Application for modification of restrictive covenant fails on “worst case” scenario

An application to modify a restrictive covenant to permit premises to be used under a broad Class E planning use (including a café) was dismissed under ground (a), (aa) and (c) in the decision of James Farrell v. Hugh Garforth-Bles and Another [2025] UKUT 429 (LC). It was held that the covenant continued to secure practical benefits of substantial value to neighbouring properties by preserving their amenity (noise, fumes etc) and privacy and security.

Facts

The subject Property, located at 540 Fulham Palace Road, was adjacent a residential mansion block development, Bishop’s Mansions. The freehold owner/ management company and one long leaseholder of Bishop’s Mansions had the benefit of a restrictive covenant in a 1983 Transfer and objected to the application. 

The covenants restricted the ground floor of the Property to professional offices and the first floor to residential or professional offices and prohibited the use of the Property as a restaurant, snack bar and other specified uses. The applicant sought modification to allow all uses that fall within planning “Class E” except for those uses that he believed were necessary to protect the beneficiaries of the covenant (such as a club, betting shop, sex shop etc).  He also wanted the covenant to be modified to allow the limited daytime sale of non-alcoholic drinks and light food.  At the time of hearing the applicant said that he envisaged the Property being used as a coffee shop or “modest café”.

Before beginning the proceedings, the objectors offered to agree to a modification permitting only Class E(e) (medical/health services) but this was rejected. 

The Property had historically been used as an estate agency and recent efforts to let it under existing restrictions were unsuccessful. The Property sits in a largely residential area with some nearby commercial uses (including coffee shops) on a busy road. 

Issues

• Whether the covenants were obsolete under section 84(1)(a).
• Whether, under section 84(1)(aa), the covenants impeded a reasonable use (retail/café) and, if so, whether they secured practical benefits of substantial value (or were contrary to the public interest) and whether money would be adequate compensation.
• Whether, under section 84(1)(c), the proposed modification would cause no injury to the beneficiaries.

Decision

The application failed on ground (a) (obsolescence). Applying the approach in Adams’ Application (2018), the Tribunal identified the covenant’s purpose as ensuring the compatibility of the Property’s use with a neighbouring large-scale residential development, by ameliorating noise and disturbance. Nothing about the Property, the benefited land or the neighbouring area had changed to the extent that this purpose could no longer be satisfied.  The covenant therefore retained its utility and ground (a) was not made out.

On ground (aa), the Tribunal accepted that as the Property had a certificate of established use for retail use and that use was reasonable and the covenants impeded that use. However, impeding the proposed use did secure practical benefits to the objectors.   The gardens and outside space of Bishop’s Mansions were a popular and valued amenity for its residents and the juxtaposition of a commercial operation and these gardens was likely to cause a noticeable loss in amenity.  The Tribunal concluded that the rear garden of the Property would likely be used for seating purposes by a café operator causing noise from customers. The covenants also preserved privacy and security which would be compromised if café use was allowed, as it would introduce customers to an area where they cannot currently go.  The covenants therefore provided practical benefits of substantial value or advantage.  The Tribunal therefore lacked jurisdiction to modify under ground (aa). 

As the covenant provided two significant practical benefits to the residents of Bishop’s Mansions.  It prohibited activities that would generate noise and fumes and prevented uses that would result in a loss of privacy and security.  It followed that ground (c) also failed and the Tribunal did not have jurisdiction to grant the modification.

Comment

The Tribunal made the point that this application was unusual in that the proposed modification provided for a wide ranging and nebulous outcome.  This meant that the Tribunal had to reach its decision on a worst case (but realistic) scenario.  Usually, applications such as this are closely tied to the specific use or development for which planning permission has been granted.  

Originally published on Property Law UK.