Lawntown Ltd v Camenzuli & Anor

Section 610 of the Housing Act 1985 creates a broad but judicial discretion to vary restrictive covenants where planning permission has been granted for converting a single dwelling-house into separate dwellings. It is a separate regime from section 84 of the Law of Property Act 1925. Planning permission creates neither a presumption nor a duty to vary. The court must independently assess and balance all relevant matters, including the interests protected by the covenant, resulting harm, the applicant’s interests, the advantages of variation and relevant public benefit. Matters considered by the planning authority cannot simply be excluded, although the court must not reopen planning policy judgments. Neighbourhood character and scheme integrity may carry substantial weight. Compensation may be ordered where just, but requires an evidential basis.

Lawntown acquired the freehold of a semi-detached house subject to restrictive covenants preventing conversion into flats. After Lambeth granted planning permission for two self-contained flats, Lawntown applied under section 610(1)(b) of the Housing Act 1985 to vary the covenants.

The county court allowed the application and limited the permission to conversion into two flats. The adjoining owners appealed, arguing that the judge had wrongly excluded matters already considered in the planning process and should have awarded compensation. The appeal was transferred to the Court of Appeal for guidance on the exercise of the discretion under section 610(2). The central issue was the proper relationship between that discretion and the planning process.

Appeal dismissed. Richards LJ gave the judgment, with Gage and Lawrence Collins LJJ agreeing.

1. Separate statutory regimes. Section 610 of the Housing Act 1985 is distinct from section 84 of the Law of Property Act 1925. Matters relevant under section 84 may also be relevant under section 610, but there is no automatic carry-across of section 84’s grounds or constraints. The power under section 610 is broad, but it is not unfettered. It must be exercised judicially. Planning permission does not create a presumption or duty to vary the covenant. Sarum Trust Ltd v Duke of Westminster [1953] CPL 86 supported that conclusion.
2. Independent balancing exercise. The court must assess for itself the interests protected by the covenant, the extent of any harm, the applicant’s interests and the advantages of variation. Public and private interests may also be relevant. Planning permission triggers the section 610 jurisdiction but does not determine its outcome. The court need not reassess the correctness of the planning decision, but it must not exclude matters merely because the planning authority considered them. This approach was supported by South Bucks District Council v Porter [2003] 2 AC 558 and Re Martin’s Application [1989] 1 EGLR 193.
3. Error below and fresh discretion. The county court judge erred by confining the assessment to matters which Lambeth had not considered. That was a fundamental error because it excluded relevant objections, including effects on neighbouring amenity. The Court of Appeal therefore exercised a fresh discretion.
4. Application of the factors. Increased density and possible noise counted against variation, but there was no evidence of a serious traffic, parking or congestion problem. Preservation of the neighbourhood’s character and the integrity of the covenant scheme deserved substantial weight. The court distinguished the s84-specific reasoning in Re Hunt’s Application (1997) 73 P&CR 126, while accepting that consistency and the possibility of future applications were relevant. It also applied the general approach in Re Snaith & Dolding’s Application (1995) 71 P&CR 104. The public benefit of additional housing through conversion was a substantial and decisive factor. The balance favoured variation.
5. Compensation and order. Section 610(2) permits financial compensation in a suitable case. Compensation was inappropriate because there was no cogent evidence of diminution in neighbouring property values, and the request for a separate hearing was raised too late. The Convention arguments under articles 6, 8 and article 1 of the First Protocol failed. The county court’s order remained in force.

• Court of Appeal (Civil Division). Exercised a fresh discretion under section 610 of the Housing Act 1985, reached the same substantive conclusion, and dismissed the appeal.
• Mayor’s and City of London County Court. His Honour Judge Marr-Johnson allowed Lawntown’s application and varied the restrictive covenants to permit conversion into two flats.