Re 21A City Walls, Chester

Restrictive covenant – Modification – Practical benefit – Property subject to prohibition on use other than for residential purposes – Applicants applying for modification of prohibition to permit use as annex to boutique hotel – Whether loss or disadvantage being suffered by objectors from proposed modification of restrictions – Whether restrictions securing practical benefit of substantial advantage to objectors – Application granted The applicants were the freehold owners and proprietors of Edgar House, a boutique hotel at 22 City Walls, Chester, located on the City Walls surrounding Chester, overlooking the River Dee. In February 2016 the applicants purchased an adjoining private house, 21A City Walls, which they wished to use as an annexe to their hotel. They had planning permission for that use, but its implementation was prevented by a number of restrictive covenants which prohibited the use of 21A except as a dwelling house. On the opposite side of 21A from the hotel was another private house, 20-21 City Walls, the home of the first objectors, who had the benefit of the covenants and who objected to the applicants’ plans. The second objectors owned an investment property at 14 Duke Street, a short distance to the rear of Edgar House, which also had the benefit of the covenants. The second objectors did not object to the proposed use of 21A in principle but sought compensation to reflect the possible effect of its proposed use on the value of their property. Faced with the objections of their neighbours, the applicants applied for the modification of the covenants under section 84(1) of the Law of Property Act 1925. The applicants relied on section 84(1)(aa) (the restriction impeded reasonable use of land) and section 84(1A) (did not secure to those entitled to its benefit any practical benefits of substantial value); alternatively, section 84(1)(c) (no injury would be caused if the covenant was modified or discharged). Held: The application was granted. (1) The objectors did not suggest that the proposed use of 21A as an annex to Edgar House was unreasonable and, by prohibiting its use other than as one dwelling house with one garage, covenant (a) impeded that use and also clearly impeded the physical alterations which the applicants wished to make to facilitate the change of use. It was not suggested that there was any element of public benefit which needed to be considered. Assuming the benefit of the restrictions was annexed to the house itself, that was much too remote for the activities of any person inside 21A to have any impact on the enjoyment of the house or its small rear garden. The restrictions on physical alterations to 21A were of no consequence to the owners or occupiers of 14 Duke Street. Therefore, no loss or disadvantage would be suffered by the second objectors from the proposed modification of the restrictions. (2) The impact of the proposals on the first objectors had to be assessed in the light of a number of established features of the immediate locality. Their property was not secluded from its neighbours. The presence of a hotel, as small and discrete as Edgar House might be, inevitably had consequences for its neighbours. The restrictions were not intended to provide protection from any adverse consequences of proximity between the first objectors’ property and Edgar House, and the extent to which they provided other benefits had to be considered in that context. Given the size of the buildings, and the fact that they were within a conservation area, there was little prospect that a hotel business on a substantially greater scale could be operated in its location, but the practical benefit of the protection offered by the restrictions would be assessed in the knowledge that different styles of hotel trading were possible. The risk of additional harm was without real substance; the risk of inconvenience from some poor behaviour already existed, the hotel being in such close proximity, and the use of 21A as an annex would create only limited additional opportunities for interaction between guests and permanent residents. Even if, whether in prospect or in reality, the presence of a small and changing population of strangers alarmed, intimidated or offended the first objectors, by preventing the use of 21A as an annex to the neighbouring hotel, and by preventing the alterations now proposed, the restrictions did not secure any practical benefits of substantial value or advantage. Furthermore, the objectors would not be injured by the modification of the restrictions sufficiently to permit the use of 21A as an annex to the hotel conducted at Edgar House. Those conclusions were sufficient to support the modification of restriction (a), the prohibition on the use of 21A other than as a dwelling, under grounds (aa) and (c) of section 84(1), so as to permit the use of 21A as an annex to the hotel operated at Edgar House. (3) It was likely that restrictions (b), (c) and (g) (the prohibitions on external modifications, new structures and colour schemes) had been discharged by the death of the original transferors whose consent was required, but there was no evidence about them nor any argument on the current status of those covenants  The objectors themselves had no right to give or withhold consent to the restricted activities and so the covenants did not confer any benefit on them. The most appropriate course was for those covenants to be discharged absolutely on the same grounds. (4) There was no reason to discharge covenant (d) which prohibited noisy, offensive or dangerous trades or pursuits being carried on at 21A, or any other trade or pursuit which might be a nuisance, annoyance or danger to those entitled to the benefit of the restriction. Its continuation was all the more important given the modification of covenant (a) to permit the hotel annex. However, it was clear that the use of 21A as an annex to the hotel at Edgar House was not to be taken in itself to amount to a breach of covenant (d). Nicholas Jackson (instructed by Direct Access) appeared for the applicants; Julian Shaw (instructed by Storrar Cowdry, of Chester) appeared for the first objectors; the second objectors appeared in person. Click here to read a transcript of Re 21A City Walls, Chester Eileen O’Grady, barrister