Peter Martin Kay v Joanne Sarah Cunningham & Anor

Under section 84 of the Law of Property Act 1925, a covenant which prevents a reasonable proposed use may be modified where it secures no practical benefits of substantial value or advantage to the benefited land. The benefits must be assessed realistically. General anxiety that a limited modification will facilitate unspecified future development is insufficient, particularly where planning controls and any future application for modification provide protection.

Once statutory jurisdiction is established, discretion to refuse modification should be exercised cautiously. A knowing breach does not itself justify refusal unless the conduct is egregious and unconscionable. A proportionate additional restriction may be imposed to address a genuine residual concern.

The applicant owned Lea Hurst, a large listed historic house. A 2005 transfer contained a covenant preventing its use other than as a single private residence, for the benefit of adjacent Lamp Cottage.

The applicant had let up to five bedrooms to paying bed-and-breakfast guests and sought modification of the covenant under section 84 of the Law of Property Act 1925. The objectors contended that the covenant protected their peace, quiet, ambience, property value and certainty against future commercial development. They had separately brought enforcement proceedings in the High Court, which were stayed pending this statutory application.

The central issue was whether the covenant’s continued existence secured practical benefits of substantial value or advantage, and, if statutory jurisdiction existed, whether the Tribunal should exercise its discretion to modify it.

1. The application was granted. The proposed small-scale bed-and-breakfast use was reasonable and the covenant plainly impeded it. The Tribunal was satisfied that grounds (aa) and (c) of section 84(1) of the Law of Property Act 1925 were established.

2. Ground (a) was not made out. Neither changes in the occupation of neighbouring properties nor the appearance of other holiday accommodation in the wider locality amounted to a change so complete that the covenant had lost all value. The covenant’s benefit was not personal to the original covenantee; it protected present and future owners of the benefited land.

3. For ground (aa), the Tribunal accepted that limited guest accommodation was a reasonable use. The alleged practical benefits were not substantial. Noise from guests was unlikely to disturb Lamp Cottage, given the distance, intervening buildings, walls and planting, and the absence of objection from the nearer owner of The Coach House. The modification would not alter the physical setting or ambience.

4. The asserted benefit of controlling future development was also insufficient. Planning controls already imposed significant limits on use and development of the listed house and estate. The modification would preserve the covenant’s principal protection, while any materially different future proposal would require a further application. The valuation evidence attributed no loss to the proposed modification alone; the suggested reduction for uncertainty was conjectural.

5. The Tribunal therefore found that the restriction secured no practical benefits of substantial value or advantage and that the objectors would not be injured. Ground (b) was not pursued. No compensation was sought or evidenced.

6. In exercising discretion, the Tribunal treated the applicant’s continuing breach as relevant but not egregious or unconscionable. This was an application concerning future use, not a physical-development fait accompli. Under section 84(1C), it proposed an additional restriction requiring paying guests’ vehicles to use the new driveway, and invited the parties to agree suitable wording for incorporation in the modifying order.

• Upper Tribunal (Lands Chamber): Statutory application under section 84 of the Law of Property Act 1925 granted: [2023] UKUT 251 (LC).
• High Court: Separate enforcement proceedings concerning the covenant were stayed pending the outcome of this application.