UK Upper Tribunal Considers Application to Discharge Restrictive Covenant on Land in Fosse Urban Projects Limited v Robert Whyte & Ors

Introduction

In the case of Fosse Urban Projects Limited v Robert Whyte & Ors, the UK Upper Tribunal (Lands Chamber) was tasked with considering an application under section 84 of the Law of Property Act 1925. The application sought the discharge or modification of a restrictive covenant that prevented the use of the land in question as anything other than garden land connected to the adjoining property. This case study examines key topics addressed by the Tribunal, with specific reference to the legal principles applied and the outcome of the case.

Key Facts

Fosse Urban Projects Limited, an experienced property developer, applied to discharge a restrictive covenant on land where it had constructed a new house in breach of said covenant. The house in question was already occupied, although the development was carried out without pre-obtaining permission from the Tribunal to discharge the relevant covenant. The objectors were neighboring residents who benefitted from the covenant, and they opposed the application on grounds of loss of open aspect, privacy, and potential devaluation of their properties.

Legal Principles

The legal principles guiding the Tribunal’s decision-making were derived from Section 84 of the Law of Property Act 1925, which allows for the discharge or modification of restrictive covenants on land. The Tribunal considered whether the covenant had become obsolete under section 84(1)(a), should be discharged on grounds that it impeded reasonable use under section 84(1)(aa), and whether discharging the covenant would injure the beneficiaries (ground (c)).

Obsolescence (Ground (a))

The Tribunal explored whether changes in the character of the neighborhood, or other material circumstances, rendered the covenant obsolete. The original purpose of the covenant was considered crucial in determining obsolescence. Reference was made to Truman, Hanbury, Buxton & Co’s Application [1956] where the concept of obsolescence due to changes in the neighborhood’s character was discussed.

Impeding Reasonable Use (Ground (aa))

The Tribunal asked whether the covenant impedes a reasonable use of the land, if it secures any practical benefits to the beneficiaries that are of substantial value or advantage, and if modifying the restrictive covenant would be contrary to the public interest. Shephard v Turner [2006] and Re Pearce’s Application [2017] were cited in relation to the notion of ‘substantial’ benefits secured by the covenant.

No Injury (Ground (c))

Consequently, it was ascertained whether modification or discharge of the covenant would injure parties entitled to its benefit, in line with the decision in Hancock v Scott [2019] which also looked at the purpose of a covenant and its contemporary impact.

Discretion and Conduct of Parties

The Tribunal also had to consider, having jurisdiction, whether to exercise its discretion to modify or discharge the covenant. Royal Mail Group Ltd v Efobi [2021] and Ahuja Investments Ltd v Victorygame Ltd & Anor [2021] were important in understanding the inferences that can be drawn from a lack of evidence from a developer about their knowledge and intentions regarding the covenant. This reflects on the developer’s conduct, which may be deemed cynical as seen in Millgate Developments Ltd v Alexander Devine Children’s Cancer Trust [2020] and affects the discretionary decision of the Tribunal.

Outcomes

The Tribunal found that while the covenant was obsolete due to extensive development in the vicinity that changed the character of the neighborhood (ground (a)), the benefit of the covenant to the objectors, which included views and privacy, was not judged to be of substantial value or advantage (ground (aa)). However, the Tribunal declined to exercise its discretion to modify or discharge the covenant, finding the developer’s conduct in proceeding with the development, knowing the covenant was in place, to be cynical.

Conclusion

The decision in Fosse Urban Projects Limited v Robert Whyte & Ors serves as a reminder that while a restrictive covenant may be deemed obsolete due to changing circumstances, the conduct of a developer in breaching the covenant is a significant factor for the Tribunal when considering exercising its discretion. The case underscores the importance of transparency and adherence to due process before proceeding with development and reinforces the responsibility of developers to make appropriate inquiries about and respect for existing covenants.