Monday, 30 January 2012

Restrictive Covenants


I drew attention to the threat to development posed by restrictive covenants in a piece posted here on Wednesday, 13 April 2011 (“Beware of restrictive covenants”).

Since then, another case has reached the Court of Appeal, on 23 January 2012. This was the case of Zenios v Hampstead Garden Suburb Trust Ltd [2011] EWCA Civ 1645. In this case, the restrictive covenant prevented alterations to the external appearance of a house within Hampstead Garden Suburb without the approval of the Hampstead Garden Suburb Trust, who are clearly diligent guardians of the architectural heritage of this world famous example of early town planning. Planning permission was granted for the erection of an extension of the house above the garage. But, as we have seen before, the mere fact that the local planning authority is happy to grant planning permission does not mean that the Lands Tribunal will obligingly lift the restriction upon an application being made under section 84 of the Law of Property Act 1925.

The criterion by which a restrictive covenant is to be judged under section 84 is whether it continues to have a practical benefit of substantial advantage to the covenantee (in this case, Hampstead Garden Suburb Trust Ltd). The Court of Appeal upheld the Lands Tribunal’s refusal to lift the restriction. The Trust itself should properly have taken account of the grant of planning permission (as they did), but they were not bound by it. They had a public role in relation to the integrity of the garden suburb and were entitled to conclude that the proposed development would not be in the public interest. Clearly damage of the sort which the proposed development might do to the character and appearance of the garden suburb was not the type of harm for which monetary compensation would be an adequate remedy.

This latest case serves to underline the warning I gave in my previous post on this topic last April. It should not be assumed that inconvenient covenants can easily be removed by applying to the Lands Tribunal. Clearly a covenantee, even if it is a public body, is not bound to consent to development simply because the development has been given planning permission. Nor is the Lands Tribunal bound to relax a covenant for that reason. As I have observed before, it is inadvisable to make a planning application before you have satisfied yourself as to the position regarding restrictive covenants and any other potential constraints on the title to the land which might affect its successful development. To do otherwise is fraught with risks.

© MARTIN H GOODALL

4 comments:

Anonymous said...

This is very interesting. Should you apply to the Lands Tribunal first in all cases?

Martin H Goodall LARTPI said...

The point of this item and also of my previous post on this topic is that applying to the Lands Tribunal may not work. The first thing to do is to check the title for restrictive covenants. If any are found you next need to come to a view as to whether or not they are enforceable in practice. If not, or if the risk is very low, indemnity cover may be obtainable for a one-off premium. If there are restrictive covenants which are in practice enforceable, paying the covenantee to release the covenant might be one option or getting their consent to the development (with or without payment) would be another. The Lands Tribunal is really a last resort and, as the two cited cases demonstrate, may not provide a solution. Check first before spending money on design work and/or making a planning application. Restrictive covenants can have sharp teeth.

passerby said...

With reference to my previous comment (as yet unpublished), I can see that there is case law (concerning Easington District Council) confirming that a grant of planning permission does not imply an easing of the covenant.

Martin H Goodall LARTPI said...

(Passer-by's other comment was posted on another thread.)

As Passer-by recognises, a planning permission cannot override a restrictive covenant. Furthermore, the grant of planning permission does not imply that the covenant can be ignored or that it should be released (for example by application to the Lands Tribunal). There are numerous cases of developers coming a cropper when they sought to avoid the enforcement of a covenant or where they attempted to get it removed. I have given one or two examples in this blog, and there are others that could be cited.