[2025] UKUT 295 (LC)

Discretion

We have determined that we have jurisdiction to modify the restrictions under ground (aa). Should we exercise our discretion to do so?

The objectors say that we should not. They say that the applicants have acted in bad faith; they misled them about the content of the restrictions in February 2020, and then carried out their development knowing that they were in breach of covenant, without seeking consent or making an application to this Tribunal for discharge or modification.

We need to look again at incidents we outlined as part of the factual background, and resolve some conflicts of evidence.

First, the letter of February 2020 (paragraph 11 above). Mr Hunt maintained that the applicants deliberately mis-stated the content of the restrictions, by not mentioning the prohibition on dormer windows looking north and east and mis-stating the height restriction, in the hope that the objectors would simply consent.

We reject that suggestion. The letter is certainly inaccurate. It was written without legal advice. It is easy to over-estimate the ability of lay people to understand the language of conveyancers and the inaccuracy looks to us like the result of misunderstanding or of skim-reading. And it is likely that the applicants did not appreciate that the height of Chesil Bank had changed. It is not credible to suppose that the applicants really thought that the recipients of the letter would simply say “yes go ahead” – instead they invited discussion. It is not credible to suppose that they thought that a consent given in the light of a mis-described covenant would in fact release them from the restrictions. They offered to provide a copy of the restrictions, which is not consistent with an attempt to deceive.

On the other hand, Mr Harison-Ellis was challenged about his state of mind when that letter was written. It was suggested that he was well aware that he could not breach the covenants without consent. He did his best to argue himself out of that position, but it is clear to us that the applicants were well aware that they needed consent to go ahead with their plans; hence the phrase “with your permission.”

As we said above, Mr Hunt chose not to reply to that letter. He explained that he did not want to get involved with people who were “just house-hunters”, and did not want to go to the expense of engaging with them and taking advice. In retrospect he wished he had replied, and we can only agree that much trouble would have been prevented had he done so.

There was also a misunderstanding when Mr Urbick relayed to the applicants what Mr Hunt had said in response to his approach (paragraph 15 above). We accept Mr Harrison-Ellis’ evidence that he did not appreciate what a planning pre-application was and that he had thought that by hand-delivering details of the proposed application to the neighbours that was what they were doing. In any event he considered that the objectors had been notified of their intended planning application by that route, even though they were not among the neighbours notified formally by the Council after the application had been made. Mr Harrison-Ellis assumed that was because the Council did not think Korobe would be affected by the application. All of this took place during the Covid restrictions of 2020, which limited personal contact with neighbours.

We also accept the applicants’ evidence that when he visited them in December 2020 Mr Hunt expressed approval of their development and expressed the hope that they would not object to his – whether or not they have recalled his precise words. Mr Harrison-Ellis would have remembered very clearly, we think, if Mr Hunt had expressed any disapproval of the extension, and Mr Hunt did not suggest that he did so.

The development of Korobe began in 2022 and the new access was opened up closer to Hillside. Mr Harrison-Ellis said that the lorries using the access were noisy and in full view of the home office at the front of the house. In October 2022 the applicants built a bin shed in front of Hillside, “to block out the view and noise from the lorries”. The objectors thought that that might be a breach of the forward building line restriction; we accept Mr Hunt’s evidence that that was what prompted him at long last to get a copy of the restrictive covenants. The objectors applied to the Land Registry for a copy of the conveyance containing the restrictions, which they received on 10 January 2023. That was the first time they became aware of the full extent of the restrictions and Mr Hunt said they were astonished to realise that the applicants had breached the roof height restriction and the dormer restriction. He said that he and Mrs Hunt were aware that the same restrictions applied to Claremont and Gap House and were concerned that by failing to act it would appear that they placed no value on the restrictions.

Mr Hunt said that he attempted to open a discussion with the applicants over the breaches but, in the face of intransigence, the objectors were obliged to appoint solicitors. An offer of mediation had been rejected by the applicants and on 6 September 2023 court proceedings were issued against them.

Mr Clarke relies on the cases of Alexander Devine Children's Cancer Trust v Housing Solutions Ltd [2020] UKSC 45 and Fosse Urban Projects Ltd v Whyte [2023] UKUT 286 (LC) in his submission that we should not exercise our discretionary power to modify the restrictions, because the applicants misrepresented the substance of the restrictions when writing to the objectors and then carried out the works knowing they were in breach of the restrictions.

Mr Clarke drew our attention to Fosse, a case where a new house had been built in breach of a covenant restricting use to garden land. The Tribunal (Mark Higgin FRICS) found at [83] that “The applicant’s ‘build first and apply later’ approach can be properly characterised as cynical. I therefore decline to discharge or modify the covenant to sanction the development.”

Use of the phrase “cynical breach” in this context arose in the decision of the Supreme Court in Alexander Devine which considered in particular how an applicant’s conduct should be taken into account by the Tribunal in the exercise of its discretion. The Tribunal, at first instance, had described the behaviour of the developer, Millgate, as “highhanded and opportunistic”. At [36] Lord Burrows said:

“36.

I interject here that the description of Millgate’s behaviour as “highhanded and opportunistic” is what some commentators, especially in the context of breach of contract, have described as “cynical”: …. In line with this, I shall use the phrase “cynical breach” as a useful shorthand description of the conduct of Millgate in deliberately committing a breach of the restrictive covenant with a view to making profit from so doing.”

Mr Skelly submitted that the situation here was very different from that in Alexander Devine and in Fosse. He submitted that the applicants here were not cynical, but naïve, and they have given evidence to explain why their conduct was not cynical. They are not experienced developers but, when they became aware of the restrictions, they were at pains to engage with the objectors, and found their approaches were resisted. They gained the understanding from Mr Urbick’s email that they should go through the planning system and that the objectors would engage at that stage. Although the objectors say (and we accept) they never received notification of the applicants’ planning application, either in draft form posted through the letterbox, or from the Council, the applicants believed that they had been informed.

By contrast, Mr Skelly submitted, it was astonishing that the objectors, who had carried out previous developments, were unaware of the restrictions when they decided to spend £1m on Korobe in order to redevelop it. When the applicants notified them of the existence of the restrictions, they chose initially not to engage because the applicants were “only house hunters”, and later to rely on the contents of the applicants’ letter for details of the restrictions. Moreover, they designed and built their house with the works in existence and were unconcerned until the matter of the bin store arose.

We agree that the applicants were not cynical. As we said above their letter of February 2020 got the content of the covenants wrong but was not an attempt to mislead; on the contrary it was an attempt to engage, to seek permission, to provide information and to devise a development that was satisfactory to all. In failing to engage with that letter the objectors missed a golden opportunity, and it is not right to penalise the applicants now for the objectors’ inaction.

We accept that the applicants thought they had done all that was needed in respect of the restrictions by applying for planning permission. They were wrong about that, they should have taken advice, and there may have been an element of wishful thinking, but they were not cynical.

Moreover the objectors appear to have been perfectly happy about Hillside until January 2023. They had no interest in the content of the restrictions until they took offence at the bin store. Their reaction to the bin store makes it clear that had they been the slightest bit unhappy about the extension of Hillside they would have taken steps to check the content of the covenants while the development was happening and before it was completed. They would have accepted the applicants’ offer of a copy of the covenants. They would then certainly have spoken up and asked for the development to stop had they not been happy. It is not right to penalise the applicants now, when reversing the extension will be expensive and destructive, for the objectors’ failure to act.

We do not understand why the objectors waited so long before finding out about the content of the restrictions when they could so easily have done so long before. We do not suggest that their indignation at the development is entirely insincere, but we take the view that it is exaggerated, in light of the fact that they were clearly unbothered until January 2023.

In our judgment any carelessness or naivety on the part of the applicants is far outweighed by the unfairness of the objectors’ behaviour, and we have no hesitation in exercising our discretion to modify the restrictions so as to permit the extension of Hillside as it stands.