Duffield & Anor v Gandy

When a restrictive covenant impedes a reasonable use of land, the section 84(1)(aa) inquiry requires a comparison between the property as it stands subject to the covenant and the likely impact of modifying or discharging it to permit the proposed development. A covenant prohibiting the erection of a residence may secure a practical benefit of substantial value or advantage by protecting a neighbour’s privacy from adjoining garden use ancillary to that residence. The fact that the covenant does not itself prohibit garden use does not make that benefit immaterial. The decision-maker must recognise uses that remain possible without breach, but may assess the additional privacy impact of the proposed residence and its associated garden.

The appellants owned freehold land at Riversview subject to a 1936 restrictive covenant prohibiting the erection of a residence or manufactory. They obtained planning permission for a bungalow and applied to the Lands Tribunal under section 84(1)(aa) to modify or discharge the covenant. The Tribunal dismissed the application, finding that the covenant gave Mrs Gandy a practical benefit of substantial value or advantage by protecting the privacy of her garden. The appeal alleged that the Tribunal had misconstrued the covenant by treating it as restricting garden use. The central issue was whether the covenant could protect privacy from garden use ancillary to a permitted residence, although garden use itself was not prohibited.

The Court of Appeal unanimously dismissed the appeal. Lord Justice Mummery gave the judgment, with Lord Justice Toulson and Mr Justice Patten agreeing.

1. Construction of the covenant. The covenant did not specifically restrict the use of the land as a garden. The owners could use the part adjoining Mrs Gandy’s garden for garden purposes without breaching the covenant. That did not determine the section 84(1)(aa) issue.
2. Statutory comparison. The Tribunal had to compare the existing state of the property subject to the covenant with the likely impact on Mrs Gandy if the land were freed from the covenant to permit the proposed development. Mr Rose understood and applied that approach. He had considered the possibility of garden use without the bungalow and had not treated the covenant as a direct restriction on garden use.
3. Practical benefit. The covenant’s value lay in preventing residential development and the associated use of an adjoining rear garden by the bungalow’s occupants. That use would affect Mrs Gandy’s privacy through proximity, overlooking, sound and visibility. The Tribunal was entitled to find that protection against that impact was a practical benefit of substantial value or advantage, even though the benefit arose from the restriction on erecting a residence rather than from a specific restriction on garden use.
4. Outcome. The remaining alleged errors of law depended on the rejected garden-use argument. They therefore failed. The appeal was dismissed.

1. Court of Appeal (Civil Division): On 17 April 2008, unanimously dismissed the appeal.
2. Lands Tribunal: In LP/36/2006, on 23 August 2007, Mr N J Rose FRICS dismissed the application to modify or discharge the restrictive covenant.