Summary and implications
The Lands Tribunal has taken a robust stance against a developer who deliberately implemented a development strategy in breach of a restrictive covenant1. The developer hoped that the Lands Tribunal would modify the covenant, and allow building work to continue.
Developers who act in this way risk the Lands Tribunal finding against them and may be unable to proceed with their development.
In an application by George Wimpey Bristol (Wimpey) and Gloucestershire Housing Association (GHA) to modify a restrictive covenant, the Lands Tribunal found that Wimpey had carried out extensive work as a part of a deliberate strategy of forcing through a development, despite numerous objections from those people who were entitled to the benefit of a restrictive covenant over the land, so that the character and appearance of the land changed so much that the Tribunal would be persuaded to allow Wimpey to continue.
This strategy did not find favour with the Lands Tribunal, which made it clear that it is “not inclined to reward parties who deliberately flout their legal obligations in this way”.
Wimpey was developing land near the Cotswolds
Wimpey and GHA were developing land in Prestbury, on the edge of the Cotswolds. In October 2006 Tewkesbury Borough Council granted planning permission for the erection of 124 dwellings. This included 17 dwellings and seven garages on land which was burdened by a restrictive covenant preventing development, imposed by a conveyance dated 25 June 1936 (see box). In May 2007, solicitors acting for two home owners with the benefit of the restrictive covenant wrote to Wimpey asking them to stop work immediately. Wimpey ignored this letter and started building in November 2007. The homeowners began proceedings against Wimpey in January 2008, seeking an injunction preventing Wimpey from building.
Wimpey applied to the Lands Tribunal for modification of the restrictive covenant. Wimpey stopped work on the development and began to use the land for storage and car parking.
The 1936 covenant
“no building shall be erected on the piece of land to the west of the line drawn on the … plan between the points marked ‘A’ and ‘B’“ (ie. the development land)
Application by Wimpey
Under the Law of Property Act 1925, the Lands Tribunal has the power to modify or discharge a restrictive covenant (see table). Wimpey applied for the covenant to be modified under section 84(1)(aa).
The case on both sides
The homeowners and Wimpey cited the following arguments:
Click here to view table.
The Lands Tribunal looked at four questions1:
- Is the proposed use reasonable for private purposes?
Yes, because planning permission had been granted.
- Does the restrictive covenant impede the proposed use?
- Does impeding the proposed use give the objectors practical benefits?
- If yes, are those benefits of substantial value or advantage?
Yes. If the restriction was not modified, it would preserve the semi-rural location of the area. If the covenant was modified:
- it would change the location to a largely suburban one;
- there would be a loss of views, privacy and overall amenity;
- the six properties which benefitted from the covenant would be reduced in value by between 7.5 and 15%; and
- it would lead to an increase in flooding.
Section 84(1) Law of Property Act 1925 – power to modify or discharge restrictive covenants
The Upper Tribunal has a discretion to discharge or modify restrictive covenants if it is satisfied that:
- (aa) the continued existence of the restriction or the unmodified restriction would impede some reasonable user of the land for public or private purposes.
In deciding whether to exercise its discretion under ground (aa), the Tribunal will consider:
- if the restriction gives any practical, substantial benefit or advantage to those people entitled to the benefit of it, or is contrary to the public interest; and
- if money would adequately compensate the people entitled to the benefit of the restriction.