In the December edition of property update, we looked at three cases dealing with applications to modify or discharge restrictive covenants.
In another case, Turner v Pryce, T applied to the High Court for an injunction preventing P and S from building three houses on land to the rear of their properties. All the properties in the road in which T, P and S lived were burdened by a covenant:
"To erect … a good and substantial … dwelling-house or one pair of semi-detached… dwelling-houses and no more".
The first point to note is that, despite the opening wording, this is a restrictive, not a positive covenant. It regulates the density of dwellings on the plot.
The court found that a building scheme existed on the road. This enabled anyone who owned a house which was part of the scheme to enforce the covenant against the owner of another property which was affected by it.
P and S argued that other properties in the road had built in contravention of the covenant. The court thought that a person who had the benefit of a covenant should not be deprived of his rights by the acts and omissions of others. The existing breaches had not changed the character of the estate as a whole. In fact, as the surrounding neighbourhood began to change, it was more important, not less, to uphold the covenants. Although the court had the power to declare a covenant unenforceable through obsolescence, it would only exercise this power in a very clear case. The better forum for determination of such questions was the Lands Tribunal.
The court did not think that a (more minor) breach of another covenant in the scheme by T prevented T from enforcing the covenant against P and S. T was prima facie entitled to an injunction and no exceptional circumstances existed to justify an award of damages instead.
Things to consider
The court noted that where development has taken place in breach of a restrictive covenant, under section 84 of the Law of Property Act 1925, the Lands Tribunal could modify the covenant to permit similar development on particular plots without having to declare the whole of the scheme obsolete.
The court does not have similar jurisdiction. A defendant in court proceedings for breach of covenant may apply to have the matter dealt with by the Lands Tribunal instead. In view of the flexibility offered by the ability of the Lands Tribunal to modify covenants and the reluctance of the court to declare covenants obsolete, this may be the preferred route for developers to take. This should however be weighed against the requirement on the Lands Tribunal to notify persons who may have the benefit of the covenant of the application to modify/discharge.
Where a building scheme exists, developers may face an uphill struggle in an application to discharge or modify a restrictive covenant. For so long as the original character of the scheme remains intact, the covenant will usually continue to secure a practical benefit.