Housing Solutions v Bartholomew Smith

Under section 84 of the Law of Property Act 1925, the jurisdictional routes in section 84(1A)(a) and (b) are alternatives. An applicant relying only on section 84(1A)(a) need not establish that the restriction is contrary to the public interest. The Tribunal must distinguish jurisdiction from discretion. A deliberate breach by a predecessor remains relevant to discretion, but it does not necessarily prevent modification, particularly where the covenant secures no practical benefit to the objector, causes no land-use conflict, and the public-interest route is not relied upon. Unevidenced assertions of development value or other harm cannot establish a practical benefit. Where modification will not injure the objector, the Tribunal may modify the covenant and need not use its discretion to punish past misconduct.

Housing Solutions, a registered provider of social housing, owned land on which affordable houses had been built in knowing breach of restrictive covenants requiring the land to remain an open space for parking. In earlier proceedings, modification was ordered but the decision was overturned on appeal because the developer’s cynical conduct had not been properly considered in the exercise of discretion. The Hospice Trust, another beneficiary, subsequently agreed to modification for payment. Mr Bartholomew Smith, the remaining objector and beneficiary, opposed a fresh application.

The Tribunal rejected applications to strike out the proceedings and to estop Housing Solutions from applying. The central questions were whether circumstances had changed, whether the covenants secured Mr Smith any practical benefit of substantial value or advantage, whether modification would injure him, and whether the Tribunal should exercise its discretion to modify the covenants.

1. Jurisdiction and procedural objections. The application was not an abuse of process. The earlier decision concerned a different application and circumstances had changed because the Hospice Trust no longer objected. The High Court’s jurisdiction to grant an injunction or damages for breach did not exclude the Tribunal’s separate jurisdiction to modify or discharge restrictive covenants. No estoppel arose from Housing Solutions’ settlement negotiations.
2. Alternative routes under section 84(1A). The routes in section 84(1A)(a) and (b) are alternatives. An applicant relying on section 84(1A)(a) need show that the restriction impedes reasonable use, secures no practical benefits of substantial value or advantage, and that money is adequate compensation. The public-interest question under section 84(1A)(b) does not arise where that route is not relied upon. The Tribunal used the questions identified in Re Bass Ltd’s Application (1973) 26 P & CR 156 as the framework for the inquiry.
3. Practical benefit. The covenants secured Mr Smith no practical benefit. His field was separated from the application land by the hospice land, and the evidence did not establish that seeing the houses, or being prevented from seeing them, affected his agricultural land. Mr Smith produced no adequate evidence that his land had development value, that it would be diminished by the affordable housing, or that the housing on the burdened land caused greater diminution than housing on the unburdened land. The remaining questions in the Re Bass framework therefore did not arise.
4. Discretion. Housing Solutions accepted that it stood in Millgate’s shoes, so the predecessor’s cynical breach remained relevant. However, the earlier appellate factors were not decisive here. There was no land-use conflict with Mr Smith and the public-interest jurisdictional route was not relied upon. The Tribunal was entitled to weigh the absence of injury and practical benefit, the passage of years, the previous litigation and compensation paid to the Hospice Trust against the misconduct. Its function was not to punish a past breach where modification would not injure the remaining objector.
5. Order. The Tribunal exercised its discretion to modify the covenants retrospectively so as to permit the affordable housing already built. It had jurisdiction under section 84(1A)(a) and section 84(1)(c) as against Mr Smith, and under the consent route as against the Hospice Trust. No compensation was payable to Mr Smith because no loss, disadvantage or evidence of depressed original consideration was established.

The judgment records earlier proceedings concerning the same development:

• Supreme Court allowed Housing Solutions’ appeal on an error of law in the exercise of discretion, leaving the covenants intact: [2020] UKSC 45.
• Court of Appeal had previously allowed the Hospice Trust’s appeal: [2018] EWCA Civ 2679.
• Upper Tribunal (Lands Chamber) had initially ordered modification of the covenants: [2016] UKUT 515 (LC).

In the present proceedings the fresh application was allowed.