Where a covenant prohibits a landowner from carrying out work, or from engaging in a specified activity, without permission or approval, the owner of the land burdened by the covenant will need to establish whether the covenantee imposed the requirement exclusively for its own benefit or for the benefit of subsequent owners and occupiers of the land as well. It will also be important to ascertain the grounds on which the covenantee can withhold consent – and whether the covenant actually constitutes a restrictive covenant at all.
The claimants in 89 Holland Park (Management) Ltd v Hicks [2013] EWHC 391 (Ch) owned the freehold and long leasehold interests in a Victorian house in London. They issued proceedings for a declaration that they were entitled to the benefit of covenants in a deed made in 1968, which prohibited the owner of the burdened land from making any planning applications unless the covenantee had approved plans, drawings and specifications beforehand.
The owners of the burdened land tried to persuade the court that the covenants did not touch and concern the benefitted land and were not restrictive covenants at all. The judge disagreed. The covenants permitted the covenantee to exercise a degree of control over the nature of any development on the burdened land and could therefore add value to the land belonging to the covenantee.
The judge dismissed arguments that the covenants were not restrictive of the user of land because they affected applications for planning permission, as opposed to what was done on the land, who could own it, or the status or physicality of the land itself. The judge ruled that it would be unrealistic to divorce a restriction on the type of planning permission that could be obtained from the type of development permitted on the land.
Were the covenants subject to an implied proviso that approval would not be unreasonably withheld? The judge decided that they were, even though the 1968 covenants were absolute in terms and had replaced similar covenants made in 1965, which did stipulate that consent was not to be unreasonably withheld.
The provisions agreed and process for obtaining approval indicated that the parties had expected to have a reasonable discussion. Also, the judge saw no reason for the parties to have created a new regime that would enable the covenantee to defeat the purpose of the sale of the land as a building plot, by exercising an absolute veto over development, when the covenantee had previously only had a qualified right. Consequently, it was necessary to imply a proviso to give business efficacy to the agreement and to meet the reasonable expectations of the parties as evidenced by their agreement as a whole.
Section 78 of the Law of Property Act 1925 deems covenants relating to land of the covenantee to be made with his successors in title and the persons deriving title under him, and the term “successors in title” includes the owners and occupiers for the time being of the benefitted land. Consequently, the covenants were enforceable by all the claimants, although the consent required was the consent of the freehold management company alone.
Allyson Colby is a property law consultant
