Restrictive covenant — Modification — Development — Objection by owners of adjoining land — Lands Tribunal ordering preliminary hearing on whether adjoining owners should be admitted as objectors — Tribunal allowing owners’ application for adjournment on paying “costs of today in any event” — Developer subsequently conceding objectors’ right to be admitted — Whether judge properly awarding developer costs of preliminary hearing — Appeal dismissed
The appellants owned freehold land that adjoined land that was owned by the respondent developer. The respondent demolished the single dwelling-house on its land and replaced it with two detached houses. The work began in February 2004 and was near completion in November 2004, when the appellants, who had objected to the development, discovered that their property might have the benefit of a restrictive covenant that prevented the erection of anything other than a single dwelling-house on the respondent’s land.
In June 2005, the respondent applied to the Lands Tribunal to modify the covenant. In September, the appellants served a notice of objection. The respondent asked for a ruling as to whether the appellants should be admitted as objectors, which was ordered to be determined at a preliminary hearing. At that hearing, the appellants were not ready to prove their case and the judge agreed to an adjournment on terms that the appellants pay “the costs of today in any event”. Shortly after the hearing, the respondent reconsidered its position and decided to admit the appellants’ right to object.
The substantive objection was disposed of by the tribunal and the appellants were awarded their costs. However, the costs relating to the preliminary issue were expressly excepted: see LP/49/2005. The appellants appealed, contending that the judge had erred in principle in failing to award their costs, either because they had won on the preliminary issue or as a result of para 22.4 of the Lands Tribunal Practice Direction, which provided, inter alia, that on an application to discharge or modify a restrictive covenant a successful applicant would normally get all its costs unless it had in some respect been unreasonable.
Held, Longmore LJ dissenting: The appeal was dismissed.
Whatever criticisms might have been made against the respondent, it was for the appellants to justify their claim and they had been forced to concede that they were not in a position to prove their case. Accordingly, the judge’s decision, although harsh, was within his discretion and there were no grounds upon which to interfere.
The practice direction was not designed to cover a situation in which there was a substantial preliminary dispute as to whether the objector had a property right. That position was closer to a conventional property dispute, to which the ordinary costs rules were more appropriate. In a restrictive covenant case, an owner that was seeking release from covenants apparently affecting its land might have no easy way of knowing who was still entitled to the benefit, particularly if the covenants had been imposed many years previously. As in the present case, the applicant might be aware of some potential objectors, but if others emerged in the course of proceedings, the tribunal would have to give appropriate directions to test their claims.
It was difficult to formulate a single rule as to how costs should be dealt with in the early stages before the tribunal. As a general rule, however, it seemed fair that an applicant should not be at risk as to costs, at least until it had had an opportunity to consider the evidence relied upon to establish the objector’s title. If the applicant persisted in resisting the objector’s claim and lost, there was no reason why it should not pay the costs in accordance with the ordinary rule. On the other hand, if an objector had delayed a potential development in reliance upon a right that it was eventually unable to establish, there was no reason why it should not pay the costs. Thus, where a party was claiming the costs of a preliminary issue, it should make clear what it was claiming and from what date.
Laura Collignon (instructed by Royds) appeared for the appellants; Richard Colbey (instructed by Traditional & Contemporary Contracts Ltd under the Public Access Rules 2004) appeared for the respondent.
Eileen O’Grady, barrister
