[2023] UKUT 189 (LC)

The application was commenced on 11 August 2022 and was initially for the discharge entirely of the eleven covenants. It was later amended to request modification of the covenants as an alternative remedy. The suggested form of modification was not revealed to the Council or the Tribunal until the hearing. In his skeleton argument Mr Hutchings KC confirmed that the applicant’s case was now solely for a modification of the covenants to the extent required to enable it to implement the planning permission it anticipates being granted once the section 106 agreement has been completed. Discharge is no longer sought.

Before we consider the grounds on which the application is brought, it is relevant to mention the limits of the evidence provided by the applicant in support of the application. We heard no evidence about the details of the negotiations over the grant of a new long lease of the Site which have been going on in parallel to the planning process and we have not been asked to consider whether the position adopted by either side or the terms they propose in those negotiations are reasonable or unreasonable. Nor have we been asked to determine whether the Council’s refusal to consent to the proposed redevelopment under the existing lease has been reasonable or unreasonable. We therefore express no view on any of those questions, which might nevertheless have been relevant to our determination had we been provided with relevant evidence.

The applicant’s only factual witness was Mr Rose. He is a Chartered Surveyor who has worked for Mr Weis and his companies since 2004. He described his role as that of a ‘fixer’ and explained that it involves advising in relation to property investments, development opportunities and general asset management issues. He has been advising the applicant on the redevelopment of the Site since 2017, project managing the planning process and leading on the s.106 negotiations. He is not an officer or director of the applicant, but he was authorised to speak on its behalf.

In view of his long association with the applicant, Mr Rose was in a position to provide evidence dealing in some detail with its track record, resources, and business model; such evidence would have been of assistance, since the Council’s main concern is over the deliverability of the project, but Mr Rose preferred (or had been advised) to describe the operations of the group of which the applicant is part in only very general terms. The explanation he gave for this reticence was the owner’s preference for privacy. He attempted to make good a lack of detail by adopting a combative approach in the witness box, often responding to questions from Ms Tythcott with questions of his own. He was more conciliatory towards the Tribunal, but not much more transparent. When asked by us about gaps in the applicant’s evidence (for example about other projects it had successfully completed) he suggested we should ‘Google it’; when asked whether there was a document evidencing his client’s wealth, his response was ‘well what do you want to see?’; when asked to comment on why other developers had been willing to agree terms similar to those which the Council sought from the applicant, his response was that they were ‘idiots’. From a Chartered Surveyor, we found his general approach disappointing.

Mr Rose’s written evidence also appeared to be inconsistent with the case he and Mr Hutchings advanced at the hearing. In particular, in his witness statement prepared on 23 March, he explained that the restriction on subletting contained in the warehouse lease was impractical and obsolete in view of the applicant’s plans for the proposed development: “the very nature of the scheme means that the applicant will be seeking to sublet the apartments and where the owners may wish to grant short term occupational tenancies”. It was not until he began to give his oral evidence that Mr Rose suggested that the applicant’s intention was to develop the buildings with a view to itself letting individual flats on short term tenancies.

The evidence given on behalf of the applicant by its expert witness, Mr Robert Davies MRICS MRTPI of Gerald Eve, was more considered but provided some similar surprises. In his oral evidence Mr Davies suggested that the development could be made viable over the remaining 60-year term of the existing lease by a funding arrangement which he described as an ‘income strip’ transaction, but this option had not featured in his written report. The only issue Mr Davies had been asked to consider in his written evidence was the effect of the proposed development on the value of the Council’s reversionary interest, and his thoughts on how the development could be funded emerged in cross examination, so we make no criticism of him for the fact that evidence on the viability of the scheme was distinctly under-cooked.

We were left with two concerning impressions. The first was that the applicant’s proposals were being formulated or adapted on the hoof or had undergone significant recent changes the viability of which was not adequately explained and may not yet have been worked out by the applicant itself. The second was that Mr Rose’s account of the applicant’s intentions may simply have been its latest negotiating gambit and that its real object is to use this application to chip away at the restrictions as far as it can before reopening discussions with the Council on re-gearing the lease with a view to securing more favourable terms for whatever its preferred letting model may be. As a commercial objective there is nothing whatsoever wrong with that approach, and we make no criticism of it at that level, but it may explain why much of the applicant’s evidence appeared vague and incomplete.

We will now consider the individual grounds of the application.