[2023] UKUT 251 (LC)

Fecha: 23-Ago-2023

Discretion

Discretion

97.

One of the grounds of the application having been satisfied it does not follow as a matter of course that the Tribunal will exercise its discretion to allow the modification or discharge of the covenant.

98.

Mr Francis submitted that in the event that the Tribunal found itself in a position to use its discretion, there were several factors that should cause it not to do so. The first of these was that Mrs Cunningham is the original covenantee. This is certainly the case and is a factor I bear in mind, even though Lamp Cottage has been through two further transfers since Mrs Cunningham acquired it in 2005, firstly to Haddon Grove (a company in which Mrs Cunningham and Mr Nix were shareholders) in 2016, and then back to Mrs Cunningham and Mr Nix in a personal capacity in 2020. It is also relevant that Mrs Cunningham only lived at Lamp Cottage between 2005 and 2008 and although she said that it was the couple’s intention to retire to the property their acquisition of Alstonefield Hall and their plans to make it suitable for retirement purposes casts doubt on their intentions.

99.

Mr Francis’s second factor was that Mr Kay had been in knowing breach of the covenant and it would be unjust and inappropriate to allow the application. Mr Peachey rejected this contention and drew attention to the Tribunal’s decision in Hodgson v Cooke [2023] UKUT 41 (LC) where at paragraph 61 it said:

‘There is no doubt they were in breach and have remained so throughout the continuance of the application. But this case involves no opportunism or secrecy and the applicants are private individuals making use of their own home to make a living, not large scale property developers intent on a substantial profit.’

100.

Mr Francis, in his third factor, thought that the Tribunal should exercise its discretion with caution, relying on the comments of Burrows JSC in Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd [2020] UKSC 45, at [52]:

‘I also accept that the Upper Tribunal in the Trustees of the Green Masjid case was correct to say, at para 129, that once a jurisdictional ground has been established, the discretion to refuse the application should be “cautiously exercised”’

101.

In ReThe Trustees of Green Masjid and Madrasah [2013]UKUT 0355(LC) the Tribunal (A J Trott FRICS) said at paragraph 129:

‘the purpose of section 84 of the 1925 Act is to enable applicants to obtain modification or discharge of restrictive covenants in circumstances where they can demonstrate statutory jurisdiction. Having satisfied me on the facts, and on the law as applied to those facts, that the Tribunal has such jurisdiction in this case, I am loath to exercise my discretion so as to deny the applicants the relief that they seek. Where jurisdiction has been established I consider that the discretion of the Tribunal to refused the application should only be cautiously exercised. It should not be exercised arbitrarily and, in my opinion, should not be exercised as, effectively, a punishment for the applicants’ conduct unless such conduct, in all the circumstances of the case, is shown to be egregious and unconscionable. On balance I do not consider the applicants’ conduct as so brazen as to justify refusal of the application.’

Mr Kay said that he did not consider that letting a few rooms breached the covenant and that Lea Hurst remained his home. However it must have been clear to him once High Court proceedings had commenced and he had made the application that his continued use of the property for bed and breakfast purposes violated the covenant. Notwithstanding Mr Kay’s attitude and his obvious reluctance to cease trading, in my view this is a situation that has more in common with Hodgson than Alexander Devine. His conduct was, in my view neither egregious nor unconscionable and, because the application concerns the future use of the house, rather than the physical development of the site, the Tribunal is not being presented with a fait accompli.

102.

Both parties made submissions in relation to the risk of a claim to enforce the nuisance covenant if the restrictive covenant were to be modified. Mr Peachey thought that the assertion was flawed on the basis that it was not supported on the evidence. I agree, there was no evidence that any activity associated with the letting of rooms in Lea Hurst had caused a nuisance or was likely to in the future. Mr Peachey went further, relying on the Tribunal’s decision in ReO’Byrne [2018] UKUT 395 (LC) and further submitted that this argument only supported Mrs Cunningham’s and Mr Nix’s case if they would successfully obtain an injunction preventing nuisance, but the Tribunal does not have jurisdiction to determine whether such a claim would succeed. He also drew attention to the Tribunal’s conclusion at paragraph 78 of that decision that the correct approach is to modify the covenant and then ‘[leave] it to the parties to take such action as they thought appropriate’.

103.

In coming to a decision to exercise my discretion in favour of Mr Kay I have balanced his behaviour in not recognising that he was in breach of the covenant, when it should have been self-evident that he was, against his apparently sincere desire to preserve a heritage asset and make it available for use albeit on a small scale to the paying public. He has spent a considerable sum to put Lea Hurst into a state where it can be enjoyed as a family home and small scale bed and breakfast establishment and I am inclined to believe that his motivation was, in part at least, altruistic rather than wholly pecuniary.