Restrictive covenants
To modify or not to modify a restrictive covenant…that is the question!
In Derreb Limited ("Derreb") v Blackheath Cator Estate Residents Limited, Prof Martin Prince and Mrs Mie Prince, and Mr Paul Harpin and Ms Clare White ("Objectors") (Case No. LP/27/2014) [2017] UKUT 209 (LC) Upper Tribunal (Lands Chamber) ("UT") the UT considered an application by Derreb to discharge or modify a restrictive covenant on a site where it was looking to carry out residential development in Blackheath ("Property").
Facts
The Property had been used as a sports ground until around 1999 but after that had remained vacant and unused.
The Property was subject to restrictive covenants contained in a 1956 Conveyance, including a clause stating:
"The property hereby conveyed shall not be used for any purpose other than as a Sports Ground or for the erection of detached houses for use as private residences only…".
Derreb wanted to develop the Property with detached and terraced houses and apartments ("the Development") but it was prevented from doing so by the covenant. Therefore, Derreb submitted an application to discharge or modify the covenant so that it could proceed with the Development.
The Objectors were occupiers of properties on adjoining land and argued that the tranquil nature of their properties and low volume of traffic would be disturbed if the Development was allowed to proceed.
As at the date of the hearing, there was no planning permission in place for the Development but it was generally accepted that planning permission would be granted in due course. The Property was also zoned as residential development in the Local Plan and there were no prospects of the Property being used as a sports ground again.
Derreb argued that planning permission was unlikely to be granted at the Property for detached houses only. Therefore, there was a conflict between planning policy demands and the wording of the restrictive covenant and it was for the UT to decide whether or not to discharge or modify the restrictive covenant to enable the Development to proceed.
Law
Section 84 of the LPA 1925 gives the UT power to discharge or modify a restrictive covenant if the covenant has become obsolete or if the UT is satisfied that the covenant prevents the reasonable use of land and in doing so it is contrary to public interest and monetary payment would be adequate compensation to anyone disadvantaged by the decision.
Findings
The Tribunal ordered that the restrictive covenant as it related to a sports ground was obsolete and therefore no longer enforceable.
The UT commented that the restrictive covenant which restricted development to detached houses only was not obsolete as there had been no change in the character of the property or neighbourhood so as to deem the covenant obsolete, but the UT ordered that the covenant should be modified to allow the Development to proceed.
This was because, without modification, the covenant restricted the reasonable use of the Property. However the UT imposed restrictions on the Development (how estate roads could be used, location of balconies and the imposition of elevation constructions requirements in order to satisfy individual objectors).
Comment
This is a useful example of a case in which a developer successfully argued for a restrictive covenant to be modified to allow development to proceed and the sorts of conditions the UT may impose to satisfy objectors concerns. Each case will be fact specific and developers should exercise caution when buying potential development sites by fully investigating the legal and planning title to the property to ensure that there are no restrictions which could prevent development.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.