The Alexander Devine Children's Cancer Trust v Millgate Developments Ltd & Anor

Section 84 of the Law of Property Act 1925 requires a careful balance between development needs and private contractual rights with property-like effects. Planning permission does not override a restrictive covenant or establish that maintaining it is contrary to the public interest. That question must be assessed separately, having regard to the development plan, relevant planning patterns and other material circumstances. A developer who knowingly builds in breach, without good reason, cannot ordinarily improve its position by presenting a completed development as a fait accompli. The developer should negotiate a release or apply under section 84 before building. Actual construction and resulting waste may be relevant where there was a reasonable excuse. Deliberate, high-handed conduct may justify refusal even if the statutory discretion arises.

Millgate built 13 houses and bungalows on land subject to restrictive covenants, then applied under section 84 of the Law of Property Act 1925 to permit their continued occupation. The Upper Tribunal modified the covenants under section 84(1)(aa), treating the provision of affordable housing, planning permission and the waste involved in possible demolition as sufficient public-interest considerations. It awarded compensation to the Trust. The Trust appealed, challenging the use of planning permission by analogy with nuisance cases, the weight given to Millgate’s deliberate breach, the failure to consider alternative affordable housing, and the exercise of discretion. The central issue was whether the public-interest precondition and statutory discretion could properly operate in favour of a developer that built first and applied later.

The appeal was allowed unanimously. The Court of Appeal set aside the Upper Tribunal’s decision and remade the decision under section 14(2)(b)(ii) and (4) of the Tribunals, Courts and Enforcement Act 2007. Millgate’s application to modify the restrictive covenants was refused.

1. Planning permission and private rights. Planning permission addresses the acceptability of development in planning terms. It does not override private contractual or property rights. The public-interest question under section 84(1A)(b) is distinct. The Upper Tribunal therefore erred by treating planning permission as an objective assessment which fully determined the public interest. The approach suggested by Lord Sumption in Lawrence v Fen Tigers [2014] AC 822 concerned nuisance remedies and was not appropriate guidance for modifying hard-edged restrictive covenants.
2. Public-interest precondition. Section 84 requires a fair balance between development needs and protection of private rights, applying the approach stated in Re Collins’ Application (1975) 30 P&CR 527. The Tribunal must consider the development plan, planning patterns and other material circumstances under section 84(1B). Those circumstances include whether the developer fairly attempted to negotiate a release or applied under section 84 before acting in breach. Millgate knew of the covenants, had no good excuse for proceeding, and could have arranged the affordable housing development without breaching them. It could not establish that maintaining the covenants was contrary to the public interest.
3. Actual construction and alternatives. Section 84 does not require the Tribunal to ignore buildings already constructed in breach. Their existence and any resulting waste may be relevant where the developer had a reasonable excuse, such as failing despite reasonable diligence to identify the covenant. But deliberate construction to create a fait accompli is itself relevant against the applicant. The availability of equivalent affordable housing elsewhere was also a material circumstance which had to be considered both at the precondition stage and, if necessary, at the discretionary stage.
4. Discretion. Even if the statutory discretion had arisen, the Upper Tribunal should have refused the application. Millgate’s conduct was deliberate, unlawful, high-handed and opportunistic. The Court endorsed the approach in Re George Wimpey Bristol Ltd’s Application [2011] UKUT 91 (LC) and the warning in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798. The public interest in preserving the unlawfully constructed units did not outweigh the need to protect the Trust’s rights and the proper operation of section 84.

1. Court of Appeal (Civil Division) allowed the appeal and refused Millgate’s application to modify the restrictive covenants.
2. Upper Tribunal (Lands Chamber) [2016] UKUT 0515 (LC) granted Millgate’s section 84 application and modified the covenants, subject to compensation.