Wrotham Park Settled Estates v Hertsmere Borough Council

Injurious affection — Housing development by local authority — Breach of restrictive covenant for benefit of neighbour’s land — Amount of compensation — Whether neighbours entitled to diminution in value of land or price of relaxation of covenant — Lands Tribunal ruling in favour of authority that compensation calculated by reference to diminution in value — Decision upheldIn 1944 restrictive covenant was imposed in a conveyance of 51 acres of the Wrotham Park Settled Estates, Elstree, Hertfordshire, providing that the purchasers would not develop the land for building purposes except in strict accordance with layout plans submitted to and approved by the vendor (which consent was not to be unreasonably withheld). In 1976 the local authority acquired the restricted land under the Housing Act 1957. In 1984 they started to develop 5.5 acres of the land in exercise of their statutory powers to provide housing accommodation. No layout plan was submitted to the claimants, which owned the estate. The claimants had no cause of action for breach of covenant since the local authority were carrying out the works under statutory powers, but they were entitled to compensation for injurious affection under section 10 of the Compulsory Purchase Act 1965. They made a claim in the amount of £307,500 calculated as a proportion of the difference in value of the site as actually developed and its value if it had been developed in accordance with the maximum density the claimants would have promoted if a layout plan had been submitted for approval. The local authority argued that compensation should be assessed by reference to the diminution in value of the claimants’ estate as a result of the development carried out in breach of covenant. The Lands Tribunal decided that the appropriate basis for the assessment of compensation was that proposed by the local authority: see [1991] 1 EGLR 230. Held The decision of the Lands Tribunal was upheld. 1. A claim in respect of injurious affection was sustainable only where the claimant would have a right of action for damages but for the exercise of the statutory powers and there was no warrant for an assessment of damages otherwise than by reference to the diminution in value of the claimants’ land as a result of the development carried out by the local authority. 2. The local authority was acting lawfully as they were entitled to override restrictive covenants in exercising their statutory powers where it was necessary to do so for the purpose of carrying out the works. Matthew Horton QC (instructed by Farrer & Co) appeared for the claimants; John Howell (instructed by Carter Lemon) appeared for the local authority.