Landlord and tenant – Restrictive covenant – Enforcement – Claimant wishing to develop land – Defendant owner of adjoining property refusing approval of plans and specifications for redevelopment of site under restrictive covenants – High Court declaring consent unreasonably withheld – Court of Appeal allowing appeal – Case remitted to High Court to determine whether on facts refusal on aesthetics, loss of trees and temporary loss of amenity grounds was reasonable – Claim dismissed
The defendant was the owner of the freehold of 89 Holland Park, London W11 (89HP), a large detached Victorian building divided into flats forming the end of a row of such buildings. The claimant was the freehold owner of an irregular quadrilaterally shaped site immediately to the south of 89HP. The claimant, as covenantor under covenants contained in clauses 2(b) and 3 of a deed made between the predecessors in title of the claimant and defendant in 1968, sought declarations to the effect that the defendant as covenantee had unreasonably refused its approval of her plans drawings or specifications for the redevelopment of the site under both covenants.
Clause 2(b) of the 1968 deed provided that no applications for planning permission should be made without the adjoining owner’s approval of plans and drawings. Clause 3 provided that no work was to be commenced before definitive plans, drawings and specifications of the proposed buildings had been approved.
In 2019, the court held that the defendant’s refusal of consent on the grounds of aesthetics, damage to trees and temporary loss of amenity during construction was unreasonable since they did not affect the defendant’s property rights and thus could not be relied on; and the refusal on structural grounds was unreasonable in fact. The defendant’s counterclaim to recover sums in respect of the cost of considering the claimant’s applications was dismissed: [2019] EGLR 39.
The defendant’s appeal to the Court of Appeal was allowed: [2020] EGLR 28. The matter was remitted to the High Court to determine whether in fact the defendant’s refusal on aesthetics grounds, loss of trees and temporary loss of amenity was reasonable.
Held: The claim was dismissed.
(1) The legal onus of establishing that the defendant’s reasons for refusing permission were unreasonable rested on the claimant. What was or was not reasonable was in every case a question of fact and degree, to be assessed at the date when the relevant consent was sought. The reasonableness concept had to be given a broad common-sense meaning tested by asking whether a notional hypothetically reasonable person in the position of the defendant might have arrived at the conclusion under challenge. A qualification to the effect that consent was not unreasonably to be withheld did not have the consequence that the court could, at the invitation of the covenantor, simply substitute its judgment as to what was reasonable for that of the covenantee. All the proviso meant was that refusal of approval would be unreasonable if the court was satisfied that no reasonable covenantee would have refused approval in the circumstances: International Drilling Fluids Ltd v Investments (Uxbridge) Ltd [1986] 1 EGLR 39, Tollbench Ltd v Plymouth City Council (1988) 55 P&CR 194 and Sequent Nominees Ltd (formerly Rotrust Nominees Ltd) v Hautford Ltd [2019] UKSC 47; [2020] AC 28 followed. Hayes v Willoughby [2013] UKSC 17; [2013] 1 WLR 935 considered.
(2) Generally, the purpose of covenants such as the present was to protect the covenantee from the subservient tenement being used in a way that was undesirable from its point of view. Whilst the purpose of the covenants was to protect property interests, those interests were not limited to adverse effects on the capital or rental value of the property but extended to the amenity value of the right to enjoy the property in question. Whilst a landlord usually needed only to consider his own relevant interests, it would be unreasonable for a covenantee to refuse consent for the purpose of achieving a collateral purpose. There might be cases where there was such a disproportion between the benefit to the landlord and the detriment to the tenant if the landlord withheld his consent that it was unreasonable for the landlord to refuse consent: International Drilling, Mount Eden Land Ltd v Straudley Investments Ltd (1996) 74 P & CR 306, Sargeant v Macepark (Whittlebury) Ltd [2004] EWHC 1333 (Ch), Sequent Nominees Ltd, and Hicks v 89 Holland Park (Management) Ltd [2020] EGLR 28 followed.
(3) Where reliance had been placed on grounds, some of which were unreasonable and some reasonable, if the reasonable grounds were ones on which consent would in fact have been refused even if the unreasonable grounds had not been put forward, the refusal would be reasonable; but if the unreasonable ground was the most important reason for refusal, with the other grounds being makeweights, then the refusal would be unreasonable and where an outright refusal was said to be reasonable by reference to a factor or circumstance that could have been neutralised by a condition, generally the refusal would be unreasonable: No 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2018] EWCA Civ 250; [2018] PLSCS 34; [2018] 1 WLR 568 followed.
(4) The question of reasonableness in this case was to be considered against the background that the purpose of the 1968 deed was to facilitate development of the site not to impede it. The claimant had conceded that there were potentially alternative designs for the entrance pavilion that were likely to obtain planning permission. Further, notwithstanding her plans for construction over the whole site, development would be possible, even if it respected the rear building line of the Victorian houses. Consequently, the defendant’s objection would not have the effect of sterilising the site. In the light of those concessions, a reasonable decision maker in the position of the defendant was entitled to refuse permission for the claimant’s proposed design on aesthetics grounds.
The potential damage to the trees was at best incidental because some trees that did not provide amenity value would not be affected, if construction was forward of the rear building line. The evidence did not support the contention that the loss of amenity and disruption, apart from that caused by construction behind the rear building line, were reasonable grounds for objection. However, given the finding on the aesthetics issues, the claimant had failed to show that the defendant had been unreasonable in its objection to the plans.
Philip Rainey QC and Mark Sefton QC (instructed by Mishcon de Reya) appeared for the claimant; John McGhee QC and James Hanham (instructed by Gowling WLG (UK)) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read a transcript of Hicks v 89 Holland Park (Management) Ltd
