Case No. UKUT-41-(LC)-UTLC-Case-Numbers:-LC-2022-180

Mr Terence Cook39.Mr Cook said that the restrictive covenant made it clear that the applicants were not to carry out any trade, business, or profession from 7 Larkin Avenue and that the Property should only be used as a private dwelling.40.He considered that the beauty treatment business was clearly operating on a full-time basis. He had noticed customers frequenting the Property on a regular basis both during the week and at weekends. He was concerned that the noise levels were greater than they were prior to the business commencing operations and the applicants had made parking much more difficult. In his view parking in the neighborhood was already problematic and he had witnessed customers parking outside his property and nearby properties in order to use the applicant’s service.41.Mr Cook said he was very concerned about the impact that allowing the application would have on the value of his house and other nearby properties. At the hearing he said that he spoken to local estate agents about the impact of the business, and they had confirmed his concerns that the presence of a business in a neighbouring property would adversely affect the value of his house. He had not instructed an expert valuer to quantify this effect.42.He said that the applicants have displayed advertisement boards on their property and have distributed flyers promoting the business. He stated that the situation had caused an enormous amount of stress and had he and his wife known that a business would be operating from the neighbouring property they would not have purchased their house. At the hearing Mr Cook said the privacy he and his wife had previously enjoyed had been lost completely.43.He did not believe it would be in the public interest for the application to be granted and saw no reason why the applicants could not carry on their business from commercial premises. Mr David Holden44.Mr Holden had attached a list of reasons to his Notice of Objection. The first of these related to the sale of properties by the original developer. He recalled that the developer had explained to all purchasers that they would be required to sign up to the restrictive covenant and each had paid a premium accordingly to protect the development as a solely residential environment.45.He described the estate as being a congested and dense housing development typical of its age. It had narrow pavements for pedestrians and small front gardens. Parking for homeowners and visitors on the narrow estate roads was ‘very limited’ and access for emergency and utility vehicles was already tight.46.He considered that clients of the beauty business might park for hours and obstruct safe passage for pedestrians and residents’ cars. Parked cars also presented an environmental hazard and the noise from clients disturbed residents’ enjoyment of their property.47.Turning to the Property itself he thought that considering the small overall footprint of the garden the cabin was relatively large and oppressive.48.Finally, he concluded that modification of the covenant would set an undesirable precedent with a consequent potentially negative impact on the value and desirability of the properties of the whole site, but especially those on Larkin Avenue who suffer the immediate inconvenience caused by the noise from clients and the parking of their cars.49.Mr Shipley addressed what is commonly termed “the thin end of the wedge” point. To put it another way would the modification of the covenant in the way sought, create a damaging precedent? To use Mr Shipley’s colourful phraseology, to permit the business to operate from the Property would ‘open the floodgates’ for further businesses to set up on the estate. The applicants sought to rely on the decision of the Court of Appeal in Shephard v Turner [2006] EWCA Civ 8 in support of their position on ground (aa) that each case was to be judged on its merits and there was no effect on any other property. It is worthwhile to examine what Carnwath LJ said at paragraph 26 of the decision about ‘the thin end of the wedge’: “It is not in dispute that one material issue (often described as the "thin end of the wedge" point) may be the extent to which a proposed development, relatively innocuous in itself, may open the way to further developments which taken together will undermine the efficacy of the protection afforded by the covenants. In McMorris v Brown [1999] 1 AC 142, 151, the Privy Council adopted a statement by the Lands Tribunal from Re Snaith and Dolding's Application [1995] 71 PCR 104. The applicants had been seeking modification of a covenant, to enable them to build a second house on a single plot within a building scheme. The President (Judge Bernard Marder QC) said: "The position of the Tribunal is clear. Any application under section 84(1) must be determined upon the facts and merits of the particular case, and the Tribunal is unable to bind itself to a particular course of action in the future in a case which is not before it… It is however legitimate in considering a particular application to have regard to the scheme of covenants as a whole and to assess the importance to the beneficiaries of maintaining the integrity of the scheme. The Tribunal has frequently adopted this approach…. Insofar as this application would have the effect if granted of opening a breach in a carefully maintained and outstandingly successful scheme of development, to grant the application would in my view deprive the objectors of a substantial practical benefit, namely the assurance of the integrity of the building scheme. Furthermore I see the force of the argument that erection of this house could materially alter the context in which possible future applications would be considered."50.Mr Shipley asked me to consider that the applicants presented their neighbours and the Tribunal with a fait accompli and that the assessment of public interest should take account of circumstances as they were prior to the relocation of the business to Larkin Avenue. He described the applicants as being “cynically in breach” and drew attention to the Court of Appeal’s decision in The Alexander Devine Children's Cancer Trust v Millgate Developments Ltd Anor [2018] EWCA Civ 2679, in which Sales LJ said:“…in general terms it is in the public interest that contracts should be honoured and not breached and that property rights should be upheld and protected”.He went on to say that the applicants had operated the business in full knowledge of the restrictive covenant and despite opposition from neighbours.51.He noted that in George Wimpey Bristol Limited and Gloucestershire Housing Association Limited [2011] UKUT 91 (LC), the Tribunal (Mr Norman Rose FRICS) said:“…that, if ground (aa) had been made out, it is unlikely that I would have exercised the discretion that I have to modify the covenant. This is because I find on the evidence that the extensive works which Wimpey Homes have carried out on the application land were not an inadvertent action resulting from the discovery of the covenant at a late stage in the development programme. Rather, they were the result of a deliberate strategy of forcing through the development on the restricted land in the face of many objections from those entitled to the benefit of the restriction, to the point where they had so changed the appearance and character of the application land that the Tribunal would be persuaded to allow them to continue with the development. It is appropriate for the Tribunal to make it clear that it is not inclined to reward parties who deliberately flout their legal obligations in this way.”52.Mr Shipley said that by failing to curtail the operation of the business until the Tribunal had determined the application the applicants had engaged in the same behaviour. He also referred me to the Supreme Court’s decision in Alexander Devine Children's Cancer Trust v Housing Solutions Ltd [2020] UKSC 45, and in particular paragraph 59, where Lord Burrows said:“As Mr Jourdan expressed it, in a submission with which I agree, “It is not in the public interest that a person who deliberately breaches a restrictive covenant should be able to secure the modification of the covenant in reliance on the state of affairs created by their own deliberate breach." By going ahead without first applying under section 84, Millgate put itself in the position of being able to present to the Upper Tribunal a fait accompli where the provision of affordable housing meant that it could (and did) satisfy the “contrary to public interest” jurisdictional ground. It is important to deter a cynical breach under section 84 but it is especially important to do so where, because the Upper Tribunal will look at the public interest position as at the date of the hearing, that cynical conduct will directly reward the wrongdoer by transforming its prospects of success under the “contrary to public interest” jurisdictional ground.”He concluded that it was ‘clear that the precedent set from the Upper Tribunal through to the Supreme Court is against Applicants who have already breached the restrictive covenant’.