Restrictive covenants – Discharge or modification – Holiday bungalow on estate – Restrictive covenant prohibiting occupation during restricted periods amounting to 74 days per year – Application to discharge covenant – Section 84(1) of Law of Property Act 1925 – Whether restriction securing practical benefits of substantial value or advantage – Whether discharge would represent “thin end of the wedge” – Appeal dismissed
The appellant owned a chalet-style holiday bungalow on an estate on the Isle of Wight. A restrictive covenant affecting the property limited its use to leisure purpose and prohibited its occupation during two “restricted periods”, one spanning mid-November to mid-December and another running from January to mid-February of each year, amounting to 74 days in total. That restriction accorded with the terms of the planning permission for the estate.
In March 2012, the local planning authority granted a lawful use certificate to the appellant, under section 191 of the Town and Country Planning Act 1990, permitting continuous use all year round. The certificate was granted on the basis that such use had become immune from enforcement action, having continued for a period of at least 10 years.
The appellant applied to have the restrictive covenant discharged or modified, under section 84(1) of the Law of Property Act 1925, to reflect that situation by permitting year-round use. He argued, by reference to the grounds in section 84(1)(a), (aa) and (c) respectively, that the restriction was obsolete, that it impeded a reasonable use of the property while securing no practical benefits of substantial value or advantage to the persons who were entitled to its benefit, and that its discharge or modification would not injure those persons.
The respondent, as the manager of the estate, objected to the application with the support of other bungalow owners. It did not object to daytime use of the bungalow during the restricted periods but it argued that night-time occupation should continue to be prohibited in order to preserve the character of the site as providing second-home, leisure-based accommodation.
The Upper Tribunal (UT) accepted the respondent’s arguments and acceded to its suggestion of modifying the covenant so as to prohibit occupation between 5pm and 10am during the restricted periods: see [2015] UKUT 82 (LC); [2015] PLSCS 80.
The appellant appealed. He contended that the UT had erred in considering that the discharge of the covenant would represent the “thin edge of the wedge”, risking a change in the character of the estate, since the planning position was such that the character of the estate could be protected from all but a very few bungalow owners.
Held: The appeal was dismissed.
The appellant had lost in the UT principally on the ground that he had not satisfied one of the requirements of section 84(1)(aa) and (1A) of the 1925 Act, namely that by impeding the user proposed by the appellant the covenant did not secure to the beneficiaries of the covenant “any practical benefit of substantial value or advantage”. It had reached that conclusion because it considered that the appellant’s application was the “thin edge of the wedge” and that the discharge of the covenant would therefore deprive the beneficiaries of a practical benefit of substantial value.
There was no doubt that the “thin edge of the wedge” argument could, in principle, lead to that result in an appropriate case. The UT would deal with each application for discharge of a covenant on its own. The fact that a covenant was discharged in one case, even within the same building scheme, did not mean that it would be discharged in the next. However, if an order for discharge were made in one case, it would alter the environment in which the application was made in the next case, even though it might not initially do so to any material degree.
Applications fell to be determined on their facts and merits and an appeal court would exercise caution in reviewing the reasons given by the UT, both because the UT was a specialist tribunal with a wealth of experience in such matters and because its reasons were, in some cases, not pure inferences of fact but rather the evaluation of a number of different facts, involving the exercise of judgment as well as the making of inferences.
In the instant case, the UT had been entitled to dismiss the appellant’s application by reference to the “thin end of the wedge” point. It was not necessarily the case that applications to discharge the covenant would be generally allowable only in a small number of cases where the bungalow owner had obtained a lawful use certificate. There was no authority to effect that the UT could never exercise its powers where there was a breach of planning law or of the covenant sought to be modified.
Further, the UT had been looking to the future and had clearly found that there was a practical benefit or advantage in being able to enforce the covenant against those who might otherwise not comply with the planning conditions or who became concerned that the character of the site was changing and sold to a person who was willing to acquire a bungalow on an estate where some people were using their bungalows as their principal homes. There was witness evidence from which the UT could draw those inferences. The UT also had an evidential basis for holding that the planning authority were unlikely to be of any real help to the respondent in enforcing the covenant. There was further evidence of harm flowing from the legal costs of any application to enforce the covenant, and additionally evidence from several witnesses that the existing roads were not adequate for the increased use that would result if there were significantly more permanent residents. Accordingly, there were no grounds for interfering with the UT’s conclusion: McMorris v Brown [1999] 1 AC 142 and Shephard v Turner [2006] EWCA Civ 8; [2006] 2 P&CR 611; [2006] 2 EGLR 73 considered.
Stephen Cottle (instructed by South West Law, of Bristol) appeared for the appellant; Stephen Jones (instructed by Scott Bailey LLP, of Lymington) appeared for the respondent.
Sally Dobson, barrister
Click here to read a transcript of Stafford-Flowers v Linstone Chine Management Co Ltd.
