Restrictive covenants: Modification or discharge of covenants under Section 84 of the Law of Property Act 1925

Modification or discharge of covenants under Section 84 of the Law of Property Act 1925 to allow the applicant to make a single storey rear extension and loft conversion that would otherwise breach the covenants.

Case name, reference and Bailii Link:

Doherty & Anor v Paskhin [2023] UKUT 196 (LC) 

Summary 

In Doherty & Anor v Paskhin [2023] UKUT 196 (LC) an application was made to the Tribunal to discharge or modify a restrictive covenant under Section 84 of the Law of Property Act 1925 (“Section 84”).

The covenants prevented the applicant from being able to exercise their development rights to carry out their plans of a single storey extension to the rear, and a loft conversion with rear dormer roof extension.

The Tribunal found that ground (aa) and ground (c) had been satisfied. The Tribunal determined that for the former, they have discretion to modify the restriction which impedes a reasonable use of the Property and does not secure any practical benefit. The Tribunal determined in relation to the latter, the proposed modification will not injure those persons entitled to the benefit of the restriction. 

Facts

The applicants own the freehold of 4 Kerfield Place, London, SE5 8SX (“the Property”). The applicant wished to exercise their permitted development rights to erect a single storey extension to the rear and a loft conversion with rear dormer roof extension.

The applicants showed their immediate neighbours architectural drawings of the proposals. The neighbours were in support of the proposals, save for Mr and Mrs Pashkin of 5 Kerfield Place, the adjoining property. 

The applicants proposed a deed of mutual release to the Pashkins who agreed to consider a limited release subject to payment of compensation. They also requested a party wall award. A party wall award was made 26 September 2022 which the Pashkins did not challenge, but stated that if work commenced, they would seek an injunction because of the restriction.

The relevant covenants are from the 1984 transfer which provide the following: 

•  “5. AND IT IS HEREBY EXPRESSLY DECLARED by the Council and by the Purchaser that it is their intention and the Purchaser purchases upon the express understanding that each transferee of a lot on the Estate is to have the benefit of the restrictions conditions and stipulations binding on all other lots forming part of the Estate whether such lots are sold by the Council to transferees before or after the date of the Transfer.
• 6. THE Purchaser hereby covenants with the Council and all other persons claiming under it as purchasers of any part of the land comprised in the title above mentioned and with the object and intent of binding the land hereby transferred into whosoever hands the same may come and for the benefit of the land comprised in the title above mentioned other than the premises that he the purchaser and his successors in title the owners and occupiers for the time being of the Premises (and who are included in the expression “the Purchaser”) will at all times hereafter observe and perform the restrictions conditions and stipulations set out in the Second Schedule hereto”.

The relevant restriction in the Second Schedule provides that: 

• “4. The exterior appearance of the buildings walls fences and other erections now on the premises shall not hereafter be altered and no additional buildings walls fences or other erections shall hereafter be constructed or maintained on the premises”.

The applicant sought to modify or discharge the covenants to enable them to carry out their development under Section 84 of the Law of Property Act 1925. 

Issues

The question for the Tribunal was whether grounds (a), (aa), (b) and (c) applied in deciding whether to discharge or modify the restriction.

In reaching its decision, the Tribunal considered the following submissions made by the applicant:

1. The restriction is obsolete under Section 84 ground (a) because there had been a gradual change to the character of the neighbourhood of the estate since the period when the restriction was imposed;
2. Under ground (aa), the proposed uses are reasonable and the restrictions impede those uses, impeding the proposed uses secures practical benefits of substantial value or advantage, and whether money would be an adequate compensation for loss or disadvantage caused by modification;
3. Under ground (b) the objector, by utilising and benefitting from his own conservatory extension, had behaved as though the covenant was discharged or modified;
4. Under (c) discharging or modifying the restriction will not injure persons entitled to the benefit of the restriction.

First instance (where relevant)

In relation to Section 84, ground (a):

• The Tribunal were not satisfied that the changes in the character of the neighbourhood were sufficient enough to be deemed obsolete. The Tribunal decided that the purpose of the restriction in maintaining the general appearance of the estate was still relevant. 
• The Tribunal concluded that the application on ground (a) failed. 

In relation to Section 84, ground (b):

• The Tribunal were not satisfied that this ground had been made out, the objector’s agreement cannot be inferred from his ownership of a property which breaches the restriction. His initial willingness to agree subject to payment did not suffice to agreement.

In relation to Section 84(1A), ground (aa):

• The Tribunal were satisfied that the proposed extension and loft conversion is impeded by the restriction. The proposed uses are reasonable.
• The Tribunal were also satisfied that there is no evidence of a demand for modifications to suggest a modification for the Property would be likely to lead to many more applications.
• The Tribunal did not accept that the restriction secures the practical benefit of structural protection to the objector, because there was no evidence that it was intended to do so but the Tribunal were satisfied that the indemnity provisions of the 1996 Act were enhanced by the applicants’ warrant.
• The restriction does not secure any practical benefits or value advantage to the objector.
• The Tribunal were satisfied that ground (aa) had been satisfied and determined that they have discretion to modify the restriction which impedes a reasonable use of the Property and does not secure any practical benefits. 

In relation to section 84, ground (c):

• This ground is also made out because the proposed modification will not injure those persons entitled to benefit of the restriction. 

This article was originally published to Property Law in October 2023.