The owner of land burdened by restrictive covenants can apply to the Lands Chamber of the Upper Tribunal for the covenants to be modified or discharged on the ground – to paraphrase the provisions of section 84 of the Law of Property Act 1925 Act – that they are no longer useful.
Re Tate [2013] UKUT 0289 (LC) concerned a covenant that was imposed in 1980, which prevented the owners of agricultural land from taking advantage of planning permissions to build four new houses on the land. They relied on section 84(1)(aa) of the 1925 Act and claimed that the continued existence of the restriction would impede some reasonable use of their land for public or private purposes. However, to succeed on this ground, they also needed to satisfy the tribunal that the covenant did not secure any practical benefits of substantial value or advantage, or that it was contrary to the public interest, and that a monetary payment would adequately compensate the dominant landowner if the covenant were to be discharged.
The company that owned the dominant land, which formed part of the green belt, belonged to the Persimmon group of companies. It owned additional sites in the area and hoped to be able to make a planning application for residential and country park development on the dominant land in 2015.
The house builder accepted that the proposed new use was reasonable, but tried to persuade the tribunal that the new dwellings were likely to be occupied by as many as ten new potential objectors to its plans for all its sites. It claimed that the increase in the number of residents would also increase the demand on local infrastructure and services. It explained that section 106 payments are based on “trigger points”, as opposed to being calculated pro rata, and suggested that the additional residents could tip the balance and leave it with considerably more to pay. Finally, if the application were successful, the company suggested that compensation should be assessed by reference to most, if not all, of the resulting increase in the value of the servient land, in the sum of £250,000.
The tribunal was having none of it. It took the view that prospective buyers would make enquiries about the prospects of development in the vicinity before buying one of the new properties and could always look elsewhere, and dismissed the company’s arguments about its section 106 contributions on the ground that the impact of the four new houses would be negligible.
In the tribunal’s judgment, the only practical benefit of the restrictive covenant was that it enabled the company to demand a monetary payment for allowing the development to go ahead. However, this was not a benefit that fell within section 84(1)(aa): Stockport BC v Alwiyah Developments (1986) 52 P & CR 278. Consequently, the restriction could be discharged in return for a payment to compensate the company for any effect on the price paid for the burdened land when the restriction was first imposed. The tribunal assessed the amount payable at £3,000 and penalised the company in costs, even though parties usually bear their own costs where an application under section 84 succeeds, because its claim for compensation had been unrealistic and unreasonable.
Allyson Colby
Property Law Consultant
