Applicant exercising right to buy – Council conveying property subject to restrictive covenant – Applicant seeking release from covenant to sell part of land for development – Council requiring share of market value of plot – Whether council’s decision unlawful – Housing Act 1985 – Application dismissed
In August 1988 the respondent council conveyed a property to the applicant and his late father, subject to, inter alia, a standard form restrictive covenant to use the property “as a single private dwellinghouse only”. The property was conveyed for the sum of £20,000, pursuant to the right to buy provisions of the Housing Act 1985. In July 1996 the applicant sought the council’s consent for the sale of a building plot at the property. The council offered to release the covenant upon receiving a payment of 90% of the open market value of the plot. Correspondence between the parties followed, and on 9 January 1998 the council asserted that they were entitled to require payment for the release of the covenant. The applicant sought judicial review of the council’s decision of 9 January and a declaration that: (1) the council’s demand for a sum of money as consideration for the waiver or variation of the covenant was unlawful, irrational and unreasonable, in that it defeated the purpose of para 6 of Schedule 6 to the 1985 Act; and (2) that the demand for 90% of the open market value of the plot was unreasonable.
Held: The application was dismissed.
It was accepted that the covenant itself was valid, therefore the council were entitled to insist upon strict adherence to it. The council had not taken such a stance and their decision to release the applicant from the covenant for payment was not contrary to the Act. The fact that the council’s motive was simply commercial could not convert a lawful demand for payment into an unlawful one. The council had a fiduciary duty to their ratepayers, to conserve, as far as possible, their financial resources. The price for which the house had been sold to the applicant did not reflect the value of any potential development of the land. The demand of 90% was not unlawful or Wednesbury unreasonable.
Andrew Gore (instructed by Stevens, of Haverhill) appeared for the applicant; Rabinder Singh (instructed by Holmes & Hill, of Braintree) appeared for the respondent council.
Sarah Addenbrooke, barrister
