The Upper Tribunal was wrong to allow restrictive covenants to be modified where a development was deliberately and cynically carried out in breach of those covenants.
The Upper Tribunal was wrong to allow restrictive covenants to be modified where a development was deliberately and cynically carried out in breach of those covenants.
A developer (M) constructed a social housing development of 23 units on a site called Exchange House (to comply with a section 106 agreement in relation to the development of another site). Of these, 13 units were built on the part of the site burdened by restrictive covenants that prohibited the land from being used for building or for any purpose other than a car park. M went ahead with the development despite objections from Mr Smith (S), who owned part of the land that benefited from the covenants. The remainder of the land that benefited from the covenants had been donated by S to a children’s cancer trust (the Trust), which began building a hospice to accommodate terminally ill children shortly after M had completed its development (the upper bedrooms of some of the houses built by M directly overlooked the hospice’s grounds).
After having completed the development M applied to the Upper Tribunal (Lands Chamber) (UT) to modify the restrictive covenants under section 84(1) of the Law of Property Act 1925 (the 1925 Act). The ground M relied on was (aa). This allows the UT to discharge or modify restrictive covenants if they impede some reasonable use of the land, but only if (in this case) the covenants, by impeding such reasonable use, are contrary to the public interest (and money will be adequate compensation for any person who suffers a loss or disadvantage by the discharge or modification).
The UT initially granted M’s application (on payment of £150,000 compensation to the Trust) even though M had deliberately and cynically chosen to build in breach of the restrictive covenants, despite being requested not to do so. The Court of Appeal subsequently overturned this decision. The social housing provider to whom M had transferred the development appealed to the Supreme Court.
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