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Court Of Appeal Overrules Previous Modification Of Restrictive Covenant That Had Allowed For Affordable Housing

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The Court of Appeal has ruled against the modification of restrictive covenants that prevented building on the burdened land…

…in a case where planning permission had been obtained and the construction had already taken place.

In this case (The Alexander Devine Children’s Cancer Trust v Millgate Developments Ltd and others [2018] EWCA Civ 2679) the developer had built properties intended for affordable housing on that land, knowing that this was in breach of covenant. The houses overlooked the benefitting land, which is to be developed as a hospice for terminally ill children. The developer constructed the properties without negotiating with the owner of the benefitting land, and without applying for modification under section 84 of the Law of Property Act 1925.

The Court of appeal held that the Upper Tribunal (UT) had no power to modify the restrictive covenant, as the precondition in section 84(1A)(b) (that the restriction impeded the reasonable use of land and was contrary to public interest) had not been satisfied.

The fact that planning permission had been obtained did not mean that there had been an objective assessment of public interest. The applicant’s conduct was also relevant, and the developer had deliberately circumvented the proper procedures for testing and respecting the covenants prior to building.

The UT had also failed to take sufficient account of the possibility that the developer could make provision for alternative affordable housing.

There may of course be reasons why a developer cannot practicably make a section 84 application before construction. However, this case highlights that, in normal circumstances, it will be appropriate to make the application before starting work, to enable a proper examination of the public interest condition to be carried out. The court was concerned to underline that developers should not be able to circumvent the section 84 procedure and flout both the law and private rights.

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Tom Warrender

Posted:

Tom Warrender

Partner

Tom is a Solicitor and Partner with 14 years + experience advising clients in relation to commercial property matters. A Legal 500 recognised lawyer, Tom is a member of SHLA and CRELA, sits on our Board of Management & Heads our Social Housing Team.