Discharging Restrictive Covenants: A Case Of Construction (If You Can Object)

Restrictive covenants, by their very nature, restrict how land or property can be used.

Absent an agreement between the beneficiaries of the restrictive covenant and the legal owner of the subservient land, the courts can be asked to discharge or vary a restrictive covenant.

The court can do so under section 84 Law of Property Act 1925 if the covenant is either obsolete or impeding reasonable use of the land (if no injury will be caused by modifying or discharging it).

Given that the presence of restrictive covenants can raise issues in a sale or land development, it is important to note the relative frequency with which disputes reach the courts. This is hardly surprising given that more than three quarters of freehold properties in England and Wales are said to be affected by restrictive covenants.

Replacing a property

The issue sometimes arises when property owners wish to build additional or replacement buildings on their land. In McDonagh & Anor v Reeve [2023] EWHC 933¸ for instance, a 1958 conveyance contained a restrictive covenant prohibiting the erection of any 'additional buildings whatsoever' at any time on the freehold land (Rose Cottage). The adjoining property (Barnwood) had the benefit of the covenant.

The Rose Cottage owners sought a declaration that on its true construction, their proposed demolition of the current building and its replacement by a substantially larger building, for which they had planning consent, would not breach that covenant.

The issue for the court was the correct construction of the covenant – its task being to determine the parties’ intention when the covenant was entered into. The High Court concluded that at that time, the sea views were important to the then purchaser of Barnwood (which was mostly open and unbuilt land). The covenant preventing the erection of new or additional, buildings – protecting those sea views being interfered with.

The High Court decided that the covenant promised no more than that no buildings in addition to, the existing building (Rose Cottage) should be erected on that land, as opposed to precluding the replacement of Rose Cottage. It was about ‘additional buildings’ only (otherwise it would have been expected to explicitly say so).

The owners could therefore go ahead and implement the planning permission and replace Rose Cottage.

While the defendants had legal standing under s84 LPA to oppose the application by Rose Cottage’s owners, an earlier case rejected the defendant’s right to object. In Livett & Anor v Hennings & Anor [2022] UKUT 325, the Upper Tribunal found that the defendants did not have a s28 right to oppose an application for the discharge or modification of restrictive covenants.

A property was subject to a covenant imposed in a 1931 conveyance which prevented the buyers from building more than one dwelling house and not to cause a nuisance to neighbours. However, by the time the restrictive covenants were actually created, the defendant’s property no longer formed part of the vendor’s land in any case. This meant they did not have the benefit of the restrictive covenants.

Also, the tribunal did not accept the defendant’s argument that there was a building scheme in existence as far as the property was concerned, such that they had the benefit of the restrictive covenants in question. They had no legal right to enforce the restrictive covenants.

Practitioners should note that the ruling provides a useful summary of the necessary characteristics of a building scheme, the legal requirements for which are strict.

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Posted on 03.11.23