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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Smith & Anor v Royce Properties Ltd [2001] EWCA Civ 949 (13 June 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/949.html Cite as: [2001] 25 EGCS 156, [2001] EWCA Civ 949, [2002] 2 P & CR 5

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE LADDIE)

		Royal Courts of Justice The Strand London Wednesday 13 June 2001

Wednesday 13 June 2001

1. THE LORD CHIEF JUSTICE: I will ask Lord Justice Tuckey to give the first judgment.
2. LORD JUSTICE TUCKEY:

Introduction

3. In August 1977 the claimants, who are the trustees of the Sambrooke Trust, sold some agricultural land in the green belt at Caddington in Bedfordshire to the defendant's predecessors in title. The land included a large field shown on the Ordinance Survey map at that time as OS 0062 (25.6 acres), and OS 0052 (1.76 acres). I shall call these parcels respectively 0062 and 0052 (although elsewhere in the documents before us they are called "D" and "E" and "F" respectively).
4. The conveyance has been lost, but it is common ground that it granted the trustees an option in the following terms:

"If within twenty years from the date hereof planning permission shall be granted in respect of the whole or any part of 0062 (25.60 acres) part of the land hereby agreed to be sold and shown hatched black on the said plan, the purchaser shall offer to the vendor the opportunity of repurchasing such part in manner and on the terms following."

5. It can be seen that no mention was made of 0052. It was common ground that the plan referred to in the option showed 0062. But it was not agreed that it showed 0052 as well.
6. In December 1996 the trustees obtained planning permission for "use of land for allotment purposes with access and parking". The application showed the allotments on part of 0062 and 0052. Access was from the main road across other land owned by the trustees on to the north-east corner of 0052, where a car park was to be provided for ten cars for the allotment users. The trustees contended that this permission triggered the option and entitled them to repurchase 0052 and that part of 0062, the subject of the permission. Laddie J held that it did not. The option did not extend to 0052 because it was not included in the land hatched black on the plan, and even if it was, the wording of the option prevailed over the plan. As no planning permission was required for a change from agricultural use to use for allotments, the option was not triggered in relation to 0062. The trustees appeal each of these conclusions.

Did the option include 0052?

7. The only record of the terms of the option was found on the charges register at the Land Registry. This inaccurately recorded its terms, but by the time of the trial the parties had agreed that it was probably as I have quoted. There was a plan on the register, but it was not a photocopy of the plan attached to the conveyance. The judge said:

"Someone appears to have taken the original and re-drawn it as the file plan."

8. The register recorded:

"The land hatched black referred to .... so far as it affects the land in this title is tinted pink in the file plan."

9. Both 0062 and 0052 were tinted pink on this plan.
10. The land in question had been conveyed to the trustees in 1958. This conveyance has not been lost. It shows 0062 and 0052 as separate parcels of land, although on the ground there is no visible feature which distinguishes or divides them. It appears that 0052 was identified as a separate parcel because the field was divided by an Ordinance Survey grid line. Although there is an accommodation road leading to it, for development purposes the only practical access to 0062 is from 0052, which fronts on to the main road. So without 0052, 0062 is effectively land-locked. For these reasons the judge accepted that Mr Harper QC for the trustees was probably right when he said that it was inconceivable that the trustees or their solicitors intended that the option should only apply to 0062. It was, he said "unlikely that it was the intention to exclude 0052".
11. However, the judge said that he had to decide whether this intention had been expressed in the conveyance. He decided that it had not. The wording was clear. It referred only to 0062 and its acreage, and yet the draftsman would have had the earlier conveyance in front of him which identified 0052 with equal prominence. The judge thought it likely that that the draftsman had been consistent in the errors which he made, and so 0052 was not hatched black on the plan. At least this was just as likely as the production of a plan which was inconsistent with the wording. In view of the errors and the entries in the register, it was at least possible that the plan on the register did not accurately produce the plan attached to the conveyance. For these reasons the judge concluded that the claimants had failed to establish that the plan showed 0052 as part of the option land.
12. This finding meant that there was no ambiguity in the conveyance because the plan accorded with the wording. However, on the assumption that the plan did show both 0062 and 0052 hatched black, the judge said:

"The conveyance, having defined the option land with precision, said that it is 'shown hatched black on the said plan'. The word 'shown' can have a number of meanings from 'define precisely' at one end to 'indicate generally' at the other. There is nothing on the register to suggest that this clause should be construed as meaning any more than that the plan illustrates, but does not qualify, the wording in the text. For this reason as well [0052] is outside the scope of the option."

13. In reaching this conclusion it appears that the judge may have relied on a number of nineteenth century cases cited in support of a passage in Halsbury's Laws at paragraph 1521 which says "a complete and unambiguous description in a deed will prevail over a plan".
14. To support the appeal against the judge's conclusions on this part of the case, Mr Harper applied yesterday morning to put in further evidence directed to showing that it was the parties' common intention to include the whole field in the option, that the plans used had always shown this, and that the mistake in the wording emanated from the trustees' surveyor. We refused to admit this evidence. Not only did it fail to pass the Ladd and Marshall tests for admitting fresh evidence, which still remain relevant for the purposes of the Civil Procedure Rules, but no notice of the application to admit this evidence was given to the respondent or to the court. In these circumstances it would have been quite wrong to admit the evidence, and I have ignored it for the purposes of deciding this appeal.
15. Nevertheless, Mr Harper submits that the judge's finding about what the plan attached to the conveyance showed was wrong. He should have started with the presumption that the file plan was accurate because the registry have stringent procedures for ensuring that this is the case. These procedures explain, for example, why black hatching will be shown tinted pink on a plan of this kind. The syntactical errors in the wording, which the judge thought must have emanated in the registry rather than with the solicitors, did not justify the conclusion that the file plan had been drawn inaccurately. Having concluded, as he should have done, that the plan was accurate and so there was an ambiguity in the conveyance, the judge should have resolved it in a way which accorded with common sense so as to avoid the extraordinary result that the trustees had only been granted an option to repurchase a land-locked parcel of land.
16. Mr Clarkson QC for the respondent defends the judge's decision. His finding that the plan did not include 0052 was one of fact with which this court should not interfere. There was evidence to show that the registry's handling of this title was careless and so the judge was entitled to conclude that, however stringent its procedures were, they had not been followed in this case. If there was an ambiguity, the judge was entitled to resolve it as he did.
17. It seems to me that the parties' arguments have to be evaluated against the commercial context in which the option was granted. The option land was in the green belt, but it had potential development value. No doubt the price paid for it reflected the fact that for 20 years the trustees would be able to realise this value by exercising the option. For development purposes it made no commercial sense to exclude what has been called the "slither" of land represented by parcel 0052. There were no physical or other reasons for treating it any differently from the rest of the field. Without it the rest of the field was effectively land-locked for development purposes.
18. If one looks at the plan attached to the 1958 conveyance, unlike the judge I do not think that the existence of 0052 is by any means clear. One could easily mistakenly assume that 0062 and its stated area extended to the whole field. The judge seems to have assumed that the plan attached to the conveyance showing the option land would have been prepared at the same time as the wording of the option. I think this is unlikely. The probability is that the wording would have been prepared from a plan. As I have said, I think it would have been easy for the draftsman mistakenly to believe that the whole field was identified as 0062.
19. I do not think the judge's finding about the plan can stand. He should have given greater weight to the filed plan. As the only plan in existence, he should have started with the presumption that it did accurately reflect what was shown on the plan attached to the conveyance, not only because it was prepared by the Land Registry, but also because that is what one would have expected it to show.
20. Having therefore concluded that there was an ambiguity between the wording of the option and the plan, how should the judge have resolved it? He does not appear to have taken account of the commercial context to which I have referred. Common sense compelled the conclusion that the parties intended the option to cover the whole field. If the judge did feel compelled to decide that the wording prevailed over the plan because of the nineteenth century cases which were cited to him, I think he was mistaken. Where there is a conflict of this kind, I think the modern approach is well summarised in Lewison: Interpretation of Contracts, 2nd edition 1997 at paragraph 10.07 which says:

"Whether a plan controls a verbal description or a verbal description controls a plan is a question of construction of the particular conveyance. There is no presumption either way."

21. Here the proper construction of the conveyance in its commercial context meant that the plan controlled the verbal description since that produced a sensible commercial result which the parties must be taken to have intended. The judge's construction produced a commercial nonsense.
22. For these reasons I think that the judge was wrong to conclude that the option did not include 0052.

Did the planning permission trigger the option?

23. I have already referred to the terms of the permission. It was apparently the product of a good deal of negotiation with the local planning authority and conditional upon, among other things, a planting and landscaping scheme to screen the allotments, completion and retention of the car park, and construction of the access road in a way which was satisfactory to the authority. The permission was granted as part of a larger scheme intended to allow the trustees to develop a parcel of adjoining land which had been released from the green belt. This scheme required the relocation of statutory allotments on other land owned by, or leased to, the local council. Hence the proposal to relocate the allotments on 0052 and part of 0062.
24. The relevant planning legislation (which was the same in 1977 as it is now) provides that planning permission is required for development, defined as "operational development" (for example carrying out engineering or building works) or changes of use. Use of land for agricultural purposes is specifically excluded from the definition of "development". Agriculture itself is defined to include horticulture, fruit growing, seed growing, the breeding and keeping of livestock, market gardens and nursery grounds. This extensive definition led the Divisional Court in Crowborough Parish Council v Secretary of State for the Environment (1980) 43 C&PR 229 to conclude that the use of land for allotments was agricultural use. The question for the court was whether the Secretary of State was right to maintain that planning permission was required because the use of land for allotments did not amount to a use of land for agriculture. Forbes J, with whom Donaldson LJ agreed, said at page 231:

"It seems to me that, so far as one knows what is done on allotments, that could quite easily be said to be horticulture, fruit growing, perhaps even seed growing, and one has known people to keep goats, and so on, on allotments. They might fall into various other categories of description set out in that definition section. They might be said to be market gardens or nursery grounds. All these terms seem to me to be apt to cover the use of land as allotments. It is true that there is no mention of allotments in the definition, but I cannot see that it would be wrong to take the view that I have just taken, namely that these descriptions of uses like horticulture, fruit growing and so on cover the use of land for allotments. I would say, therefore, that allotments as such are included within the definition of 'agriculture' ...."

25. The respondent's argument before the judge was that, as planning permission was not required for the change of use to allotments, there was no planning permission within the meaning of the option. If 0052 was to be included, the car park and access road were merely ancillary to the use as allotments, which did not require permission and so (as Mr Clarkson put it) "the tail should not wag the dog". The judge accepted this submission. He said:

"The words of the option must be construed so as to give effect to the presumed intention of the parties. It appears to me that their intention was to allow the trustees to secure the increased value of the land as a result of that land being the subject of, or potentially the subject of, development. When the option refers to planning permission being granted 'in respect of' the whole or a part of 0062, it does not cover everything within the application site. It only refers to those parts of 0062 in relation to which there is permission for relevant development. For the purpose of such relevant development, the .... planning permission is not given 'in respect of' a piece of land on which development is not being permitted. Here no development is being permitted in respect of any part of [0062] or most of [0052]. [Counsel] puts it succinctly in respect of [0062]. He says that that plot was part of the planning permission but permission was not given in respect of it. I agree."

26. Mr Harper says that the judge's reasoning is flawed. It is common ground that planning permission was required to build a car park and road. The allotments could not be used without proper access to them and parking. The local planning authority would not have permitted such development without considering the scheme as a whole and without being able to impose conditions to ensure that it was environmentally acceptable. The planning permission applied to the whole of the land to which it related and it was impermissible to examine it bit by bit to see whether permission was or was not required for any particular bit. If necessary Mr Harper contended that Crowborough was wrongly decided.
27. Mr Clarkson supported the judge's reasoning. The permission could not be taken at face value because otherwise the option could be triggered by a mere device. Applicants for planning permission are not restricted in the way which they define the planning unit, and planning authorities do not have to concern themselves with whether or not permission is actually required. So here the trustees could have included the whole of 0062 in their application, although it was only intended that part of this land should be used for allotments. The purpose of the option was to enable the trustees to realise the development value of the land. There is no such value in a planning permission which is not required.
28. I think this last submission is wrong. It seems to me that the trustees are seeking to realise the development value of the option land, either directly by its use as allotments and the necessary operational development to facilitate that use, or indirectly as an enabling development to release value in the trustees' nearby land. In developer's terms, the marriage value of the option land and the adjoining land is enhanced as a result of the planning permission.
29. The question in the end is one of construction of the option. That refers simply to the grant of planning permission in respect of any part of the land. The words used are unqualified. They do not say that such permission has to be necessary. Mr Harper rightly conceded that if the option was exercised in bad faith or over an extravagantly large area of land (assuming the local planning authority would give permission for such a development), different considerations might apply. But there is no suggestion of that in this case. There is planning permission for a sensible planning unit. Permission is required to carry out the operational works and without them use of the option land as allotments would not, it seems to me, have been a realistic proposition.
30. For these reasons I accept Mr Harper's submissions on this part of the case. The planning permission enabled the trustees to exercise the option over 0052 and that part of 0062 required for use as allotments. In reaching this conclusion I do not think that it is necessary to consider whether Crowborough was rightly decided.
31. For these reasons I would allow this appeal. If my Lord and my Lady agree, no doubt the parties can agree the terms of a declaration or declarations which reflect that result.
32. LADY JUSTICE ARDEN: I agree that the appeal should be allowed for the reasons given by Tuckey LJ. Interpretation is not the process of ascertaining the parties' intentions as regards the meaning of a document, but, as Lord Hoffman said in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912, "the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge reasonably available to the parties in the situation in which they were at the time of the contract". That background knowledge has been referred to as the matrix of fact (as to which see the Investors Compensation case at pages 912-3). As Mr Harper QC submitted, the crucial fact here is the omission of plot 0052 and that that omission made no sense; it made no sense commercially or as a matter of topography because plot 0052 was not a physically identifiable parcel of land. In my judgment, a reasonable person faced with the verbal description of the property subject to the option in the conveyance on the one hand and on the other hand with the plan in the same form as the filed plan showing that property (but hatched black rather than tinted pink) would have formed the view that the plan should prevail. The word "shown", which is used in the clause in the conveyance, is capable of having this effect and accordingly the option should be construed as Tuckey LJ has held. For those reasons I, too, would allow the appeal.
33. THE LORD CHIEF JUSTICE: I agree with both judgments and for those reasons would allow the appeal.
ORDER: (not part of judgment) Appeal allowed with costs; there be a declaration that the obligation to offer certain land (defined in the Statement of Claim) for sale to the claimant was valid and subsisting as between the claimant and the defendant as at 18 April 1997; there be an order that the defendant does offer the land (as defined in the Statement of Claim) for sale to the claimant on the terms of the agreement contained in a conveyance dated 23 August 1977; there be an order that if a price for the said land cannot be agreed within one month of the date of judgment, the valuation of the land be referred to an independent surveyor; permission to appeal refused.