Recent cases have established that, where a covenant requires the owner of a property not to do something without the consent of a seller who no longer exists or has died, then the restriction either lapses or becomes absolute.
In Veee Ltd v Barnard [2018] UKUT 379 (LC) the Upper Tribunal was considering the effect of two covenants affecting houses in a development, which were expressed to be imposed as part of a building scheme. The first prohibited the erection of any new building (or any addition to or alteration to the elevation of an existing building) on a new development without obtaining the developer’s approval for plans, elevations and specifications. And the second covenant prohibited the covenantor from using the burdened land except as a private dwelling for the use and occupation of one family.
Applying Crest Nicholson Residential (South) Ltd v McAllister [2002] EWHC 2443 (Ch), the tribunal considered that the parties’ intention must have been for the developer to be able to exercise some control over the development of properties that it had already sold, while there were still others left to sell – as opposed to imposing an absolute prohibition on development when the developer ceased to exist. Consequently, the covenant against alterations, additions and new buildings had ceased to have any effect. It was obsolete, and was therefore liable to be discharged pursuant to section 84(1)(a) of the Law of Property Act 1925 – and also under section 84(1)(c) because its discharge would not injure anyone.
However, the user covenant also prevented the owner of the burdened land from building an additional house on the property. And it was indisputable that the owners of the other properties on the development had the right to enforce it pursuant to the words of annexation used when the covenant was given, as well as under the building scheme. Was the tribunal prepared to modify the covenant to enable garden land to be used to accommodate another dwelling?
The tribunal refused to modify the covenant under section 84(1)(c). This would have been possible, if modification of the covenant would cause no injury. But the construction work was bound to cause some inconvenience to other residents – and that was enough to put paid to an application under ground (c).
Did section 84(1)(aa) assist instead? Ground (aa) 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). Despite objections on various grounds, the tribunal decided that the construction of a further house would not make very much difference to anyone. And although the short-term inconvenience that was likely to be caused by the construction work had put paid to the application under ground (c), the tribunal took a different view in relation to ground (aa). This was not a covenant whose primary purpose was to prevent disturbance caused by construction. Therefore, protection from disturbance was not a benefit of substantial advantage for the purposes of ground (aa). So the tribunal modified the user covenant to permit the construction of a further house without awarding the objectors any compensation.
Allyson Colby, property law consultant
