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(Not so) Restrictive Covenants

By D

Flowers, Re 30 Burges Road [2010] UKUT 23 (LC)

The Lands Tribunal, or the Upper Tribunal (Lands Chamber) as we should now refer to it, has recently ruled on an interesting restrictive covenants issue.

Ms Flowers is the owner of a freehold house on the Thorpe Bay Estate in Southend. She holds as a successor in title from the Woods who originally purchased from the Thorpe Bay Estate Company itself. The original transfer included an interpretation clause stating:

In this Transfer unless the context otherwise requires ‘the Vendor’ includes its assigns and the owners for the time being of the Thorpe Bay Estate aforesaid …

It also includes a number of restrictive covenants, the key one in this case being:

Not at any time to make any alterations or additions whatsoever to the property hereby transferred nor to erect any other buildings whether of a permanent or temporary nature upon the property hereby transferred except in accordance with the plans previously approved in writing by the Vendor and to pay the Vendor’s Architect’s and Surveyor’s costs in connection with such approval.

Over time the freehold interest in many of the properties on the estate have been conveyed to the leaseholders. The Thorpe Bay Estate Company has also conveyed its interest to Thorpe Estates Ltd.

The essence of Ms Flowers complaint was that Thorpe Estates Ltd had been seeking to enforce its rights to be paid under the provisions of the restrictive covenant above where an owner sought to redevelop or alter his property. They had apparently been successful in gaining payment for the giving of their approval. Ms Flowers was described by the Tribunal as being ‘incensed’ by this state of affairs. She was seeking amendment of the restriction under section 84(1) of the Law of Property Act 1925 so that it read:

Not at any time to make alterations or additions whatsoever to the property hereby transferred that are not in keeping with the scale, design and character of the neighbouring properties. Not to erect any other building of a permanent or temporary nature upon the property.

Section 84 allows the Lands Tribunal to modify or wholly or partly discharge a restrictive covenant on various bases. The two Ms Flowers was seeking to rely on were ground a which reads:

that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete…

and ground c which reads:

that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction

Ms Flowers two concerns were concisely expressed by the Lands Tribunal as follows:

Firstly there is the demanding of payments by Thorpe Estates Limited for its approval. But, secondly, she is concerned that the quality of the estate should be upheld, and she considers that the planning regime is inadequate for this purpose. The property next to hers has been redeveloped in a way that she considers out of keeping with neighbouring properties. She therefore seeks to have imposed on her own property, which she is about to sell, a restriction that would prevent its redevelopment or its alteration in a way that was out of keeping.

The Tribunal was not, however, prepared to make the modification that Ms Flowers sought. No objections to her application had been received and so the Tribunal was largely unconcerned that the first two effects of the amendments she sought would be to prevent any redevelopment to her own property on its sale and would also deprive Thorpe Estates Ltd of its ability to refuse consent for any alterations or redevelopment.

What the Tribunal was not prepared to countenance was the third consequence of the amendment which would prevent changes which were “not in keeping with the scale, design and character of the neighbouring properties”. The Tribunal did not accept Ms Flowers contention that it would be obvious what was and was not in keeping and held that it was far too subjective and because the restriction had no provisions as to who should arbitrate disputes it was so fraught with problems that it should not be imposed.

This case is a good example of the dangers of carelessly drafted provisions and this decision has avoided the high probability of satellite litigation at a later date.

D is a solicitor specialising in landlord and tenant matters with a London firm.


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