In the recent case of Pethick the Upper Tribunal of the Lands Chamber modified a restrictive covenant to allow the building of a further property on land which was subject to a covenant limiting the number to just one house.

The Applicants sought to discharge at a restrictive covenant relying on grounds (a), (aa) and (c) of section 84(1) Law of Property Act 1925.  There was correspondence between the parties and the neighbouring beneficiary owners but only one of those submitted an Objection Notice to the Tribunal, but even that was subsequently withdrawn. The Tribunal proceeded to modify the covenant in this case, and published a decision for the benefit of all involved so as to provide clarity.

The case focused on whether the restriction was obsolete (s84(1) a) and whether injury would be caused (s84(1) c) by  the erection of a further house. The Tribunal found that a further property would have little if any effect on the land benefiting from the covenant.

Background

As recorded at paragraph 10 of the judgment, the Applicant said that the covenants applied equally to numbers 11 and 17 and that houses had been built in the gardens of both of those properties, including a tall three-story house and a two-story house. At paragraph 11, the proposed property subject of the application had been in set within the contours of the existing gardens to reduce its dominance when viewed in elevation and to maintain uninterrupted views of neighbouring properties.

The result of those additional buildings was that there were now 5 properties on land where the restriction would have only allowed 3. One neighbour had received £3,000 to agree to discharge/release the covenant in respect of their additional building.

The Decision

In reaching the decision, the Tribunal member (PD McCrea FRICS) found that as the respective levels of the applicant land and surrounding land were sufficiently different, the construction of a new house would not have any substantial effect on the covenant holders. However, they were not persuaded that ground (aa) had been made out, and there was no evidence as to whether the covenant secured to the beneficiaries a ‘practical benefit of substantial value or advantage’.

The Tribunal member held that the application under ground (a) had some substance and that the pattern of planning consent and development either side of the application land demonstrated the character of the immediate neighbourhood had indeed changed to the extent that the purpose of the covenants (which was to maintain the status quo) could no longer be fully achieved. The covenant was to that end obsolete.

Similarly under ground (c), absent evidence from the Objectors coupled with the Tribunal member’s site inspection, it was held that no injury would be caused to those surrounding the application land. A limited modification of the covenant was permitted to allow for the building of an additional property as per the planning consent.

Comment

What is interesting about this case is that, despite there being no objectors when the matter came to trial, the Tribunal did not completely discharge the covenant (as sought by the Applicants) but modified it to provide for the proposed construction of one more house, and in accordance with the planning permission obtained. This is also to perhaps limit the change becoming the "thin end of the wedge" had the covenant been discharged completely, and possibly resulting in multiple properties being developed later.

This case, although not adding substantially to the interpretation of the statutory limbs on which one can apply to the Upper Tribunal, is further evidence that it can be beneficial to acquire land capable of development with planning permissions, and that a restrictive covenant will not necessarily stand in the way of such development (and associated profit).

Case: Pethick (unopposed) (2019) UK UT 276 (LC)

This article was written by Toby Walker, Dispute Resolution Partner at Allan Janes. Toby has developed an expertise in negotiating and litigating the discharge and modification of restrictive covenants. He deals with clients seeking to uphold covenants, as well as helping people challenging them. Toby’s details can be accessed here..