Rajarajan Narayanasamy Naidu & Anor v Valerie Morton & Ors
[2023] UKUT 185 (LC)
Richard Charles Hodgson & Anor v Terence Cook & Ors
8 February 2023
[2023] UKUT 41 (LC)
Upper Tribunal
Neighbors fought against a beauty salon operating from a home's garden. Even though the salon had permission from the city, the judge sided with the neighbors because the agreement made when the houses were built said no businesses should operate there. The judge also noted the business started before trying to change the agreement.
Key Facts
- •Applicants sought modification of a restrictive covenant prohibiting business use of their property (7 Larkin Avenue, Cottingham) to continue operating a beauty salon from a garden cabin.
- •The covenant was in the property's transfer document from 2013.
- •Planning permission for the mixed-use (residential and beauty salon) was granted in 2021, with conditions on operating hours and location within the cabin.
- •Objectors argued the covenant secured substantial benefits, citing amenity, property value, and potential for setting a precedent.
- •Applicants argued the covenant impeded reasonable use, citing economic hardship and minimal disruption to neighbours.
- •The dispute centred on noise levels, parking, and the impact on the residential character of the estate.
- •The applicants had operated the business in breach of the covenant before seeking modification.
Legal Principles
Section 84(1) of the Law of Property Act 1925 allows modification of restrictive covenants under certain conditions.
Law of Property Act 1925, s.84(1)
Under s.84(1)(aa), a restriction can be modified if its continued existence impedes reasonable use and secures no substantial benefits.
Law of Property Act 1925, s.84(1)(aa), (1A), (1B)
The Tribunal considers the development plan, planning permission patterns, the restriction's creation context, and other material circumstances (s.84(1B)).
Law of Property Act 1925, s.84(1B)
The Tribunal considers whether modification would injure those entitled to the benefit of the restriction (s.84(1)(c)).
Law of Property Act 1925, s.84(1)(c)
Relevant case law on “thin end of the wedge” arguments and the importance of upholding contracts and property rights was considered.
Shephard v Turner [2006] EWCA Civ 8, Alexander Devine Children's Cancer Trust v Millgate Developments Ltd & Anor [2018] EWCA Civ 2679, George Wimpey Bristol Limited and Gloucestershire Housing Association Limited [2011] UKUT 91 (LC), Alexander Devine Children's Cancer Trust v Housing Solutions Ltd [2020] UKSC 45
Outcomes
Application dismissed.
The Tribunal found the covenant's continued existence did secure substantial benefits to objectors by preserving the residential character of the estate and preventing potential amenity issues from increased commercial activity. The applicants' breach of the covenant before applying for modification was also a factor, though not the sole reason for dismissal.