Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd

Under section 84(1)(aa) and (1A)(b) of the Law of Property Act 1925, the jurisdictional question is whether continuation of a restrictive covenant impedes a reasonable use of land contrary to the public interest. The applicant’s conduct is irrelevant to that narrow enquiry but may be highly relevant to the subsequent discretion.

A deliberate breach may justify refusing relief where it created an avoidable land-use conflict and transformed the applicant’s prospects of satisfying the jurisdictional ground. A tribunal errs in law if it omits those material effects of the applicant’s conduct when exercising its discretion.

A developer deliberately built 13 affordable housing units on land burdened by restrictive covenants which prohibited building and limited use to open-space parking. It proceeded despite knowing of the covenants and despite objections made on behalf of a neighbouring children’s cancer hospice. The development could instead have been placed on adjoining unencumbered land with planning approval.

The Upper Tribunal modified the covenants under section 84 of the Law of Property Act 1925, subject to payment of £150,000 compensation. Its decision was reported at [2016] UKUT 515 (LC). The Court of Appeal allowed the Trust’s appeal and refused the application: [2018] EWCA Civ 2679; [2019] 1 WLR 2729.

The principal issues were whether the developer’s cynical breach was relevant to the statutory jurisdictional ground or only to discretion, and whether the Upper Tribunal had erred in exercising that discretion.

1. Appeal dismissed unanimously. Lord Burrows, with whom Lord Kerr, Lord Lloyd-Jones, Lord Kitchin and Lord Hamblen agreed, held that the Upper Tribunal had erred in law when exercising its discretion. The Supreme Court set aside its decision and re-made the decision by refusing the application under section 84 of the Law of Property Act 1925.

2. The “contrary to the public interest” jurisdictional ground requires a narrow enquiry. The tribunal asks whether continuation of the covenant impedes a reasonable use of the burdened land and whether that impediment is contrary to the public interest. It does not ask whether maintaining the covenant would be contrary to the public interest in all the circumstances. On the facts, preventing occupation of the completed affordable housing caused waste which had to be weighed against the public interest in protecting the hospice as a sanctuary. The Upper Tribunal was entitled to find the jurisdictional ground established.

3. The applicant’s good or bad conduct is irrelevant at the jurisdictional stage because it says nothing about the merits of the proposed land use. Conduct, including a cynical and deliberate breach, is instead relevant when the tribunal exercises its discretion. The Court of Appeal therefore erred by treating the developer’s conduct as relevant to jurisdiction.

4. The discretion should be exercised cautiously once jurisdiction has been established. Appellate disagreement with the weight assigned by the specialist tribunal is insufficient. Intervention nevertheless was justified because the Upper Tribunal omitted two material effects of the breach. First, an alternative development on unencumbered land would have provided the housing without affecting the hospice. Secondly, an application made before building would probably have failed because that alternative meant continuation of the covenant would not have been contrary to the public interest. The breach created an avoidable conflict and then produced the very state of affairs on which jurisdiction depended.

5. The Upper Tribunal had not applied the wider observations in Lawrence v Fen Tigers Ltd [2014] UKSC 13 by analogy. Nor had it overlooked the possibility of funding alternative affordable housing: it had treated that possibility as outweighed by the waste of leaving completed homes unused. Those matters disclosed no error warranting reversal.

6. Given the elapsed time and resulting uncertainty, remittal was inappropriate. Exercising the power under section 14 of the Tribunals, Courts and Enforcement Act 2007, the Supreme Court re-made the decision and refused modification. The judgment did not determine any future claim for an injunction or monetary remedy arising from breach of covenant.

1. United Kingdom Supreme Court: Appeal dismissed unanimously: [2020] UKSC 45. The court upheld the refusal of relief, although its reasoning differed in part from that of the Court of Appeal, and re-made the decision by refusing the section 84 application.
2. Court of Appeal: The Trust’s appeal was allowed and the section 84 application refused: [2018] EWCA Civ 2679; [2019] 1 WLR 2729.
3. Upper Tribunal (Lands Chamber): The restrictive covenants were modified to permit occupation and use of the 13 housing units, conditional upon payment of £150,000 compensation: [2016] UKUT 515 (LC).