View from the bar: Evaluating the public interest

We can’t vouch for the accuracy of the research, but a study into HM Land Registry data carried out four years ago found that properties in Greater London were subject to nearly 42,000 restrictive covenants affecting the use of their land. Many of these will restrict development, with the result that those who seek to develop land burdened by such a covenant will have little recourse, in the absence of an amenable owner of the benefit of the covenant (we’ve never met one) or a compliant local authority (nope), but to apply to the Upper Tribunal of the Lands Chamber under section 84 of the Law of Property Act 1925 to modify or discharge the covenant. The ground for modification or discharge to which resort is most frequently had is that set out in section 84(1)(aa). Simplifying the language a fraction, this is so where the person bound by the covenant can establish that the continued existence of the covenant would impede some reasonable use of the restricted land for public or private purposes. Subsection 84(1A) illuminates this bald text by adding that this will apply where the tribunal is satisfied the restriction either (a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them; or (b) is contrary to the public interest. Public interest in practice Proving alternative (a) is sometimes easy, but often difficult, resting as it does on the subjective impression of local amenity when the tribunal judges and members carry out their site inspections. Alternative (b) at first sight appears to be more straightforward – for surely what is in the public interest is readily demonstrable in any given case? And does not the provision of extra housing offer a ready candidate, given that there is a pressing need in large parts of this country for housing? In Clarion Housing Association Ltd v Chitty [2024] UKUT 187 (LC); [2024] PLSCS 124, the deputy president of the Upper Tribunal, Martin Rodger KC, sitting with tribunal member Peter McCrea, had to consider both these alternatives in a case where the claimant housing association wished to develop land in Kent burdened by a covenant restricting its use to an old persons’ warden scheme with gardens and ancillary uses. The association had secured planning permission for a general residential development involving the construction of 38 flats. In the absence of consent to its plans by the owners of the benefit of the covenant, it applied to the tribunal, relying not merely on the grounds set out in section 84(1)(aa), but also section 84(1)(a) (obsolescence). The tribunal allowed the application on this ground, and on the first of the section 84(1)(aa) alternatives, making it unnecessary to consider the alternative ground directed at the public interest. However, the tribunal took the opportunity to add its thinking concerning the public interest alternative. It noted the pressing need for additional housing in Kent, as in many other parts of the country. It concluded that “a compelling case could be made out in favour of the view that the modification of the restriction would be in the public interest”, apparently without any further factor. That is surely something that could be said of most housing developments (perhaps excluding those where one or two luxury dwellings are proposed with no affordable housing element). Does this then suggest the public interest ground is likely to succeed in most section 84 cases? If so, is that not odd, given that this ground has been available for use since 1969? The year 1969 is relevant since that was when the Law of Property Act 1925 was amended to introduce ground (aa). That enactment followed the Law Commission’s Report on Restrictive Covenants in 1967, which recommended a restatement of the tribunal’s powers, “… in such terms as to enable it to take a broader view of whether the use of land is being unreasonably impeded”. When introducing the Bill in the House of Lords, the Lord Chancellor explained the existing provisions had in the past been strictly interpreted, so in practice it was rare for a restriction to be modified or discharged unless it was obsolete or of no value to the person entitled to enjoy its benefits. In consequence, the development of land was often either frustrated by restrictive covenants or carried out in breach of them. The amendment in 1969 changed all that – but just how much? Open or closed? The new ability to take a broader view was notably demonstrated in Re SJC Construction Co Ltd [1974] 28 P & CR 200. In that case, the tribunal refused to modify a covenant under section 84(1A)(a) because it did continue to secure to the persons entitled to the benefit of it practical benefits of substantial value or advantage to them; but it did modify on the public interest alternative (among other things that there was a scarcity of land available for building in the whole of south-east England, including Cheam). However, other early cases in the 1970s showed the tribunal applied the public interest test more strictly, holding that for an application to succeed on this ground, it had to be shown that the public interest was so important and immediate as to justify the serious interference with private rights and the sanctity of contract (see for example Re Collins’ Application [1975] 30 P & CR 527). The strictness of that statutory gloss was doubted by the Supreme Court in Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd [2020] UKSC 45; [2021] EGLR 1, in which the court was satisfied the public interest at play in that case was sufficiently important and immediate to justify the exercise of the tribunal’s power under section 84(1)(aa) to override the objector’s private rights. Nonethless, there remains a line of cases, for example Re Afzar’s Application [2002] P & CR 17, which suggests it could be hard to satisfy the public interest alternative if the public interest can be fulfilled on a different non-burdened site. Therefore, there remains a question as to how strictly the public interest ground will be interpreted: in an open-textured way (as the decision in Clarion last year suggests); or in a restricted way? The prudent advice has to be that alternative (b), the public interest limb, does not mean a developer in an area with proven housing need will face no problems. As the Court of Appeal pointed out in Shephard v Turner [2006] 2 P &CR 28, while the general purpose of section 84(1)(aa) is to facilitate the development and use of land in the public interest, having regard to the development plan and the pattern of permissions in the area, the section seeks to provide a fair balance between the needs of development in the area, public and private, and the protection of private contractual rights. It is probably still relevant whether the public interest can be satisfied elsewhere, on non-burdened land. There is no carte blanche for developers. Guy Fetherstonhaugh KC and Emily Windsor are barristers at Falcon Chambers Image © WMCA