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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Grender & Ors v Dresden & Ors [2009] EWHC 214 (Ch) (13 February 2009) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2009/214.html Cite as: [2009] WTLR 379, [2009] NPC 29, [2009] EWHC 214 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		13/02/2009

Mr Justice Norris :

1. The origins of the Coombe House Estate at New Malden, Surrey lie in the ancient manor of Coombe, whose mansion house was rebuilt in 1752. In the 1930's this mansion house and its immediate grounds and orchards was acquired for development. The mansion house itself was demolished but certain outbuildings and lodges were retained. The outbuildings and lodges were served by lanes or tracks which remain today: thus what is now known as Fitzgeorge Avenue was originally the driveway to the mansion house, and what is now the northern part of Warren Rise was a lane serving some outhouses.
2. The developers who acquired the estate in 1933 were Messrs Helmore and Adamson. They lotted it out as a residential estate, laying out new roads to link with the original lanes. As and when they sold off plots adjoining these new estate roads they gave an undertaking to indemnify the purchaser against the costs and charges levied on the plot in connection with the adoption of the road by the local authority. This undertaking was not given to purchasers of plots adjoining the original lanes.
3. Over the next 30 years neither the original lanes nor the new roads were adopted by the local authority (though there is a suggestion in the evidence that a Road Agreement may have been entered into in December 1934). The roadways remained vested in the estates of Helmore and Adamson, which could not be fully administered because of the outstanding undertakings. The position was no more satisfactory for any of the purchasers of plots on the Coombe House estate. They might have been granted easements over the estate roads: but if they were, then they had only the limited rights of such easement holders to make up the surface, and no arrangements were in place to coordinate or share the cost of upkeep. Property owners therefore lacked a convenient and secure access to their plots.
4. On 8^th November 1963 the Coombe House Estates Residents' Association Ltd ("the Company") was incorporated, with two residents on the estate being the original subscribing shareholders. Its objects were to acquire and maintain the roads footpath and verges on the Coombe House Estate and with a view thereto

" to enter into such agreements and other arrangements with the residents on the estate……. as may from time to time seem expedient."

The Company was empowered for those purposes to levy charges both on the residents on the estate and on other persons interested. The Memorandum authorised a distribution of the property of the Company in specie amongst its members. Recital (8) to a Conveyance dated 18^th November 1963 ("the Conveyance") (to which I will next come) says that the Company was incorporated with the privity and consent of the majority of the owners of plots or parcels of land abutting the new estate roads

"for the purpose of maintaining the said roads on the said Coombe House Estate and the verges thereof as private roads".

5. On the 18^th November 1963 the personal representatives of Helmore and Adamson conveyed to the Company the roadways (both the original lanes and the new estate roads) and the verges on the estate, subject to any subsisting easements. The transferors also paid £6973 to the Company in return for an indemnity from the Company against all claims by any persons claiming the benefit of the undertakings that had been given in respect of the local authority road charges. (There was also an assignment of the benefit of estate covenants, so far as then subsisting, and of the power to vary or release them).
6. By 18^th November 1963 further shares had been issued in the Company. From the documents it would appear to have been largely a matter of chance who was selected to become a shareholder. The additional shareholders were all residents on the estate: but in some cases their property abutted on one of the original lanes, and in others abutted one of the new estate roads (sometimes using the estate road for sole or principal access, but in others obtaining that access from one of the adopted roads that bordered estate). On that date all of the then shareholders entered into a Trust Deed ("the Deed") with which this application is concerned.
7. The key features of the Deed are these:-

(a) Its parties were the shareholders (who were called "the Trustees"), the Company, the personal representatives of Helmore and Adamson, and the persons whose names and addresses were set out in the First Part of the First Schedule to the Deed, and those whose names were set out in the Second Part of that Schedule (together called "the Estate Residents");

(b) Recital (e) to the Deed says that the shareholders had agreed to hold the shares issued to them and all rights attaching thereto for the benefit and subject to the direction of the Estate Residents;

(c) The First Part of the Schedule created a class called "the Southern Estate Residents". The resident gave his or her full name, postal address, number and address of the plot in respect of which he or she was registered at the feet of frontage, and then signed the Schedule. The Southern Residents had properties abutting Burghley Avenue, Neville Avenue, The Fairway and the southern part of the Warren Rise. It is clear that not all eligible plot owners signed up.

(d) The Second Part of the Schedule created a class called "the Northern Estate Residents". Their properties bordered the original lanes (including the northern part of Warren Rise). One such property belonged to Coombe House School Ltd and was operated as a school. Not all of those eligible to be Northern Residents signed the Schedule.

(e) By clause 2 of the Deed the Trustees covenanted to maintain a register of the Southern Estate Residents and of the Northern Estate Residents showing their respective addresses and plot particulars "and the frontage represented by such plot or holding". The Deed recorded that details of the Estate Residents who were original parties were shown in the First Schedule and provided that upon any subsequent changes in the register involving subdivision or alteration then the decision of the Trustees as to the frontage to the registered parcel was to be final. The Deed made no specific mention of alteration of the Schedule by addition of extra plots, or as to the means of settling the frontage to be registered in relation to any such added plots.

(f) By clause 1 the Trustees declared that all rights attaching to the shares (including convening and voting at general meetings of the Company) would be exercised by them subject to such directions and conditions as the Estate Residents may from time to time direct; but that subject to such directions the Trustees would exercise those rights as they in their absolute discretion should think fit in the best interests of the Southern Estate Residents and the Northern Estate Residents in accordance with their respective rights under the Deed. Any direction relating to a resolution of the Company which had to be passed as a special or an extraordinary resolution had itself to be embodied in an extraordinary resolution of the Estate Residents: otherwise the Trustees could be directed by an ordinary resolution.

(g) Clause 3 contained a covenant by each of "the Estate Residents" to pay the due proportion of the contribution which the Trustees decided was required by the Company for the purpose of implementing the indemnity given to the estates of Helmore and Adamson and of repairing and maintaining the roads and footpaths vested in the Company "and in respect of the administration and management of the Company". The contribution of an Estate Resident was to be calculated in accordance with the feet of frontage in respect of which that resident was registered. There was a machinery whereby at separate meetings of the Southern Estate Residents and of the Northern Estate Residents the contribution could be varied as between the classes.

(h) The Trustees also declared that they would hold the sum of £6,973 and the investments from time to time representing it on trust to discharge claims against the estates of Helmore and Adamson by owners of plots or holdings on the Coombe House Estate who were not parties to the Deed, and subject thereto to discharge the liability for road charges in respect of plots registered to Southern Estate Residents.

(i) Clause 6 of the Deed referred to detailed rules for the requisitioning and convening of general meetings of the Estate Residents and separate class meetings of the Southern Estate Residents and the Northern Estate Residents. These were set out in the Third Schedule to the Deed. For present purposes it is necessary to refer only to the provisions relating to quorum and voting.

(j) So far as quorum is concerned paragraph 3 of the Third Schedule provided that one third of the Residents present in person could form a quorum for the transaction of all business except the passing of an extraordinary resolution. The quorum for the passing of an extraordinary resolution should be Estate Residents present in person or by proxy representing a clear majority of the total feet of frontage registered in respect of all Estate Residents. Paragraph 20 of the Third Schedule provided that that regulation should (with necessary modifications) apply to separate class meetings of the Southern Estate Residents and of the Northern Estate Residents respectively.

(k) So far as voting is concerned, paragraph 7 of the Third Schedule said that this should be on a show of hands unless a poll was demanded; paragraph 8 said that if a poll was demanded it should be taken in such manner as the chairman might direct; and that for an extraordinary resolution the resolution had to be carried by a majority consisting of not less than three quarters of the persons voting thereat on a show of hands or not less than three quarters of the votes given on a poll.

(l) By Clause 8 the power of appointing new Trustees was vested in the body of Trustees itself, but no candidate might be appointed unless he had been approved by an ordinary resolution of the Estate Residents (the Clause requiring that at least three trustees were to be nominated by the Southern Estate Residents and at least two by the Northern Estate Residents).

(m) By Clause 10 "each Estate Resident (meaning thereby an Estate Resident who has executed to these presents)" released the estates of Helmore and Adamson from all liability against the road charges and "the Estate Residents (each contributing proportionately to the frontage represented by the plot or holding in respect of which he is registered)" covenanted to reimburse and indemnify the Trustees in respect of all costs properly incurred in the performance and carrying out of their duties and functions under the Deed and further to indemnify Helmore and Adamson and their estates from all liability in connection with the making up and taking over by the local authority of the new estate roads.

(n) There was a "Royal Lives" perpetuity period by reference to the issue then living of his late Majesty King George V.

8. So much for the basic scheme of the Deed. But in addition to the provision for the updating of the register there were three other key provisions designed to cope with changes in circumstance.

(a) Clause 9 dealt with what was to happen on a sale by an Estate Resident; it is necessary to set out its terms in full:-

"Upon any alienation by an Estate Resident of any part of the Coombe House Estate in respect of which he is registered such Estate Resident shall procure that his successor in title executes a Deed in such form as the Trustees shall approve covenanting with the Company, the Developers and their personal representatives and the Trustees to be bound by all the obligations imposed on his predecessor in title by these presents in respect of the part of the Estate so alienated. Upon delivery to the Trustees of such Deed the said successor in title shall thereupon succeed to all the obligations, rights and privileges imposed and conferred upon his said predecessor under these presents in respect of the aforesaid part of the Estate and such predecessor shall thereupon stand released from the said obligations and cease to be entitled to any of the said rights and privileges".

The Deed did not, however, contain any mechanism by means of which the Trustees and the Company were to be alerted of any intended alienation (which might have entitled them to embark upon the cumbersome and expensive course of seeking an injunction to restrain a threatened breach of Clause 9): and the law does not provide a means for the automatic transmission of the burden of positive covenants. The scheme was to that extent flawed.

(b) Clause 11 contained a power to vary the trusts and provisions of the Deed in these terms:-

"The trusts and provisions of these presents may be varied, modified, extended or abrogated in any manner with the consent of the Company and the sanction of an extraordinary resolution of each class of Estate Residents…".

(c) Clause 13 contemplated the possibility that part of the roads on the estate might be taken over by the local authority, and stipulated that the name of each registered owner whose plot abutted on the adopted road should be removed from the register of residents and cease to be bound by the obligations or to enjoy the rights conferred under the Deed: and if he was a Southern Estate Resident then he might receive a contribution from the trust fund in respect of the charges payable by him. There was no provision which addressed the possibility that adoption of the roads might cease to be a reality.

9. The passage of 45 years has led to difficulties in the current operation of the Deed.

(a) None of the original signatories is still resident. One of them (Mr Culliford of 22 Neville Avenue) has lately died but his widow has not entered into the succession document contemplated by clause 9 of the Deed. Does this mean that there is a divorce between ownership of 22 Neville Avenue (now vested in Mrs Culliford) and exercise of the rights arising from the registration of 22 Neville Avenue in the schedule to the Deed (still vested in the personal representatives of Mr Culliford)? Or have Mr Culliford's rights lapsed because 22 Neville Avenue has been alienated without the relevant Deed having been entered? If the rights have lapsed, would they be revived if Mrs Culliford did choose belatedly to enter into the relevant document?

(b) In only 16 cases is there a continuous chain of covenants from the original signatories to the present owners of the plots on the Coombe House Estate. Are these now the only true "Estate Residents" for the purposes of the Deed?

(c) In 19 cases the current owners of plots on the Coombe House Estate have signed what are effectively Deeds of Adherence with the Trustees, although there is an earlier break in the chain of covenants from original signatories to present Trustees. By so signing, did they obtain the rights of registered plot owners?

(d) In a number of cases the current plot owners have simply not signed the succession document contemplated by the Deed. In their case (like that of Mrs Culliford) the question arises whether their predecessors in title (some immediate, some earlier) continue to hold the rights attaching to registration, or whether the rights themselves have lapsed.

(e) In 6 cases owners of plots have signed a Deed adhering to the scheme, although the owners of their plots in 1963 were not Estate Residents whose plots were registered in the schedule to the Deed. Did they thereby become "Estate Residents": or is the term "Estate Resident" to be confined to original subscribers and their successors in title?

(f) In other cases there are current owners of plots who have not signed any document adhering to the Deed and whose predecessor in title did not in 1963 become a registered plot holder in any of the schedules to the Deed. Can they ever be brought within the scheme: or must they forever remain outside it, using the private roads to access their properties but not contributing to the upkeep and having no voice in the management of the estate?

(g) Moreover, within each of the various classes of covenantor there are those who are withholding their annual road charges in disapproval of the current state of affairs. Are they entitled to attend and vote at any meeting?

(h) On the other hand, there are 29 owners who have signed no covenant of any sort but choose to pay frontage charges.

(i) There is a measure of doubt whether the provisions relating to frontages can possibly be operated accurately (as the result of the development of some plots, the sub-division of others, the subsequent adherence of frontages whose predecessors in title were not original subscribing Estate Residents, individual bargains struck when negotiating the grant of rights over the estate roads, and occasional historic lapses in accurate record keeping).

(j) Finally, the prospect of adoption that was apparent in 1933 may now be said to have receded so far as to cease to be a reality. The Coombe House Estate is and will for the foreseeable future be an estate served by private roads.

10. Legal uncertainty, factual obscurity and clashes of personality are a potent cocktail. What should be routine and probably tedious business relating to the repairs of roads and sewers has become a hotbed of controversy which has the potential to put a blot on the title of every property on the estate. Plainly something must be done to prevent that. The power of amendment in Clause 11 provides the obvious means to a remedy, but it requires the sanction of an extraordinary resolution of each class of the Estate Residents. But unless there is a tacit acceptance of who are the lawful current Trustees, who are the "Estate Residents", who may vote as "a Southern Estate Resident" and who may vote as "a Northern Estate Resident", how the aggregate and individual frontages are to be computed for the purpose of confirming the presence of a quorum, and the identity of those entitled to vote on the taking of a poll, the Clause cannot be operated.
11. In these circumstances the present Trustees determined to seek the guidance of the court as to how they should act. This simple move of itself proved divisive, with a group of residents saying that the application of trust monies in the prosecution of court proceedings was not justified – a view that persists notwithstanding the sanction given by the court to the prosecution of the present proceedings.
12. The focus of the opposition is Mr Michael Dresden (a retired conveyancing solicitor of over 40 years experience) and his wife. They have signed a covenant with the Company but their predecessor in title was not a subscriber to the Deed. Their entitlement to be heard therefore depends upon a particular construction being given to the Deed (namely, that a resident can be an enfranchised member of the scheme even if he cannot show an unbroken chain of covenants from an original 1963 subscriber). They have filed a huge quantity of evidence in the present proceedings, detailing their investigations into the history of the Coombe House Estate both pre-dating and post-dating the Deed, and surveying the actions of various trustees over the years. They say that the present individual claimants (whilst perhaps properly appointed Directors of the Company) have not been validly appointed Trustees for the purposes of the Deed because of the absence of valid class meetings of the Southern Estate Residents and of the Northern Estate Residents approving their appointment. They say that the trusts of the Deed are no longer valid (because they were from the outset an unlawful purpose trust, or because the perpetuity period has expired, or because it is not possible to operate the Deed according to its terms). They say that because the Deed is "invalid" these present proceedings are improper and without point, because the only asset that was put into trust was some shares in a company which owns the estate roads, and those roads are a liability not an asset. They say that the present proceedings are a waste of time, and that nothing of any value is going to be decided by me. Although he asserts that the present trusts are invalid Mr Dresden resists the notion that the shareholders now hold the shares on a beneficial resulting trust for the 1963 shareholders who declared the trusts of the Deed (or that the present shareholders could now distribute the assets of the company amongst themselves in specie). Mr Dresden says that what the Trustees should do is either (a) establish a new company with all estate residents as shareholders and procure a transfer of the Company's assets the new Company; or (b) enlarge the capital of the Company and distribute new shares to the present owners of all of the houses on the estate. He was unable to suggest a mechanism for how (if the Deed is invalid and Clause 11 is not available) this might be achieved without either the Trustees being treated as beneficial owners and volunteering to embark on this scheme, or being treated in some sense as Trustees for a defined body of people whose unanimous consent they secured. Quite apart from the question of the estate roads and their maintenance Mr Dresden also wished to advance arguments that the Coombe House Estate was subject to local law comprised in "a building scheme", and that the Trustees had in the past erred in agreeing to various developments (in particular the re-development of the school as the 12 leasehold properties now known as Coombe Chase). But then Mr Dresden and his wife said that they had not appeared at the hearing to claim anything or to resist anything: but merely to put forward reasons why I should not grant the relief sought by the Trustees.
13. One of the matters on which the claimants sought guidance was whether the Deed should be amended so as to secure that a restriction be placed on the title to each parcel on the estate registered at HM Land Registry prohibiting a transfer without certification by the Company that the transferee had entered into a succession Deed. Mr and Mrs Dresden were much exercised by this suggestion, which they characterised as an attack upon their title which would render every house on the Estate un-saleable and un-mortgageable: and they rallied a number of residents to their cause one of whom (Mr Cullinan) addressed me on this issue alone. Mr Dresden had apparently expressed the view (which he repeated to me) that most restrictions upon title arose out of mortgages or joint ownership, that it was improper for the Trustees or the Company to assert such rights against owners on the estate, and that he had not come across such an attempt in 43 years of conveyancing practice.
14. Although I do not intend to rule on the "restriction" scheme (since I regard that as entirely a matter for the residents) I do intend to comment upon it because of the shadow it has cast over the Trustees' proposals and over these proceedings. The residents need to be assured that this was not a nefarious scheme to entrench the present Trustees in office and to reduce property holders' rights (any more than any of the other proposals now before me). As Professor Scamell points out in "Land Covenants" (1996) at page 555, where land is registered land, a common and easy means of overcoming the inconvenient rules about the transmission of positive covenants (and the consequent the risk of a disposition being made without the transferee entering into a direct Deed of Covenant with a counter-party like the Company), is an agreement for the entry of a restriction in the register of the covenantor's title. The restriction stipulates that no transaction shall be effected unless the solicitors for the counter-party in the position of the Company certify that a direct Deed of Covenant has been entered (and the Land Registry has produced a standard restriction, Form L, to meet just such a case). It seems to me that the alarmist response to this proposal of the Trustees has not assisted the objective consideration of their other proposals. To these proposals I now turn.
15. The Deed is undoubtedly difficult to operate in the circumstances which now obtain. The Trustees were, in my judgment, entirely right to apply to the court for guidance, and Master Moncaster was undoubtedly right to authorise the present proceedings. Master Teverson's constitution of the present action (with the present Trustees as claimants, Mr and Mrs Dresden as general objectors, Mr Cullinan as a specific objector, and Mr Roberts as a representative of the residents of the Coombe House Estate generally) has afforded the opportunity for all relevant points to be argued. Mr Studer (Counsel for the claimants) assumed the burden and has fairly drawn to my attention the difficulties which face the Trustees, placing before me a range of options as to how those difficulties might be addressed. Mr Dresden has raised his fundamental challenges. Mr Roberts has communicated the views of the general body of residents (which is to the effect that 83% of the respondents to a survey supported the Trustees in raising the questions, and 94% of them were opposed to the stance taken by Mr Dresden). Mr Cullinan argued his specific concerns relating to a restriction being placed on his title. I have been assisted by them to reach the following clear conclusions.
16. First, I hold that the existing Trustees are lawfully in office. They are the holders of the issued shares in the Company, and they plainly hold them as trustees (not as beneficial owners). Whatever doubts may be raised about the quorum of Northern Estate Residents or Southern Estate Residents which attended the meeting that approved their respective appointments, no evidence has been adduced which establishes on the balance of probabilities that any of them was invalidly appointed. Each was appointed unanimously by his or her relevant constituency (any defect in the appointment arising from the supposed absence of a quorum of the relevant class or the holding of a separate class vote).
17. Having been unanimously appointed by their constituency, no attempt has been made to secure their removal, and they have continued to act. Had it been necessary for me to do so I would have applied the principle which Pennycuick J applied in Re: Plymouth Breweries Ltd (1967) 111 SJ 715. In 1893 a scheme of reconstruction which adjusted the rights of the preference and the ordinary shareholders was promoted, and in the following year was approved by the court. But it appeared that the scheme had never been approved by a quorate meeting of either class. The scheme was implemented. The judge held that the contention that the class resolutions were a nullity owing to the absence of a quorum, would have been correct, apart from the circumstances of ratification and estoppel. Although the period here is obviously shorter, if Mr Dresden is right the quorum issue has been live since 1979 (the date by which he described the Trust Deed as "dead"): and it is simply too late in proceedings almost thirty years later to seek to raise the issue.
18. Second, I hold that the Deed is legally valid. As to the suggestion that the perpetuity period has expired, the argument was only faintly advanced and was entirely unsupported by evidence. Such evidence as was adduced by Mr and Mrs Dresden proceeded on a misapprehension that the "issue" of the late King George V meant only his "children". Once that error is corrected I am left with the advice received by the Trustees, namely that the perpetuity period probably has another 60 years to run. (In the course of preparing this judgment I noticed that Master Teverson had, in the course of dismissing some of Mr and Mrs Dresden's claims, already ruled on this point). As to the argument that this is an unlawful purpose trust, I reject that argument and hold that this is a trust for a definable class of persons of the type recognised in Re: Denley [1969] 1 Ch 373. The Deed recites that the shares are held for the benefit and subject to the direction of the Estate Residents, and it is simply a question of identifying that class of beneficiary.
19. Third, I find that there are assets held by those lawful Trustees upon those valid trusts. It is not correct to say that there is nothing of value to be decided by me. The assets directly or indirectly under the control of the Trustees include the shares in the Company and the rights attaching thereto, the roads and verges on the estate, the benefit of positive covenants given by some of the residents, the benefit of any subsisting restrictive covenants annexed to land now vested in the Company or capable of passing by assignment (and the power to vary them), the developers' "dowry" of £7000, £36,000 accumulated road charges allocated to specific reserves, and a sum of £41,600 accumulated road charges and fees for the grant of rights on the estate that are as yet unallocated. These assets cannot be distributed amongst the Trustees (though they may be applied in re-imbursing the Trustees for expenses incurred, including in connection with these present proceedings). They must be applied in the manner authorised by the Company's constitution and in the execution of the trusts upon which the shares are held.
20. Fourth, I find that the Deed had a clear commercial purpose. That purpose was to provide for the cost of the making up and adoption of the new estate roads (utilising the £6,973 provided by the developers together with any relevant contributions) and to provide for the repair and maintenance of the roads and footpaths generally on the estate. This clear commercial purpose does not mean that different rules of construction are to be applied to the Deed than would be applied to a non-commercial or private trust. But a recognition of the commercial purpose underlying a trust may lead to a different outcome in the application of those rules. That is in part because it is much easier to give a purposive construction to an ambiguous or obscure provision where the defined purpose can be ascertained: and partly because the court is more likely to resist the conclusion that the trusts have failed and that the property reverts to the donor, the trust provisions having failed to exhaust the entire beneficial interest. The intention of donors may well be limited: that of participants in a commercial arrangement is likely to be that the entire arrangement is covered. I intend to approach the Deed on the footing that those who entered it intended to provide an effective and enduring scheme.
21. Fifth, I consider the key task in construing the Deed is to ascertain the meaning of "Estate Resident" in the events which have happened. I hold that the true meaning of the term as used in the Deed is that an Estate Resident is someone who is a freehold proprietor of a plot or parcel on the Coombe House Estate which abuts or adjoins an estate road (coloured pink or blue or green on the plan annexed to the Conveyance) and who has entered into a direct obligation with the Company to pay a due proportion of the sum required to secure the making up and adoption of the estate roads and in the meantime the repair, maintenance and upkeep of the roads, verges, sewers and so forth, and who is not in default of that payment obligation. With that last qualification as to payment, I would therefore answer the questions raised in the Part 8 Claim in senses 1(a), 1(b) and 1(c).
22. I would begin the analysis by considering the various uses of the term "Estate Resident" in the Deed. It is clear from Clause 2 that each Estate Resident must have a "plot or holding on the said Coombe House Estate": and so far as appears from the evidence each of those was held for a freehold estate. (The key leasehold development was that which took place on the site formerly in the ownership of Coombe House School Ltd – the freehold being registered in the name of the Coombe Chase Residents Association Ltd: this post dates the Deed, and there is no evidence that it was in contemplation at the date of the Deed).
23. The term "Estate Resident" plainly includes such of those owners as signed the First Schedule to the Deed. Thus:-

(a) The Deed defines "Southern Estate Residents" as those who have signed the first part of the First Schedule, the "Northern Estate Residents" as those who have signed the second part of the First Schedule, and the Southern Estate Residents and the Northern Estate Residents together as "the Estate Residents";

(b) Recital (c) to the Deed says that it is entered into with the privity of "the Estate Residents (signified by their execution of these presents)";

(c) Clause 2 of the Deed refers to Estate Residents who are original parties;

(d) Clause 3 of the Deed contains a covenant by "each of the Estate Residents", and such an obligation could only be entered into by someone who was a party to the Deed;

(e) Clause 10 contains a release by "each Estate Resident (meaning thereby an Estate Resident who has executed these presents)";

(f) Clause 10(2) contains a covenant by the Estate Residents to reimburse the Trustees the costs of discharging their duties and functions (an obligation that is only effective in respect of Estate Residents who are parties to the Deed).

24. But although such Estate Residents (i.e original subscribers) are plainly within the scope of the Deed it does not follow that the term "Estate Residents" is confined exclusively to them. Indeed the draftsman's language in clause 10(a) of the Deed may indicate an awareness that there might be "Estate Residents" (within the meaning of the Deed) who were not original parties.
25. Further, it is plain that the term "Estate Resident" must include a successor in title for someone who was an original party to the Deed. That is apparent from the definition of "Southern Estate Resident" and "Northern Estate Resident" (which expressly includes successors in title): and from the provisions in Clause 9. It is also implicit in the use of a "Royal Lives" perpetuity clause.
26. But once again, the fact that the term "Estate Residents" must include both the original parties to the Deed and their successors in title who comply with the provisions of Clause 9 does not mean that the term is confined to such persons. Thus recital (b) to the Deed refers to the Estate Residents as being "the present owners of plots or portions of land on the said Coombe House Estate" (whether or not they were subscribers or successors of subscribers). Moreover, the actual obligations which the Deed imposes (a promise to contribute to costs, a release of an existing indemnity, and a giving of an indemnity to the Trustees) are capable of being entered into at any point during the running of the perpetuity period. If in 1964 a person whose ownership of a plot on the Coombe House Estate pre-dated the 23 November 1963 had said "I did not get round to signing the Schedule to the Deed, but I would now like to do so" it is extremely difficult to point to any provision in the Deed which would have entitled the Trustees to say "I am afraid that is no longer possible". I think the only candidates are (i) the provision which specifically empowers the Trustees to amend the register of frontagers on sub-division or alteration, but not expressly by way of addition and (ii) the terms of the covenant to be entered into under Clause 9 which require the covenantor to assume the obligations of "a predecessor in title" but make no apparent provision for an initial Deed of Adherence. But these administrative provisions are not of such significance that they should determine the true meaning of the Deed as a whole. Likewise, if a present owner of a plot on the Coombe House Estate said "It appears that our vendor never got round to signing a Deed under Clause 9, but we would like to do so and confirm our willingness to contribute to the costs of maintenance" it is extremely difficult to identify any provision in the Deed which would entitle the Trustees to say "It is too late: I am afraid that it is not possible". A very literal reading of the terms of Clause 9 itself might be taken to support that approach (reading "predecessor in title" as "immediate predecessor in title"): but that would run counter to the apparent purpose of the Deed. The commercial purpose of the Deed was to provide for the repair, maintenance and upkeep of the roads, verges and sewers: I do not think that there is any rule of construction which requires me to read the Deed as imposing that burden on a steadily reducing number of people, and to exclude from it those who are willing to share the burden.
27. The actual practice of the Trustees and of the Company over the years has been to accept the covenants of persons who are willing to join the scheme. This was plainly within the power of the Company itself (which could enter agreements with estate residents generally and without any restriction whatever). Even if the directors, in procuring the Company to do so, were exercising powers that were fiduciary (the Deed refers only to powers attaching to the shares, but should not be read narrowly), they were free in their absolute discretion to do so provided that they thought it was for the benefit of those who had signed the First Schedule to the Deed and their successors in title (as a spreading of the burden of maintenance undoubtedly would be). Those with the right to object have not complained about this sharing of a burden that would otherwise (on a narrower construction of the Deed) have fallen solely on their shoulders. (I should emphasise that nothing I have said about the meaning of "Estate Resident" on the true construction of the Deed should be taken as disentitling those non-defaulters presently in a covenant relationship with the Company who fall outside the definition but whom trustees have in the past decided to admit and other Estate Residents to accept).
28. The expressed commercial purpose and the established commercial practice both indicate that a wide rather than a narrow meaning should be given to the term "Estate Resident"; and since there is nothing in the language of the Deed which prevents it, that is the view I take.
29. But in my judgment this argument cannot be taken so far as to include within the term "Estate Resident" either:-

(a) Someone who has entered into a direct covenant with the Company but is currently in default of paying a contribution or of complying with Clause 9 ; or

(b) Someone who has not entered into a covenant with the Company but is willing to volunteer a contribution.

In each case there is a disconnection between obligation and performance. The former category of resident insists upon the rights attaching to the status of "Estate Resident" to vote upon matters in respect of which he or she is unwilling to contribute (so exercising the privileges but not performing the obligations). The second category of resident seeks to exercise the privileges, but is unwilling to assume the ongoing correlative obligations. Such a resident could, for example, exercise the franchise conferred by a single year's subscription to vote for expenditure to which he or she may thereafter decide not to contribute (not having entered into any obligation to make contributions). It seems to me implicit in the terms and machinery of the Deed that neither category of resident should count as an "Estate Resident" for the purposes of the Deed i.e for the purpose of constituting a quorum or attending and voting at meetings. Such a reading is not compelled by the language and is not consistent with the commercial purpose of the Deed.

30. I should develop that point in one respect to address the difficulties created by situations such as that of Mrs Culliford. Mr Culliford was in a covenant relationship with the Company. When his house was transferred to Mrs Culliford his personal representatives did not procure that she enter into a direct Deed pursuant to Clause 9 and she declines to do so. (The Culliford context is one of transmission on death: but the same point of principle arises on sale). In my judgement Mrs Culliford is not entitled to attend and vote at a meeting convened by the trustee shareholders to direct the Company how to act because she is not in a covenant relationship with the Company. Mr Culliford's personal representatives are no more entitled to attend and vote than a vendor who failed to procure his purchaser to enter a succession deed and has now left the Estate. Each of them is a defaulter, and I do not think the commercial purpose of the Deed was to require the Trustees (or the Company) to track down defaulters for the purpose of ensuring that they can exercise rights under a document whose terms they have broken. But further, in my judgement persons in default could not have their frontages taken into account in the computation of any quorum. It simply makes no commercial sense to say that a defaulter's frontage is to be taken into account in the aggregate of registered frontages for the purpose of calculating a quorum, for that puts defaulters in a position to prevent performing covenantors holding a valid meeting.
31. It would be convenient if I could also reach the conclusion that the term "Estate Resident" included owners of plots which did not adjoin or abut any of the estate roads (so bringing into the scope of the original Deed those whose houses constitute "back land development"). But I do not consider that, consistent with a proper application of the rules of construction, I can reach that convenient conclusion. A key element of the context in which the 1963 arrangements were made was the existence of un-adopted roads on the Coombe House Estate in respect of which the developers had given an indemnity against potential road charges. Those road charges would (under a code that had applied since the Private Street Works Act 1892 and was most recently embodied in the Highways Act 1959 sections 174 and 176) be levied according to the frontage of the respective premises. Under that Code there was sometimes debate about whether the concept of "frontage" applied to properties which merely adjoined or abutted the private road. A primary purpose of the Conveyance and of the Deed was to release the developers from the indemnity they had given, to cast the burden of that indemnity on the Company, and to provide a mechanism under the Deed for the Estate Residents to supplement the assets of the Company by their contributions to ensure that that indemnity was effective. Thus the Deed recites that the indemnity had been given to the purchasers of plots "abutting on certain roads" in respect of the "costs, charges and expenses in connection with the making up…of the roadways…upon which the said respective plots…abut". The contribution to be made by each Estate Resident is to be "calculated in accordance with the feet of frontage of the plot or holding of the Coombe House Estate in respect of which he is registered". Finally, the Deed draws the fundamental distinction between the Southern Estate Residents (who were the recipients of an indemnity in respect of road charges) and the Northern Estate Residents (who were not, but whose registered frontage was still relevant to establish a quorum at a class meeting). So although the Deed extends to matters not dependent upon frontage (e.g those provisions relating to the repair and maintenance of estate roads generally, the general preservation or enhancement of the amenities of the Estate, and the general expenses of the Company and of the Trustees), the concept of "frontage", or of "abutting" or "adjoining" an estate road (whether an original lane or a new estate road) is integral to the Deed. I do not consider that I can ignore it so as to reach, as a matter of construction, the convenient conclusion that every owner of a plot on the Estate is an "Estate Resident". It may be highly desirable to use the power of amendment under Clause 11 to redraw the trusts so as to achieve that result: but it is achievable only by amendment not by a process of construction. (I would repeat that my ruling on the construction of the Deed does not have the effect of altering any current arrangements with those who are not strictly frontagers e.g the owners of "Shenstones" or "Foxburgh")
32. Mr Studer informed me that in the event that I construed the Deed as I have done then it would be possible to convene quorate meetings of the Southern Estate Residents and Northern Estate Residents. But the errors of the past may haunt the present Trustees; and I would not wish to give any encouragement to any group of residents to obstruct the implementation of sensible modern arrangements by means of the Clause 11 power of variation. I will therefore address the possibility of doubt over any quorum.
33. I direct that in the event that at any time an indubitably quorate general or class meeting cannot be held in strict accordance with the Third Schedule to the Deed then for the purposes of that meeting and any adjournment thereof upon any challenge to quorum the quorum shall be calculated by reference to the number of registered persons in each class entitled to vote and not by reference to the aggregate frontages represented. In case of doubt as to allocation of an Estate Resident to a class the Trustees shall have an absolute discretion as to allocation having regard to the proximity of any relevant parcel to any relevant estate road. The quorum for a meeting (general or class) to consider an ordinary resolution shall be Estate Residents present in person who constitute one third of those entitled to vote, and for an extraordinary resolution shall be Estate Residents present in person or by proxy who constitute a majority. It will not for quorum purposes be necessary to undertake any frontage calculations.
34. In making that direction I am exercising the jurisdiction conferred by s.57 of the Trustee Act 1925. Where in the management or administration of any trust property (which both the shares in the Company and the benefit of any covenants with the Trustees by Estate Residents plainly are) the Court considers a transaction to be expedient, but it cannot be effected by reason of the absence of a power in the trustees, then the Court may "either generally or in any particular instance" confer on the trustees the necessary power. It was said in Re J T C Mayne deceased (1928) 29 SR NSW 157 of the virtually identical section in New South Wales that it had been deliberately framed in the widest possible terms to enable the Court to do any administrative act in the administration of a trust. The object of the Company was (inter alia) to maintain the roads and footpaths on the Estate: for that purpose it was empowered to enter into agreements with the residents, and to levy charges on the residents and others. The Trustees wish to exercise the powers attaching to the shares in the Company to refine the existing arrangements so as to produce clarity, and to reflect the fact that administering an indemnity against incipient road charges is not really what the Company is now about. They cannot exercise those rights without the sanction of the Estate Residents but they lack the power to obtain that sanction in the circumstances which now exist. The concept of expedient management and administration of trust property is wide ranging: James Kirby Foundation v A-G of NSW [2004] NSWSC 1153 paras 12 and 13. It is plainly expedient that the relationships between the Company and the Estate Residents be clarified and refined. I propose to grant the Trustees only such power as is necessary to achieve that end. Mr Studer asked to settle the quorum for a general resolution at 10 and for an extraordinary resolution at 15 residents. It may ultimately be appropriate to exercise the discretion in that way: but I prefer to leave as much power as possible in the general body of residents who I am confident will see that it lies in their best interests to put an end to all disputes (both over road charges and the expenditure on these proceedings which the Court has authorised), to spread the burden as widely and fairly as possible, and to secure that an effective scheme is in place for ensuring that incomers assume a fair share of the burden. If it is not possible to convene an indubitably quorate meeting even under this direction then the Trustees have liberty to apply for further directions.
35. If section 57 had not afforded jurisdiction I would have considered my direction to have been a proper exercise of the Court's inherent "salvage" jurisdiction. Disputes over quorum will occasion a deadlock in trust administration. It is essential in the interests of all plot owners that the roads and drains serving their properties are adequately maintained and that the scheme constituted by the Company and the Deed is effective for that purpose. The Court may, in an emergency, do something not authorized by the precise terms of the trust. Where the trust property includes shares it not infrequently happens that some peculiar state of circumstances arises for which provision is not made by the trust but in which it is highly desirable in the interests of those for whose benefit the property is held for the trustees to be authorised to take steps. That was the situation in Re New [1901] Ch 534 and it is the situation before me. The trustees must be enabled to hold a meeting (which everyone is bound to accept is valid) for the purpose of receiving directions and (so far as necessary) varying the trusts of the shares and/or exercising the rights attaching to the shares to modify the agreements between the Company and the estate residents and others.
36. I therefore answer the questions raised in the Claim Form in the sense set out in paragraph 21 and give the direction as to meetings set out in paragraph 33.
37. I have not heard submissions on costs; but it may assist if I set out a provisional view (which upon application I will reconsider afresh either when handing down judgement or, if the interests of fairness require, on a separate occasion).
38. The Claimants are entitled (insofar as the costs are not otherwise recoverable from another party) to their costs assessed (if not approved by a meeting of the Estate Residents) on the indemnity basis out of the assets subject to their control as trustees or out of the assets of the Company. This follows from the Order of Master Moncaster dated 10^th May 2006 and accords with CPR 48.4.
39. Mr Roberts is entitled to the costs incurred by him in acting as a representative defendant pursuant to the Order dated 18^th December 2007. Those costs are payable out of the same assets as those to which the Claimants can look.
40. Mr Cullinan is not entitled to any costs. He became a party in his own interest to make representations about the "restriction scheme". I have in the course of the judgement indicated that his fears may be misplaced and that in any event I regard the form of any alterations to the scheme to be a matter for the residents in general meeting. On the other hand, his intervention did not significantly increase the costs.
41. Mr and Mrs Dresden have already been ordered to pay the costs of the Application to strike out certain claims made in their evidence (identified in paragraph (9) of the Order dated 18^th December 2007). Their submissions to me nonetheless substantially interwove the evidence in support of the struck out claims with their submissions on the actual questions before me. I am in no doubt that this lengthened the hearing, and will have increased the costs of the Trustees in considering much evidence that was not in truth material to the issues in the case. Against that must be weighed the fact that this is an application to construe a deed, where the general rule might be that any party interested might appear to argue for a particular construction without exposure to the risk of an adverse costs order. Balancing the legitimate points that were taken by Mr and Mrs Dresden against the irrelevant evidence and argument that they introduced and which had to be addressed, and guided by CPR 44.3(7), I consider a fair order would be that Mr and Mrs Dresden should pay 20% of the Claimants' costs assessed on the indemnity basis. (In order to avoid the expense of two assessments on different bases I have adopted the indemnity basis but reduced the proportion that I might otherwise have ordered Mr and Mrs Dresden to bear).
42. I emphasise that all these decisions on costs are provisional. But I wish to do what I can to spare the general body of residents from exposure to the costs of arguing how the costs already expended are to be borne.
43. If the Trustees resort to Company funds they should first charge the costs against unallocated accumulations, then against allocated accumulations, and lastly against the developers' "dowry".

Mr Justice Norris………………………………………………………….….12 February 2009