Question: neighbours requesting release of covenant
My neighbours have secured planning permission to build another house in their garden. I have the benefit of a restrictive covenant which provides that there should not be more than one house (with garage) on their plot. They have asked me to consent to their plans and tell me that they can apply to have the covenant released if I do not do so. The new house will not particularly affect my property but I am concerned about the potential for traffic disruption and noise while it is being built. What should I do?
Answer
Although the situation will depend on the details of the covenant and your concerns, it is possible that your neighbours might be able to secure the modification of the restrictive covenant. The best course is likely to be to try to reach an amicable agreement with them which addresses your key concerns and it may be possible for this to include a small element of financial compensation.
Explanation
Your neighbours may apply to the Upper Tribunal (Lands Chamber) under section 84(1)(aa) of the Law of Property Act 1925 (the “1925 Act”) for the discharge or modification of the restriction. This applies where a restriction impedes a reasonable user of land. Under section 84(1A) discharge or modification is permitted where: (a) the beneficiary of the restriction does not secure any practical benefits of substantial value or advantage from it; or (b) 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 discharge/modification of the restriction.
Re Perkins’ Application [2012] UKUT 300 (LC) gives guidance on how such an application might be treated. In deciding whether a covenant preventing the construction of a new house conferred a practical benefit of substantial advantage, the tribunal followed Shephard v Turner [2006] EWCA Civ 8; [2006] 2 EGLR 73 in finding that the primary consideration is the value of the covenant in “providing protection from the effects of ultimate use rather than from the short-term disturbance that is inherent in any construction project.”
This rule may be displaced by something specific in the covenant or facts that would justify giving special weight to disturbance during construction. However, the expert evidence in Re Perkins showed that any disturbance would be no greater than that from building a substantial extension to the applicants’ house.
In terms of the ultimate effects of the development, the tribunal found that overlooking from the new property would be extremely limited. It therefore held that the covenant did not secure a practical benefit of substantial advantage to the relevant owners and allowed the modification of the restriction. For the houses suffering overlooking, the tribunal awarded compensation payments of £1,000-£2,000.
Consequently, it is possible that you will be unable to prevent the development and seeking to reach an agreement with your neighbours to address your concerns is likely to be the best way forward.
Question: opposition as custodian of public interest
We own a disused warehouse that is subject to a restrictive covenant imposed by the local authority when it sold the land preventing its use for any other purpose. Our church wishes to use it as a place of worship, but the local authority is opposing an application to modify the covenant under section 84(1)(aa) of the 1925 Act because of concerns about parking in nearby roads. It says it is entitled to raise such concerns in its capacity as custodian of the public interest. Is that correct?
Answer
Unless the covenant was imposed as a planning obligation, the local authority can only rely on its interests as the owner of land benefiting from the covenant, and not the wider public interest, in seeking to uphold it.
Explanation
On an application for discharge or modification of a restrictive covenant under section 84(1)(aa) of the 1925 Act, the question of whether a restriction secures any practical benefits of substantial value to a covenantee in general falls to be considered by reference to the land of the covenantee for whose benefit the covenant was imposed. However, a covenantee may rely on wider public interest grounds in objecting to the discharge of a restriction, where it was imposed for the protection of such interests.
This typically arises:
● in the case of pre-1991 covenants imposed by a local planning authority as a condition of the grant of planning permission, or covenants imposed on a disposal of local housing authority land under section 609 of the Housing Act 1985: Re Martin’s application (1987) 53 P&CR 146; [1988] EGCS 74 and Re Willis’s application (1998) 76 P&CR 97; and
● in cases of covenants imposed by an estate owner on the sale of individual plots for the protection of the estate as a whole under a contractual scheme where it retains responsibility for enforcement of the same: Re Zenios [2011] EWCA Civ 1645.
It is important to understand the limits of this exception. In Re Trustees of the Green Masjid and Madrasah’s application [2013] UKUT 355 (LC); [2013] PLSCS 243, it was held that a local authority was not permitted to rely on objections to the discharge of a restriction based on its capacity as custodian of the public interest where the restriction was not imposed under any such statutory or contractual scheme, but rather just in its capacity as landowner for the benefit of its own neighbouring land.
In this case, if the authority is unable to show any practical benefit to its own land – as distinct from the wider neighbourhood – secured by the restriction, its opposition is likely to fail. Any concerns relating the impact of the user on local roads should more properly be addressed through the planning regime.
Emma Humphreys is a partner at Charles Russell Speechlys LLP and Edward Francis is a barrister at Enterprise Chambers
E-mail questions on any topic to egq&a@charlesrussell.co.uk and egq&a@enterprisechambers.com
