Restrictive covenants

Citation

Waterson, G. and Lee, R. (2000), "Restrictive covenants", Property Management, Vol. 18 No. 5. https://doi.org/10.1108/pm.2000.11318eab.008

Restrictive covenants

Restrictive covenants

Caradon D.C. v. Paton; Caradon D.C. v. Bussell (2000), The Times, 17 May 2000

This particular case concerned covenants given to the former local authority landlord when the tenant(s) purchased the reversion under the statutory "right to buy", but there is no very obvious reason why it should not also be of wider application. The purchasing tenants had covenanted with the local authority "not to use or permit to be used the property for any purpose other than as a private dwelling house and no trade or business or manufacture of any kind shall at any time be permitted to be set up or carried on in any part of the property …". The question which arose was whether the subsequent letting of the property as a holiday home for periods of one or two weeks at a time was in breach of the covenant. Yes, said the Court of Appeal (overruling the decision of the court below): use "as a private dwelling house" connoted a degree of permanence in occupation, the use of the property as a home, and this was not satisfied by such short holiday lettings; in the circumstances the Court said, it was not neccesary to go one stage further and decide whether or not such use constituted a business.

In Jillas' Application (2000) 23 EG 147

On the same general topic, readers will no doubt be familiar with the provisions of s.84 of the Law of Property Act 1925 (as amended) which give power to the Lands Tribunal in certain circumstances either to discharge or to modify obsolete or otherwise inconvenient restrictive covenants, with provision for the payment of compensation where appropriate.

In the instant case the covenants in question affected a residential property which had been built in part of the former garden of an adjacent residential property. The covenants, which had been imposed at the time of the sale of the former garden plot in 1993, required (inter alia) that:

1. Not more than one dwellinghouse with suitable garage and other ancillary buildings shall be erected on the land

2. No house or other building shall be erected until the plans and specifications thereof shall have been submitted to and approved by the vendors or their successors in title so far as relates to the external appearance of the said building

The applicants argued (inter alia) that the covenants did not apply to the construction of any subsequent extension; alternatively that the covenants should be read as if they contained a proviso that consent was not to be unreasonably withheld; alternatively, they sought the discharge or modification of the covenants on the grounds set out in ground (a) viz. "that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case … the restriction ought to be deemed obsolete", or on ground (aa) viz. "that the continued existence thereof would impede some reasonable user of the land …".

The Lands Tribunal did not accept that the covenants did not apply to the subsequent extension to the original building. Mr George Bartlett QC, President of the Tribunal, said that he was

in no doubt that the requirement to obtain approval to the plans and specifications applies as much to an extension of the house or other building as to the original construction of such house or building. The purpose of the covenant was in [his] view to afford the vendor protection against a house or building that would impact unacceptably on his own house. If it were open to the purchaser [subsequently] to extend the house some time later by the construction of an additional storey or a lateral extension across the garden the purpose of the covenant would be, to a very considerable degree, frustrated …;

as regards the second point, that Tribunal appears to have been satisfied that the covenants should be read as if consent should not be unreasonably refused; as regards the question of obsolescence, the Tribunal was not satisfied that the covenants, which were still capable of protecting the neighbouring property, should be regarded as obsolete under ground (a); however, the Tribunal did find that ground (aa) was made out and ordered that the covenants should be modified so as to allow the extension to be built. Compensation was assessed at £10,000, the estimated loss in value to the dominant property. No order for costs.

Hannon v. 169 Queen's Gate Ltd (2000) 09 EG 179

Finally, under this heading, a brief note as to a case where the tenant holding a 999 year lease of a top floor flat of the landlord company which was owned by all the tenants in the block claimed (inter alia) that the lease contained an implied covenant not to build any additional flats, in an effort to prevent the landlord company from constructing two additional flats on the roof of the building above the flat owned by the claimant. Unsuccessfully, be it said, since the defendant landlord retained the roof space and roof surface and it would therefore have a prima facie right to carry out the proposed development on its own retained property; the implied term contended for by the tenant was not so obvious that the "officious bystander" test referred to by Scrutton LJ in Reigate v. Union Manufacturing Co (Ramsbottom) Ltd (1918) 1KB 592 at p605 should overide that general proposition; nor was there any covenant restricting the landlord from carrying out alterations; nor would the proposed works conflict with the landlord's repairing obligations. The landlord company was entitled to carry out the proposed development therefore.

Geoffrey WatersonRosalind Lee

The law is stated as it is understood to be up to 1 August 2000.