Can a restrictive covenant become obsolete?

The Upper Tribunal (Lands Chamber) has affirmed in Savage v 60 Kent Road (Maintenance) Ltd [2021] UKUT 102 (LC), [2021] All ER (D) 84 (Apr) that restrictive covenants affecting a burdened title can become obsolete when the original beneficiaries no longer exist.  The case involved proposed building works to the burdened land so will be of interest to developers whose sites are burdened by historic restrictive covenants.

The applicants owned the freehold of a bungalow known as 60a Kent Road. A conveyance of 1961 (“the 1961 Conveyance”) imposed several restrictive covenants for the benefit of 60 Kent Road, owned by the respondent.  One stated the owner of 60a Kent Road was not to build on the property, nor make any alterations to the external appearance of the bungalow, without submitting plans and specifications to the vendor’s surveyor.  Any building works or alterations must be in accordance with such plans and specifications (as approved by the vendor’s surveyor) and the vendor’s surveyor’s fee of two pounds and two shillings must be paid for their approval.  The vendor was three individuals who had all subsequently passed away. 

When the respondent objected to the applicant’s proposed works at 60a Kent Road the applicant argued that the above restrictive covenant should be discharged because:

1. unlike an absolute prohibition on building works this restrictive covenant allowed for building works and alterations, as long as the plans were approved by the vendor’s surveyor (along with payment of the fee); and
2. the restrictive covenant didn’t provide that the approval of the plans and specifications be undertaken by the surveyors of the vendor’s successors in title or the current occupiers of 60 Kent Road (other restrictive covenants in the 1961 Conveyance did refer to the vendor’s successors and/or current occupiers).

The Tribunal determined in the applicant’s favour. Confirming that if the party with the power of approval are no longer in existence then the restrictive covenant automatically lapses.  To determine otherwise would mean the restrictive covenant was absolute, which was not the case here.  The restrictive covenant didn’t specifically refer to successors in title and didn’t allow for the fee of two pounds and two shillings to be increased in line with inflation.  All of this pointed to the restrictive covenant being time limited.

Developers looking to refurbish or redevelop sites will be heartened by this case. The case reaffirms the landmark decision in Crest Nicholson Residential (South) Ltd v McAllister, 1 April 2004, (Court of Appeal, Civil Division), whereby the Court of Appeal held land benefitting from a restrictive covenant must be clearly defined and easily ascertainable. Where such approval is impossible to obtain statute can be used to discharge obsolete restrictive covenants so there can be a way through even the trickiest covenant.  Whilst it is always sensible to obtain indemnity insurance against historic restrictive covenants, depending on their nature, cases such as this one highlighting the reduced the risk of enforceability may lead to a reduction in insurance premiums, and confidence in implementing redevelopment plans.