expend the sum of £2,000 at the least in the erection of one detached
dwelling house …’;
-
User restrictions – ‘Not to use … any building … otherwise than as a private dwellinghouse’.
The entirety of 7 Cleaver Avenue lies within Hfaced and affected by the Mountpellier
Restrictions. As only one other detached house (5 Cleaver Avenue) lies within Hfaced, the
proposed development by substitution of one block of semi detached houses for this detached
house would not amount to erecting “more than two blocks of semi detached villas or two
detached villas” and would not breach the Mountpellier Restrictions.
The Mountpellier
Prohibition affects only a small part of the rear garden and would not affect the proposed
development.
51.
The 1937 sublease of the Applicants Mr and Mrs Magee of 6 Cleaver Gardens includes
covenants:
-
To build – ‘To build … one good and substantial detached private dwelling house … and
… expend £1000 at least’;
-
Type restrictions – ‘Not to erect … any building or erection of any kind whatsoever …
other than one detached villa …’; and
-
User restrictions – ‘Not to use … any building … otherwise than as a private dwellinghouse …’
The 1951 Supplemental Lease of 6 Cleaver Gardens includes a covenant:
-
To perform and observe all the covenants contained in the Principal Indenture except
the covenant to erect a dwelling house.
Most of the rear garden is affected by the Mountpellier Restrictions and by the Mountpellier
Prohibition.
52.
The 1937 sublease of the Applicants Mr and Mrs T Palmer of part of 4 Cleaver Gardens
includes covenants:
-
To build – ‘To build … one good and substantial detached private dwelling house…
and … expend £1000 at least’;
-
Type restrictions – ‘Not to erect … any building or erection of any kind whatsoever …
other than one detached villa …’; and
-
User restrictions – ‘Not to use … any buildings … otherwise than as a private dwellinghouse’.
The 1951 Supplemental Lease of 4 Cleaver Gardens includes a covenant:
-
To perform and observe all the covenants contained in the Principal Indenture except
the covenant to erect a dwelling house.
Most of the rear garden is affected by the Mountpellier Restrictions and a small part of that is
probably affected by the Mountpellier Prohibition.
53.
The 1947 sublease of the Applicants Mr & Mrs James Fitzpatrick of 10 Cleaver Gardens
includes covenants:
-
To build – ‘To build … one good and substantial detached private dwelling house …
and … expend £1,500 at least’;
-
Type restrictions – ‘Not to erect … any building or erection of any kind whatsoever …
other than one detached villa …’; and
-
User restrictions – ‘Not to use … any building … otherwise than as a private dwellinghouse’.
Most of the rear garden is affected by the Mountpellier Restrictions and a small part of that is
probably affected by the Mountpellier Prohibition.
54.
The 1950 sublease of the Applicants Mr & Mrs Martin King of 12 Cleaver Gardens includes
covenants:
-
To build – ‘To build … one good and substantial detached private dwelling house…
and … expend £2,000 at least’;
-
Type restrictions – ‘Not to erect … any buildings or erections of any kind whatsoever …
other than one detached villa …’; and
-
User restrictions – ‘Not to use … any building … otherwise than as a private dwellinghouse’.
Most of the rear garden is affected by the Mountpellier Restrictions.
55.
The 1951 sublease of the Applicants Mr & Mrs V Alan Hewitt of 5 Cleaver Avenue includes
covenants:
-
To build – ‘To expend before the first day of January 1951 the sum of £2,000 at the
least in the erection of one detached dwelling house …’; and
-
User restrictions – ‘Not to use … any building … otherwise than as a private dwellinghouse’.
The entirety is probably affected by the Mountpellier Restrictions. The side garden and most of
the rear garden is affected by the Mountpellier Prohibition.
Contractual limitation to a single unit
56.
What is apparently a positive covenant may be restrictive. Mr Lockhart QC suggested that, in
the context of 8 Cleaver Gardens, the intention to denote singularity can be inferred from both
the user restrictions and the reference to “one” in the ‘to build’ clause. He referred to Martin v
David Wilson Homes Ltd [2004] 3 EGLR 77; [2004] EWCA Civ 1027 and suggested that,
although in that case the indefinite article “a” did not carry any necessary implication of
singularity, the reasoning of the Court of Appeal at para 23 of the decision is useful:
“If the draftsman had wanted to say, “Build one dwelling house and one dwelling house
only”, he would have needed to take at least the following steps. First, unless he was
going to produce a draft that was extremely confusing, he should put that clause
separately in the covenants from the user clauses. Secondly, he would have to refer to the
erection of one dwelling house only, not to the use of buildings, extant or to be built. Third,
he would not refer to the use of buildings in the plural.”
57.
In the subleases there is a common positive covenant ‘to build’ one detached villa or dwelling
and a minimum expenditure that varies between subleases. None expressly contain an upper
limit of a single unit.
58.
In the 1951 subleases of 5 and 7 Cleaver Avenue there is no ‘type restriction’ covenant. There
is in all the others.
Most of the ‘type restriction’ covenants also contain an express upper limit
to the number of the relevant type that is permitted –‘one’ but the 1946 sublease of part of 8
Cleaver Gardens and the 1951 sublease of 7 Cleaver Avenue do not.
59.
In all the subleases and supplementary leases there is a ‘user restriction’ to ‘a private dwelling
house’.
60.
The Tribunal does not accept that the intention to denote singularity can be inferred in the
context of 8 Cleaver Gardens.
The covenant to build uses the word ‘one’ rather than the
indefinite article ‘a’ but does not go on to say ‘and only one’. Bearing in mind that one purpose
of covenants to build is to secure a ground rent and the evidence showed the pricing scheme
was based on frontage only (see later), a requirement to build ‘one’ unit may be either a
minimum or a maximum numerical requirement. Also the ‘type restriction’ does not contain an
express upper limit to the number of the relevant type that is permitted and the user clause ‘not
to use any building otherwise than as a private dwelling-house’ does not imply singularity.
61.
The supplemental leases exclude the ‘to build’ covenant. So, in the 1946 sublease of the rear
garden of the Respondent Dr Nelson at 8 Cleaver Gardens, even if the indefinite article ‘a’ in
that covenant were to be taken to imply singularity, it is not imported into the terms of the 1951
Supplemental Lease.
62.
Mr Lockhart QC referred to the circumstances and suggested that 5 and then 7 Cleaver Avenue
appear to have been among the last subleases and by that stage the maximum number of
houses in Hfaced had been reached and so restriction to single dwellings may be implied. The
Tribunal does not agree. Two pairs of semi detached houses rather than two single houses
would not breach the Mountpellier Restrictions.
63.
The Tribunal is not persuaded that the wording in its context, of the sublease of 8 Cleaver
Gardens, is to be taken as a restriction to a single unit.
64.
The Tribunal therefore concludes that there is a ceiling, of not more than two blocks of semi
detached houses or two detached houses, that affects 5 and 7 Cleaver Avenue by virtue of the
Mountpellier Restrictions but currently neither is restricted to one detached dwelling.
65.
The Tribunal was shown what appeared to be a copy of an original estate agent’s brochure from
1937 or earlier with a map. It appears to be a ‘price list’ showing the McMaster lands divided
into 11 sectors (‘A’ to ‘K’) and a ground rent per foot frontage that varies from sector to sector. It
does not map individual plots.
66.
Judging from maps, 5 & 7 Cleaver Avenue and the premises demised by the supplemental
leases would appear to be in Sector H and the other premises demised by the subleases would
appear to be in Sector G of the brochure.
Conclusions on Ordinary Building Schemes
67.
The Tribunal accepts that the parties all derive title from a common vendor. But for the following
reasons it concludes that there is not a relevant contractual building scheme restricting the
relevant developments and extending to any of the areas – the McMaster Lands; West Cleaver;
Hfaced; Sector H or Sector G:
1. None of these areas is wholly comprised of lots subject to a single house restriction;
2. In regard to intention, purchasers were not shown to have purchased on the footing that
all purchasers shall be mutually bound by and mutually entitled to enforce a single house
restriction. The Tribunal does not accept the suggestion of Mr Lockhart QC that it is
reasonable to infer that solicitors representing purchasers would have been quite clear
that the restrictions were common and were calculated to preserve the amenity and
value of the Cleaver estate;
3. None of these areas were shown to have been laid out in individual lots defined to
intending purchasers as an area to which a single house restriction would apply and
none is defined in individual leases as an area to which a restriction applied;
4. Prior to selling, Mr McMaster zoned the land into sectors, not individual plots. The
brochure showed a pricing schedule that left intending purchasers free to choose as
much or as little frontage as they wished;
5. The restriction in a sublease may have been for the benefit of Mr McMaster rather than
for the benefit of all the other plots; and
6. The fact that the covenants have been observed without breach for over 70 years may
be relevant to any exercise of the Tribunal’s discretion in considering continuing benefit
but does not assist in determining the intention of the parties at the time the subleases
were created.
68.
Even if 5 & 7 Cleaver Avenue are considered as a ‘sub scheme’ and subject to similar
restrictions by virtue of the Mountpellier Restriction the requirements are not satisfied.
69.
Although individual restrictions such as the Mountpellier Impediments all apply as and where
relevant, the Tribunal concludes there is not any ordinary building scheme affecting 8 Cleaver
Gardens or 7 Cleaver Avenue.
Section 17 Building Schemes
70.
The Tribunal now turns to the question of whether the rent-payers at either or both 8 Cleaver
Gardens or 7 Cleaver Avenue would, after first redemption, be participants in a Section 17
building scheme in which any or all of the applicants would also be participants. The Applicants
and Respondents were persons holding parcels from the same rent-owner. The first question
that arises is whether the relevant restrictions are covenants for the protection of amenities
within the meaning of Section 16(2)(g) and therefore survive. The next question is whether
some or all are persons holding parcels under dispositions in substantially similar terms from the
same rent-owner.
Covenants for the Protection of Amenities
71.
A restriction in the nature of “Not to erect … any building … other than a detached villa/ dwelling
house etc” may be presumed to be a restriction for the protection of amenities and it was not
suggested in this case that the presumption was rebutted.
72.
The Mountpellier Impediments are amenity covenants restricting building works, but the Tribunal
agrees with the suggestion of Mr Dunlop BL that the amenities intended to be protected were
almost certainly those of the Mountpellier land. They probably were designed to reserve a
cordon sanitaire on the boundary and a visual prospect towards the East. It is most improbable
that they were intended to be for the benefit of dwellings within Cleaver West.
Dispositions in substantially similar terms
73.
A Section 17 building scheme cannot exist until a potential participant redeems.
74.
This decision is a review of the position of those with a holding in Cleaver West. But it should be
noted that if any persons anywhere in the jurisdiction hold a parcel under a disposition from the
same rent-owner and in substantially similar terms that of any person in Cleaver West, they all
may be participants in a Section 17 building scheme.
75.
As discussed earlier differences between the terms of disposition of parcels may be created or
eliminated by virtue of covenants not surviving redemption. The outcome of a ‘substantially
similar terms’ test may turn to some extent on which potential participants in a Section 17
building scheme have redeemed and which have not.
76.
It may therefore be convenient to begin the assessment of similarities and differences by
reference to covenants that would survive redemption.
77.
A number of the holdings, 4, 6 and 8 Cleaver Gardens include rear gardens held under
supplemental leases.
These dispositions were at different times from those of the
corresponding principal leases; related obviously to different parcels in each instance; and were
on substantially different terms in that they excluded the covenant to erect a dwelling house.
For purposes of Section 17, the Tribunal treats the parcel held under each sublease as a
different parcel from that held under each corresponding supplemental lease.
78.
The question for the Tribunal therefore is whether 7 Cleaver Avenue or 8 Cleaver Gardens (or
its rear garden) are parcels of land which are or would be held by persons under dispositions in
substantially similar terms to those held by any of the Applicants. If so, on a first redemption,
such persons and the qualifying Applicants would be participants in a Section 17 building
scheme and covenants restricting building also would be enforceable by and against each of the
various participants among themselves, whether or not their ground rents have been redeemed.
79.
The Table below summarises key terms of the dispositions of the parcels.
Table 1: Key Terms of Dispositions
Party
Nelson
Parcel
8 Cleaver Gdns
Sector
G
8 Cleaver Gdns
H
5 Cleaver Ave
Constraint 2:
Constraint 3:
on building
Mountpellier
Mountpellier on
type and
barring building
no. of buildings
quantity
(Approx
(Approx
(‘not other than’)
proportion of
proportion of
parcel affected)
parcel affected)
A det Villa
Fifth
Fifth
1946
25 Jul
[as part of whole]
1951
A det Villa
th
(rear garden)
Hewitt
Constraint 1:
date
th
(Part = House)
Nelson
Disposition
H
27 Apr
[as part of whole]
1951
None
Whole
Whole
None
Half
Whole
One det
2 Apr
7 Cleaver Ave
H
1951
dwelling
None
Tenth
Whole
th
4 Cleaver Gdns
G
th
(Part = House)
King
12 Cleaver Gdns
1937
G
One det Villa
15 July
[as part of whole]
1950
One det Villa
Does not apply
Fifth
Does not apply
Fifth
th
4 Cleaver Gdns
H
th
(rear garden)
Magee
6 Cleaver Gdns
H
10 Cleaver Gdns
G
One det Villa
[as part of whole]
1951
One det Villa
27 Apr
[as part of whole]
1947
One det Villa
Fifth
Whole
None
Four fifths
Whole
None
Minimal
Fifth
One det
st
21 Aug
Magee
6 Cleaver Gdns
(Part = House)
80.
G
1937
th
7 June
One det
dwelling
27 Apr
th
(rear garden)
Fitzpatrick
1951
One det
dwelling
24 Jan
Palmer
One det
dwelling
20 Dec
Palmer
One det
dwelling
nd
O’Neill
To Build
dwelling
One det Villa
Sixth
Fifth
[as part of whole]
One det
dwelling
The point at which a difference in terms becomes substantial is a question of degree and a
matter of judgment in all the relevant circumstances, but the Tribunal has accepted that a
broader degree of latitude than minor variation in detail is appropriate.
81.
In the view of the Tribunal there are substantial differences between obligations to build
accommodation of different types e.g. between a ‘villa’ and ‘a dwelling’, or neither and also
between restrictions on building only accommodation of different types.
substantial difference between a limit to one unit and no limit.
There also is a
82.
Where two parcels are held under the same restrictions, if that restriction is important and, in
one instance a minimal geographical area of a parcel is affected and in another almost the
whole of the parcel is affected, in the view of the Tribunal that is a substantial difference in the
terms on which the parcels are held. Depending on the circumstances, the difference between
a fifth and a sixth may not be substantial.
Conclusions on Section 17 Building Schemes
83.
7 Cleaver Avenue and 5 Cleaver Avenue share an absence of ‘type restriction’ on building.
(See Table 1: Key Terms of Dispositions - Constraint 1.) But there is a difference between
these two in the proportion of each parcel affected by the Mountpellier Prohibition (Constraint 2).
In one case it is about one tenth and in the other one half. That, in the view of the Tribunal, is a
substantial difference.
84.
8 Cleaver Gardens (house and rear garden) is subject to a ‘type restriction’ to a detached villa.
That is not shared with any of the other parcels, which are subject to either no restriction or one
detached villa (see earlier discussion on contractual limitation to a single unit). That, in the view
of the Tribunal, is a substantial difference.
Summary
85.
Mrs O’Neill has planning permission to demolish a detached house, at No. 7 Cleaver Avenue,
and replace it with a pair of semi-detached houses. Dr Nelson of 8 Cleaver Gardens has
planning permission to erect an additional dwelling in her back garden. This is an application
under Article 4 of the Property (NI) Order 1978 for a determination as to whether in certain
circumstances the Applicants, who are neighbours, and the third Respondent, who is their
ground lessor, would be entitled to enforce certain covenants that restrict building.
86.
The objectives of the 2001 Act include the simplification of the conveyancing process. In
Northern Ireland, complex pyramid titles are a feature of residential conveyancing, especially in
the urban areas. The aim is to clarify titles by providing for the buying out (redemption) of
ground rents by rent-payers from rent-owners. But the 2001 Act also fundamentally changes
the law in regard to covenants. Most covenants do not survive redemption and cease to have
effect; but some do. In addition to preserving ordinary building schemes, the 2001 Act provides
for additional new reciprocal entitlement to the enforcement only of certain covenants for the
protection of amenities (including building restrictions) – by participants in ‘a Section 17 building
scheme’.
This departs from the concept of ordinary building schemes as ‘local laws’ by
classifying participants not primarily by location but instead by the substantial similarity of the
terms on which they hold their land, wherever it may be. The Tribunal accepts that the test of
similarity is less strict than that required to imply an ordinary building scheme.
87.
In the view of the Tribunal the 2001 Act, which interferes with property rights, strikes a fair
balance between the demands of the community or society and the need to protect the
individual’s fundamental rights. Participants in Section 17 building schemes may enforce those
schemes but not modify or extinguish them.
The benefit of those covenants that survive
redemption remains as a residual interest of the rent-owner, including the ability to vary or
extinguish the surviving covenants by a private contractual arrangement with the rent-payer.
The degree of control given to participants in a Section 17 building scheme is modest, the
degree of adverse impact on the rent-owner is low, and there is a compensation scheme.
88.
The Tribunal concludes there is not any ‘ordinary building scheme’ affecting 8 Cleaver Gardens
or 7 Cleaver Avenue. Individual restrictions such as the ‘Mountpellier Impediments’ all apply as
and where relevant. There is a common positive covenant ‘to build’ to a minimum standard that
varies from holding to holding but none expressly contain an upper limit of a single unit. In the
Cleaver Gardens subleases, but not the Cleaver Avenue subleases, there is a ‘type restriction’
covenant. But all of the Cleaver Gardens subleases except 8 Cleaver Gardens contain an
express upper limit to the number of the relevant type that is permitted –‘one’ and the Tribunal
does not accept that, in the context, an intention to restrict 8 Cleaver Gardens to a single unit
can be inferred.
89.
Covenants for the protection of amenities include covenants to build and to comply with a
minimum standard, restrictions on type of building permitted, and limits on numbers of buildings.
The amenities intended to be protected by the Mountpellier Impediments were almost certainly
those of the Mountpellier land and it is most improbable that they were intended to be for the
benefit of dwellings within Cleaver West. But plainly they are amenity covenants restricting
building works and therefore survive redemption.
90.
A Section 17 building scheme cannot exist until a potential participant redeems. As the act of
redemption limits which covenants survive, that action itself affects the terms of the disposition
on which a parcel is held. So differences between the terms of disposition of parcels may be
created or eliminated by virtue of covenants not surviving redemption as well as by later
contractual arrangements between rent-payers and rent-owners.
91.
The point at which a difference in terms becomes substantial is a question of degree and a
matter of judgment in all the relevant circumstances. In the view of the Tribunal there are
substantial differences between obligations to build accommodation of different types e.g.
between a ‘villa’ and ‘a dwelling’ or neither, and also between restrictions on building only either
type. There also is a substantial difference between a limit to one unit and no limit. Where two
parcels are held under the same restriction, if that restriction is important and, in one instance a
minimal geographical area of a parcel is affected and in another almost the whole of the parcel
is affected, in the view of the Tribunal that is a substantial difference in the terms on which the
parcels are held. 7 Cleaver Avenue and 5 Cleaver Avenue share an absence of ‘type restriction’
on building. But there is a difference between these two in the proportion of the parcels affected
by the Mountpellier Prohibition. In one case it is about one tenth and in the other one half. That,
in the view of the Tribunal, is a substantial difference. 8 Cleaver Gardens (house and rear
garden) is subject to a ‘type restriction’ to a detached villa. That is not shared with any of the
other parcels. That, in the view of the Tribunal, is a substantial difference.
92.
In regard to 8 Cleaver Gardens and 7 Cleaver Avenue and on the basis of the material presently
before the Tribunal, it declares that:
-
The Mountpellier impediments are covenants for the protection of amenities, and:
o
other persons, including those with an interest in the adjoining Mountpellier land may
be entitled to the benefit of the Mountpellier Impediments;
o
the erection of an additional dwelling to the rear of 8 Cleaver Gardens would breach
the Mountpellier Impediments; and
o
the erection of a single pair of semi detached houses at 7 Cleaver Avenue would not
breach the Mountpellier Impediments.
-
Before any person who may be a participant in a Section 17 building scheme redeems their
ground rent:
o
none of the Applicants is entitled to enforce the covenants for the protection of
amenities because there is no ‘ordinary building scheme’ incorporating either 8
Cleaver Gardens or 7 Cleaver Avenue; and
o
the third Respondent is entitled to the benefit of the covenants, is entitled to enforce
them and, subject to any covenant restricting her interest, is entitled to modify or
extinguish them by private contractual arrangement with covenantors.
-
After any person who may be a participant in a Section 17 building scheme redeems their
ground rent:
o
none of the Applicants is entitled to enforce the covenants for the protection of
amenities because there is no Section 17 building scheme incorporating their parcels
and the parcels of either 8 Cleaver Gardens or 7 Cleaver Avenue;
o
there may be Section 17 building schemes incorporating parcels elsewhere and the
parcels of either 8 Cleaver Gardens or 7 Cleaver Avenue; and
o
the third Respondent continues to be entitled to the benefit of the covenants for the
protection of amenities, is entitled to enforce them and, subject to any covenant
restricting her interest, is entitled to modify or extinguish them by private contractual
arrangement with rent-payers.
M R Curry FRICS IRRV MCI.Arb Hon.Dip.Rating Hon.FIAVI
24th September 2008
LANDS TRIBUNAL FOR NORTHERN IRELAND
Appearances:
Applicants:
Brett Lockhart QC instructed by Elliott Duffy Garrett, Solicitors.
First Respondent:
Craig Dunford BL instructed by Fitzsimons Kinney Mallon,
Solicitors.
Second Respondent: David Dunlop BL instructed by Peden & Reid, Solicitors.
Third Respondent:
Mark Orr QC instructed by Hewitt & Gilpin, Solicitors.