In this latest blog of the restrictive covenant series, we look at the case of Walsh v Lester (2016). The case involved a restrictive covenant dispute concerning whether consent had been unreasonably withheld in the context of restrictions of building/construction works. The first instance Judge held the covenant was enforceable and consent was unreasonably withheld. The defendant then appealed the decision; this blog will focus on the Court of Appeals’ judgment.

Background

The property with the burden of the restrictive covenant was a piece of leasehold land known as 42 Glen Road, Craigavad, County Down. The lessor lived in a neighbouring property called Dunratho House.

42 Glen Road was advertised as a development plot before being bought by Walsh and subsequently full planning permission was granted for the construction of a dwelling house.

The restrictive covenant so far as relevant to this blog provided (Writer’s emphasis):

• Not to erect or build or permit on any part of the demised premises hatched blue on said map any dwelling house, building or other erection any part of which or the ridge height of which shall exceed 12 metres above the concrete footpath of the north west corner of the site shown on the map attached hereto or the height of the wall dividing the demised premises from the adjoining premises of the lessor whichever is the lesser height and not to do or permit to be done anything which shall obstruct the view of the sea from the residence known as "Dunratho."

• Not to erect or build or permit to be erected or built on the part of the demised premises hatched blue on the said map any building save for one dwelling house or bungalow with suitable garages and outhouses the plans, specifications and elevations of which are to be approved of previously by the lessor such approval not to be unreasonably withheld.

To summarise, the covenant prevented and claimant from building a house that would obstruct the view of the sea from the Dunratho house owned by Defendant. The covenant achieved this by imposing a 12 metre height restriction on any building to be built on the site of 42 Glen Road. The claimant required the Defendant’s approval of the specification and plans of the building before he could begin construction. Importantly, the clause expressly stated consent cannot be ‘unreasonably withheld’.

The Claimant presented to the Defendant the development plans and specifications for a dwelling house to be built on the plot. Despite these complying with the height restriction imposed by the covenant, the Defendant refused consent. The Claimant started legal proceedings on the basis that consent was unreasonably withheld.

Decision

The Court of Appeal affirmed the High Court’s decision that the covenant was enforceable and that the Defendant had unreasonably withheld consent.

There were three main issues the Court of Appeal considered; i) whether a ‘right to a view’ can be protected, ii) if so, what is the construction of the clause, and iii) was the Defendant unreasonably withholding consent?

The first two issues focus on whether the covenant is enforceable or not will receive no further comment here. The focus on this blog is the ‘reasonableness’ issue at number ‘iii’. The judgment cites a list of principles that have emerged from previous cases that are relevant to withholding consent in relation to restrictive covenants. The most relevant in this case are:

1. The legal test that should be applied is whether ‘no reasonable covenantee would have refused approval in the circumstances’*

2. Consent cannot be withheld for reasons that have nothing to do with the purposes of the covenant

3. Consent should relate to what is being protected and not for the purpose of increasing or enhancing the rights of the person

The consent was withheld due to the Defendant wanting a completely unobstructed view of the sea. The plans and specifications put forward by Walsh were compliant with the height restriction and as such the dwelling house would not obstruct the view of the sea. The purpose of the covenant was therefore fulfilled; to enable a dwelling house to be built while still protecting the benefitting land’s view of the sea. For the Defendant to claim a completely unobstructed view of the sea despite the building complying with the height restriction, would enhance their right beyond what was intended by the covenant.

Therefore it was upheld that no reasonable neighbour could refuse consent in these circumstances.

What if the covenant did not expressly provide for reasonableness?

In this case, the requirement for reasonableness was expressly reserved in the covenant. However, in the absence of this, it is possible to require reasonableness by implication. This is unlike a lease assignment where there is a statutory implied requirement for ‘reasonableness’ when giving consent**.

The Claimant in this case was fortunate in the drafting of the covenant leading to a consideration of reasonableness, rather than whether reasonableness was required at all. As you could imagine, if the Claimant had to convince the court that it was implied, it would have added a further layer of risk and complexity to the litigation as the party seeking to rely on it would have the burden of proving it to the court.

To decide if reasonableness is required by implication, the courts have made it clear that each case will turn on its own facts, and will focus on (the Arnold v Britton factors);

1. the wording of the covenant;

2. what the purpose of the covenant is;

3. what the proposed action is from the covenantor; and

4. whether the restriction is ‘specific’ or ‘general’.

To expand on point (d), it can be said where the consent relates to a ‘general’ matter – such as restriction of a particular trade being carried out at the property – there is less scope for reasonableness being implied. However, where consent is required for something ‘specific’ – such as plans for a building – business efficacy is to be given and reasonableness is more likely to be implied.

The team at Allan Janes are experienced in dealing with modifying, discharging or seeking to uphold covenants over land. For any enquiries contact Toby Walker by email or on on 01494 521301.

*This test was set out in Margerison v Bates (2008) EXCA 1211 Ch

** See s.19 Landlord and Tenant Act 1927