Restrictive covenant modified to allow development

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Mrs Geall wanted to convert a barn on land which she owned in East Sussex into a three-bedroom house and obtained the necessary planning permission. However, she was unable to start work because of a restrictive covenant preventing building, which was contained in the transfer of the land to her in 1987. The beneficiary of the covenant was Mr Hammond, the owner of the neighbouring properties: Cowden Hall and Cowden Hall Farm.

Mrs Geall applied to the Upper Tribunal of the Lands Chamber to modify the restrictive covenant and the Hammonds objected.

Restrictive covenants can be modified

In relation to restrictive covenants (but not positive covenants), an application can be made to the Upper Tribunal, to ask the Tribunal to modify or discharge a restrictive covenant, if:

  • The covenant is obsolete.
  • The covenant impedes some reasonable use of the land.
  • The beneficiaries expressly or impliedly agree.
  • No injury will be caused.

In this case, Mrs Geall argued that the covenant impeded her reasonable use of the land, in wanting to convert the barn. She had to show that:

  • The covenant did not secure any practical benefit of substantial value or advantage to the Hammonds; and
  • Money would be adequate compensation for any loss the Hammonds would suffer due to the modification of the covenant.

Would the proposed modification reduce the value of the Hammonds’ property?

The experts for the parties agreed that the value of the Hammonds’ land would be reduced if the barn were converted into a house (with an access road).

The Tribunal decided that the value of the Hammonds’ land would be reduced by 2.5% (equivalent to £65,000). The Tribunal found that, although £65,000 was a significant amount of money, it was not substantial in the context of the value of the whole estate owned by the Hammonds, which was worth £2.6 million.

In the opinion of the Tribunal, stopping the development would not secure the Hammonds a practical benefit of substantial value or advantage. Of note were that the Tribunal considered that the potential impact of noise from the development, both during and after construction, in an otherwise quiet rural location; and the increase in traffic were not significant enough to uphold the objection. The restrictive covenant was modified and Mrs Geall was ordered to pay the Hammonds £65,000.

While each case will turn on its own facts this decision is interesting in showing how the Tribunal might exercise its discretion despite the applicant being the original covenantor and the covenant itself being entered into just over thirty years previously (which the Tribunal did not consider to be recent). This was a relatively modest development but the principles could apply to larger schemes especially if managed sensitively with regard to such neighbourly issues.

There is a link to the judgment here.