Sale of property – Restrictive covenant – Discharge or modification – Property being divided into two self-contained freehold units – One unit sold off subject to restrictive covenants – Applicants later purchasing unit and applying to discharge or modify covenants – Whether restrictions being deemed obsolete – Whether discharge or modification would injure persons entitled to benefit of restriction – Application granted
The applicants applied to discharge or modify restrictive covenants affecting their home, a freehold property at 141A Dunstans Road, East Dulwich, London. The covenants were imposed by a transfer dated 20 July 1984. The application was made under section 84(1)(a) and (c) of the Law of Property Act 1925. The application was opposed by objectors who owned and occupied the adjoining residential property (141) and enjoyed the benefit of the restrictive covenants imposed by the 1984 transfer.
The two properties originally comprised a single double-fronted, two-storey Victorian residential property. A previous owner had converted that property into two self-contained freehold residential units (141 and 141A). By the July 1984 transfer, the owner sold off 141A but retained title to 141 (and the hallway). That transfer imposed the restrictive covenants on 141A which the applicants sought to discharge or modify. No corresponding covenants were imposed on 141 for the benefit of 141A.
The restrictive covenants were: (i) not to use the premises other than as a private dwelling-house in the occupation of a single family; (ii) not to keep more than one domestic pet on the premises at any one time; (iii) not to play any musical instrument or loud music after 11.00 pm without the permission of the owner or occupier of the adjoining premises; and (iv) not to alter the structure or external appearance of the property transferred or to erect any walls fences hedges or garages without the consent of the transferee or her successors in title.
The applicants said that when they purchased 141A from the original purchasers, they were not alerted to the existence of the covenants. They only became aware of their existence when they put the property on the market and a prospective purchaser dropped out because of the covenants. A second purchaser had also withdrawn because of the objectors’ refusal to release the covenants.
Held: The application was granted.
(1) The present application had been brought solely under section 84(1)(a) and (c) of the 1925 Act. Therefore, the power of the tribunal under section 84(1) to discharge or modify restrictive covenants affecting land might be exercised only where it was satisfied that: (a) by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the tribunal might deem material, the restriction ought to be deemed obsolete; or (c) the proposed discharge or modification would not injure the persons entitled to the benefit of the restriction. By section 84(1B), the tribunal was required to take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant area, as well as the period at which and the context in which the restrictions were created or imposed, and any other material circumstances. The restrictions had been imposed 35 years ago when 141A was sold off, by and for the benefit of the original vendor, who had now parted with all interest in the benefitted land at 141. Although there were no words in the 1984 transfer expressly annexing the benefit of the covenants to 141, such annexation was statutorily effected by section 79 of the 1925 Act. The tribunal had taken all of those factors into account together with the applicants’ unchallenged evidence that the existence and terms of the restrictions had caused sales of 141A to fall through and that their continued existence had, and would have, a very negative (but unquantified) impact on the value and saleability of 141A. Further, inconvenience to the applicants, as the owners of the land burdened by the restrictions, and loss to its value, were material considerations on an application under section 84(1).
(2) The tribunal could only operate within the statutory framework of section 84(1) and within the context of the existing application. On the evidence, and from the tribunal’s own inspection of the property, it could not be said that the restrictions had been stultified by changes in the surrounding area since 1984: it remained residential in character. The objectives which the covenants sought to achieve, of ensuring that the owners and occupiers of 141 would still be able to retain an acceptable level of control over activities in 141A, were still capable of attainment. The covenants still served the purposes originally contemplated of them; they still afforded protection, and remained of value, to the owners and occupiers of 141 as the persons entitled to the benefit of the restrictions. Nor could it sensibly be said that their objections to the discharge or release of the covenants were frivolous or vexatious. The fact that the owners and occupiers of 141A did not have the benefit of corresponding restrictions affecting 141 did not render the restrictions obsolete since that was the position from the moment the covenants were first imposed; nor did it mean that their discharge would not harm the persons entitled to the benefit of the restrictions. No case had been made out for their discharge under section 84(1)(a) or (c).
(3) No specific modifications of the covenants were proposed by the applicants. Whilst the prohibitions contained in restrictions (i) and (ii) were phrased in absolute terms, restrictions (iii) and (iv) were in terms qualified, with restriction (iii) expressly contemplating that permission might be given by the owner or occupier for the time being of 141 and restriction (iv) expressly contemplating that consent might be given by the transferor or her successors in title. In such circumstances, the courts would readily imply a term that such permission, or consent, should not be unreasonably withheld. The objectors, as the persons entitled to the benefit of the restrictions, would suffer no injury if those two restrictions were modified to make explicit that which was implicit in the restrictions; and no harm or injury was identified by the objectors. Further, no harm would be suffered, or injury caused, to the objectors, as the persons entitled to the benefit of the restrictions, if restriction (ii) were to be modified by the insertion of a proviso “without the permission of the owner or occupier for the time being of 141 (such permission not to be unreasonably withheld)”.
The parties appeared in person.
Eileen O’Grady, barrister
Click here to read a transcript of Re: Application of Owen and another
