Winter & Anor v Traditional & Contemporary Contracts Ltd

Compensation under section 84 is assessed by reference to loss caused to the objector’s property, including diminution in value or enjoyment, rather than loss of a financial bargaining position. A negotiated-share approach may be used as a flexible tool, but there is no fixed percentage and any award must bear a reasonable relationship to the actual loss. The 50 per cent approach in an earlier public-interest case creates no precedent, and in limited-benefit cases any percentage is likely to be near the 5 per cent end of the range. The ability to influence the form of development may itself be a practical benefit. In assessing loss, a tribunal may compare the permitted development with a reasonably anticipated compliant alternative, but the mere possibility of that alternative does not necessarily eliminate compensation.

The appellants owned and occupied 99 Ravensbourne Avenue, adjoining land on which the respondent had constructed two houses. A restrictive covenant limited the adjoining land to one dwelling-house. The respondent applied to the Lands Tribunal for modification under section 84 after the development had substantially been completed.

The Lands Tribunal modified the covenant and awarded £10,000 for apprehension caused by inadequate backfilling, subject to reduction to nil if specified strengthening works were undertaken. It rejected compensation for other alleged amenity losses and declined to assess compensation by reference to a share of development value. The appeal from decision LP/49/2005 concerned the proper basis of compensation, loss of influence over the development, the weight given to a possible compliant alternative development, the adequacy of the tribunal’s reasons and the backfilling issue.

1. Appeal dismissed. The tribunal’s reasons were sufficiently clear. Its adoption of the reasoning in Re Skupinski’s Application [2005] RVR 269 disclosed no error of law.
2. Under section 84, compensation is for loss or disadvantage caused to the objector’s property, including loss of amenity, diminution in value or enjoyment. It is not compensation for the loss of a financial bargaining position or an opportunity to extract payment for release of the covenant. The negotiated-share approach remains a permissible tool, but only where it reasonably reflects the objector’s actual loss. There is no fixed formula. The 50 per cent award in Re SJC Construction Company Ltd’s Application [1976] RVR 219 establishes no precedent, particularly for the limited-benefit ground; a percentage in such cases is likely to be near the 5 per cent approach in Wrotham Park Estate Co v Parkside Homes Ltd [1974] 1 WLR 798.
3. The ability of a covenantee to influence the form of development, through negotiation or tribunal conditions, may constitute a practical benefit of substantial value or advantage. Developer profitability may affect the likelihood of mitigation, but does not itself measure compensation.
4. A tribunal may compare the actual development with a reasonably anticipated alternative complying with the covenant. The probability relevant to establishing the substantiality of a benefit is not necessarily the same as that required to treat the alternative as eliminating compensable damage. The tribunal’s factual assessment was rational and supported by the evidence and site inspection.
5. The tribunal was entitled to deal practically with the backfilling issue by making the £10,000 award conditional on specified strengthening works. A more generous award might have been possible, but the decision disclosed no error of law.

• Court of Appeal (Civil Division) [2007] EWCA Civ 1088: appeal dismissed; the Lands Tribunal’s decision disclosed no error of law.
• Lands Tribunal LP/49/2005: restrictive covenant modified to permit the two houses, with compensation assessed at £10,000 subject to specified pressure-cement grouting works.