In the matter of an application by Pamela Anne Theodossiades [2017] UKUT 461

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The applicant applied to modify or discharge restrictive covenants affecting her property, pursuant to s.84(1) of the Law of Property Act 1925. The relevant plot of land was on the south side of a larger plot of land sold in 1900, and subject to covenants restricting the purchaser to the erection of not more than two private dwellinghouses. The applicant had obtained planning permission to demolish the dwellinghouse currently occupying the plot and erect a two-storey building comprising two six-bedroom apartments, plus underground parking.

The applicant admitted that the proposed development was in breach of covenant, and sought to modify the covenant on the basis that this would have no or very little effect on the enjoyment, amenities or value of the objectors’ properties under ground (aa) of s.84(1). Grounds (a) (change of character in the neighbourhood) and (c) (the proposed discharge not injuring the persons entitled to the benefit of the restriction) were relied on in the alternative but quickly dismissed in the judgment on the evidence.

The application was opposed by the owners of three neighbouring properties, in part on the basis that the development would create a precedent undermining the scheme of covenants governing the plot and neighbouring land. This, the objectors submitted, had intended to keep the development at high value and low density, with plots occupied by houses and not flats.

His Honour Judge Behrens and A J Trott FRICS, sitting as a member of the Upper Tribunal (Lands Chamber) set out in the decision the history of the covenants, and observed that while there were 15 properties covered by the covenants, five of these had been built in breach of the density covenants. It was also doubtful whether the covenants could be enforced against three of the 15 properties where there were no express words annexing the covenants to the relevant land. The court also heard expert evidence as to the changing character of the neighbourhood.

The Tribunal followed the test set out in Re Bass Limited’s Application (1973) 26 P&CR 156, primarily focussing on the ‘thin edge of the wedge’ argument submitted by the objectors to determine whether the practical advantages secured by the covenant were of substantial value to the respondents. The Tribunal considered that they were not, as there was a likelihood of development in the foreseeable future on some of the houses in the scheme of the covenants, taking into account that the pattern of planning decisions suggested similar proposals to develop flats would be granted.

 The Tribunal therefore determined that ground (aa) had been established and modified the covenant to permit the development. As a consequent order, one respondent owning a cottage neighbouring the applicant’s land was granted compensation representing a diminution in the rental value of the property during the course of the works. The Tribunal lastly determined that the applicant should bear her own legal costs, on the basis that the objectors’ conduct had not been unreasonable.