In the April 2008 edition of property update, we considered the case of Re Alisha House. A developer successfully applied for a covenant to be discharged under section 84 of the Law of Property Act 1925 on the grounds that it no longer secured any practical benefit of substantial value or advantage. This was because the benefit of the covenant was vested in the local authority, which had granted planning permission for the proposed development. The local authority appealed.
The Court of Appeal has dismissed the appeal. At the heart of the decision was whether the local authority could justify its apparent change of heart from having granted permission (in its capacity as planning authority), to its later refusal to discharge the covenant.
The authority argued that it was entitled to take a broader approach as landowner than it had to do as planning authority. It also contended that circumstances had changed since the planning permission was granted. The Lands Tribunal had concluded that, "The grant of … permission … is the best evidence that the practical benefits secured by the restriction are not of substantial advantage to [the authority]. Those benefits were considered by [the authority] in the context of the residential planning application and were overridden in favour of residential development. I do not think that the changes that have occurred subsequently are sufficient for me to conclude that the practical benefits should be regarded as substantial given the grant of residential planning permission".
It was common ground that the grant of planning permission by the authority was a relevant factor, but it was not the determinative factor. The Court of Appeal noted that the planning permission was a circumstance which the tribunal should take into account, but the tribunal was still able to make up its own mind. The court accepted that in some cases there may be a significant difference between the interest of the authority as landowner and its interest as local planning authority, but the tribunal was entitled to take the view that this case raised very much the same issues. Whether there had been a change in circumstances since the planning permission was granted was a question of fact for the tribunal and the Court of Appeal would not overturn the tribunal's conclusions on this. In any event, the relevant test under section 84 was not whether there had been any change in circumstances, but whether the covenant secured a practical benefit of substantial advantage. This was again a question of fact for the tribunal.
Graham v Easington District Council.