In this blog I take a look at an application to modify covenants preventing an increase to external dimensions of buildings and preventing use for business purposes. The application was successful in part. The building would be allowed, but there was insufficient evidence for the change to the restriction on business use. The case: Naidu v. Morton and others [2023] UKUT 00185 (LC)

The first time this case was before the Tribunal, the application was denied. I wrote about this in my blog on 30th January 2023 (link here) - Naidu v. Morton and others UTLC case number LC-2020-33. The Tribunal Judge left the door open to the Applicants, should they finally obtain planning permission and could then renew their application to the Tribunal for modification.

The previous decision – discretion not exercised in Applicants’ favour

In the first application, the Tribunal Judge concluded that the fact that the planning permission process gave rise to a number of controls for the neighbours, any adverse impact was mitigated, and the additional protection provided by the covenant, though important, but not a ‘substantial advantage’. Despite there being no substantial advantage to the covenantees, the Judge in her previous decision had declined to exercise discretion to do so.

Planning permission now granted

Planning permission for the side extension of their house was then granted on 16th September 2022. The Applicants, Mr and Mrs Naidu, then wrote to their neighbour, Mrs Morton. Mrs Morton and the other neighbours still had their concerns. A fresh application was made to the Tribunal on 25th November 2022 and the 3 neighbours objected as they had in the previous case.

The existing property

The subject property was a three-storey townhouse at the end of a stepped terrace of 3 similar but not identical houses within a spacious private development known as Beachcroft Manor. The ground floor accommodation of the property comprised a garage converted to a bedroom, an office with access to the garden and a WC. The first floor had a kitchen, dining room and a sitting room with a balcony overlooking the rear garden.

Proposed use

The proposed extension would provide a further bedroom, shower room and utility room on the ground floor, allowing the converted garage to become a second study/office. There were changes to the first and second floor also.

The Covenants

The restrictions in this case, by which the Applicant was bound was:

1. ‘not to increase the external dimensions of any approved building erected on the property’; and

2. ‘not to use the property for any business purposes’.

Further to the covenants, there was similar restrictions in a schedule to a transfer which required prior written consent of the vendor to make any alterations, and to use as a single private dwellinghouse and not a business.

Modification to permit business use?

On this second application, Mr Naidu explained to the Tribunal that he was a senior Geomechanics Specialist and his wife a software test analyst, both working for organisations that allow working from home. They wished to vary the restriction in the covenants preventing business use so as to be covered by their employers policies and allow for flexibility for future self-employment operating their own businesses.

Specifically, they sought modification to the covenant preventing business purposes, to ‘business purposes requiring planning permission’.

The objectors objected on the basis that the future intended business use was vague and therefore they could not, nor could the Tribunal, comment as to potential adverse impacts.

The Tribunal Judge at paragraph 34 held:

‘In this case the application is lacking any detail which might allow me to consider whether the statutory grounds are satisfied to modify the business restriction for a limited purpose. The application therefore fails. But the applicants are aware that the objectors make no objection to them continuing to work from home as they have been doing, whether for themselves or for an employer.’

Modification to permit development

In relation to the building restriction, the Tribunal member held that ground (aa) was made out, the covenant impeded reasonable use of the property, and did not secure to the persons entitled to the benefit of it any practical benefits of value or advantage. Discretion was exercised to modify the building restriction. The covenant was modified to permit the development under the specific planning permission reference.

Summary and conclusions

This decision underlines the importance of obtaining planning permission for a proposed development before applying to the Upper Tribunal Lands Chamber to modify or discharge a covenant. Although not having planning permission does not mean an application won’t be successful, the process provides checks and balances, and makes various findings - all of which might be useful to an applicant. Interestingly, in this case although the Tribunal declined to modify to permit business use (other than that requiring planning permission) the Tribunal Judge recorded that that working from home was not objected to.

Toby Walker and his team specialise in disputes over property, include applications to the UTLC. They act for both owners and developers as well as those seeking to uphold covenants in all stages from initial advice, negotiations, deeds of variation and litigation. Toby has written extensively on covenants and you may wish to check out here for an overview on covenants and what you may be able to do with them.