Great Jackson Street Estates Limited v Manchester City Council

Under section 84 of the Law of Property Act 1925, an applicant must establish a jurisdictional ground before the Tribunal may exercise its discretionary power to modify restrictive covenants. A covenant is not obsolete merely because the neighbourhood or the originally permitted use has changed. Its original object must no longer be capable of fulfilment.

For ground (aa), the reasonableness of a proposed use concerns the use of the land itself. Practical deliverability is not part of that inquiry, although it may matter in the discretionary stage. A landlord’s covenant-based control over the timely and orderly development of land may be a practical benefit of substantial advantage even where modification would increase the monetary value of its reversion.

The applicant held a lease with just under 61 years unexpired over two redundant Manchester warehouses. It proposed to replace them with two residential towers containing 1,037 flats. Although the Council supported residential redevelopment in principle, it would consent only through a new building lease on terms unacceptable to the applicant.

The applicant sought modification of eleven leasehold covenants under section 84 of the Law of Property Act 1925. It relied on grounds (a), (aa) and (c), contending that the restrictions were obsolete, impeded a reasonable use without securing substantial practical benefits, and caused no injury to the Council.

The central issue was whether the Council’s continuing contractual control over the form, commencement and completion of redevelopment prevented any of those jurisdictional grounds from being established.

1. Application dismissed. The applicant established none of the jurisdictional grounds in section 84(1) of the Law of Property Act 1925. The Tribunal therefore had no occasion to exercise its power to modify the covenants.

2. Ground (a) failed. The relevant question was not simply whether the neighbourhood had changed, nor whether warehouse use had become obsolete. The critical question was whether change had made the covenant’s original purpose incapable of achievement. The use restriction did not fossilise warehouse use; it preserved the Council’s control over a change of use. That object remained capable of fulfilment because the Council was willing to consent subject to safeguards directed to orderly redevelopment.

3. Ground (aa) also failed. The proposed residential development was a reasonable use, assessed on the land use itself and in light of the development plan. Practicality or deliverability was not part of that statutory inquiry, although it could be relevant to discretion. The restrictions impeded the proposed use.

4. However, the restrictions secured the Council a practical benefit of substantial advantage. They enabled it, as landlord, to require safeguards for timely commencement and completion, and to mitigate the risk of an incomplete development. That control was not merely a device for obtaining a pecuniary advantage. The likely improvement in the value of the Council’s reversion did not displace the substantial advantage of retaining control.

5. Ground (c) necessarily failed because modification would injure the Council by depriving it of that control. The Tribunal added that, even if jurisdiction had been established, it would have declined relief. It would be slow to disrupt negotiations between a local authority using private landlord rights to promote its strategic development plan and a commercial developer able to protect its own interests.

not stated in the judgment.