Restrictive covenant – Discharge or modification – Section 84(1)(aa) of Law of Property Act 1925 – Applicants wishing to erect three-storey side extension to town house for business purposes – Covenants restricting extension and business use – Applicants renewing application to modify or discharge covenants with benefit of planning permission – Whether tribunal having discretion to modify building restriction – Whether statutory grounds satisfied to modify business restriction – Application granted in part
The applicants owned a property at 52 Beechcroft Manor, Weybridge, a three-storey town house at the upper end of a stepped terrace of three similar but not identical houses within a spacious private development. They made a renewed application for the Upper Tribunal to discharge or modify restrictive covenants that burdened the title to the property, preventing any alteration to the external plan or elevation of the building and preventing its use for business purposes.
A previous application was made in June 2022, when the applicants had applied for planning permission for a side extension but had not received a decision. The neighbours objected. The tribunal agreed with the objectors that the proposed uses, to work from home or run a business from home, were not impeded by the restriction and so it had no jurisdiction to modify that covenant.
The tribunal held that it had jurisdiction under section 84(1)(aa) to modify the building restriction, which impeded a reasonable use of the property and did not secure to the persons entitled to the benefit of it practical benefits of substantial value or advantage. However, the tribunal declined to exercise its discretion to modify the restriction before the plans for the side extension had been scrutinised and determined through the planning process: Naidu and another v Morton and others [2022] UKUT 172 (LC); [2022] PLSCS 136.
Planning permission was granted in September 2022 and the approved plans included structural drawings of the proposed new retaining wall in the garden beneath the next-door property. On the applicants’ renewed application, notices of objection were again received from the same neighbours. The application was determined on written representations.
Held: The application was granted in part.
(1) Section 84(1)(a) applied where a restriction had become obsolete because of changes to the neighbourhood since it was imposed. In the present case, the application under ground (a) for discharge of the building restriction failed because there was no change in the character of the neighbourhood arising from implementation of the prior approval, nor any other material circumstances to suggest that the restriction ought to be deemed obsolete.
(2) Section 84(1)(aa) was satisfied where the continued existence of the restriction would impede some reasonable use of the land for public or private purposes or would do so unless modified. By section 84(1A), in a case 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 it was contrary to the public interest. The tribunal also had to be satisfied that money would provide adequate compensation for the loss or disadvantage (if any) which that person would suffer from the discharge or modification.
In determining whether section 84(1A) was satisfied and a restriction ought to be discharged or modified, the tribunal was required by section 84(1B) to take into account “the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances”.
The tribunal might also direct the payment of compensation to any person entitled to the benefit of the restriction to make up for any loss or disadvantage suffered by that person because of the discharge or modification, or for any effect which the restriction had, when it was imposed, in reducing the consideration then received for the land affected by it. If the applicant agreed, the tribunal might also impose some additional restriction on the land when discharging the original restriction.
(3) In the present case, the tribunal was satisfied that it should now exercise discretion to modify the building restriction under ground (aa) to allow the applicants to construct their side extension in accordance with the planning permission. Modification should cause the adjoining neighbour no permanent loss or disadvantage requiring monetary compensation. The restriction did not secure the practical benefit of preventing temporary disturbance during the construction period and the objector had made no claim in that respect.
(4) By applying to modify the business restriction at the same time as applying to modify the building restriction, to allow a sizeable extension to be built, the applicants had created in the minds of the objectors the potential for more disruptive non-residential uses than might be intended. Nonetheless, without detail of what business use was proposed, it was not possible to determine whether the proposed modification would have the adverse effects the objectors’ feared.
In application of Johnson and another [2022] UKUT 294 (LC); [2022] PLSCS 185, concerning modification of a business restriction for a defined business use which did not require planning permission but was impeded by the restriction, the applicants proposed to run a small childminding business for up to six children. They provided extensive evidence to allay concerns over the potential impact of additional car movements and parking in a residential area. That case was an example of why a simple modification to allow uses which did not require planning permission could have significant results. It also showed good practice by applicants who undertook to demonstrate how the business restriction was not undermined by their proposal.
In the present case, the application was lacking any detail which might allow the tribunal to consider whether the statutory grounds were satisfied to modify the business restriction for a limited purpose. The application therefore failed. But the applicants were aware that the objectors made no objection to them continuing to work from home as they had been doing.
(5) Accordingly, the tribunal was satisfied that ground (aa) was made out and that it had discretion to modify the building restriction, which impeded a reasonable use of the property and did not secure to the persons entitled to the benefit of it any practical benefits of value or advantage.
An order modifying the restriction to that extent would be made provided, within three months of the date of the decision, the applicants signified their acceptance of the proposed modification of the restriction in the Charges Register.
Eileen O’Grady, barrister
Click here to read a transcript of Naidu and another v Morton and others
