This recent case has given us a useful illustration of what makes an application for modification or discharge of a restrictive covenant under s84 of the Law of Property Act more (or, in this case, less) likely to succeed.
A piece of land was subject to a covenant benefitting neighbouring land not to "erect any further building of any kind on the land". The land previously had a house on it, but not long after the covenant was imposed that house burnt down leaving a shell building. Its owner, Mr Briant, devised plans to redevelop the site with much more than a simple restoration which would not have been contentious. The neighbouring landowner, Mr Baldacchino, objected, and so in 2020 Mr Bryant applied a first time to the Upper Tribunal, under Section 84 of the Law of Property Act 1925, to get the covenant modified to allow his development. He failed.
Undeterred, Mr Briant came back to the Tribunal a second time, in 2024. This time, he offered a choice of seven different development schemes, all of which went beyond a restoration of the old burnt-out building, in the hope that at least one of them might succeed.
In its judgment the Tribunal applied a good number of familiar rules of thumb, and it is handy to see them all concentrated in one case. The rules that it applied are:
1. It is permissible for a landowner to make as many applications at different times as they want to the Upper Tribunal to discharge a covenant, provided of course that there is a material difference in what he is proposing and/or the grounds on which he is seeking to discharge or modify the covenant. Sometimes this is a successful tactic (see Housing Solutions v Smith 2023 UKUT 25 (LC), a case where Trowers & Hamlins advising Housing Solutions successfully and had a covenant modified where an earlier application had failed).
2. Presenting to the Tribunal a multiple choice of different schemes is not a good idea and was one of the reasons why Mr Briant failed. The Tribunal is not a consultation process and presenting multiple schemes does not help to show the Tribunal that the applicant's stated intention is genuine. It gives the impression, on the contrary, that even if consent is modified for one of them, that successful scheme might itself be later modified.
3. Without planning consent, any application for modification is likely to be refused. This, of course, will have a significant impact on the timescale for any development subject to an adverse restrictive covenant. If a developer can only apply for discharge or modification once it has got planning consent (or else is likely to fail) its only two choices are:
3.1 to factor in the extra amount of time that it takes to run a case through the Upper Tribunal into its timetable, with all the costs implications that that entails; or
3.2 start the development without having the covenant discharged in the hope that the Tribunal will retrospectively modify it. The trouble with this approach is that doing so is likely to result in the application also being refused, this time on the grounds of wilful and/or cynical disregard of the covenant (see Millgate v Alexander Devine (2020 1 WLR 4783).
4. When it assesses the benefit to the land benefitting from the covenant, the Tribunal will compare the scenario where the covenant is modified to allow the development proposed with the scenario where the maximum development permitted by the covenant is undertaken. In this instance, the covenant was not to build "any further building" so the Tribunal compared the effect of any of the schemes put forward by Mr Briant against the effect of a restoration of the burnt-out building – not the scenario where no development happens at all. We frequently see covenants which prevent excessive development (e.g. no more than four houses per acre) rather than covenants that are a simple prohibition on any development.
5. When it assesses whether the covenant bestows any benefit of substantial value or advantage, that value or advantage can either be physical or financial. In this case some of the schemes were rejected because of the proximity and size of the proposed development. Others were rejected because of the effect they would have in reducing the value of the land benefiting from the covenant (a 9% reduction in value of Mr Baldacchino's house) was held to be substantial.
This case is well worth looking at for lawyers and developers alike because it neatly encapsulates in a relatively short judgment all of these useful pointers, as well as being an object lesson in how to fail in getting the Tribunal to give you the order that you seek as a developer.
