A lawyer writes

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A Lawyer Writes……

Thames Water Utilities Ltd -v- (1) Oxford City Council and (2) Oxford United Football Club Limited

On 31st July 1998, His Honour Judge Rich QC, gave judgement in the High Court of Justice (Chancery Division) in the above case. The spin that has subsequently come from the Club is apparently that the decision represents one less hurdle to be overcome before completion of the stadium at Minchery Farm.
This is an interesting theory, but not one to which the writer would immediately subscribe.

Wrap your head in a damp towel so that you can try to avoid a headache, and accept full apologies in advance for any tedious legal jargon (which will no doubt have crept in); see what you make of some slightly different spin on the decision.

The facts (set out in the judgement):
In 1986 Oxford City Council (‘OCC’), obtained outline (provisional) planning permission for certain parts of land around the Oxford built up area. OCC obtained planning permission to provide ‘recreational facilities’, of a public nature, on the land.

On 30th March 1993 part of the land was transferred to Thames Water Utilities (‘Thames’). Thames effectively swapped part of the land that it owned for land owned by Council. The notional figure, which was apparently put on the value of the land, was ?1.5 million.

At the time of this deal, Thames obtained a written promise in the transfer deed from OCC (a ‘restrictive covenant’), that OCC would not (until 28th September 2037), use one of the parcels of land it received in the deal, other than for highway or recreational purposes.

It will come as no surprise that this parcel of land that OCC had now received from Thames includes Minchery Farm.

Under section 237 of the Town and Country Planning Act 1990 (stay with me), the Council has power to ‘appropriate’ (compulsorily acquire) land for planning purposes if it considers that this will enhance the area. By virtue of this statutory gem, the Council has the power to allow building on any such appropriated land, even if there is (as in this case) a legal promise (restrictive covenant) attached to the land.

Of course the promise, (i.e. that the land will only be for recreational use) remains binding despite the acquisition of same by OCC.

As we know, in August 1996, OCC granted the Club a 125 year lease of Minchery Farm to operate and build a football stadium. At or about the same time, OCC also granted planning permission for the Club to build a 15,000 seat stadium together with a restaurant, supporters’ club, fitness centre and about 2,000 parking spaces. This prompted Thames to issue proceedings in the High Court seeking various orders and compensation for breach of the restrictive covenant.

As a preliminary issue, the Court was asked to decide whether or not:

  1. the building of the stadium was in breach of the restrictive covenant given in the 1993 deed; and
  2. if there was a breach of the restrictive covenant, whether this is permitted by the Town & Country Planning Act.
The Decision
The Court decided both of these issues in favour of Thames.The Court felt that building of the stadium was a breach of the promise to use the land for ‘recreational’ purposes. The Court felt that it was irrelevant that people using the stadium would, ‘… enjoy a recreational experience’ (clearly, the Judge must have already seen OUFC actually play).

The Court also decided that there was no defence (by virtue of the Town & Country Planning Act or previously decided cases) to the breach of the restrictive covenant.

Whilst both Club and Council will no doubt be gratified to know that they have added to the weight of 20th century English jurisprudence, the result is not exactly heartening. If the decision genuinely helps the Club move, one wonders why the Club and Council both decided to fight in Court (rather than simply agree that they were in breach of the covenant).

Issues:
1. The Club and the Council would normally have 28 days from the date of judgement (i.e. until approximately 27th August 1998) to decide whether or not to lodge an appeal to the Court of Appeal. An appeal appears unlikely.

It is improbable that the Court of Appeal would be prepared to hear the case for several months (and time is fast running out in terms of satisfying the demands imposed by the Taylor Report).

There is also the issue of costs. The report of judgement does not indicate what order the Judge made as to the costs of the hearing. However, the usual rule in litigation is that the loser must pay both sides’ costs. Presumably the Club and OCC will have to pay both their own costs, and the costs incurred by Thames in relation to the hearing (at a guess – ?100,000 in total).

2. If the case were to go to the Court of Appeal and the Club/OCC were to lose, then the costs payable would probably double.

3. In light of the decision (and assuming that OCC and Club do not appeal), Thames will be quite confident that they will be awarded damages from OCC and the Club. As a matter of commercial reality, negotiations should be under way with regard to the amount of such damages. Both sides would have to commission (expensive) expert reports from sales and land valuers. Broadly, the measure of damages is likely to be based upon the injury caused by breach of the restrictive covenant by both the OCC and the Club.

Allegedly, the Club has an agreement with OCC, that OCC will pay the first part of any damages, but that the bulk of the same must be paid by the Club.

If a negotiated settlement cannot be reached, then Thames will certainly press on with this matter and seek an early trial, at which the amount of damages would be quantified. Given that the relevant covenant lasts until September 28th 2037, it seems reasonable to conclude that those damages are likely to be extremely substantial.

It is difficult to see how the judgement in favour of Thames (which gives them the green light to obtain substantial damages – be this from the Club or OCC) removes an obstacle to completion of work on the stadium. Answers on a Winding-Up Petition please.A chilling thought is that, if Thames is not prepared to negotiate a deal, then they could insist on the case going to trial to decide the amount of compensation. Such a trial is likely to take months, incur OCC and the Club in further costs, and generally promote delay, confusion and anxiety.

No doubt the Club will be more than happy to explain their strategy at the next Open Meeting. Or perhaps not.

Howard Roberts