[2024] UKUT 00001 (LC)

Before I examine the arguments for and against the discharge of the covenant it is worth remembering that the covenant does not constitute an absolute prohibition on the building of extensions, rather it prohibits them without the consent of the vendor or their surveyor. There is no presumption against modification of the property, only a prohibition on modification without the consent of the covenantee. Mr Jarvis observed that no reasonable covenantee would have withheld consent for the works in 2018, but the covenant does not say expressly that the covenantee may not refuse consent unreasonably. In Mahon v Sims, Hart J considered whether any restriction on the covenantee’s right to refuse consent could be implied in a covenant ‘not to use the property hereby transferred for any purpose except that of a private garden and not to erect thereon any building other than a greenhouse garden shed or domestic garage in accordance with plans which have been approved previously by the Transferors in writing.’

His answer is contained in paragraphs 28 and 29:

I therefore turn to the grounds under which a covenant can be discharged or modified. The first is that the covenant is obsolete. In this case the covenant is relatively modern having been included in a transfer made in 1980. Unfortunately, Mr Roy Dinshaw, one of the parties to the original transaction has passed away in the period since the extensions that gave rise to this dispute were constructed. Mr Michael Dinshaw said that his parents wished to exercise control over what was built on the land they were selling. I note that the property was one of the first to be sold and was also close to the site of Mr and Mrs Roy Dinshaw’s own home at 5 Redwood Close. A conventional house on the site of the property would have potentially overlooked their plot. In that context the ability to influence the design of whatever was built would be an understandable and desirable prerequisite for a disposal. It is equally plausible that Mr Dinshaw’s motivation was to protect the value of the other plots.

However, 43 years later, the context is different. The whole area has been fully developed and neither Mr Roy Dinshaw, prior to his death, nor his wife, from whom he was later divorced, were resident at Redwood Close by the time that Mr and Mrs Rogers started their building works. The original purpose of the covenant now has limited relevance, the constrained nature of the site limits development options and the protection of amenity for the other properties nearby is to an extent controlled by the planning system. However, the covenant does retain a modicum of utility for those, other than the objectors, who own benefitted land as it prevents development which might affect amenity but not require planning permission. This being the case I conclude that ground (a) is not made out.

Turning to ground (aa) neither party addressed the question of whether the covenant impeded a reasonable use of the land. In my view the extensions are a reasonable use, and they are clearly impeded by the covenant.

Mr Jarvis submitted that the covenant does not secure any practical benefits to the objectors, but the objectors’ case is that it enables them to protect the character, visual amenity, and environment of Redwood Close and Redwood Grove. They view the discharge of the covenant as the ‘thin end of the wedge’ which would make it difficult for them to resist unfavourable change in the character of the neighbourhood and over development of the other plots. It is likely that the covenant at the property is enforceable by the current owners of the original vendors’ retained land, which could encompass the ten plots that were created together with the roadway. On the evidence adduced it is not clear whether that is the case because I have not been shown a plan showing the extent of “the said adjoining and neighbouring land of the Vendors and any part thereof”. I note however that the owners of properties in the immediate vicinity were given notice of the application and there were no other objections. That might be said to be consistent with the extensions being relatively inconsequential, and not being capable of setting any sort of precedent for more intrusive development. That is the view I take of them, and I am satisfied that the ability to prevent the retention of the extensions is not a practical benefit to the objectors.

The objectors did not identify any other practical benefits of the covenant but they considered that if the discharge led to more intensive use of the plots in Redwood Close, they would be likely to face greater costs for the maintenance of the road. Given the size of the plots and the fact that they are already built on I view the possibility of further development as a distant and unlikely prospect. None of the objectors’ land has any potential for an alternative use other than the grassed area which Mr and Mrs Rogers thought could be usefully incorporated into their garden. Mr Jarvis noted that Mr Michael Dinshaw resides in the United States of America, Mr Ian Dinshaw in Weymouth and that Mr Anthony Dinshaw cannot see the benefitted land from his house. I conclude that ground (aa) is fulfilled.

It follows that the objectors will not be injured by the discharge of the covenant and ground (c) is therefore also made out.

Regarding ground (b), notwithstanding that one of the original covenantees was invited to approve the extensions before building work commenced it is acknowledged by the applicants that they did not have consent in the appropriate form. Ground (b) does not require agreement in writing, but it does require that all those of full age and capacity entitled to the benefit of the restriction have agreed, expressly or by implication to the proposed modification or discharge. In her evidence Mrs Rogers said that she and her husband had shown Mr Roy Dinshaw the plans in 2018 and he had raised no objection which might imply that he consented, objectively to the proposed extension. Mr Michael Dinshaw did not deny that his father had seen the plans but questioned whether his consent simply related to the removal of the fence to facilitate the project.

However, there is no evidence that others with the benefit of the restrictions have consented, because it is not known who they all are and they have not been asked although those who are neighbours have been given the opportunity to object. In those circumstances, my judgement is that ground (b) is not satisfied.

In their notice of objection, the objectors stated that they were seeking compensation of £50,000 although they described the figure as provisional. They also sought a right of first refusal if the property were to be sold and damages equivalent to the enhancement in value that the extensions had created. Their approach is misguided. The purpose of compensation in these circumstances is to make good the loss or disadvantage suffered by that person resulting from the discharge or modification. It is usually quantified by the diminution in in value of the benefited land, but in this case there is no evidence that the objectors’ land has suffered any decline in value and it is difficult to foresee how such circumstances might arise. I therefore reject the claim for compensation.

In circumstances where jurisdiction is established the Tribunal will not normally decline to exercise its discretion unless there is a compelling reason for it no to do so. In this case grounds (aa) and (c) are satisfied but the extensions were built in breach of the covenant and the application to the Tribunal was after the event. The objectors say that Mr and Mrs Rogers chose to build the extensions in clear breach of the covenant and that by avoiding the need for planning consent they had demonstrated an intention to subvert or circumvent the covenant. For her part, Mrs Rogers said that they built the extensions to provide the extra space they needed. I accept her evidence that she and her husband were unaware of the restriction when they built the extensions. Their motivation appears to have been to create a more comfortable home and the decision to sell was taken in response to a decline in Mr Rogers’ health rather than to make a profit. Nevertheless, it is true that the extensions have physically enhanced their house and made it more valuable. In my judgement this is not a situation where an applicant, with profit in mind, cynically breached a covenant in the expectation that no objections would arise or that those with the benefit could be ameliorated with a financial inducement.

It is my judgement that there will be no harmful effects on the interests of the objectors. Their concerns about the interests of the owners of the other nine plots are in my view unfounded. Any future application to modify similar covenants, assuming they exist, to permit work on other plots would be decided on the facts of each case. The discharge or modification of the covenant at the property would make the prospect of modification or discharge on the other properties in Redwood Close and Redwood Grove no more or less likely.

Although this is an application for discharge of the covenantI have jurisdiction to allow modification instead.  In my view that latter course of action is preferable as it enables the applicants to sell the property but leaves the neighbours, who are likely to have the benefit of the covenant, with an assurance for the future that more extensive alterations could not be made without their approval. I therefore exercise my discretion to allow modification of the covenant to enable the retention of the two extensions as built.