The modification of a covenant may affect easements too

Re Land at Tubney Manor Farm [2018] UKUT 395 (LC) concerned covenants imposed in a transfer requiring the transferees “not to use the Property for any purpose other than for the Permitted Uses”. The permitted uses were described as use as “a single private dwellinghouse and for agricultural or forestry purposes” and the transfer included a right of way “at all times and for all purposes in connection with the use and enjoyment of the Property for the Permitted Uses to pass and repass with or without vehicles” over a private roadway to and from the public highway. Fifteen years later, the transferees decided to convert two of the barns on their land into a dwelling and to move into them. However, the conversion of the barns would infringe the permitted user covenant, which Magdalen College, Oxford had extracted from them when it had sold them the land 16 years previously. Therefore, they applied for the modification of the covenant under section 84(1) of the Law of Property Act 1925. They relied, in particular, on ground (aa). It applies where a restriction impedes some reasonable use of land and does not secure to those entitled to the benefit of it any practical benefits of substantial value or advantage (so long as a monetary payment will provide adequate compensation for any loss or disadvantage suffered if the covenant is modified or discharged). The College suggested that a restrictive covenant must be the sole impediment to a proposed use for ground (aa) to apply – and pointed to the right of way, arguing that it presented another obstacle to the development because it was exercisable only in connection with “the Permitted Uses”. However, the Upper Tribunal disagreed. Section 84(1)(aa) did not state that the covenant must be the sole impediment to the proposed use, or even the main impediment to such user. And there was no reason to imply such a provision. Furthermore, if an easement is expressly linked to the authorised use of land for the purposes of a restrictive user covenant, there is Court of Appeal authority for the proposition that the subsequent modification or discharge of the user covenant may effect a corresponding change in the scope of the easement: see Hotchkin v McDonald [2004] PLSCS 97. So, if the Upper Tribunal were to modify the covenant in order to allow the applicants to create a second private dwellinghouse on their land, as a matter of construction, the effect would be to permit the right of way to be exercised for the benefit of two private dwellinghouses, instead of one. And, if the Tribunal was wrong about this, the College would be entitled to take such action as it thought fit in respect of the use of the right of way. The Tribunal was satisfied that the conditions set out in ground (aa) were met and that it was appropriate to allow the application. However, in return, the applicants would be required to pay £60,000 (which the Tribunal considered was the amount by which the restrictive covenant had reduced the purchase price paid to the College in 2001), to enter into restrictive covenants preventing them from commenting on or objecting to any application for planning permission in respect of the land retained by the College, and to register an appropriately worded restriction against their registered title to ensure that they and their successors in title would pay a fair and reasonable proportion of the cost of repairing the access road. Allyson Colby is a property law consultant