Overlooking an error in the documentation
Author: Simon Meek and Michael Callaghan
Applies to: England and Wales
A court construes a property sale and purchase agreement to mean what the parties had intended to say, rather than what it actually said.
The case of Jones v Oven  EWHC 1647 (Ch) concerned a dispute between neighbours arising out of a complicated land acquisition arrangement in the past.
The (simplified) background to the dispute is that the Mr and Mrs Jones (whom we will call 'the farmers') sold part of their farmland to a residential developer ('the developer'). When the land was transferred, the farmers entered into restrictive covenants binding their remaining farmland that it would not be used in ways that would adversely affect the use and enjoyment of the development land for residential purposes. Another part of the deal was that a strip of land four metres wide would be transferred back to the farmers if a barn on the development land was demolished. Mr and Mrs Oven ('the Ovens') were successors in title to the developer as a result of buying one of the houses in the new development. As they had bought the house nearest to the farm, once the barn had been demolished, they became subject to the obligation to transfer the strip back to the farmers.
There was a complication however. At the time when the restrictive covenants had been imposed on the farmers' land for the benefit of the development land, the strip was still owned by the farmers and was therefore subject to the covenants. However, at a later stage the strip had been transferred to the developer. As a result, following the second transfer the strip ceased to be subject to the restrictive covenants because the rule of 'unity of seisin' applied: the developer owned both the land that was burdened by the covenants and the land that had the benefit of them, so the covenants ceased to exist.
The dispute concerned whether or not, when the strip was transferred back to the farmers, it should be subject to the restrictive covenants originally entered into by the farmers in relation to their retained land. Evidence showed that the farmers were keeping pigs on the strip alongside the Ovens' house, to which the Ovens naturally objected. The original intention had clearly been that there should be a strip four metres wide at the edge on the farmland that would be subject to the covenants not to cause a nuisance, but the agreement governing the transfer of the strip back to the farmers did not provide for the re-imposition of the covenants - because at the time of the second transfer, it seemed that no-one had spotted that the covenants would be extinguished by reason of unity of seisin.
The judge therefore had to consider carefully the construction of the original documentation and, separately, whether a term should be implied into that documentation that the strip would be transferred subject to covenants on similar terms to those originally given by the farmers.
Perhaps surprisingly, the judge concluded that the definition of the retained land in the original transfer was wide enough to include the strip if and when it was transferred back to the farmers. It was plain that the parties' intention was that land in the vicinity of the development land would not be used for purposes that would affect the use and enjoyment of the development land. Limiting the definition of retained land to just the land retained by the farmers after the second transfer (without the strip) would subvert that intention.
In addition, the judge said, that if he was wrong in relation to the construction of 'retained land', he would be prepared to imply a term in the documentation that the strip would be transferred subject to the same covenants in order to give business efficacy to the transaction. It was inconceivable, he said, that the parties would not have included the provision had they realised that the strip would otherwise be transferred free of the covenants.
Accordingly, the judge ordered that the transfer of the strip from the Ovens to the farmers should contain the restrictive covenants.
The Ovens were fortunate to be able to persuade the judge to read the documentation in the way he did. While it was clearly the intention of the parties that the strip should be subject to the covenants when it once again became owned by the farmers, this is not what the agreement between the parties provided. The role of the court is normally considered to be to interpret the agreement actually made between the parties, rather than the agreement that the parties apparently intended to make.
Jones v Oven  EWHC 1647 (Ch)
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.