Law of Property Act 1925, section 84 as amended — Discharge or modification of restrictive covenants — Restriction of use of land to that of a private dwelling-house only — Application for discharge of covenant or for its modification so as to apply to residential user generally — Objections by owners of retained land entitled to benefit of covenant — Decision of Lands Tribunal in favour of discharge — Appeal by case stated on a point of law by the adjoining owners — Point based on misconstruction of tribunal’s decision — Appeal dismissed
to the Lands Tribunal, respondent to the appeal, owned a bungalow and
surrounding land subject to a covenant in favour of adjoining owners
restricting the use of the property to that for a private dwelling-house only —
The retained land which enjoyed the benefit of the restriction was owned by the
present appellants, who had built on it a three-storey block of six flats and
three garages, the flats let to tenants with long leases — The appellants had
considered building a single family dwelling on the site of the three garages
but had withdrawn a planning application for this purpose — The respondent had
obtained planning permission for a three-storey extension to her bungalow, for
the provision of four self-contained flats in the extended building and for two
garages and two parking places — She then applied to the Lands Tribunal to
discharge the restrictive covenant or to modify it so as to apply to
residential use generally instead of to a single dwelling-house — The appellants
objected — The decision of the president of the Lands Tribunal was that the
covenant should be wholly discharged — The appellants appealed by case stated
to the Court of Appeal
of the tribunal, having concluded that the restriction should be wholly
discharged, added that if he had not discharged the covenant under subsection
(1)(a) of section 84 of the 1925 Act he would have modified it under subsection
(1)(aa) (continued existence of covenant impeding reasonable user) — However,
it was accepted by the appellants that the decision to discharge the covenant
could not be challenged, but they had other points — They submitted that the
president had failed to use his discretion to make an award of compensation,
or, if he had so failed, had failed to give reasons — The appellants claimed
that the development proposed by the applicant would prejudice their chances of
obtaining planning permission for the development of the site of the garages;
and they claimed £5,500 in compensation if the applicant were successful
law on which the appellants founded their appeal was contained in a paragraph
of the president’s order which stated that if he had not concluded that the
covenant should be wholly discharged he would have held the applicant entitled
to a modification of the covenant under subsection (1)(aa) of section 84 — He
pointed out that the applicants would suffer no loss or disadvantage other,
possibly, than financial from such a modification — He added that the claim for
£5,500 was in any case excessive — The appellants’ suggestion was that the
president thereby accepted that there would, or might, be a disadvantage if the
covenant were merely modified; and it must necessarily follow that there would
also be a disadvantage if the covenant were wholly discharged — The president
had, however, failed to quantify this disadvantage in pecuniary terms
Appeal pointed out that this was a complete misconstruction of the president’s
reasoning — The president had made it plain that in his opinion there was no
loss or disadvantage to the appellants and he went on to say that, if he were
wrong about this and if there would have been a loss or disadvantage, then it
would in any case have been less than £5,500 — The president was not saying that
he considered that there would be a loss or disadvantage; he had made it clear
that he thought otherwise — The argument used turned a hypothesis into an
assertion of fact — The absence of any loss or disadvantage was the reason why
he decided that there should be no compensation — That was a perfectly adequate
reason — Appeal dismissed
The following case is referred to in this
report.
Eagil Trust Co Ltd v Pigott-Brown [1985]
3 All ER 119, CA
This was an appeal by Vercan Ltd, owners
of the retained land, known as 132 Friern Park, London N12, which was benefited
by the restrictive covenant in question in the present case. The respondent,
who was the applicant to the Lands Tribunal, was the freeholder of the land
subject to the restrictive covenant, Mrs Alice Elizabeth Moody. Her property,
known as 6 Torrington Grove, London N12, consisted of a bungalow and
surrounding land.
Sebastian Head (instructed by J J
Goldstein & Co) appeared on behalf of the appellants; Jonathan Brock
(instructed by Fischer & Co) represented the respondent.
Giving judgment, PARKER LJ said:
This is an appeal from a decision of the president of the Lands Tribunal given
on March 29 1990, the appeal being by way of case stated to this court.
The matter arises under section 84 of the
Law of Property Act 1925 as subsequently amended. So far as material, that
section reads:
The Lands Tribunal shall (without
prejudice to any concurrent jurisdiction of the court) have power from time to
time, on the application of any person interested in any freehold land affected
by any restriction arising under covenant or otherwise as to the user thereof
or the building thereon, by order wholly or partially to discharge or modify
any such restriction on being satisfied —
(a) that by reason of changes in the character of
the property or the neighbourhood or other circumstances of the case which the
Lands Tribunal may deem material, the restriction ought to be deemed obsolete;
or
(aa) that (in a case falling within subsection (1A)
below) the continued existence thereof would impede some reasonable user of the
land for public or private purposes or, as the case may be, would unless
modified so impede such user; or
(c) that the proposed discharge or modification
will not injure the persons entitled to the benefit of the restriction,
and an order discharging or modifying a
restriction under this subsection may direct the applicant to pay to any person
entitled to the benefit of the restriction such sum by way of consideration as
the Tribunal may think it just to award under one, but not both, of the
following heads, that is to say, either —
(i) a sum to make up for any loss or
disadvantage suffered by that person in consequence of the discharge or
modification; . . .
I need not read (ii).
The respondent, Mrs Alice Elizabeth
Moody, is the freeholder of premises known as 6 Torrington Grove, London N12.
This property consists in a bungalow and surrounding land conveyed to her and
her late husband by a conveyance dated July 4 1955. The vendor was a Mr
Dickinson. He had built the bungalow shortly before in the eastern part of his
garden. When he sold he retained his own bungalow and the western part of the
garden. The conveyance or transfer contained a covenant restricting the use of
the property sold to that of a private dwelling-house only. It is common ground
that the purpose of the covenant was to protect the bungalow and the garden on
the retained land.
In the early 1960s the retained land was
transferred to the appellants, who redeveloped it, building upon it a
three-storey block of six flats and three garages. The six flats are held on
long leases, which have still approximately 70 years to run, by tenants from
the appellants. The retained land, together with a small part owned by the appellants,
is now known as 132 Friern Park.
On August 2 1985 Mrs Moody obtained
planning permission to erect a two-storey extension to the bungalow, to provide
two garages and two parking spaces and to provide four self-contained flats in
the extended building.
In 1986 the appellants applied, but later
withdrew, application for planning permission to erect a single family dwelling
on the site of the three garages plus a small extra piece of land.
On April 11 1989 Mrs Moody applied to the
Lands Tribunal under section 84(1)(a) (aa) and (c) of the
Law of Property Act 1925 as amended, which I have read. Her application was for
the discharge of the covenant or its modification so that it would apply to
residential user generally instead of being limited to one property.
The matter was heard by the president of
the Lands Tribunal, who concluded that the covenant should be wholly
discharged. He also concluded that if he had not discharged the covenant under
para (a) it would clearly have been a case for modification under para (aa).
It is accepted by the appellants that the decision to discharge the covenant
wholly cannot be challenged, and there is no attempt to challenge it.
It is said that the president of the
tribunal failed to exercise his discretion to make an award of compensation or,
if he did not fail to exercise his discretion, he failed to give the necessary
reasons. It is unnecessary to read more than a small part of the decision. On p
2 there are recited certain agreed facts, which include the following:
(2)
Notwithstanding publicity given to the application for planning
permission and the originating application, no objection was made by any of the
residents of Sherwood Court [the block of flats] in respect of either
application.
(3)
The purpose of the relevant covenant in the 1955 transfer was to protect
the bungalow and its garden which then existed on the retained land.
(4)
Development on the application land might preclude future development on
the site of the three garages at No 132 Friern Park.
On p 3 of the decision the president
said:
The principal ground of objection by
Vercan Limited is that the development proposed by the applicant, if permitted,
will prejudice its chances of obtaining planning permission for development of
the site of the garages and the drying and dustbin areas of its property. The
company claims compensation in the sum of £5,500 in the event that this
application should succeed.
He then sets out in detail the
submissions which had been made and the evidence of the rival parties upon the
matter. At p 6 of his judgment, having so recited and recorded the fact that he
had inspected the application property internally and externally and 132 Friern
Park externally only, he says:
In my judgment, the original purpose of
the restrictive covenant, namely, to protect the amenities of Mr Dickinson’s
retained bungalow and his garden, can no longer be served. The restriction was
not intended to protect a block of flats and the amenities of more than one
family; it was not intended to protect a commercial use of No 132 Friern Park.
The restriction ought therefore to be deemed obsolete. I so hold and order it
to be discharged wholly.
If the decision had stopped there, but
there had been added to it the words which appear in a later paragraph ‘There
will be no award of compensation to the objectors’, no appeal could have been
brought, because there would have been nothing upon which to found any appeal.
The appeal is founded wholly upon what appears in the paragraph immediately
following the president’s order that the covenant be discharged wholly where he
says:
But for that decision, the applicant, in
my opinion, would also be entitled to succeed under paragraph (aa) of
section 84(1) of the Act of 1925 and be granted the alternative remedy (namely
modification of the restriction) prayed by her. The objectors would suffer no
loss or disadvantage other, possibly, than financial from such a modification.
I am not persuaded that the hope value of the objectors’ proposed site is as
high as put by Mr Shapiro nor that it would be substantially diminished if the
applicant’s proposal were permitted. Money would plainly be an adequate
compensation for such loss or disadvantage (if any) which the objectors might
suffer from the discharge or modification of the restriction but their claim
for £5,500 is excessive.
Mr Head submits that the effect of that
paragraph is that the tribunal have decided that there would, or might, be a
disadvantage if the covenant were merely modified but had failed to quantify
such disadvantage, and if it had so decided it must follow that there would
also be a disadvantage from the discharge wholly of the covenant.
The point, as he rightly says, is a short
one which does not bear repetition. In my judgment, he places far too much
weight upon that paragraph. It is quite clear that the president had decided
that there was no loss or disadvantage, and he then goes on to say: ‘but if I
were wrong about that [that is to say, if there would have been a loss or
disadvantage] then I am convinced that any loss suffered would have been less
than £5,500’. But he is not saying that he does consider that there would be a
loss or disadvantage. He has made it perfectly plain that he considers that
there is no loss or disadvantage. That is the reason for which he decides that
there should be no compensation. That, in my judgment, is a perfectly adequate
reason.
We were referred by Mr Brock to the case
of Eagil Trust Co Ltd v Pigott-Brown [1985] 3 All ER 119, where
Griffiths LJ at p 122 points out that as a general rule a court exercising a
discretion should give reasons for the exercise of the discretion. I of course
accept that that is a general rule, but in this case there was only one reason,
which was adequately expressed, namely that there had been no loss or
disadvantage. In the circumstances, I would, without hesitation, dismiss this
appeal.
TAYLOR LJ and SIR ROGER ORMROD agreed and
did not add anything.
The appeal was dismissed with costs on an
indemnity basis.
For a
further case on this subject see p 178
