Restrictive covenant — Application under section 84 of Law of Property Act 1925 to permit residential development — Whether paras (a), (aa) and/or (c) satisfied — Whether compensation payable — Appropriate costs order
The applicant
company owns 1.64 acres of land, the subject of mutual restrictive covenants
against the erection of specified buildings. The applicants obtained planning
permission for 27 houses on the application site and applied under paras (a),
(aa) and (c) of section 84(1) of the Law of Property Act 1925 for
the modification or discharge of the covenants to permit the erection of the
houses. There were 33 objectors of whom 28, with the benefit of the covenant,
appeared at the hearing. The application site was part of a larger area of
paddock land affected by the covenants. Following an earlier decision to modify
the covenants some years ago, 20 houses have been erected on some of the
paddock land. In addition eight bungalows have been erected on the paddock land
in breach of the covenant.
The
restrictions did secure practical benefits of substantial value or advantage to
the persons entitled to the benefit of them, and that accordingly the proposed
discharge or modification would injure them; no order could be made under paras
(aa) or (c) of section 84(1) of the 1925 Act. However, the
original purpose of the covenants, which was to procure for the owners of each
plot an open view across his neighbour’s land, no longer existed because of
development since the covenant impinging on these views; an order could be made
under para (a) on the ground that the restriction was now obsolete.
Objectors owning properties on that part of the original paddock land where
restrictions have already been modified should not be entitled to compensation;
they, or their predecessors in title, should not be in the same position as
those objectors who had remained bound by the mutual restrictions. Compensation
of £10,000 was ordered to be payable to two objectors, and sums of £7,500 and
£5,000 to two further objectors, in respect of the loss or disadvantage
suffered. The applicants were ordered to pay the costs of the 28 objectors;
their objections were proper and reasonable and the applicants obtained a
modification only upon terms more onerous than they were willing to offer in
sealed bids before the hearing.
to in the decision
Chatsworth
Estates Co v Fewell [1931] 1 Ch 224
Ecclesiastical
Commissioners for England’s Conveyance, Re [1936]
Ch 430
Gilbert v Spoor [1983] Ch 27; [1982] 3 WLR 183; [1982] 2 All ER 576;
(1982) 44 P&CR 239, CA
Henderson’s
Conveyance, Re [1940] Ch 835
Ridley v Taylor [1965] 1 WLR 611; [1965] 2 All ER 51, CA
Stockport
Metropolitan Borough Council v Alwiyah
Developments (1983) 52 P&CR 278
Truman,
Hanbury, Buxton & Co Ltd’s Application, Re
[1956] 1 QB 261; [1955] 3 WLR 704; [1955] 3 All ER 559; (1955) 7 P&CR 348;
[1955] EGD169; 166 EG 564, CA
Application
under section 84 of the Law of Property Act 1925
This was an
application by Kennet Properties Ltd under section 84 of the Law of Property
Act 1925 for the discharge or modification of restrictive covenants.
Dinkin QC (instructed by Gellhorn & Co, of Guildford) appeared for the
applicant, Kennet Properties Ltd.
Dowding (instructed by Andrewes & Co) appeared for the objectors.
following decision was delivered.
JUDGE RICH
QC: The applicant is a subsidiary of Thames Water
plc, which is the successor in title of the Metropolitan Water Board which
acquired the application site for its operational purposes in 1905. The site is
not now needed for such purposes and the applicant wishes to build upon it 27
houses in accordance with a planning permission granted by Haringey London
Borough Council on October 13 1993. The site is within a building scheme created
by a deed poll dated January 4 1853, which contains covenants against building
on this part of the scheme land, and the applicant applies for an order
modifying or discharging the covenants so far as is necessary in order to
permit it to implement the planning permission.
At the date of
the hearing there were 33 objectors who had duly entered objections to the
application, of whom all but five were represented by Mr Robert Andrewes, a
solicitor who is himself an objector, who instructed Mr Nicholas Dowding as
counsel on their behalf. Mr Dowding also appeared for Haringey London Borough
Council as freeholders of eight bungalows in Buckden Close, which had been
built within the building scheme land in breach of the covenants of the scheme,
but they withdrew their objection on the second day of the hearing upon terms
agreed between the parties. The four objectors not represented by Mr Andrewes
did not appear. The title of the 28 who did appear and that they had the
benefit of the covenants the subject of the application were all admitted.
Building
scheme
The building
scheme was for the development of an estate of some 17.3 acres lying to the
south of the road now known as Fortis Green. The deed recited that the estate
owners had laid out nearly the whole of the land for building purposes and that
parts thereof
have been laid out and are now being formed and completed as
parts of the same lands have been divided into building lots and other parts …
have been laid out for paddocks to be used in connexion with the adjoining building
lots …
The building
lots were distinguished on an accompanying plan by lot nos 1 to 153 and the
paddock lots by nos 154 to 180, but the numbers were not indicative of the
number of actual plots. The plan showed 63 building plots, upon which detached
or pairs of semi-detached houses might be built. Each of these had two or more
lot numbers attached to it by reference to which the cost of certain sewerage
and water works for which the deed provided were to be apportioned.
The most
southerly building lots were on the south side of Southern Road. They were nine
in number, but being larger than the average building lots had 32 lot numbers
attached to them. The paddock lots accounted for just over five acres or some
29% of the estate. They lay to the south of the building lots on the south side
of Southern Road. The plan showed a layout of 12 paddock lots to which 27 lot
numbers were attached. They are so arranged in relation to each building lot
that each building lot has some joint boundary with not less than two paddocks.
The deed included a covenant to fence the paddock lots as shown on the plan,
but included a proviso that where an owner owned more than one such lot he
should not be bound to erect a fence between them. Although a footpath runs
southwesterly between the paddocks the deed makes no provision for access to
the paddocks except from the adjoining building lots, and I accept that the
layout shown is, as the deed says: ‘for the paddocks to be used in connexion
with the adjoining building lots’ and that adjoining means contiguous: see Re
Ecclesiastical Commissioners for England’s Conveyance [1936] Ch 430 at
p440.
Application
site
The
application site is approximately 1.64 acres and so amounts to about one-third
of the original paddock land. It includes almost the whole of the four paddocks
to the east of the path through the paddocks, but when the Metropolitan Water
Board acquired the site it did not acquire quite the whole of this paddock
land. The part which was not so acquired now constitutes the site of two and a
half of the bungalows in Buckden Close, and for the rest has been incorporated
into the gardens of the three houses fronting Southern Road, which have
boundaries contiguous to the site, adding, it would seem, nearly 40 ft to their
gardens. It constitutes about two-thirds of the site of the planning
permission, which is for a total of 28 houses, of which one, sited entirely off
the covenanted land, has already been built together with an access to Southern
Road to the east of the original estate, which would serve the proposed
development.
Covenants
The principal
covenant which prevents the implementation of the rest of the planning
permission is the covenant indicated by a side note ‘On Paddocks’. It is a
covenant not to erect:
on any lot …
distinguished by any number or numbers above 153 any dwellinghouse warehouse
shop or factory or any other building than a summer house stable coach house or
cart or cattle shed or other building of a like nature (and without any
sleeping or dwelling room thereon) or any building of such permitted kind
exceeding twelve feet in height or any building or erection other than a
boundary or division fence within two hundred feet of any of the said lots
which are distinguished on the said Plan by any number or numbers below 154 or
any operative machinery whatever.
This
effectively confined any building, even of permitted buildings less than 12 ft
in height to the bottom third of the paddocks, which varied in length from just
over 200 ft to just over 300 ft.
There are also
covenants which oddly in the face of the above covenant do apply to the paddock
lands, to build only detached or semi-detached houses, whereas the planning
permission includes linked or terrace houses, and for building lines. While
criticising the permitted scheme it was not part of the objectors’ case that if
the principal covenant was to be relaxed, the form of building permitted should
differ from that proposed, and the issue can therefore be treated as being
whether the principal covenant should be modified or discharged so as to allow
the dwellings permitted by the planning permission to be erected.
Grounds of
application
The
application as amended seeks relief on grounds (a) and/or (aa)
and/or (c) of section 84(1) of the Law of Property Act 1925, as amended
in 1969. It is not necessary in this decision to set out those grounds in full,
but I do think it is necessary before considering the facts of this case to
explain how I understand the relationship of the four grounds set out in the
section to each other. They are, in summary:
(a) the
restriction ought to be deemed obsolete;
(aa)
some reasonable user would be impeded without securing practical benefits of
substantial value;
(b)
consent of those with the benefit of the restriction;
(c) no
injury to those with the benefit of the restriction.
One or other
of these grounds must be proved before the tribunal has jurisdiction to modify
or discharge a restriction: see Re Henderson’s Conveyance [1940] Ch 835.
If the tribunal is so satisfied then it has a discretion: (i) as to whether to
make an order, in respect of which it must regard the matters set out in
subsection (1B); and (ii) if it does make an order, whether to award
compensation under either of the two heads set out in subsection (1).
As I read the
statute, the grounds which I have summarised are separate and independent.
Although one restriction in a single document may be discharged on one ground
and another on another ground, the Act does not permit the discharge of any
single restriction because one ground is satisfied as to some persons entitled
to the benefit of the restriction and another as to others. It would appear to
me that a proper approach to the construction of the statute must be that each
of the grounds was to have some separate purpose, that is to say that
circumstances could arise in
none other could be satisfied. A practice has grown up which has been followed
in this case of pleading a multiplicity of grounds. It is, of course,
permissible to plead alternatives, but the practice leads to evidence being
less precisely directed to the probanda for any particular ground than
if the relevant ground upon which the applicant wishes to rely were identified
from the beginning.
It seems to me
that an analysis of ground (c) may particularly assist in understanding
the scope of the other grounds. It appears to set up the most stringent of the
four tests, namely that no injury will be caused by the discharge or
modification to any person entitled to the benefit of the restriction. If that
is proved, it would follow that no compensation could be awarded under head (i)
‘to make up for any loss or disadvantage’. It has been called by Russell LJ in Ridley
v Taylor [1965] 1 WLR 611 at p622 ‘a long-stop against vexatious
objections’, but it none the less appears to me that the four grounds must be
so construed that there are, to continue the cricketing metaphor, some balls
which it alone can field and some which would not come its way at all.
I think that
it relates to ground (b) in that para (c) can be satisfied if all
those who had the benefit of the restriction and would be injured by its
discharge have consented to the discharge, but some with that benefit who would
not be injured have not consented, by treating those who have consented as, to
that extent, not having benefit.
It is I think
possible for para (c) to be satisfied even if para (aa) is not,
in the unusual case where a modification is sought independently of a
particular proposal as to use after discharge. Para (aa) was introduced
in its present form by the 1969 Act to relax the stringency of the original
enactment, but para (c) is still appropriate to plead where the
applicant is claiming that no compensation should be paid on modification.
Where that is not, as it was in this case, the applicant’s case, then, in my
view, the practice of pleading (c) as an alternative to (aa) is
not helpful.
Para (c)
may be contrasted to para (a) in that para (a) can be relied on
only if there can be proved changes in the character of the property or the
neighbourhood, or other material circumstances such as to justify the tribunal
in deeming the restriction obsolete. This cuts down the scope of para (a).
But I think para (a) is to be construed as embracing circumstances where
para (c) would not be satisfied, and Preston and Newsom (8th ed)
refers at para 12-23 to cases which support this view, which, incidentally,
would lead me to reject a submission at para 12–19 of that work that the
paragraph is concerned only to enable an applicant to get clarification of a
situation where no one would be able to obtain an injunction to enforce the
covenant.
In Re
Truman, Hanbury, Buxton & Co Ltd’s Application (1955) 7 P&CR 348
Romer LJ said at p357:
If serious
injury would result to the opponents and others if the covenant was discharged
… I cannot see how, on any view, the covenant can be still described as
obsolete, because the object of the covenant is still capable of fulfilment.
This dictum
should not however, in my judgment, be taken to mean that if discharge would
give rise to injury or even serious injury, it follows that a covenant cannot
be deemed to be obsolete. The reason which Romer LJ gave in the particular case
with which he was dealing was that the object of the covenant was still capable
of fulfilment.
In Truman‘s
case the tribunal had made a finding that discharge of a covenant against
carrying on the trade of an innkeeper would cause serious injury to adjoining
residents, who had the benefit of the covenant. The appellant submitted that
the tribunal had been wrong to apply a test propounded by Farwell J in Chatsworth
Estates Co v Fewell [1931] 1 Ch 224 to determine whether a defendant
could resist a claim for an injunction for breach of a restrictive covenant,
namely that change had made the covenant valueless and thus relief useless, to
whether para (a) had been satisfied. It seems to me that the court
accepted that the meaning of ‘obsolete’ in the paragraph had to be determined
in its own context, and that covenants may become obsolete ‘because their
original purpose can no longer be served’. At p357 Romer LJ said that ‘it was
in that sense that the word ‘obsolete’ is used in section 84(1)(a)’. I
do not therefore think that the dictum which I cited above is to be read
as meaning more than that in the particular circumstances of the case the
tribunal’s finding was not consistent with a finding that the covenant was
obsolete, because that finding of fact meant that the object of the particular
covenant was still capable of fulfilment.
In my
judgment, an obsolete covenant may, in spite of being obsolete, none the less,
be valuable so that its discharge would cause injury. That is possible, for
instance, if the covenant provides a benefit which is incidental to, but not
part of the original purpose for which it was imposed. Change may then render
the covenant obsolete, and yet the change may give it a value it did not
originally have. In such circumstances, in my judgment, the tribunal has the
jurisdiction to discharge the covenant as obsolete, although the circumstances
may not be such that it will exercise its discretion.
In this
respect I think that ground (a) differs from ground (aa). In Gilbert
v Spoor (1982) 44 P&CR 239 the
Court of Appeal held that a view which was not annexed to the land with the
benefit of the covenant could none the less be ‘a practical benefit’ within the
meaning of subsection (1A)(a) in order to determine whether para (aa)
was satisfied. This, in my judgment, follows from the language of the section.
Para (a) is concerned with whether the restriction itself is obsolete,
that is to say is now out of date compared to when it was imposed, as to which
its original purpose must be the touchstone, whereas para (aa) is
concerned with the benefit which the restriction is conferring at the time of
the application which may well be different from its original purpose. Thus
there may be cases which fall within para (a), but which do not fall
within para (aa) because there are practical benefits which are not part
of the original purpose of the covenant, and perhaps more cases which will fall
within para (aa) but not para (a), because there are not such
changes as to justify a finding that the covenant should be deemed obsolete,
but none the less the benefits which it confers are not substantial and can be
compensated by money.
Facts
I heard
evidence from Mr Robert Sellwood frics
as to the history of the site and its neighbourhood, producing plans showing
the gradual development of the estate. He also gave opinion evidence that the
covenant was obsolete. That conclusion was based on the understanding that the
covenant restricted use to use as ‘paddock land’ to serve the adjoining
building plots and that that meant for the grazing of horses, for which as he
believed there was no demand at least from the adjoining owners. His opinion
was, in my judgment, illfounded, for the covenant is not a restriction on use
but on building, and in the context where summer houses and cattle sheds are
included among the permitted buildings, I do not think that the reference to
paddocks in the deed means more than that the land was intended to be enclosed
as amenity land for the adjoining plots.
The two copies
of the deed which have been produced indicate that lots 157 to 163 (the
majority of the paddock land east of the footpath) was held with the adjoining
building lot 35 to 38, and that paddock 169 to 170 was held with an adjoining
building lot 49 to 51. I have no basis for thinking that the paddocks were not
laid out in the manner envisaged by the deed; the plans produced by Mr Sellwood
indicate that, at least in the case of the land to the west of the path, they
were thereafter occupied as garden land, with, it would appear, some building
of greenhouses within the area required by the covenant to be kept open. The
history of the land to the east of the path is less clear. It appears to have
been in single ownership when the water board acquired it. Thereafter I find as
a fact that it has been used both as a playing field and for the grazing of
horses, in both cases other than in connection with the adjoining houses.
Meanwhile the
estate was developed gradually over the years until the first world war, with
attractive houses, sufficiently in conformity with the intentions of the deed
for the departures to be immaterial for present purposes. I do not regard the
development of sites originally reserved for waterworks to serve the estate,
which were apparently not needed, as significant. The estate is accordingly, to
this day a pleasant quiet residential area whose character well justifies its
designation as a conservation area. So far as the area of the application site
is concerned I do not regard the erection in the post-war era, of three blocks
of flats at the northern end of Western Road as materially affecting the
character of the neighbourhood.
Nevertheless
between the wars and immediately after the second war, developments did take
place which, in my judgment, made significant changes to the character of the
paddock lands. Some land on the western fringe was apparently incorporated into
adjoining developments taking place off the estate. In April 1935 the official
arbitrator modified the covenants as they affected lots 167 to 174, being about
half of the paddock land to the west of the path, to permit the erection of
what is now a cul-de-sac of some 20 houses in Shakespeare Gardens, whose
gardens indeed seem to have extended beyond the permitted lots. There were
erected, apparently in breach of covenant, the eight bungalows forming Buckden
Close forming an incursion into the paddock land on the eastern side of
the footpath. The land between Shakespeare Gardens and the development on the
western boundary is laid out as tennis courts for a private club which has a
pavilion, apparently erected in breach of covenant within the area where
building even of permitted buildings was prohibited.
The result of
these changes is that the only open land left of the original paddock land
beside the application site itself, and the area incorporated into the ends of
the gardens of 1½ to 3½ Southern Road is that part of lot 164 to 166 which has
been incorporated into Mr Andrewes’ garden at 11 Southern Road. Even on this it
would seem that the summer house which Mr Andrewes has erected is within the
area which the covenant requires should be kept clear even of permitted
buildings. Likewise a summer house in the garden of no 3, to which I will refer
further later, seems almost certainly to be in such area.
It seems that
this reduction in the open area has made the openness of the application site
even more valuable in the estimation of objectors. Many value the view they get
of the site as they walk past it, on the footpath which leads to East Finchley
Underground Station via an attractive recreational area, or in the opposite
direction leads towards Highgate Woods. Robert Maunder Taylor frics, who gave evidence on behalf of
the objectors, produced excellent photographs of the views available over the
site from the houses of objectors. I also had the advantage of a view from nos
1, 3, 5 and 11 (particularly the garden) in Southern Road and from a house in
Shakespeare Gardens. All enjoy a view over the application site which I accept
is of practical benefit and is of substantial advantage to the owners. I shall
return to the details of such views and their value to the properties later. I
do not regard the much more restricted views which could be obtained from 9 and
13 Southern Road or 2 Eastern Road as falling within that category.
Mr Maunder
Taylor gave it as his opinion that the other houses would be adversely affected
by the proposed development in other ways. Many objectors were fearful of the
effect of traffic emanating from the 27 proposed houses, in creating noise,
danger, congestion or parking within the estate. I see no reason to fear that
it will have a greater effect proportionately than the traffic from Shakespeare
Gardens which Mr Tyler who lives directly opposite to the entrance regarded as
imperceptible. Indeed as the proposed development provides parking and has an
access off the estate its impact will probably be less.
Mr Maunder
Taylor suggested that the erection of smaller and he thought cheaper houses
would result in a ‘watering down’ of value of existing houses. Except possibly
during the construction period when there may be some disturbance and fear of
the unknown, I see no reason why the erection of the proposed houses in their
separate enclave should affect the value of houses on the estate, except in so
far as a greater supply of houses in the locality may marginally reduce prices,
and I reject Mr Maunder Taylor’s opinion to the contrary.
I have a
somewhat more sympathetic reaction to the fears which he has expressed about
the adverse effect of the footpath’s becoming close
restriction does not however prevent that, and so does not secure such benefit
except if it can be said to make such fencing less likely. Although I accept
that there would be no incentive to close fence an open paddock, there is no
restriction, as I read the covenant, against the application site being used as
garden land, for which, as can be seen on the west side of the path, close
boarding is the obvious choice.
Mr Maunder
Taylor fears the loss of trees if development proceeds. Again the trees are not
protected by the covenant. A line of trees alongside the path is, however,
protected by a tree preservation order and the reports of the relevant officers
show that the planning authority satisfied themself that their preservation
would not be inconsistent with the development, which they permitted. I do not
find myself justified on the evidence in holding that the restriction, in
impeding the development, is securing the preservation of these trees.
Conclusions
on grounds of application
My above
findings of fact mean that I am satisfied that the restriction does secure
practical benefits of substantial value or advantage to persons entitled to the
benefit of it, and that accordingly the proposed discharge or modification
would injure them. Accordingly I am bound to conclude that I have no
jurisdiction to make an order on grounds (aa) or (c).
My
jurisdiction under para (a) depends, for the reasons which I have
already given, on whether the original purpose of the covenant is still capable
of being served. The covenant is a covenant against building in a strip of 200
ft from the southerly boundaries of the building lots on the south side of
Southern Road. The availability of the land to serve as amenity land for the
houses on those plots, which is in effect recited in the description of the
layout, was secured initially not by the covenants but by the layout itself
leaving at that time no access to the proposed paddocks except through the
building plots. The only advantage of the mutual covenants against building in
that area was therefore to procure for the owners of each adjoining building
plot an open view across his neighbour’s land. This I take to be the original
purpose of the covenant.
Of the seven
building plots to the west of the path none can enjoy that open view either to
the west, where either adjoining development outside the estate impinges on the
view or Shakespeare Gardens does so, or to the east where either Shakespeare
Gardens or, albeit to a lesser extent, Buckden Close, impinges on the view. On
plot 35 to 38 Buckden Gardens has been erected. On plot 31 to 34 there is the
pair of Victorian semi-detached houses 3 and 5 Southern Road and a single modern
detached house 1½ Southern Road. Subject to Buckden Gardens, which, in my view,
impinges very significantly on no 5 and significantly on no 3, the application
site can afford open views to the houses on that single building lot. I do not
regard that as sufficiently serving the purpose of the system of mutual
covenants over 12 paddock lots for the benefit of, at any rate, the nine
adjoining building lots, for me to do other than deem the covenant to be
obsolete.
Discretion
It does not
follow that because the covenant is to be deemed obsolete, I should
necessarily, modify or discharge it. I am required by subsection (1B) to:
take into
account the development plan and any declared or ascertainable pattern for the
grant or refusal of planning permission in the relevant areas, as to the period
at which and the context in which the restriction was created … and any other
material circumstances.
In the
development plan adopted in 1982, the site is shown on a proposals map with the
note that: ‘The Council has agreed in principle to the residential development
of the [application site]’. Mr A H Cumberbirch, the head of the policy division
of the planning and programmes service of Haringey Council, gave evidence as to
the council’s policies and their emerging unitary development plan. The effect
of the inspector’s recommendation on the application site after an inquiry in
1994 is that the site, being one where the council have approved planning
permission, should continue to be shown as such on the proposals map in the
emerging unitary plan. I accept that if planning permission had not been
granted then it would not have been so shown; and I accept that if it had not
been so shown it may well have been shown as part of an area of significant
local open space; and that if it had been so shown the pattern of planning
decisions in the area is such that permission for residential development on
the site would probably not have been granted. But all this is on an unreal
hypothesis. The council did agree, before the Haringey district plan which
constitutes the statutory development plan, that the site should be developed
residentially and did so show it on the proposals map, and for this reason
planning permission was granted on appeal and has since been granted in the present
form by the council. I am bound to treat this as having some weight in favour
of granting an order.
It perhaps
goes without saying that this is a covenant now nearly a century and a half old
entered into in a very different context both as to the surrounding area and as
to expectations and usefulness of amenity space for a private house. It is also
true, as Mr Sellwood points out, that development is now regulated by planning
control, but I reject his suggestion that that is a sufficient reason to exercise
a discretion to discharge a covenant. These factors alone would not therefore
persuade me to modify this covenant. But when the factors which the statute
specifically requires me to take into account point in the same direction, it
requires significant other material circumstances to justify a different
exercise of discretion.
I have heard
evidence as to the ecological interest of the site from Mr J G Kelcey on behalf
of the applicants, and Mr David Bevan, the council’s conservation officer, on
behalf of the objectors. The site was proposed to be designated as an
ecological site of borough importance Grade II, in the emerging UDP, but the
inspector has recommended that the question of
would be for the objectors, if they wished to persuade me that I should refuse
to exercise my discretion because of the ecological interest of the site, to
satisfy me that it does indeed have such interest of an importance that should
weigh in the balance. I am not so satisfied on the material before me. The
basis of the recommendation as to designation in the UDP, which was not made by
Mr Bevan, is neither clear nor proved. Mr Kelcey does not accept that the site
is worthy even of such classification and I am not so satisfied for the
purposes of my decision.
Mr Dowding,
who has presented his clients’ case at all times with exemplary clarity,
moderation and persuasiveness, has suggested three other matters relevant to my
discretion. A number of objectors told me that they had relied on the covenant
when they acquired their properties. Of these, I regard the cases of Mr
Andrewes, who bought an extension of his garden in 1983 and accepted a covenant
for the benefit of his vendor against building because he was already bound; of
Mr and Mrs Howell who bought 3 Southern Road in 1981, and erected a summer
house at the bottom of their garden; and of Mr and Mrs Jack who bought the site
on which he erected no 1½ to take advantage of the views to the south in 1961,
as of particular importance. It is however an odd irony that, admittedly only
after careful review, I have come to the conclusion that all three have, since
their initial purchases, broken the covenants which they seek to preserve.
Mr Dowding
also points out that this is not a case where the site would be without use if
the covenant was not relaxed. A relaxation would give to the applicant a very
large increase in the value of its land, but this is the usual reason for such
applications and is not of itself a reason for refusing an order. That the
value subject to the covenant is not nil is not of great weight.
Finally, Mr
Dowding relied on a matter which has caused me to hesitate. The council wish to
create what they call a ‘green chain’ of continuous open space acting both as a
landscape, recreational and ecological link between the open spaces in this
part of north London. This, no doubt, is a worthy aspiration and I would regard
it as a material matter to weigh in deciding whether to relax the covenant even
though it is an objective quite outside the purpose of the original covenant.
Parliament has vested the tribunal with a power to interfere with property
rights, presumably because parliament thought that such interference could be
justified in the public interest. I therefore do think that the public interest
is material to the exercise of the tribunal’s discretion. The council’s
aspiration however seems to me to be too inchoate to affect my decision. Mr
Cumberbirch held out no possibility of any council action to achieve this
purpose, even if I refused to grant an order. The council could have used the
1993 planning application as an opportunity to create or preserve at least the
possibility of a pedestrian route along the line of the proposed chain. They
did not. I think that I must take that as indicating the weight to be attached
to this aspiration.
I have not
only heard nine of the objectors giving evidence on oath but
by the sincerity of their concern at this application. Nevertheless, I do think
that it is appropriate that I should exercise the power which I have held that
I have, to discharge the principal covenant and to so modify the other
covenants as to enable the permitted development to proceed, in accordance with
the planning permission dated October 13 1993.
Compensation
The applicants
called Ian Rennie frics to give
evidence of his opinion as an experienced valuer that the proposed development
would not affect the value of any of the objector’s properties. He had, I
think, underestimated the impact on the three immediately adjoining properties
and had not inspected at all the garden of 11 Southern Road.
Mr Maunder
Taylor prepared valuations of the diminution in value which he said would arise
to each of the objectors’ properties if the development proceeded. He purported
to be valuing the effect which would occur because of the development, but,
perhaps inevitably, drew from his experience of difficulty either in advance of
development or during construction. In the circumstances his figures did not
really purport to be valuations, and I would, in any case, be very wary of
relying on them because they seemed to me to lack consistency as they addressed
properties further away from the site, and to depend on an exaggerated view of
traffic impact and a very doubtful expectation of what Mr Maunder Taylor called
‘watering down’ of values.
Compensation
is:
to make up
for any loss or disadvantage suffered by [the objector] in consequence of the
discharge or modification.
Such loss in
the case of a long-standing resident with no intention of selling is not best
measured by the diminution in the value of his property. His primary loss is
the loss in the enjoyment of his property and the extent of it will depend at
least in part on his own assessment of what it is that he enjoys. I think that the value of the house
is of some assistance in putting a monetary value on the loss of enjoyment, and
I am grateful to the two valuers for an agreed schedule of such values.
It is not
however exclusively an exercise in awarding damages. The amount of the
compensation is to be ‘such sum as the tribunal may think just’. I think that
this requirement imports a further consideration. The right to enforce a
covenant under a building scheme arises in equity, because equity creates a
mutual system of obligations and rights, sometimes referred to as a local law.
Those who do not submit to the local law should not be in the same position as
those that do, when it comes to being compensated for loss because another has
been relieved of his obligation under that law.
For these
reasons I do not think that it is just that the occupant of a house which
exists only because his predecessor in title was relieved of the
awarded compensation for his loss as a result of such modification. For this
reason, I do not think that I should award any compensation to any objector in
Shakespeare Gardens even though I am satisfied that they will suffer loss of
amenity as a result of the modification of the covenants.
Where the loss
does not arise from an exemption from the covenant but has been increased as a
result of a departure from the obligation of the law, I do not think it
just that the loss should be assessed on
the basis of the enjoyment that the loss should be assessed on the basis of the
enjoyment that such departure gives the objector. I have been exercised as to
whether in such assessment it makes any difference that the departure was
authorised under section 84 or constituted a breach of covenant which has not
been restrained. I have accepted Mr Dowding’s submission that it should not be
part of the exercise of assessing compensation to punish the covenant-breaker.
Applying these
principles, I would assess compensation for Mr Jack on the basis of the house
as if it had been built within the building line and not as it has been
extended to create terraces on the first and second floors extending beyond the
building line. The second floor contains the main living room of the house
which enjoys wide views southwards and south eastwards to the Highgate Ridge. I
have studied the photographs of such views as well as seeing them myself on a
cloudy day, and I have studied the sight lines prepared from sections through
the proposed development. I have considered the position in the garden where
the rear fence is screened by a 9 ft-high shed. I have taken into account the
applicant’s undertaking to improve the tree screening, subject to the local
planning authority’s agreement by substituting hornbeams for whitebeams. I note
that the agreed value of 1½ Southern Road was, in November 1994, £350,000. I
think that suitable compensation for the loss of Mr and Mrs Jack is £10,000.
No 3 is more
directly behind the proposed development with a more restricted view eastwards.
Its view westwards is impaired by Buckden Close, but it is not overshadowed by
that development in its garden to the extent that no 5 is. The main living room
is on the first floor, high enough for the development to impinge on the view
but not so high as to enjoy the very long views available from the living room
of no 1. Of particular importance to Mrs Howell is the enjoyment of her summer
house, but I have come to the conclusion that it must have been built on
paddock land and therefore is in breach of covenant. I therefore disregard it.
The agreed value of this house is £220,000. Allowing for the greater effect
upon this property than on no 1½, but the less value of the property, I get
back to the same figure of £10,000 as being due by way of compensation.
The effect on
no 5 is less than on no 3, because of the greater impact from Buckden Close,
and its agreed value is £170,000. I award compensation to the two objectors,
the joint owners of this property, in the sum of £7,500.
Mr Andrewes’
claim for compensation arises out of his garden land
it he enjoys seclusion and privacy coupled with open views of the kind
that the covenant was designed to protect which advantages will, in my judgment
be severely reduced by the proposed development. He accepts readily that he has
pleasures in his garden which will be little impaired. He accepts also that the
summer house which he has erected constitutes a breach of covenant, but he
still has a patio for party giving upon which he expended money and from which
views will be affected. I assess his compensation in the sum of £5,000.
I would accordingly
order that on payment of the above sums in compensation the covenants should be
modified as asked.
This decision
determines the substantive issues raised between the parties, and the
tribunal’s award is final. The parties are invited to make such submissions as
they are advised as to the costs of the hearing, and a letter accompanies this
decision as to the procedure for submissions in writing. The tribunal will, in
due course, incorporate an order as to costs in an addendum to this
decision. Rights of appeal under section 3(4) of the Lands Tribunal Act 1949
and Rules of the Supreme Court Ord 61 will not accrue until the decision has
been thus completed, ie from the date of the addendum.
Addendum —
decision as to costs
Both the
applicant and the 28 objectors who have appeared at the hearing (other than
Haringey London Borough Council who withdrew on agreed terms) apply for costs.
The applicant
applies on the ground that it has successfully obtained the modification of the
restriction for which it applied, and costs should follow the event. Although
that is the rule in ordinary litigation, and would be applicable in the Lands
Tribunal to cases analogous to such litigation, I do not regard proceedings
under section 84 of the Law of Property Act 1925 as usually so analogous. In
such cases the applicant is seeking the exercise by the tribunal of its
discretion for the benefit of the applicant. Such exercise deprives a party of
the benefit of a restriction, to which that party would, but for the application,
be entitled.
Unless an
objector behaves unreasonably, a successful applicant should, in my judgment,
usually bear its own costs and may in certain circumstances appropriately be
required to pay objectors’ costs.
Among the
circumstances which, in my judgment, may make an order for costs against a
successful applicant appropriate are when the application is made, inter
alia, on the ground contained in para (c) of section 84(1) because it is
denied that compensation should be awarded, and modification is then granted
only on an alternative ground and compensation is awarded.
Such was the
position in this case, although compensation was awarded only to some of the 28
objectors represented by Mr Andrewes. All however, presented a single case with
the same witnesses and counsel appearing on behalf of all of them. The
applicants’ own submission in support of its application for costs included the
submission that:
In cases of
multiple objections where objectors have a common interest in objecting and put
forward a joint case at the hearing, as in this case, costs should be decided
on the basis that in reality there is one objector …
In this
regard, the contention on behalf of the 28 objectors was the same. Without
deciding whether in all cases it would necessarily be appropriate to treat
multiple objectors singly represented, as if they were one single objector, I
think that it is right in the face of such united submissions to do so.
Of the 28
objectors only four have been awarded compensation. The compensation to these
four however amounted to £32,500. The applicants on November 22 1995 addressed
letters to all the objectors other than Haringey London Borough Council making
what were described as sealed bids in various sums but amounting in respect of
the 28 objectors to £20,755. Criticism has been made of the form of these
letters. They do not offer to pay the objectors’ costs until the date when they
were sent, nor do they invite the recipient to withdraw his objection in
consideration of the proposed payment. None the less, I would regard these
letters as material to the question of what order should be made as to costs
subsequent to that date. Treating the offer as if it had been made to a single
objector, the amount of compensation awarded exceeds the amount offered, even
disregarding costs to the date of the offer, and to that extent the objectors
have succeeded in their objection. The applicant is not however to be in a
worse position than if it had made no offer at all.
I note that in
Stockport Metropolitan Borough Council v Alwiyah Developments
(1983) 52 P&CR 278, the Court of Appeal disturbed an award of costs in
favour of the applicant who obtained the modification applied for only on
payment of compensation, only to the extent of ordering that each side should
pay its own costs. Dillon LJ said at p286:
The Member of
the Tribunal did not give any special reason for ordering the council to pay
the developers’ costs … and in my judgment that was not a proper order to make.
I do not infer
from this that an order that the applicant should pay the objectors’ costs
would not be a proper order even in the absence of special reasons. I would
not, however, regard such an order as automatic, although unsuccessful reliance
on para (c) would usually be sufficient to make it appropriate.
In the present
case however there are, in my judgment, particular reasons why an order for
costs should be made in favour of the objectors. The applicant’s case was, as I
have explained in my decision, based on a misconstruction of the terms and
effect and therefore purpose of the deed poll. A factor of some importance both
in the exercise of my discretion and the amount of compensation which I awarded
was the objectors’ own breach of the restriction, but this was not part of the
applicant’s case which the objectors knew they would have to meet. I think that
the objectors’
only upon terms more onerous than they were willing to offer the applicant
should pay the costs of the 28 objectors represented by Mr Andrewes to be taxed
on the High Court standard basis if not agreed.
There will be
no order as to costs in respect of the other objectors.
The
application was allowed.
