Neutral Citation Number: [2013] EWHC 1954 (Ch)
Case No: 3BM30026
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

Birmingham Civil Justice Centre
Bull Street, Birmingham B4 6DS

Date: 16/07/2013

Before :

HHJ DAVID COOKE
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Between :

	British Malleable Iron Company Ltd 	Claimant	
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	Revelan (IOM) Ltd (1)
Revelan Properties (IOM) Ltd (2)	
Defendants	

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David Stockill (instructed by SGH Martineau LLP) for the Claimant 
Martin Hutchings QC (instructed by DLA Piper UK LLP) for the Defendants 

Hearing dates: 11 June 2013 
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Judgment

HHJ David Cooke: 
1.	The defendants apply for summary judgment on the whole of the claim against them on the basis that the claimant has no reasonable prospect of success if the matter were to go to trial and there is no other compelling reason to allow it to do so. That claim is for a declaration as to the construction of a right of way over Vernon Road, Halesowen which is a private road owned by the claimant and forms the only vehicular access to an industrial estate called Acorn Park, of which the defendants own the freehold. The claimant alleges that use made by CES (UK) Ltd, a tenant of the defendants by virtue of a lease date 6 February 2013, is outside the purposes permitted on the true construction of the deed of grant of the right of way and/or excessive in any event, and seeks an injunction to restrain that use, and damages. There are factual disputes as to the extent of that use and the exact nature of CES's business, and also as to the factual matrix against which the language of the deed of grant is to be construed, so that the defendants must satisfy me that the claim is bound to fail even if these matters are taken at the strongest position in favour of the claimant that may reasonably be established at trial on its evidence and pleaded case.
2.	Vernon Rd is in an old industrial area of Halesowen, but has residential housing nearby. The defendants' right of way is given by a Deed of Grant ("the Grant") dated 3 April 2009 (bundle 1/ tab 12/p6), superseding an earlier deed dated 23 July 1971 ("the 1971 Deed") in favour of the defendants' predecessors in title, GE Bissell & Co Ltd. Prior to 2009 what is now Acorn Park was a factory site and Vernon Rd was apparently a badly made up track with a potholed surface. The Grant was agreed in the context of a planning application made by the defendants to redevelop the Acorn Park site into 12 units for sale or letting, which involved creation of a new access via Vernon Rd. The commercial deal between the parties involved the defendant making up the surface of Vernon Rd to a proper standard for access to the new estate and the installation of security gates across the road which would be closed (to put the matter neutrally) outside business hours but remotely controlled by a security company so that access could be obtained by occupiers of Acorn Park and various other premises bordering Vernon Rd authorised by the claimant.
3.	The material terms of the Grant (in which the claimant was referred to as "the Owner" and the defendants as "the Grantee") were as follows:
i)	the rights granted ("the Rights") were set out in schedule 3, including:
“... the right for the Grantee and its successors in title and those authorised by it or them in common with the Owner and other persons having the same right to ... pass with or without vehicles over and along [Vernon Road] to and from the public highway known as New John Street at all times to gain access to and egress from [Acorn Park]”
ii)	Clause 2.2(c) provided that the rights were granted:
“ only for so long as [Acorn Park] is used for the purposes of industrial units or for such other purpose as the Owner shall consent to[,] such consent not be unreasonably withheld where the proposed use will not result in an increase in traffic above that which would be produced where [Acorn Park] is used for the purposes permitted by the Planning Permission ”
iii)	Schedule 4 set out covenants given by the Grantee, including the obligation to carry out "the Required Improvements" and:
“4. Not to cause any nuisance or disturbance to the Owner or occupiers of [Vernon Road], or of any neighbouring land, or to any other person entitled to the Rights in common with the Grantee…
9.  Keep the Gates closed (other than for access and egress) between the hours of 18.00-06.30 Monday-Friday (inclusive) and at all times on Saturdays, Sundays and public bank holidays (such hours and days being subject to change at any time by the Owner upon written notice to the Grantee) 
10.  Not allow [Vernon Road] to be used by (1) commercial vehicles of more than 44 tonnes laden (2) tracked vehicles of any weight or (3) cranes of any weight without the prior written consent of the Owner such consent not to be unreasonably withheld or delayed.  ”
iv)	The "Required Improvements " were defined as:
“ 1.  Creating a new access from [Vernon Road] in compliance with planning permission number PO6/1191… as applicable at the date hereof ("the Planning Permission")
2.  Installing new fully functional electronically operated Darfen cantilever sliding security gates between the points marked A and B on the Plan which shall include two separate intercoms to remote operators for each of the Owner and Grantee and security cameras…” [these being the "Gates"]
v)	Clause 6 contained an indemnity as follows:
“ the Grantee covenants with the Owner on behalf of itself and its successors in title for the benefit of  [Vernon Road] to keep the Owner indemnified at all times from and against any Losses suffered by the Owner in the exercise of the Rights which shall for the avoidance of doubt include any Losses suffered by the Owner as a result of any breach of the provisions of the Planning Permission.  ”
vi)	By clause 14 any rights the defendants previously had over Vernon Road pursuant to the 1971 Deed were extinguished.  That deed had provided for a right of way (Tab 19) in favour of what was referred to as "the second property".  That was defined by reference to a plan which is not included in the bundle, but I assume that it included all or at least part of what is now Acorn Park.  The terms of the right of way were expressed very widely and without any restriction as to the use to which the grantee's land was put as follows:
“... at all times hereafter by day or night to pass and repass over and upon Vernon Road aforesaid … with or without vehicles of any description for all purposes in connection with the use and enjoyment of the second property but not for any other purpose whatsoever.  ”
4.	The essence of the present dispute is whether the use that CES is making of the unit leased to it is or is not "use for the purposes of an industrial unit" as referred to in clause 2.2(c) of the Grant.  If not, the claimant says that such use is unauthorised and liable to be restrained.  Mr Stockill confirmed on instructions that it is not his client's case that if the use is outside the purpose envisaged by clause 2.2(c) the effect of that clause is to terminate the right of way entirely.
5.	Mr Hutchings made the point that insofar as the relief sought by way of declaration, the court will not normally make a declaration unless all the persons potentially interested in the outcome are either before the court or have had the opportunity to appear.  Such persons clearly include CES, and yet despite the point being flagged up at a previous hearing the claimant has taken no steps to join CES.  It seems to me also that any other occupier of Acorn Park is also potentially interested since he too would have a right of way over Vernon Road derived from the defendants' rights.  Arguably, the occupiers of other properties with concurrent rights of way over Vernon Road derived from the claimant may also be interested in the outcome since it is the claimant's case that the excessive and/or unauthorised use by CES interferes with their own use of the road and the security of their properties.  I accept that point, but it seems to me that it is not sufficient on its own to dispose of the matter on summary judgment since it is a procedural matter that could in principle be resolved before any eventual trial.
6.	Mr Hutchings further submitted that in so far as damages and an injunction are sought against the defendants, there is no allegation of unauthorised use or conduct amounting to a nuisance by the defendants themselves, and that in so far as complaint is made of use by CES, the defendants are only the landlords of CES and cannot be held responsible for unauthorised or excessive use of the right of way by their tenant unless they have expressly or impliedly authorised that use, and that on the evidence the defendants have done all they can to ensure that CES comply with the terms of the Grant, as properly construed.  That too is not a basis for resolving the claim summarily since it seems to me to raise issues of fact which cannot be determined at this stage, in that the claimant disputes the evidence as to what the defendants have done in relation to CES's activities.
7.	The pleaded case is that "CES operates, or apparently operates, a wholesale and/or retail, warehousing and supply business involving the delivery of car parts at short notice to local garages and other retailers and also for sale on the premises to members of the general public.  It operates six days a week including a Saturday."  Such use "necessitates almost continuous use in and out of its premises (and therefore through the gates) by vans on a very regular almost continual basis.  During such times the gates are more open than closed (and opening and closing very frequently)" (Amended Particulars of Claim paras 10-11).  The pleading sets out the construction that the claimant says should be put upon the Grant by cross-reference to the terms of the planning permission and various categories of use prescribed for the purposes of planning law.  At paragraph 13(2)(c) "the claimant contends that the proper construction of the use permitted and envisaged by clause 2.2 of the 2009 deed was in effect class B2 (even though the clause does not actually import the language and notions of planning law)."  Paragraph 13(3) pleads that "in the alternative… the claimant will contend that permitted use it is in accordance with 'the Planning Permission' " and that the terms of the Planning Permission permit use within class B2, alternatively B1,B2 and B8, but that the use made by the defendants and CES is neither "for the purposes of an industrial unit" nor within the terms of the planning permission.  Paragraph 14 pleads that CES uses its unit for retail sale to the general public on a basis which is more than minimal or "tantamount to retail (a motor vehicle accessories shop) with the sale and supply not of wholesale bulk deliveries to retailers but of individual items or delivery of small quantities to individual garage owners, mechanics and other customers."
8.	Paragraph 15 pleads that the use made by the defendants and CES constitutes a nuisance and disturbance to the claimant and its neighbours.  Paragraph 16 pleads that the covenant in paragraph 9 of schedule 4 means that between the hours of 6 PM and 6:30 AM on weekdays the gates may only be opened "for access and egress (meaning a fairly infrequent use by the staff and management of the various commercial concerns within the gate)" and that on Saturdays, Sundays and bank holidays the gates must be kept closed at all times, alternatively only opened for infrequent access and egress as so specified.  
9.	In support of the allegation that CES's use is not as an industrial unit, and particularly that it is effectively a retail operation, the Claimant points to evidence that on Saturday mornings a notice is placed behind the gates stating that CES is open and inviting customers to phone a number which is answered by its counter staff, who then give the customer a password to use over the intercom to the security company, which will open the gates. There are photographs of notices stipulating that CES is only open to trade customers. The claimant says that the security procedures are not sufficient to limit access, since a log of vehicle movements on Saturdays shows a considerable number of entries and exits by CES vans making and returning from deliveries, and that on occasions private cars have entered and left, sometimes without using the intercom because the gates were open to allow a CES van in or out. Further, there are four witness statements from individuals who went to the counter (not all on Saturdays) and were sold individual small items such as a can of oil that were obviously for personal use and not trade purchases.
10.	It is common ground that the court must in construing the grant seek to identify the meaning objectively conveyed by the deed of grant to a reasonable person having the background knowledge available to the parties at the time of its execution, in accordance with the five principles set out by Lord Hoffman in ICS v West Bromwich Building Society [1998] 1WLR 896. But Mr Hutchings submits that an important qualification to that approach in relation to the extent to which evidence extrinsic to the terms of the document itself should be considered has been made by the decision of the Court of Appeal in Cherry Tree Investments Ltd v Landmain Ltd [2012] EWCA Civ 736. In that case the majority (Lewison and Longmore LJJ) held that in the case of a public document, particularly one to be entered on a register and relied on by persons as dealing with property, extrinsic evidence not readily available to such third parties, while in principle admissible, should not be allowed to affect the conclusion as to the meaning the public document would convey to the reasonable reader. Lewison LJ said this:
“128 There is, in fact, no conflict between this approach and the principles established in Investors Compensation Scheme. For the question is: what weight would the reasonable person with all the background knowledge of the parties attribute to background material which did not appear on the face of the charge itself? All this was elegantly explained by Campbell JA in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 (§ 151): 

"However, the way those principles come to be applied to a particular contract can be affected by aspects of the contract such as whether it is assignable, whether it will endure for a longer time rather than a shorter time, and whether the provision that is in question is one to which indefeasibility attaches by virtue of the contract being embodied in an instrument that is registered on a Torrens title register. All these are matters that would be taken into account by the reasonable person seeking to understand what the words of the document conveyed. That is because the reasonable person seeking to understand what the words convey would understand that the meaning of the words of the document does not change with time or with the identity of the person who happens to be seeking to understand the document. That reasonable person would therefore understand that the sort of background knowledge that is able to be used as an aid to construction, has to be background knowledge that is accessible to all the people who it is reasonably foreseeable might, in the future, need to construe the document."
129. In Attorney General of Belize v Belize Telecom Ltd Lord Hoffmann himself said of an earlier decision of the Court of Appeal discussing a company's articles of association: 

"Because the articles are required to be registered, addressed to anyone who wishes to inspect them, the admissible background for the purposes of construction must be limited to what any reader would reasonably be supposed to know. It cannot include extrinsic facts which were known only to some of the people involved in the formation of the company."
130. In my judgment this is the key to the present case. The reasonable reader's background knowledge would, of course, include the knowledge that the charge would be registered in a publicly accessible register upon which third parties might be expected to rely. In other words a publicly registered document is addressed to anyone who wishes to inspect it. His knowledge would include the knowledge that in so far as documents or copy documents were retained by the registrar they were to be taken as containing all material terms, and that a person inspecting the register could not call for originals. The reasonable reader would also understand that the parties had a choice about what they put into the public domain and what they kept private. He would conclude that matters which the parties chose to keep private should not influence the parts of the bargain that they chose to make public. There is, in my judgment, a real difference between allowing the physical features of the land in question to influence the interpretation of a transfer or conveyance (which we do) and allowing the terms of collateral documents to do the same (which we should not). Land is (almost) invariably registered with general boundaries only, so the register is not conclusive about the precise boundaries of what is transferred. Moreover, physical features are, after all, capable of being seen by anyone contemplating dealing with the land and who takes the trouble to inspect. But a third party contemplating dealing with the land has no access to collateral documents.”
11.	The defendant's title to Acorn Park is registered, the deed of grant is referred to on the register and a copy of it is filed. The rights it grants are in my view squarely within the principles expressed in Cherry Tree, since third parties (most obviously lessees and purchasers of units on Acorn Park) will reasonably expect to rely on the Land Registry to ascertain the extent of the rights from which they will benefit.
12.	Turning to the facts of the present case, it is clearly not the case that para 9 of Sch 4 requires the gates to be kept closed "at all times on Saturdays Sundays and public bank holidays"- the words "(other than for access and egress)" apply to those times just as they do to "between the hours of 18.00 -06.30 Monday-Friday (inclusive)". Nor can there be any basis for construing "access and egress" to be limited to "fairly infrequent use by staff and management" unless that is a necessary implication from the fact that the right may only be used for purposes of "industrial units", since such a construction would otherwise be clearly contrary to the express terms in which the right is granted in para 1 of Schedule 3 to "pass with or without vehicles…at all times…". The same applies to the allegation of excessive use; there is no quantitative limit on use set out in the deed (in contrast to the express prohibition on use by certain types of vehicle) and use may only be found to be excessive if it amounts to use for a purpose outside the terms of the grant; see Gale on easements para 9-64ff.
13.	What limitations then are implied by the requirement to use the road for access to "industrial units", and is there any real prospect that the claimant would succeed at trial in establishing a breach of any such limitation? Mr Stockill contends that use as "industrial units" means use for an industrial process of some kind, and only such use, so that any element of sale of goods from the premises, a fortiori retail sale, is outside the permitted purposes. It is accepted that other units on Acorn Park are used for purposes that include sale of goods, but these he submits are merely tolerated by the claimant as they do not have the impact on other properties that CES's business does. He points to the concern about traffic levels that may be inferred from the fact that clause 2(c) which restricts use to "industrial units" provides that consent "will not be unreasonably withheld to use for other purposes provided that such use will not result in an increase in traffic above that which would be produced where [Acorn Park] is used for the purposes permitted by the Planning Permission". That however seems to me to take the matter no further; it implies nothing about the level of traffic to be expected from use as industrial units, nor whether such use means the same as use "for the purposes permitted by the Planning Permission".
14.	The planning permission (1/12/31) grants permission for the erection of "11 Industrial Units" but does not in terms state a limitation on the use to which they may be put, save that none of them may be used primarily for office use as defined in class B1(a) of the Use Classes Order, and unit 11 (the nearest to residential housing) must only be used for classes B1(b), B1(c) or B8. The conditions attached impose restrictions on hours of access by "goods vehicles" and operation of machinery, to protect the amenity of residents, and state that the reason for approval is to encourage redevelopment for an industrial use within a Local Employment Area and Industrial Renewal Area. Complaints to the planning authority that CES's use is outside the planning permission have produced the opinion of the authority that the permission is intended for uses within classes B1, B2 and B8, and that the activities of CES are not considered to be outside such classes, any retail sales being minor and ancillary to the main use of storage and distribution which falls within B8. The claimant's own planning expert has produced a report assuming also that use for B1,B2 and B8 is permitted.
15.	Class B1 is described in the Schedule to the Use Classes Order as "Business" but includes office use and use for any "industrial process" that can be carried on with out without detriment to the amenity of residential property. Class B2 is "General Industrial" ie carrying on any other "industrial process" (apart from certain specialist industrial classes designated B3-7) and B8 is headed "Storage and Distribution". "Industrial Process" is defined as, broadly, a process for making or working on any article. Other planning classes are class A (shops, professional services, restaurants and the like) class C (hotels, residential institutions and houses) and class D (non residential institutions such as museums, and leisure facilities).
16.	Mr Hutchings was content to accept that "industrial units" required a use within the planning permission, but pointed out that where a permission does not specify a restriction on use of a development, it is deemed to permit any use for which the development is designed. The units are plainly of a type suitable for storage and distribution as much as for manufacture or similar industrial process, supporting the interpretation of the local authority and the claimant's own planning expert.
17.	Mr Stockill was constrained to argue that the term "industrial units" is more narrow than the terms of the planning permission, and limited to use for an "industrial process", so excluding storage and distribution, though he retreated from the contention that it was limited to the heavier industrial processes that fall within class B2. In my judgment, that cannot be correct. He points to extrinsic evidence of the terms of the previous deed, the historical industrial nature of the area and the concerns as to security lying behind the covenants dealing with installation and operation of the gates. It is said that the previous deed had no restriction as to use of the site, and that the introduction of a reference to "industrial units" must have shown an intention to be more restrictive. In my view, this is the sort of material that Cherry Tree rules out of consideration as affecting the meaning of the present deed, since a person inspecting the register would be entitled to assume that the previous deed had been superseded, and would not expect to investigate the history of the area to form a view as to what the registered document meant. Even if that is not right, the change in language is of no assistance to the claimant, since the fact of introduction of a restriction without more says nothing about the extent of that restriction. Nor does the fact that a concern over security is apparent on the face of the deed; one may infer that it was expected that access and egress would be less frequent during night time hours and on weekends etc because the gates were not to be left open between visits,  but how much less frequent? There is no direct restriction, and it is not obvious that the sort of broad restriction implied by a condition as to purpose must have been intended to draw the line so as to prevent, say, a distribution business rather than use for a hotel. As for the history of the area, even if it is right that the previous use of premises on and near the site had been for manufacturing industry, given the changes in the economy over the past century or more that could not in my judgment mean that parties referring to "industrial units" must have contemplated that a similar use would be perpetuated.
18.	It would in my view be permissible to have regard to the terms of the planning permission and the general nature of the units constructed on the site under it, since the planning permission is a publically available document and expressly referred to in the deed, and the units themselves are physical features of the land. Both can therefore be inspected by anyone dealing with it. Neither however suggests any reason to adopt a restrictive interpretation of what is an "industrial unit"; the units themselves are clearly suitable for a distribution business of the sort carried on by CES and there is nothing in the terms of the planning permission to prevent that use, at least unless on the facts it amounts to retail selling. That being so, such use is permitted by the planning permission in the absence of an express restriction. Although reference was made to the stated reason for grant of planning permission as being to support industrial renewal and a Local Employment Area, there is no evidence that this is limited to particular types of what may broadly be called "industry", and employment is as much advanced by distribution jobs as by manufacturing jobs.
19.	In my judgment, apart from the argument over retail use, nothing in the allegations as to the use made by CES is such as to make that use other than as an industrial unit. That term is not a term of art, a reasonable member of the public would consider it as being a broad one and, while it could readily be distinguished from uses such as residential, hotels, shops and offices, it does not in my view indicate the sort of more precise or nuanced distinctions adopted in the various sub-classes of class B of the Use Classes Order, in particular between industrial processing on the one hand and storage and distribution on the other. Nor does it indicate an intention to prevent  storage, delivery or sale of goods per se; every industrial business must sell its goods, must deliver them from the place where they are made and stored, and receive customers and potential customers on the premises to buy. 
20.	No doubt the term suggests something about the general construction and appearance of the property- industrial units are generally relatively plain constructions with easy access for vehicles and an open interior that can be divided or laid out to suit the occupier. I assume the units at Acorn Park fit this description; the complaint is as to the use, not the nature of the building. But use for storage and distribution is not at all inconsistent with such a  type of building, indeed it is in my judgment well within the sort of activity members of the public would expect to see carried on from industrial units. I do not consider that premises mainly used for storage and distribution but from which some sales are made to trade customers thereby cease to be an industrial unit, even if part is laid out as a trade counter with or without some goods on display.  Again, such ancillary sales are a common feature of industrial units. The position may be different if such use becomes predominant, but there is nothing in the evidence to suggest that is the case here, for instance that sales made to customers collecting their own goods exceed those delivered by CES's vehicles. The assessment of the planning authority has been that it is incidental to the main purpose, and there is nothing in the allegations made, taken at their highest (as I must for the purpose of this application) to indicate that is wrong.
21.	I accept that in principle if the actual use were shown on the facts to be as a retail shop, that would be outside the permitted purpose. But the allegations go nowhere near as far, being only of isolated sales to customers who were not bona fide trade purchasers. One must look in the round at the use to which the premises are put; individual retail sales do not make them a shop any more than having a small number of desks and telephones in a factory makes it an office. There is no evidence of any alteration to the premises to lay them out as might be expected for a retail shop (eg with a display visible from outside), or of any advertising or promotion to retail customers.
22.	Mr Stockill submits that even if the use is for a permitted purpose, it may still be quantitatively excessive. He relied on Jelbert v Davis [1968] 1 WLR 589, in which a right had been granted in apparently unrestricted terms "for all purposes" to an agricultural property. When the use changed to a caravan park, it was held that the change of use itself could not be objected to. Lord Denning MR said that use could be excessive if it interfered with lawful use by others having the same right in common. There is nothing in this case however to indicate any use to such a degree that other rights holders are prevented or hindered in their own use of the road.
23.	Mr Stockill also cited Bee v Thompson [2009] EWCA Civ 1212 in which a right of way "for all purposes" was created over a narrow track beside a rural house leading to an area of land ("the Garth") at the rear which at the time was used for agriculture. The Court of Appeal upheld a finding that use for the purposes of access to three houses proposed to be built on the land would be excessive. Mummery LJ said "Mere change of the Garth by itself to residential use may not be unlawful, but the track must not be used excessively so as to interfere unreasonably or substantially with the rights of Mr and Mrs Bee to use the track or to enjoy the rest of their property."
24.	The land subject to the right is only the road itself, which is a separate title. It is said that the fact that the gates are relatively frequently used on Saturdays means that the security they afford neighbouring properties, which are owned by the claimant or other group companies or their tenants, is reduced and that this is particularly important to them since they or some of them have valuable stocks of metals on the premises. As well as entry by CES's vans and vehicles of its customers, it is possible for other vehicles to "tailgate" through, and once inside the gate they are not limited to going to CES's unit. It is not however said (and there is nothing to suggest that it could be) that CES is using the road and/or the gate other than in a manner reasonable and appropriate for the purposes of its own business.
25.	But in my judgment there is no real prospect that any such effect on security will be held to amount to an unreasonable or substantial interference with the enjoyment of the surrounding properties of the claimant. No doubt the security of a property is part of its reasonable enjoyment by its occupier. But if there is an effect on security of any opening the gates on a Saturday, that cannot itself be regarded as unreasonable interference with enjoyment of the claimant's land because such opening is permitted by the terms of the grant. Once it is accepted that customers and employees of CES may come and go on Saturdays for the purpose of its general business (and are not limited to a minimal number of openings) the security risk exists and it seems to me impossible to say that there is any point at which the risk that must be taken to have been accepted becomes unreasonable.
26.	Nor in my view can the matters complained of amount to a breach of the covenant against 'nuisance or disturbance' to neighbours. The fact that there are visitors to the claimant's premises on a Saturday does not interfere with the use that such neighbours make of their own properties, all of which are industrial, or disturb them in such use. The covenant does not amount to an obligation to preserve the security of neighbouring properties by cutting down on what would otherwise be legitimate use of the rights granted to the defendant. Since that right extends to use for a business of the type run by CES, and it is not suggested that (apart from the limitations argued for, which I have held do not exist) the use made is not reasonable for the purposes of that business, it follows that there can be no implied restriction on that use arising from the covenant.
27.	For these reasons there is no reasonable prospect that the claim will succeed, and there should be summary judgment for the defendant. I invite the parties to submit a draft order accordingly.