There are few cases so iconic that lawyers remember the names long after university or law school. One is Tulk v Moxhay [1848], the case on the restrictive covenants which have prevented building on Leicester Square. The date of that case demonstrates that well-drafted restrictive covenants on land are an effective way of controlling development of land indefinitely. However, not all restrictions are worthy of preservation, so the Law of Property Act 1925 contains in section 84 a mechanism for the release of land from restrictive covenants in certain circumstances.
Release (or modification) of covenants under section 84 can be sought if a change in the character of a neighbourhood means that the covenant has become obsolete, or if the covenant impedes some reasonable user of the land. In the latter case the person with the benefit of the covenant should not obtain any practical benefit of substantial value from the covenant, or the covenant should be contrary to the public interest and in either circumstance money would be an adequate compensation.
In practice the section 84 procedure is lengthy and the results unpredictable. For example, the person seeking discharge must contact any party who may benefit from it – effectively giving those parties notice that they have a reason to object which they might not otherwise have appreciated. Faced with historic covenants of uncertain enforceability, property developers often prefer defective title insurance, obtainable for a single premium and capable of benefiting successors in title and their mortgagees. The insurance policy provides a sum of money to defend against future claims and to pay compensation to neighbouring landowners who subsequently demonstrate that their rights have been infringed by the breach of covenant or successors in title who can no longer use the land. But insurers are loath to offer such policies if it seems that neighbours are likely to object; among other things, insurers will want to see full copies of all objections to the development received during the planning process.
Perhaps such objections are the reason why Derreb Ltd did not take out insurance against its proposed development in Blackheath, London, and instead applied to the Upper Tribunal of the Lands Chamber under section 84 (Derreb Ltd v Blackheath Cator Estate Residents Ltd and others [2017] UKUT 209 (LC)).
Derreb had bought land which was conveyed in 1956 subject to a restrictive covenant not to use it ‘for any purpose other than as a sports club or for the erection of detached houses for use as private residences’. Derreb’s proposals were for 38 detached houses, 25 terraced houses and 67 apartments.
The first question for the tribunal was whether the covenant was obsolete. The property had not been used as a sports ground since 1999 and everyone accepted that there was no prospect that it would return to use as a sports ground. That restriction was held to be obsolete. The main body of the judgment is on the requirement for dwellings to be detached. The developer had never actually submitted an application for planning permission for the development of solely detached houses. In expert evidence, the developer submitted that the local planning authority had objected to the current scheme because the density levels were too low, and the developer’s expert was adamant that the scheme represented the maximum number of detached houses possible within planning policy and material planning considerations.
The objectors were the Blackheath Cator Estate Residents Ltd, who own the freehold of the estate roads, and two landowners whose properties were near the proposed development. The road owners argued that the stipulation of detached houses operated as a density control: the roads have a spacious, quiet and lightly used atmosphere which benefits all those entitled to use them. The tribunal found that the estate had not changed in nature to such an extent that there was no longer an advantage in specifying that only detached houses should be built. The 1956 covenant had been imposed to complement and preserve the pleasing nature of the estate and still operated to achieve that. It was not, therefore, obsolete. The objectors did not provide any expert evidence to the court. The tribunal seems to have accepted that the covenant had defeated the local authority’s objection of low density, and to have been persuaded that if a scheme of this nature did not proceed, the authority would use its powers of compulsory purchase to build a great many more dwellings.
However, the tribunal did not stop there. It also had to consider whether the covenant impeded some reasonable use of the land. There was certainly no public interest in allowing the property to remain derelict and undeveloped. The tribunal held that the proposed scheme was a reasonable user, which would be impeded if the restriction remained in place. How were they to resolve the dilemma of a valid restriction preventing a reasonable use of the land?
In Driscoll v Church Commissioners for England [1957] 1 QB 330, it was recognised that a covenant could still serve a useful purpose even if the purpose originally contemplated could not be achieved. This is because the covenant enables those entitled to the benefit of it to keep control of what is built. They may no longer be able to require that solely detached houses are built, but they may be able to prevent a development prejudicial to them even though, as a matter of planning, such a development may be acceptable. The restrictive covenant gives some control of development beyond mere planning powers, and this is an advantage to those who benefit from such covenants.
Judgments give only a tantalising glimpse of the legal drama during the hearing itself. This particular judgment makes it clear that the parties (all of them) modified their respective positions during the course of the hearing. By the time the developer’s barrister stood up to argue that the covenant was obsolete, the two landowners had already accepted that some modification of the covenant would be sufficient. These two objectors were not represented and it seems probable that the tribunal played an active role in helping them realise that a modification of the restrictive covenant might be an acceptable solution. Once all submissions had been made, the tribunal invited all the parties to agree terms of a revision to the covenant which would be mutually acceptable. Amending the covenants provided an elegant means for the tribunal to resolve a situation where all parties had a reasonable point of view and a logical argument.
In the end, the restriction on detached houses near the two landowners was preserved, but relaxed on the rest of the property. New restrictions were imposed to guard against overlooking by the detached houses. The number of dwellings was capped at 130. Finally the rights of way over the Cator Estate roads were substantially circumscribed – only pedestrians, pedal cycles and mobility scooters can use them. This modification is actually more onerous than the traffic permitted by the original covenant. The control on traffic is intended to maintain the tranquility of the estate; the amended covenants provide readier means of enforcement for the Cator Estate than would exist if they had to rely on planning law alone.
What broader lessons can be drawn from the case? It is a salutary reminder that restrictive covenants do not necessarily need to be removed and that updating may be enough. It provides an interesting example of the proactive role played by judges and other professionals in the Upper Tribunal. It shows the importance of providing proper expert evidence, though I suspect I am preaching to the converted. Finally, it demonstrates the longevity of our drafting and its wider impact: a covenant imposed in 1956 still benefits the dominant land today.
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