Mill Strand Developments Ltd v James Ernest Tapp & Ors

Under section 84(1)(aa) of the Law of Property Act 1925, a restrictive covenant may be modified where it impedes a reasonable use and any practical benefit it secures is not of substantial value or advantage, provided money adequately compensates the affected beneficiary. Substantiality is a fact-sensitive judgment for each objector and property. A benefit may be real, including preservation of a rural setting, without being substantial. Compensation must address the enduring disadvantage caused by modification, not temporary uncertainty arising from the proposal itself. Ground (c) is unavailable where the modification will injure a beneficiary.

The applicant sought modification of a covenant restricting a 1.24-acre site to agricultural buildings and uses. It held an option over the site and had planning permission for five dwellings. The covenant benefited six neighbouring houses at Old Manor Close.

The objectors relied on their rural outlook, tranquillity and the anticipated effects of construction and residential occupation. The central issues were whether the proposed housing was a reasonable use impeded by the covenant; whether the covenant secured practical benefits of substantial value or advantage; whether compensation would be adequate; and whether modification would cause injury under section 84(1)(c) of the Law of Property Act 1925.

1. The application was granted under section 84(1)(aa). The proposed five-house development was a reasonable use. It had received planning scrutiny and consent, and the parties agreed that the covenant impeded it.

2. The covenant secured no practical benefit for the owners of Nos 1, 2, 5 and 6 Old Manor Close. They neither viewed the site nor adjoined it. It did secure a practical benefit for No 4 by preserving its edge-of-village setting and rural southerly outlook. The benefit to No 3 was materially screened already and was not shown to be practical.

3. Applying the fact-sensitive meaning of substantiality stated in Shephard v Turner [2006] 2 P&CR 28, the benefit to No 4 was real but not substantial. The site had become redundant for agriculture because of surrounding housing and restricted access. Its preservation as scrubby undeveloped land provided a less than substantial advantage.

4. Money could adequately compensate No 4. The relevant assessment was the long-term effect of modification, not the temporary discount caused by uncertainty while development was proposed. Construction disruption would be temporary, but the changed setting and interim loss of outlook before planting matured would cause a permanent disadvantage. Compensation of £25,000 was adequate.

5. The Tribunal took account of the planning pattern, the changed residential character of the locality, and the historical agricultural context of the covenant. Ground (c) failed because the modification would injure the owners of No 4. The restriction was modified to permit implementation of the identified planning permission and reserved matters approval, conditional on the applicant accepting the modification and paying £25,000 to the owners of No 4 within three months.

not stated in the judgment.