Restrictive covenants are a means by which a seller of land can restrict what you can do on that land going forwards. They can often prevent you from erecting other buildings on the land and/or otherwise restricting the use of your land in some specific way.
This article considers applications to discharge and/or modify such covenants under Section 84 of the Law of Property Act 1925 (Act) in light of the recent Upper Tribunal (UT) decision of Livett v Hennings [2022] UKUT 325 (LC).
The application
The UT has jurisdiction to discharge and/or modify a restrictive covenant where the applicant can show that one or more of the grounds set out in Section 84 of the Act applies. The grounds are set out in Section 84(1) and the most used grounds are that the covenant is obsolete or impedes reasonable use or development of the burdened land.
Who can object to an application to discharge and/or modify a restrictive covenant?
Objections to applications can generally be made by:
- Those with the ‘benefit’ of the restriction, either as one of the original parties to the transaction and/or a person (or class of people) that the restriction was designed to protect. In the case of the latter, a common example is where a restriction is designed to protect the aesthetics of, say, a new build housing development (by, say, preventing alterations/addition of satellite dishes, etc or pegging out washing on the ‘front’ garden);
- Where a ‘building scheme’ is said to exist (considered below, but becoming increasingly rare); and
- Those who otherwise have the right to enforce the restriction by, say, statute (i.e. local authority).
The right to object was considered a preliminary issue in Livett v Hennings.
Livett v Hennings
Case review
Mr and Mrs Livett’s property was subject to a restrictive covenant requiring them not to build more than one dwelling on their land and not to cause a nuisance to their neighbours.
They obtained planning permission to demolish their house and build two new ones, before applying to the UT to discharge and/or modify the restrictive covenants insofar as they prevented the planned development.
Mr and Mrs Hennings and Mr and Mrs Murdin (Objectors) wanted to oppose the application. The UT considered whether the Objectors had the ‘benefit’ of those covenants (which, in turn, would give them the right to object).
The benefit of the covenants
The covenants were imposed by a conveyance dated 22nd October 1931 and were given for the benefit of the ‘residue of the Estate of the Vendors’.
In considering whether the Objectors had the benefit of the covenants, the UT found that by the time the covenants were created the Objectors’ properties no longer formed part of the ‘residue of the Estate of the Vendors’. This is because both Objectors’ properties were sold before 1931. Accordingly, the Objectors did not have any standing to object to the discharge or modification of the covenants unless they could demonstrate the existence of a ‘building scheme’.
Building scheme
The characteristics of a building scheme were summarised by Lord Justice Lewison in Birdlip v Hunter [2016] EWCA Civ 603 as:
- It applies to a defined area;
- Owners of properties within that area have purchased their properties from a common owner;
- Each of the properties is burdened by covenants which were intended to be mutually enforceable between the several owners;
- The limits of that defined area are known to each of the purchasers;
- The common owner is himself bound by the scheme, which crystallises on the occasion of the first sale of a plot within the defined area, with the consequence that he is not entitled to dispose of plots within that area otherwise than on the terms of the scheme; and
- The effect of the scheme will bind future purchasers of land falling within the area, potentially forever.
The UT found that the necessary ‘defined area’ was not identified in the 1931 conveyance, nor was identifiable from extrinsic evidence.
Moreover, the UT found that the Objectors had failed to prove that the covenants were given to benefit the whole of the estate, rather than simply for the land that the Vendor then retained. As such, Judge Elizabeth Cooke concluded that the Objectors had not been able to prove that there was a building scheme. They were therefore not able to object to the discharge or modification.
Conclusion
Restrictive covenants are a complex area of law and applications under Section 84 to discharge and/or modify them can similarly be difficult, lengthy, and costly. As Livett v Hennings illustrates, the UT will scrutinise the legal standing of any objectors before going on to consider:
- Whether it has the jurisdiction to discharge and/or modify them; and
- Whether it is willing to do so.
Any discharge and/or modification is discretionary, and each case will turn strictly on its own facts and the wording of the instrument that created the restrictive covenant in question.
It is therefore essential that advice is taken at the earliest possible opportunity when landowners consider making a Section 84 application to the UT or, equally, if they consider objecting to one that might affect them.
How can Nelsons help
For more information concerning the subjects discussed in this article, please contact a member of our Dispute Resolution team in Derby, Leicester, or Nottingham on 0800 024 1976 or contact us via our online form.
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