Restrictive covenants — Applications to modify covenants to permit development — Section 84(1) of Law of Property Act 1925 — Respondent lodging objections to modification but withdrawing them before hearing — Whether respondent acting unreasonably in pursuing objections — Whether applicants entitled to costs against respondent — Applications allowed
The applicants (N and J) were two married couples who were the respective owners of two freehold properties in Gerrards Cross. Each had purchased their property with the intention of demolishing it and replacing it with a new family home. The respondent, a solicitor and local resident, claimed the benefit of restrictive covenants that affected the applicants’ properties and that would be breached by the proposed development.
In each case, planning permission for the proposed development was applied for, and granted, without the respondent lodging any objection. However, the respondent then raised the issue of breach of the restrictive covenants. Correspondence between the applicants’ solicitors and the respondent failed to resolve the matter. During the course of that correspondence, the respondent avoided specifying the nature of her objections to the development or the sum for which she might agree to a release of the restrictions. Instead, she raised issues of negligence by the solicitor’s firm that had acted for J on their purchase of the property and of conflict of interest on the part of the firm that later came to act for J; similar allegations were made in respect of the solicitors acting for N. At one point, J offered a £10,000 payment, and their solicitor invited a without prejudice meeting in an attempt to bridge the gap between the parties, but nothing came of this.
Ultimately, the applicants applied under section 84(1) of the Law of Property Act 1925 for the modification of the covenants to permit their development. The respondent objected to that application in terms that she sought a payment of £50,000 as a “reasonable sum for the release of the restrictions”. She later withdrew that objection on the grounds that she was unable to pursue it owing to her ill health. The applicants applied for costs against the respondent on the ground that her objection had been unreasonable. The Lands Tribunal ordered the modification sought by J and indicated that it would make a similar order in N’s case, which would not be finalised until the costs application had been determined.
Held: The application was allowed.
The respondent had acted unreasonably in pursuing her objection, such as to justify an order of costs in accordance with para 22.4 of the Lands Tribunal practice directions of 11 May 2006. Her predominant motive in lodging an objection had been to extract a large sum of money from the applicants, even though she was scarcely affected by the developments. At no stage had she put forward any reasoned justification for the figure of £50,000 claimed in her objections. The respondent had not attempted to justify such an exorbitant figure, nor had she suggested that a lower one might be acceptable. In J’s case, where an offer of £10,000 had been made, the proposed without prejudice meeting had not taken place because of the respondent’s refusal to state the sum that she required in advance of that meeting. Those considerations alone justified an award of costs against the respondent. In addition, she had acted unreasonably in using threats that went well beyond fair bargaining.
On the other side, it was to be borne in mind that the applicants would have had to apply to the tribunal for an order for modification, and to incur some costs, even if no objections had been raised or if any objections had been reasonable. It was relevant that the respondent was the only objector and that, by withdrawing her objections, she had limited the costs. The appropriate order was that the respondent should pay the costs of the applicants incurred between the date of her objections and the date of their withdrawal.
Martin Hutchings (instructed by IBB Solicitors, of Uxbridge) appeared for the applicants; Edward Denehan (instructed by Stuarts, of Gerrards Cross) appeared for the respondent.
Sally Dobson, barrister
