Property law reports

Rentcharge: ValidityRentcharge - validity - rentcharge permitting respondent to recover all expenditure incurred in maintenance or management of industrial estate - judge holding rentcharge valid and appellant liable thereunder - whether rentcharge for benefit of land charged - whether limited to reasonable payments - section 2(3), (4) and (5) of the Rentcharges Act 1977 - appeal dismissedOrchard Trading Estate Management Ltd v Johnson Security Ltd; Court of Appeal (Lords Justice Gibson and Mummery); 26 March 2002

The respondent owned and managed the common parts of an industrial estate in Toddington, Gloucestershire.

The appellant was the freehold owner of one of the units on the estate.

A rentcharge created by deed, purporting to be a valid estate rentcharge, entitled the respondent to recover from the freeholders rates and service expenditure, the latter being defined as 'all...

expenditure incurred by [the respondent] in or about the maintenance and proper or convenient management of the estate'.

By virtue of section 2(3)(c) of the Rentcharges Act 1977, estate rentcharges were an exception to the prohibition on the creation of new rentcharges.

An estate rentcharge was defined in section 2(4) as one created for the purpose of, among other things: '...

meeting...

the cost of the performance...

of covenants for the provision of services, the carrying out of maintenance and repairs...

or the making of any payment...

for the benefit of the land affected by the rentcharge.' Section 2(5) provided that a rentcharge securing payments for those purposes was not an estate rentcharge unless the payments were reasonable.

In proceedings by the respondent to recover certain sums under the rentcharge, the judge tried a preliminary issue as to the validity of the rentcharge.

The appellant contended that it was void because it failed to comply with section 2(4)(b) and 2(5), respectively, since rates in respect of the common parts were not payments for the benefit of the land charged; and the definition of service expenditure in the rentcharge did not limit the respondent to recovering reasonable sums.

The judge held that section 2(4) and (5) were satisfied, after finding that: it was for the benefit of the individual owners on the estate to have any liability for rates for the common parts discharged out of a fund to which all contributed, so that there was no interruption to the common services; and since the purpose of the service expenditure provisions was to meet 100%, but no more than 100%, of the expenditure under the respondent's covenants, then the payments had to be reasonable in relation to those covenants.

He accordingly struck out the appellant's defence and gave judgment for the respondent.

The appellant appealed.

Held: The appeal was dismissed.

The common parts of the estate had been transferred to the respondent to enable it, as the management company, to perform its obligations for the benefit of the units.

Rates, were they to be charged, would be part of the cost of the respondent holding the common parts for that purpose.

It followed that the payment of rates was for the benefit of the units and their individual owners, and fell within section 2(4)(b).

A rentcharge did not have to be expressly limited by a requirement of reasonableness in order to satisfy section 2(5).

Since the rentcharge imposed in the instant case was a variable one, measured and limited by the respondent's expenditure in carrying out its covenants, it was difficult to see how it could be said to be unreasonable in relation to those covenants.

Anthony Radevsky and Charles Harpum (instructed by Bretherton Price Elgoods, Cheltenham) for the appellant; Paul Morgan QC and Edward Cousins (instructed by Mishcon de Reya) for the respondent.

Town and Country planning: planning permissionResidential development - unitary development plan - claimant providing further education from a number of sites - planning permission sought for use of site for residential development - adjacent football club making alternative proposal for use of site as social club - strong likelihood of club acquiring site - inspector refusing application - whether inspector's decision taking into account all material considerations - section 288 of the Town and Country Planning Act 1990

Stroud College v Secretary of State for Transport, Local Government and the Regions; Queen's Bench Division: Administrative Court (Mr Justice Harrison); 25 March 2002The claimant was a body corporate under the Further and Higher Education Act 1992, providing further education from its main campus, two annexes and a number of outreach centres.

It wished to develop the site of one of the annexes for housing in order to use the sale proceeds to enhance other college facilities.

Therefore, it applied to the local planning authority for outline permission for residential use of the site.

Planning officers recommended approval of the application, but it was refused by the planning committee on the ground that the proposed development would result in the loss of a potential community or recreational use.

This was a reference, among other things, to the potential loss of amenity for the adjacent football club, which had obtained planning permission for development of the site for sport and leisure use and associated car parking.

The claimant appealed to the secretary of state, whose planning inspector recommended refusal of the application.

She found that: the appeal site was the only place into which the football club could expand while remaining on its existing site; the social club attached to the ground was vital to the provision of community, social and recreational facilities in the area; redevelopment of the site would mean that no part of it would be available for use by the club; and, because the club had already obtained planning permission, there was a strong likelihood that it would be in a position to use the site.

The claimant applied under section 288 of the Town and Country Planning Act 1990 to quash that decision on the basis that the inspector had been wrong to find that there was a strong likelihood that the club would acquire the site.

The claimant had not accepted the club's offer, and if its own planning application were unsuccessful, it would have to review its plans for the site.

Both points had been raised before the inspector, and her failure to deal with them constituted a failure to deal with a material consideration.

The decision was consequently flawed.

Held: The claim was allowed.

The inspector had failed to deal with a material consideration.

The likelihood of the club being able to acquire the appeal site, whether the club's offer would be accepted and, if not, what the claimant would choose to do with the site, were all clearly material considerations in deciding whether the club would be able to develop the site.

The inspector had not expressly dealt with any of those points, and the claimant was entitled to know how the inspector had reached her conclusions.

Peter Wadsley (instructed by Eversheds, Cardiff) for the claimant; Nathalie Lieven (instructed by the Treasury Solicitor) for the defendant.