Howard and others v Surana

Restrictive covenants – Modification – Building scheme – Section 84(1) of Law of Property Act 1925 – Application land designated as close with access to all residents – Restrictive covenants preventing development – Previous tribunal decision modifying covenant linked to planning permission granted to adjoining property owner – Applicants applying for further modification of restrictions – Whether appropriate for covenants to be modified – Applications granted The objector lived at 21 Icklingham Road, on the Fairmile Estate in Cobham, Surrey. The estate was laid out and made subject to schemes of mutual covenants by its original owner. Icklingham Road was a sub-estate with its own scheme of covenants. The objector had previously also owned two plots of land next door (the application land) which were affected by restrictive covenants. In 2016, the objector applied to the Upper Tribunal under section 84(1) of the Law of Property Act 1925 to have the restrictive covenants modified to permit residential development for two houses. The tribunal permitted modification, limited to a specific planning permission or any renewal thereof, but prohibiting access to the houses through an established front hedge: Re Surana’s Application [2016] UKUT 0368 (LC); [2016] PLSCS 251. The application land was subsequently sold to the applicants, who were building substantial houses on their respective plots. They wished to access the houses through the front hedge and to that end each applied to the tribunal for a further modification of the restrictions. The objector was the sole objector to the application on the plot adjacent to her house. The applicants accepted that the houses under construction were in breach of the restriction as authorised by Surana. The applications were brought under section 84(1)(aa) of the 1925 Act on the basis that the continued existence of the covenant would impede reasonable user of the land; and the restriction did not secure any practical benefits of substantial value or advantage (section 84(1A)). Held: The applications were granted. (1) In determining whether a restriction ought to be discharged or modified under ground (aa), the tribunal was required to take into account the statutory development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the area. It also had to have regard to the period at which and context in which the restriction was imposed and any other material circumstances. Section 84(1A) provided two alternative routes: (i) substantiality of value or advantage to the covenant holders; or (ii) impeding the user was contrary to the public interest. The public interest point was not pursued in the present case. In Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd [2020] UKSC 45; [2021] EGLR 1, the Supreme Court emphasised that the tribunal “shall have power” but was not obliged to exercise that power. The applicant first had to satisfy at least one of the grounds under section 84(1), as part of the jurisdictional stage. It then had to decide whether to exercise its discretion to discharge or modify. On the evidence, the tribunal was satisfied that both the new accesses and the houses currently under construction represented a reasonable user of the application land, and there were no practical benefits of substantial value or advantage in preventing their construction. There was no greater overlooking, no particular loss of sense of space than from the permitted development, and no greater impact on the integrity of the building scheme. So, the applicants had succeeded on the jurisdictional stage under ground (aa). (2) In Alexander Devine, the Supreme Court considered that at the discretionary stage, the tribunal failed to take account of two omitted factors.  The first was that the developer could have built the offending units on the part of the site which was unencumbered by the restrictions, but chose not to do so. There would have been no need to apply to the tribunal for modification and the hospice would have been left unaffected. By that cynical breach the developer put paid to what would have been a satisfactory outcome. It was important to deter such a cynical breach, especially when that conduct had produced a land-use conflict. The second factor was that had that cynical breach not been committed, it would have been unlikely that the applicant would have succeeded under the public interest limb. It was important at the discretionary stage to deter such a cynical breach where, because the tribunal would look at the public interest position at the date of the hearing, that cynical conduct would directly reward the wrongdoer by transforming its prospect of success under the public interest ground. By the time the matter returned to the tribunal in Housing Solutions v Smith [2023] UKUT 25 (LC) several things had changed. The developer had paid a substantial sum to the Alexander Devine Hospice, such that it no longer objected to modification, the public interest ground was no longer relied upon, and the the tribunal was satisfied that the proposed modification did not cause harm to the remaining objector. So, the omitted factors could not play the same role as they did previously and the tribunal ordered modification. (3) In this case (unlike Housing Solutions) the applicants or their predecessor in title had not yet paid any price to the beneficiaries of the covenants, including the objector, for their breach of the restrictions. The objector had not sought to prevent them from building in breach by applying to the court for an injunction. If the covenants were modified, the applicants’ property rights would be clear and they would be able to enjoy their new houses, or sell them, without fear of future enforcement of the restrictions. But the tribunal’s jurisdiction under section 84 was about the future, and not the past. Modification would not rewrite history and it would not absolve the applicants from responsibility for their previous breaches of the covenants. Nor would it deprive beneficiaries of the covenants of their rights to seek damages for the breaches. The objector had not sought to have the new houses demolished. The tribunal would not be approving or rewarding cynical conduct by modifying the restrictions to regularise the position for the future because the right to seek a financial remedy for the past breach would remain. In those circumstances, the appropriate exercise of the tribunal’s discretion was to allow modification, limited to permitting development for which detailed planning permission had been granted. The hedge had to be maintained and/or renewed, save for the driveways. Jacqueline Lean (instructed by Higgs LLP) appeared for the first applicants; The second applicants appeared in person. The objector appeared in person. Eileen O’Grady, barrister Click here to read a transcript of Howard and others v Surana