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Re Holden’s Application

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14th February 2018

Paul Holden (“H”) is the freehold owner of a property (“the Property”) forming part of a new estate of about 30 dwellings in Lincolnshire. The Property comprises a detached house with a detached double garage.

H had converted the garage for use as a dog grooming parlour.

He acquired planning permission for change of use of the garage from domestic use to use as a dog grooming parlour. However the transfer of the Property to H contained certain restrictive covenants, to include not carrying on any trade or business or manufacture upon the Property.

H therefore applied to the Upper Tribunal (Lands Chamber) (“the Tribunal”) under section 84 of the Law of Property Act 1925 (“the 1925 Act”) to discharge the covenant affecting the Property. He relied upon grounds (a) (obsolescence) and (c) (no injury to persons entitled to the benefit of the covenant). Notice of the application was given to the other freeholders on the estate. The application was unopposed.

To succeed under ground (a) (obsolescence) an applicant must be able to demonstrate that there have been material changes in the character of the land that is the subject of the application, or changes in the character of the neighbourhood, or that there has been some other change in material circumstances. H argued in support of his application that self-employed persons were now working in their homes on the estate and that commercial vehicles used by homeowners were parked outside their homes.

The Tribunal found that there had been little significant change in the character of the estate since inception. The main purpose of the restriction was to prevent what is a purely residential estate from becoming a mixed use area, by the conversion of houses or garages wholly or partially to commercial use. The Tribunal considered that commercial user would not be apparent to any visitor to the estate and that the character of the estate remained the same. Further, H had himself entered into the restrictions in the transfer completed less than four years before the application to the Tribunal: a very short space of time. The application under ground (a) was refused.

The application under ground (c) was more successful.

There was no evidence to suggest that H’s use of the Property caused any annoyance to the owners of nearby properties. There had been no objections to the application. The use that underpinned the application had planning permission. The sort of moderate intensity business use conducted by H did not represent a threat to the scheme of protection afforded by the covenants

However, H was knowingly using the Property in breach of restriction. The tribunal referred to the earlier decision in Millgate Developments Ltd v Smith [2016] UKUT 0515 (LC) which had indicated that persons who deliberately flout restrictive covenants can find such behaviour to be a reason why an application under section 84 of the 1925 Act is refused. The Tribunal considered that here there was no suggestion that H was seeking to gain a tactical advantage by acting as he did.

The Tribunal highlighted its power to modify as well as discharge a covenant.

In the material case the Tribunal did not want to give carte blanche for any business use. Further, it considered that discharge might set a precedent that could encourage other applications for discharge whilst at the same time making them more difficult for objectors to resist. Therefore it modified the restriction only to the extent required to enable H’s current use to continue and also made the modification personal to H.

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