Shephard & Ors v Turner & Anor

Under Law of Property Act 1925, section 84, the proposed reasonable user must be assessed as a whole, together with the practical benefits secured by the covenants. Substantiality is judged by the practical value of those benefits to the covenantees, not by the importance of the proposed development. A thin-end-of-the-wedge argument is relevant, but raises questions of fact and professional judgment rather than a separate legal test. Incidental benefits outside the contractual purpose of the covenants may be considered, but may receive less weight. Construction disturbance is generally secondary to protection against the long-term use, unless the covenant or facts justify special weight. The appeal was dismissed because no error of law or irrationality was shown.

The owners of Evergreen applied under section 84 of the Law of Property Act 1925 to modify restrictive covenants forming part of a building scheme in Orchard Close. They sought permission to construct a bungalow, associated access and garage works. The Exeter County Court had declared that the covenants were enforceable and that the proposed development would breach them, then stayed the proceedings.

The Lands Tribunal modified the covenants under ground (aa), imposed conditions and awarded compensation for temporary disturbance and loss of privacy. The neighbouring owners appealed, alleging errors concerning the possible future effect of the modification, the overall benefits secured by the covenants, the access-way and construction disturbance. The central issue was whether the Tribunal had erred in law in concluding that the covenants secured no practical benefits of substantial value or advantage.

Lord Justice Carnwath gave the principal judgment. Lord Justice Latham and Lord Justice Mummery agreed. The appeal was dismissed.

1. Statutory approach. Under section 84(1)(aa) and (1A)(a) of the Law of Property Act 1925, the Tribunal had to consider whether the restrictions impeded some reasonable user and whether they secured practical benefits of substantial value or advantage. The proposed use had to be considered as a whole, including related access and garage works. A building-scheme case might involve a greater evidential onus, but that point did not determine the appeal.
2. Meaning of substantiality. The word was context-sensitive and should not be replaced by an artificial formula. The value of the benefit was to be judged practically, as a question of fact and degree, by reference to the covenantees’ position rather than the importance of the proposed development.
3. Future development. The thin-end-of-the-wedge argument was relevant. The Tribunal could consider the integrity of the scheme and the likely effect on future applications, but could not bind itself in a future case. Its assessment was factual and could not be challenged merely because another view was possible. The Tribunal had considered the point and its conclusion was not irrational.
4. Incidental effects. Benefits had to be assessed against the nature and purpose of the particular covenants. The covenants aimed to preserve the character and environment of the close through limits on density, disturbing activity and garden clutter. Protection of the continuity of the façade was not a direct contractual objective. It was therefore relevant but incidental, and the Tribunal was entitled to give it reduced weight.
5. Construction disturbance. Reasonable user ordinarily referred to the long-term use of land rather than the transition to that use. Short-term construction disturbance would generally carry less weight, although the wording of a covenant or exceptional facts could justify special weight. A nuisance-or-annoyance covenant could protect against temporary annoyance, but it was not equivalent to a covenant specifically directed to construction disturbance. The Tribunal’s reasoning was brief, but nothing showed that it had failed to understand or consider the issue.
6. Appellate review. Specialist Tribunal decisions on matters of fact and degree do not normally establish precedent. Unexplained inconsistency may sometimes amount to an error of law, but inadequate reasoning alone is insufficient where the decision shows that the relevant issue was understood and addressed. The Lands Tribunal’s modification order and compensation awards therefore stood.

• Court of Appeal (Civil Division) — [2006] EWCA Civ 8, 23 January 2006: dismissed the appeal.
• Lands Tribunal — decision dated 5 April 2005 in LP/45/2003: modified the restrictive covenants under section 84, subject to conditions, and awarded compensation.
• Exeter County Court — order dated 6 January 2003: declared that the covenants formed part of an enforceable building scheme and that the proposed development would breach them; proceedings were stayed to permit the section 84 application.