[2025] UKUT 139 (LC)

Initially the application was for modification under section 84(1) grounds (a) and (aa) of both clause 4(iii) (“the alterations covenant”) and clause 4(iv) (“the nuisance covenant”). Mr Thompson explained that the nuisance covenant was included because it made reference to actions which may “...tend to depreciate the value of any adjoining or neighbouring property” and he said it would make sense to modify the two covenants hand-in-hand, even though the objector had not pursued breach of the nuisance covenant in the injunction proceedings. In closings, he confirmed that the applicants no longer sought modification of the nuisance covenant. I will therefore refer simply to “the covenant” as meaning the alterations covenant.

For the application under ground (a) Mr Thompson cited the case of Adams v Sherwood [2018] UKUT 0411 (LC) where the Tribunal (Deputy President Martin Rodger QC and Mr Andrew Trott FRICS) identified four connected matters to be considered for an application under ground (a):

“35.

In determining whether the 1929 covenant can be discharged under ground (a) it is therefore necessary to consider a number of connected matters. It is first necessary to identify the purpose or object of the covenant, which may be stated in the instrument imposing the restriction or may be inferred from the nature of the restriction or from the known circumstances. Next it is necessary to ask whether the character of the property or the neighbourhood has changed since the covenant was imposed. Thirdly, whether the restriction has become obsolete by reason of those changes, in the sense that the object for which the restriction was imposed can no longer be achieved. Fourthly, and finally, whether some material circumstance other than a change in the character of the property or the neighbourhood has had that effect.”

For the applicants, Mr Thompson agreed that the purpose of the covenant was to preserve the aesthetic of the community, i.e. to maintain the character of the neighbourhood, but disputed the objector’s submission that the purpose was also to guard against unwanted changes to the character and amenity of the objector’s own property, since that was prevented by the nuisance covenant.

He submitted that the covenant was imposed over 42 years ago, when the objector owned a sufficient number of properties to warrant the imposition of a scheme of restrictive covenants to control the aesthetics of the neighbourhood. In cross-examination Mr Rome had been unable to confirm the proportion of properties remaining in the objector’s ownership, but acknowledged that probably more than 50% of the stock had been sold. The applicants had identified 12 properties in the neighbourhood, within a radius of 0.6 miles, where similar works had been undertaken to provide private porches which required a previously open shared porch to be split. The objector had confirmed that none of the properties adjoining those 12 remained in its ownership. There has been significant change to the makeup and character of the neighbourhood, by virtue of the sale of more than 50% of the properties, and Mr Thompson submitted that since the objector only enforces the covenant where it owns a neighbouring property, the original purpose of the covenant can no longer be achieved and it should be deemed obsolete.

For ground (aa), it had been agreed by the objector that the use is reasonable, as evidenced by the LDC, and that the use is impeded by the covenant. It was submitted for the applicants that the objector could not demonstrate that the covenant secured for it practical benefits of substantial value or advantage. It has only a reversionary interest in No 18, and the tenant in occupation has lifetime security, so the only practical benefit secured is in limiting injury to its reversionary interest. In Stockport Metropolitan Borough Council v Alwiyah Developments (1986) 52 P&CR the Court of Appeal upheld the decision of the Lands Tribunal that restrictions preventing development of land adjoining houses belonging to Stockport MBC did not secure to it practical benefits of substantial value or advantage. The restrictions secured the benefit of good views from some of the houses and modification to permit development would only result in diminution in value of the reversionary interest when the occupants of those houses exercised their Right to Buy under the Housing Act 1980. The Lands Tribunal awarded compensation of £2,250, being the future market value loss of 11 houses which benefited from the view.

Similarly in Re Da Costa’s Application (1986) 52 P & CR 99 the Lands Tribunal (V.G. Wellings Esq, QC) held that where a house had the benefit of a restriction over neighbouring land, but the freeholder held only a reversionary interest in it, the restriction did not secure practical benefits of substantial value or advantage. Money would be adequate compensation for injury to the reversionary interest caused by modification of the restrictions.

In this case the objector relied on the written evidence of the neighbours, which was produced for the proceedings but only appended to Mr Rome’s statement for this application, to assert that the works have caused access difficulties and a loss of amenity to the occupiers of No 18. It was submitted that the Tribunal should give little or no weight to that evidence, which could not be tested. The objector had also asserted that retention of the works would constrain its ability to allocate No 18 as housing for tenants with disabilities, but no evidence had been adduced to support that assertion. The applicants accepted that the works had involved some alteration to the wall and floor of the entrance to No 18, but Ms Owinoron had pointed out the poor state of the previous glazed double doors, which indicated that the objector was not supporting its tenants by taking good care of its property.

Mr Thompson submitted that modification to permit the works would cause no loss of value to the objector’s reversionary interest, and the objector had adduced no evidence to demonstrate such a loss, so the Tribunal could modify without awarding more than de minimis compensation.