UK: Restrictive Covenant - Modification Under Section 84(1)(Aa) Law Of Property Act 1925; Practical Benefits Of Substantial Value Or Advantage

Last Updated: 17 July 2014
Article by Emma Humphreys

Re Kerai Upper Tribunal (Lands Chamber), 29 April 2014 [2014] UKUT 153 (LC)

Facts

The applicants purchased a plot of land in March 2007 on which stood a 'lodge' (two-bedroom cottage) which they demolished in October 2008. The objector had owned the adjacent property since October 1981.

Planning consent was granted in October 2011 for a new detached house on the application land together with the retention of an existing garage. The new house was to be situated in approximately the same location as the former lodge but would be larger. A conveyance dated 22 June 1942 contained a restrictive covenant imposed on the application land, which provided as follows:

"That no house or other building shall be erected on the land hereby transferred unless the plans and specifications thereof shall be previously submitted to and approved in writing by the Vendor or his assigns as aforesaid and no alteration in the structure or elevation of any house (whether now or hereafter erected upon the said land) shall be made without the consent in writing of the Vendor or his assigns as aforesaid whose consent shall not be unreasonably withheld."

The objector refused to approve the applicants' plans and specifications for the new house, with the main objections being the potential for overlooking and lack of privacy. The applicants' sought modification of the restrictive covenant so as to allow the construction of a new house as approved in the planning consent.

Issues

Whether the restrictive covenant should be modified in accordance with section 84(1) (aa) LPA 1925 so as to allow the construction of the new house as approved in the planning consent. In accordance with Re Bass Ltd's Application (1973) 26 P & CR 156, the questions posed were:

(1) whether the proposed user was reasonable;

(2) whether the restrictive covenant impeded the proposed user;

(3) whether impeding the proposed user secured practical benefits to the objector;

(4) whether those practical benefits were of substantial benefit or advantage; and

(5) whether money would be adequate compensation for the loss/disadvantage resulting from any modification of the covenant.

Decision

(1) The Tribunal noted that the planning inspector's report had considered the impact of the proposed development upon the amenity of the objector's property and had concluded that it would not harm the character or appearance of the area.

Moreover, the objector's concerns about the proposed construction of the new house were largely dealt with by the conditions attached to the planning consent. The Tribunal also noted that the proposed construction of the new house largely followed the roofline of the former lodge and was no higher than it. In light of these findings, the Tribunal concluded that the proposed user of the land was reasonable.

(2) That the restrictive covenant impeded the proposed user was a common ground between the parties.

(3) On considering the practical benefits secured by the covenant, the Tribunal highlighted that the covenant was focussed on the appearance of the proposed building and made no to other adverse consequences from building works, such as noise, nuisance, smells or disruption. However, the Tribunal agreed that the covenant secured practical benefits to the objector by allowing his property to remain private and not overlooked.

(4) As to whether those practical benefits were of substantial value or advantage, the Tribunal considered that it was appropriate to compare the lodge previously on the applicants' land and the proposed replacement house, since this was a benchmark as to what the objector found acceptable and the objector had accepted in evidence that the former lodge had not diminished the enjoyment of his adjacent property. The Tribunal did not consider the proposed new property to be significantly more intrusive than the lodge and again noted that some of the objector's concerns about the new house were addressed by the conditions attached to the planning consent.

(5) The Tribunal considered the question of whether money would be adequate compensation for the loss/disadvantage resulting from any modification in conjunction with the question of whether the practical benefits secured by the covenant were of substantial benefit or advantage.

The Tribunal found that the value of the objector's property seemed likely to be reduced by 5% (or £75,000) as a result of the impact of the new house. In the context of a £1.5m property, the Tribunal considered this sum to be significant but not substantial for the purposes of s.84 LPA 1925. It therefore concluded that the objector did not secure practical benefits of substantial value or advantage by impeding the proposed user and that money would be adequate compensation for the loss/disadvantage.

The Tribunal held that the applicants had satisfied the requirements under ground (aa) and that the restrictive covenant should be modified to permit the development in accordance with the planning consent and attached conditions. The Tribunal awarded a compensatory payment of £75,000 to the objector. No further award was made in respect of the disruption as the purpose of the covenant was not aimed at protecting against disturbance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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