Restrictive covenant – Discharge or modification – Covenant restricting use of site to garden land in connection with adjoining property – Applicant building new house on site in breach of covenant – Applicant applying to discharge or modify covenant – Whether covenant obsolete or securing practical benefits of substantial value or advantage – Application dismissed
The local planning authority granted the applicant planning permission to build a single house on the land at 9 Buttercup Drive, Wymondham, Norfolk, which was a broadly rectangular flat plot measuring approximately 44.4m x 26.25m. The new house was located in the rear part of the plot adjacent to the eastern boundary with a detached garage between the house and the western boundary.
The house was occupied by G and his family. G was a director of the applicant company which was the registered owner. The objectors lived at 41 and 39 Osprey Crescent, Wymondham respectively and the land upon which their houses were built had the benefit of the covenant.
The applicant applied to discharge a restrictive covenant which burdened the land and restricted its use to garden land. The application for discharge of the covenant was made under grounds under section 84(1)(a) (changes in character of neighbourhood), (aa) (restriction impeding reasonable user of land) and (c) (persons entitled to the benefit of the restriction not injured by proposed discharge or modification) of the Law of Property Act 1925.
Where condition (aa) was relied on, the tribunal might discharge or modify the restriction if it was satisfied that, in impeding the suggested use, the restriction either secured “no practical benefits of substantial value or advantage” to the person with the benefit of the restriction or was contrary to the public interest: section 84(1A).
Held: The application was dismissed.
(1) To succeed on ground (a), the defendant had to show that there had been such a complete change in the character of the neighbourhood that there was no longer any value left in the covenants: Chatsworth Estates Ltd v Fewell [1931] 1 Ch 224.
When the covenant was imposed, the application land was on the periphery of Wymondham adjacent to open farmland. The purpose of the restriction was likely to have been to preserve the boundary between the developed area and the open farmland. The application land was now completely encircled by housing developments. Taken together, that development essentially constituted a whole new district and extended the boundary of the built part of Wymondham. The boundary between developed and open land had been relocated and, to the extent that it was intended to preserve the original boundary, the covenant had become obsolete. Ground (a) was made out.
(2) A proper evaluation of ground (aa) was framed by a series of questions: (i) whether the proposed user was reasonable; (ii) whether the covenant impeded that user; (iii) whether impeding the proposed user secured practical benefits to the objector; and (iv) if so, whether those benefits were of substantial value or advantage: Re Bass Ltd’s Application (1973) 26 P&CR 156 applied.
In this case, planning permission had been granted to use the application land for a new house and none of the objectors had advanced a reason why that use was not reasonable. It was self-evident that the covenant impeded the development of the application land for residential purposes. The fact that the covenant had not yet been enforced and the new house had been built in breach did not alter the effect of the covenant.
The objectors had experienced a loss of the open aspect and privacy that they previously enjoyed. It was clear that they felt the loss of privacy very keenly and it had affected the enjoyment of their home. There was an effect on amenity and value, but it was not substantial. Similarly, the practical benefits that the covenant conferred were not of substantial value or advantage to any of the objectors. It followed that the tribunal had jurisdiction to modify the covenant in favour of the applicant on ground (aa).
Following that conclusion, the objectors would be injured by discharging or modifying the covenant and ground (c) was not satisfied.
(3) The applicant’s conduct was relevant in deciding whether the tribunal should exercise its discretion to discharge or modify the covenant. The lack of a witness statement from anyone at the applicant company was a notable omission and hindered an examination of its motives. It was likely that, as an experienced developer in receipt of legal advice, the applicant was aware of the covenant.
In determining whether an adverse inference might be drawn from the absence of a witness, so far as possible, tribunals should be free to draw, or decline to draw, inferences from the facts of the case using their common sense. Whether any positive significance should be attached to the fact that a person had not given evidence depended entirely on the context and particular circumstances.
Relevant considerations would naturally include such interrelated matters as: whether the witness was available to give evidence; what relevant evidence it was reasonable to expect that witness to have given; other relevant evidence on which the witness could potentially have given relevant evidence; and the significance of those points in the context of the case as a whole: Royal Mail Group Ltd v Efobi [2021] UKSC 33 and Ahuja Investments Ltd v Victorygame Ltd [2021] EWHC 2382 (Ch); [2021] PLSCS 154 considered.
(4) The applicant was a well-resourced developer with access to legal advice. It was for the applicant to explain why they acted as they did and to provide evidence which persuaded the tribunal that their conduct was not cynical because, for example, they proceeded in ignorance of the existence of the covenant, or under a genuine misconception about its effect. There was no such evidence here: Re Trustees of the Green Masjid and Madrasah [2013] UKUT 355 (LC); [2013] PLSCS 243 and Millgate Developments Ltd v Alexander Devine Children’s Cancer Trust [2020] UKSC 45; [2021] EGLR 1; [2020] WLR 4783 (SC) considered.
The applicant had failed to adhere to an obvious process to discharge or modify the restrictive covenant. It chose not to adduce evidence about why it failed to take the proper course. The inference was that it deliberately went ahead with the development without seeking agreement from those with the benefit of the covenant or making an application to the tribunal. The applicant’s “build first and apply later” approach could be properly characterised as cynical. Therefore, the tribunal would decline to discharge or modify the covenant to sanction the development.
Amanda Eilledge (instructed by Cozens-Hardy LLP, of Norwich) appeared for the applicant; the objectors appeared in person.
Eileen O’Grady, barrister
Click here to read a transcript of Fosse Urban Projects Ltd v Whyte and others
