The Upper Tribunal (Lands Chamber) has granted an application to modify a restrictive covenant to allow residential development, and has considered both what constitutes a practical benefit of substantial value and the basis of compensation in Mill Strand Developments Ltd v Tapp and others [2022] UKUT 143 (LC).
The application related to 1.24 acres of land adjoining the village of Lower Moor, Pershore, in Worcestershire. The applicant held an option over the site – scrubby grassland surrounded by residential development on three sides – and with the consent of the freehold owners obtained planning consent for five detached dwellings.
The development would breach the terms of a covenant restricting buildings on the land to structures of an agricultural nature to be used solely in connection with agriculture, contained in a 1972 conveyance of the site. The restriction benefitted adjoining land which was subsequently developed as Old Manor Close. The owners of all six properties in Old Manor Close objected to the development of the site but only numbers 3 and 4 adjoined the site.
The applicant sought the discharge or modification of the covenant to permit the development under section 84(1) of the Law of Property Act 1925: (aa) that the continued existence of the restriction would impede the development, as a reasonable use of the land and; (c) that its discharge or modification would not injure those entitled to benefit from it.
The Tribunal can discharge or modify a covenant under (aa) if satisfied that the restriction either secures “no practical benefits of substantial value or advantage” to those benefitting from it and that money will be adequate compensation for any loss or disadvantage suffered. The Tribunal can also award compensation to make up for any loss or disadvantage suffered as a result of the discharge or modification, or to make up for any reduction in consideration received when the covenant was imposed.
The objectors argued that the practical benefits secured by the restriction included the preservation of the visual amenity of a rural view and tranquility and protection from the noise and disturbance of both the development and the subsequent use of the houses.
The Tribunal concluded that the proposed use of the land was a reasonable one, the development having been scrutinised during the planning process. There was no evidence of any practical benefit secured to the objectors living at 1, 2, 5 and 6 Old Manor Close who had no view of the site and were separated from it by numbers 3 and 4. The same applied to number 3, since its outlook was already screened by a significant hedge and tree boundary which would be changed little by the development. The restriction did secure practical benefits to number 4 by preserving the setting of the property on the edge of the village where most windows had southerly rural views over undeveloped land: modification of the restriction would leave 4 surrounded by residential development. However, those benefits were not substantial and capable of being compensated in a sum of less than 5% of the value of the property.
Louise Clark is a property law consultant and mediator
