A less restrictive approach?
Developers facing the hurdle of a restrictive covenant can sometimes achieve relief by way of section 84 of the Law of Property Act 1925, which empowers the Upper Tribunal to modify or discharge a covenant in appropriate circumstances. A common basis for making the application is ground (aa), which is where the covenant impedes a reasonable user of land. In assessing the position, the Tribunal will consider whether the restriction secures any practical benefits of substantial value or advantage to the beneficiary or if the restriction is contrary to the public interest. Consideration also has to be given as to whether money is adequate compensation for the loss or disadvantage to the beneficiary as a result of the modification/discharge of the restriction.
The Tribunal’s application of these criteria usually makes for interesting reading. Recently, we have seen some decisions from the Tribunal where the hint of “Nimbyism” has been rejected and restrictions have been modified so as to allow fairly small developments to proceed. The developers in the two cases summarised below paid compensation of £50,000 and £65,000 in return for the modifications, in the context of property owned by the objectors worth around £2.25 - £2.6 million.
Dean Nicholas Lamble v (1) Vincenzo Buttaci (2) Giuseppina Buttaci  UKUT 175 (LC)
The applicant had been granted planning permission to construct a five-bedroom house on his green belt land, which was intended to replace the three-bedroom bungalow his family initially lived in. The applicant also had planning permission to construct an adjoining garage for the new house, as well as a summerhouse elsewhere on his land. However, the applicant’s land was subject to two restrictive covenants which restricted any development or alteration of existing buildings without the consent of the objectors. One 1971 restrictive covenant burdened the land on which the new house would be constructed, whilst a 1994 restrictive covenant burdened the land where the proposed garage and summerhouse would be. The objectors, a husband and wife, were the applicant’s neighbours and refused to give consent to all three of the applicant’s proposals. Therefore, the applicant applied for the modification of the covenants under ground (aa).
The Tribunal partially granted the application.
The Tribunal rejected the objectors’ suggestion that the covenants would not impede development if their refusal was reasonable. It found the grant of planning permission alone was insufficient to prove the applicant was a reasonable user of the land in accordance with s.84 of the LPA 1925. The Tribunal agreed with the objectors’ claim that the local planning authority had unintentionally given the applicant planning permission to build all three buildings. Given that this meant an intensifying of the built environment in a green belt area, the Tribunal concluded that a development, which included all three structures, did not represent a reasonable use of land.
However, the Tribunal concluded that the five-bedroom house and its adjoining garage was a reasonable use of land. The Tribunal found that permitting these two proposed developments would simply allow the applicant’s property to mirror other properties in the area. In addition, both developments would be largely concealed from the objectors’ view by vegetation. As such, the Tribunal modified the restrictive covenants to permit the proposed house and garage because the covenants secured insubstantial practical benefits to the objectors.
Nevertheless, the Tribunal declined to modify the restrictive covenants in reference to the proposed summerhouse. The Tribunal found the restrictive covenants conferred a substantial advantage for the objectors in this instance because the summerhouse would have been very visible from the objectors’ property if constructed, impeding their sense of relative seclusion.
In terms of compensation, the Tribunal found that the presence of the larger five-bedroom house could affect the value of the objectors’ property. If the objectors were to sell, a buyer might pay less for the property because the applicant’s five-bedroom house would be in view, peeking slightly over the vegetation concealing it. Therefore, the Tribunal concluded the objectors were entitled to £50,000 compensation from the applicant for the modification of the restrictive covenants.
Geall, Re Vine Cross  UKUT 154 (LC)
The applicant had been granted planning permission to convert her barn into a separate dwelling in 2015. The barn was situated at the southern part of the applicant’s 150m x 25m plot of land, which also contained her semi-detached cottage at the northern part. The applicant’s property shared a private driveway with two other properties, Cowden Hall Farm and Dill Hundred Cottage. The objectors reside in a large detached house called Cowden Hall, situated on Cowden Hall Farm, and they let out Dill Hundred Cottage for 40 weeks per year as a holiday residence.
The applicant was in poor health and wanted her son and daughter to move into her cottage, whilst the applicant herself would move into the converted barn. However, the bard was burdened by two relevant restrictive covenants contained within the 1987 land transfer between the applicant and the previous owners of Cowden Hall Farm. Covenant 6.1.1 restricted the applicant from any developments without the consent of the objectors. Covenant 6.1.4 restricted the applicant from using the barn for anything other than agricultural or horticultural purposes.
The applicant applied for the modification of the covenant 6.1.4 under ground (aa), and the Tribunal also considered the modification of covenant 6.1.1. The owners of Cowden Hall Farm (and Dill Hundred cottage) objected to the application.
The Tribunal found that the covenants secured some practical benefits to the objectors by preventing potential noise and light disturbance from the development and residential use of the barn, disruption from additional traffic in the private driveway, and security risks, all of which would undermine the general amenity and sense of seclusion of the objectors’ property.
However, the Tribunal concluded that residential use of the barn could not generate an amount of disturbance so substantial as to justify its restriction. Crucially, the barn is situated 150m away from the objectors’ residence. The applicants’ cottage was far closer to the objectors’ house and the objectors confirmed that they had not had cause to complain about noise levels from there.
The Tribunal considered the potential noise generated by family use of the converted barn and on the private driveway, but decided that the prevention of such noise could not be described as a practical benefit of substantial advantage, not least because it would be an irregular and localised noise source that would not affect the amenity of the objectors’ property. The prevention of construction was also considered to be an insubstantial practical benefit given that construction is short-term, especially in this instance as the applicant’s plans did not involve the construction of a new building.
In addition, the Tribunal found that the objectors were letting out Dill Hundred Cottage to up to eight people at once, and had done so for at least 40 weeks per year uninterrupted for the past 20 years. As such, the Tribunal concluded that the objectors had already voluntarily undermined their sense of seclusion and the general amenity of their property.
Therefore, taking all factors into account, the practical benefits to the objectors were not of substantial value of advantage. Accordingly, both covenants 6.1.4 and 6.1.1 were modified in order to permit the applicant’s barn conversion. The objectors suggested they were misled by the applicant previously and claimed she always intended to convert the barn. However, the Tribunal dismissed the suggestion of ulterior motives, considering the 16 year gap between when the applicant constructed the barn and when she decided to seek planning permission for its conversion to be too long for there to have been an ulterior motive.
In terms of compensation, the Tribunal found that the applicant’s residential use of the barn conversion might adversely affect the value of the objector’s property at Cowden Hall Farm. The Tribunal accepted that total seclusion was highly valued, although the objectors’ properties would not enjoy total seclusion even without the barn conversion. Nevertheless, if the objectors were to sell Cowden Hall Farm, prospective buyers might perceive the barn conversion to pose a bigger problem to the amenity of Cowden Hall Farm than it would be in reality. Therefore, the Tribunal concluded that the objectors were entitled to 2.5% of Cowden Hall Farm’s market value, namely £65,000.
Both of these cases offer interesting illustrations as to how the Tribunal may assess an application made on the basis of ground (aa) of section 84. Lamble v Buttaci also offers a salient reminder that obtaining planning permission alone is insufficient for the Tribunal to find the reasonableness of a development proposal. Indeed, it has been emphasised that Tribunals should make their own decisions regarding a development’s reasonableness, without placing unnecessary weight on the grant of planning permission.
Developers may also want to keep an eye out for the Court of Appeal’s decision in Millgate Developments Limited v Smith, where a developer succeeded at first instance in persuading the Tribunal to modify certain covenants in circumstances where it had already completed its housing development without regard to the covenants.
Please click here for the decision of the Supreme Court in this case, which was handed down in November 2020.
This article was written by Emma Humphreys. For more information please contact Emma on +44 (0)20 7203 5326 or firstname.lastname@example.org.