Haycock v Cooper and Rans

• Jurisdiction: Bermuda
• Judgment Date: 05 July 2010
• Docket Number: Civil Jurisdiction 2009 No. 67
• Date: 05 July 2010
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Civil Jurisdiction 2009 No. 67

BETWEEN:

PATRICIA HAYCOCK AND GREGORY HAYCOCK (AS TRUSTEES OF THE BAYSIDE TRUST)

Plaintiffs

v

PETER NEWBOLD COOPER AND ROBERT RICHARD RANS (AS TRUSTEES OF THE NORWOOD BERMUDA TRUST)

Defendants

Mr N Hargun for the Plaintiffs

Mr S Froomkin, QC for the Defendants

The following cases were referred to in the judgment:

Investors Compensation Scheme Ltd v West Bromwich Building SocietyWLR [1988] 1 WLR 896

Bank of Credit and Commerce International SA v AliELR [2002] 1 AC 251

Attorney General of Belize v Belize Telecom LtdWLR [2009] 1 WLR 1988

Chartbrook Ltd v Persimmon Homes LtdELR [2009] 1 AC 1101

Crest Nicholson Residential (South) Ltd v McAllister [2002] EWHC 2443

Dobbs v LinfordELR [1953] 1 QB 48

Chamber Colliery Co Ltd v TwyerouldELR [1915] 1 Ch 268 (note)

Abstract:

Construction of conveyance - Restrictive covenant - Whether planning objection has estopped proceedings

JUDGMENT of GROUND, CJ

Introduction

1. This case concerns the interpretation of a conveyance of real estate, and in particular of a restrictive covenant contained therein. The real estate concerned is an historic dwelling-house, Norwood, which formed part of a large, waterside estate in Pembroke parish owned by the defendants as trustees for a Mr. Richard Aeschliman and his family. The estate was sub-divided, and the lot on which Norwood itself stood was conveyed to the plaintiffs, who hold it on trust for their daughter and son-in-law ('the Tafurs'), who now live in the house.

2. The conveyance between the parties is dated 23rd January 2006. The covenant in issue is to be found in paragraph 6 of the Sixth Schedule ('Clause 6'1), and is one given by the vendor in favour of the plaintiff purchasers. By it the vendor covenants:

"Not to construct any new buildings on the Retained Land except for a dwelling house and2 ancillary buildings of a residential nature and ensure that any new dwelling house constructed on the retained land shall be of a traditional Bermudian design and construction which shall not materially detract from the visual prominence or amenity of the existing dwelling house on the Property shown on the Plan and marked "Norwood" and its ancillary buildings."

3. The Retained Land (being the remainder of the original estate not conveyed to the purchasers) was divided into three lots numbered 1, 3 and 43. There was an existing dwelling, 'Norwood Cottage,' on Lot 1; another dwelling, 'Norwood Boat House,' on Lot 3 ('the Boathouse'); and Lot 4 was vacant and not built upon. Mr. Aeschliman, the

beneficiary under the defendant trust, lived in Norwood Cottage, on Lot 1. However, at some point he determined to extend the Boathouse to provide a home for himself and his wife. When this became known to the purchasers of Norwood they opposed it, and objected to the planning application. The Planning Board refused planning permission, but on appeal to the Minister the appeal was allowed and approval for the construction given. The purchasers then lodged an appeal to the Supreme Court against that decision, but abandoned it in favour of these proceedings.

4. The Statement of Claim seeks declarations as to the meaning and effect of Clause 6, and damages for its breach. The declarations sought are in the following terms:

"1. A declaration that the covenant contained in Clause 6 of the Sixth Schedule to the Deed of Conveyance between the Defendants and the Plaintiff dated 23 January 2006, whereby the Defendants undertook "not to construct any new building on the Retained Land" is binding on the Defendants, their successors in title and agents (including Norwood Limited) accordingly, binds Lot 3 on the plan attached to the Conveyance.

2. A declaration that the proposed development by the Defendants' agents (Norwood Limited) by way of additions to the Boathouse on Lot 3, as approved in principle on appeal by the Minister of the Environment, is in breach of the covenant contained in Clause 6 of the Sixth Schedule against the construction of any new buildings on the Retained Land.

3. Further and in the alternative, a declaration that the proposed development on Lot 3 is in breach of the covenant in Clause 6 of the Sixth Schedule in that it materially detracts from the visual prominence or amenity of the property known as "Norwood" on Lot 2."

5. In the event, the claim for damages was not pursued. The damages claimed had been the legal costs sustained in respect of the planning objection. Mr. Hargun in closing accepted that the question of damages would not arise until there was a breach of the covenant by reason of actual construction.

6. The Defence raised issues as to the proper construction of the conveyance, to which I will return below. It also alleged that the plaintiffs were estopped from now bringing these proceedings as they had elected to make a planning objection instead. There was also a counterclaim for rectification of the conveyance to accord with the defendants' construction. The plea of estoppel and the claim for rectification were addressed in the evidence, and were maintained until the close of the defence case. At that point Mr. Froomkin formally abandoned them on the basis that the Originating Motion seeking to appeal the Minister's decision did not go to judgment, and that the evidence did not disclose a mutual mistake sufficient to support rectification. Mr. Hargun, in his closing speech sought the costs of those issues in any event, arguing that most of the evidence went to the question of rectification, and that he estimated that two thirds of the preparation and court time and been spent on those two issues alone. In the event, that does not arise, as I find for the plaintiffs, but I indicate in case the matter goes further that, had I found for the defendants on the construction issue, I would nevertheless have thought that this was a proper case for a split costs order and awarded the plaintiffs their costs of those two issues in any event, and I would have accepted Mr. Hargun's attribution of the time and expense devoted to them.

7. Mr. Hargun also made it clear in closing that it had never been the plaintiffs' case that any representations made by the defendants' real estate agents had been embodied in the contract or become a contractual term. He said that the evidence addressing any such representations was directed to the question of rectification, and that he accepted the "entire agreement" clause in the conveyance. I consider that that is made clear by the wording of paragraph 2 of Mrs. Tafur's witness statement, and I do not therefore need to address the law on that further.

The Law

8. As to the correct approach to the construction of a conveyance, or any other document, both sides accept the five principles set out by Lord Hoffman in Investors Compensation Scheme Ltd. v West Bromwich Building SocietyWLR[1998] 1 WLR 896 at 913:

"(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax

(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had."

9. Those principles were further qualified by Lord Hoffman himself in Bank of Credit and Commerce International SA v AliELR[2002] 1 AC 251 at [39], in the following terms:

"I should in passing say that when, in Investors Compensation Scheme Ltd v West Bromwich Building SocietyWLR[1998] 1 WLR 896, 913, I said that the admissible background included 'absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man', I did not think it necessary to emphasise that I meant anything which a reasonable man would have regarded as relevant. I was merely saying that there is no conceptual limit to what...