COMMENT Three decisions concerning restrictive covenants have been given in recent months. Each features the development of houses.
On Twitchells Lane in Beaconsfield, “a pleasant rural road”, stands Severalls. Severalls sits on the highest part of its plot and has a front garden on its southern (sunny) side which slopes downhill towards the lane. The front garden is terraced, has been cultivated with care and is the family’s outdoor space. The rural, leafy outlook of Severalls, in which buildings do not intrude, was held to be a big attraction by the Upper Tribunal in the recent case of Creebray Ltd v Deninson [2020] UKUT 262 (LC).
Creebray owned the property next door to Severalls, Oldways, which was a vacant plot. It applied to have a restrictive covenant – to which Oldways was subject – discharged or modified pursuant to section 84 of the Law of Property Act 1925. The covenant prevented building in front of a line 50 feet away from Oldways’ rear boundary. Creebray wanted to build a large house over three levels which would be mostly in front of the building line. Planning permission had been granted subject to conditions designed to preserve the privacy of Severalls. The owners of Severalls had the benefit of the restrictive covenant. They objected to the application claiming that it would have a detrimental effect on their property because of the loss of amenity and privacy caused by being able to see the proposed house and by being overlooked respectively.
Section 84(1)(aa) gives the Upper Tribunal power to discharge or modify a restrictive covenant if its continued existence would impede some reasonable user of the land; in impeding that user, the restriction does not secure any practical benefits of substantial value or advantage; and that money will be an adequate compensation for any loss or disadvantage.
It was held in Creebray that while the proposed house was large and possibly overbearing, having planning permission, its construction was a reasonable use of the land. Further, as the building of the proposed house would be a breach of the covenant, the covenant impeded that reasonable use. However, the restrictive covenant ensured a leafy outlook from Severalls without sight of buildings. The discharge or modification of the covenant to enable the proposed new house would spoil that purpose and the layout and rural aspect. Consequently, the covenant secured a practical benefit, which was of substantial advantage.
89 Holland Park
The Court of Appeal has also recently considered objections to development on aesthetic grounds. In Hicks v 89 Holland Park (Management) Ltd [2020] EWCA Civ 758; [2020] EGLR 28, rather than seeking the discharge or modification of restrictive covenants affecting her property, Sophie Hicks sought permission under them. 89 Holland Park Management Ltd (the company) had the benefit of covenants which required consent to the plans before any application for planning permission and consent before work could commence.
The company was the freehold owner of 89 Holland Park, London, a property divided into flats. Each of the leaseholders of the flats were shareholders in the company. The company refused Hicks’s applications for consent, among other things, on aesthetic grounds. While the company was interested in the property only as reversioner, the Court of Appeal held that the starting point was to identify the land for the benefit of which the covenant had been given, in this case 89 Holland Park.
Further, the effect of section 78 of the Law of Property Act 1925 was to deem a covenant to be made with the covenantee, their successors in title and the persons deriving title under them. Consequently, the company was entitled to take into account the leaseholders’ interests and, in doing so, could refuse consent on aesthetic grounds. Property interests in connection with a covenant went further than the capital or rental value of property and they could include the amenity value of the right to enjoy the property.
Sheppard
By contrast, the company with the benefit of restrictions in Sheppard v Martin Grant Holdings Ltd and another [2020] UKUT 171 (LC); [2020] PLSCS 124 was unable to allege any loss of amenity value. Neil Sheppard had planning permission to demolish the garage on his property and build an additional house. He sought modification of restrictive covenants to which his property was subject to enable him to take those steps.
The holding company with the benefit of those covenants held roads and several areas at the boundary of the estate on which Sheppard’s property was situated. The concluding part of section 84(1) provides that an order discharging or modifying a restriction may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award, being either:
- a sum to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification; or
- a sum to make up for any effect which the restriction had, at the time when it was imposed, in reducing the consideration then received for the land affected by it.
The holding company accepted that the value of its retained land would not be affected by the modification of the restrictions. The question was how much more than the original purchase price of £52,500, if anything, the purchaser might have paid had sufficient of the restrictions been removed to allow the proposed second house on the site, subject to planning permission. On that basis, compensation of £4,000 was payable.
Ellodie Gibbons is a barrister at Tanfield Chambers
