Quantum (Barrowsfield) Limited v Andrew John Bell & Ors

Under section 84 of the Law of Property Act 1925, a restriction may be modified under ground (aa) only where its continued existence impedes a reasonable use and, in doing so, secures no practical benefits of substantial value or advantage to those entitled to its benefit. The assessment is property-specific and must address the actual proposed development. A benefit may be substantial for one objector but not for another. Protection from overlooking and an overbearing development may constitute practical benefits of substantial advantage, even where planning permission has been granted and compensation could be paid. Where such a benefit exists, the Tribunal has no discretion to modify the covenant. A covenant may be obsolete under ground (a) where its original and only beneficiary is dead.

Quantum (Barrowsfield) Limited owned four properties at Barrowsfield and had planning permission to demolish the existing houses and construct a four- to five-storey building containing 33 flats. It applied under section 84 of the Law of Property Act 1925 to discharge an older covenant and to modify later covenants restricting development to single dwellinghouses.

The owners of neighbouring properties objected, relying on practical benefits including protection from overlooking, noise, light, changes to the setting and the development’s visual impact. The Tribunal also considered the position of the management company that owned part of the access road. The central issue was whether the covenants secured practical benefits of substantial value or advantage within ground (aa).

1. 1908 covenants. The covenants requiring detached private houses and approval of plans were discharged under ground (a). The original and only beneficiary was dead, and the approval covenant was in any event personal and obsolete (paras [70]-[72]).
2. Ground (aa) framework. Applying the questions identified in Re Bass Ltd’s Application (1973) 26 P&CR 156, the Tribunal asked whether the proposed use was reasonable, whether the covenants impeded it, and whether they secured practical benefits of substantial value or advantage. Planning permission and the provision of housing made the proposed use reasonable. The covenants plainly impeded it (paras [73]-[77]).
3. The assessment had to be made by reference to the actual proposed development, including the part situated on No. 4, although that property was not burdened by the relevant covenants. It would be unrealistic to assess only the portions of the building situated on burdened land (paras [78]-[79]).
4. The covenants secured no practical benefit to the management company. The company had no personal amenity interests, and concerns about traffic and parking could be addressed by closing the private-road barrier. The Tribunal therefore had discretion to modify the covenants as against that objector (paras [80]-[81]).
5. For the individual neighbouring owners, the covenants provided practical benefits by protecting against changes to the setting, noise and light, overlooking, and the visual impact of a large building. The benefits differed between properties. Protection from overlooking was of substantial advantage for No. 1A, while the visual impact of the building was of substantial advantage for Nos. 1A and 1B. Those findings meant that the statutory condition for modification was not met (paras [82]-[98]).
6. The Tribunal therefore had no discretion to modify the 1963 and 1993 covenants. The application failed as to those covenants. The Tribunal made no determination of the alleged diminution in value, but criticised the polarised and largely unevidenced valuation approaches advanced by both experts (paras [99]-[101]).

First-instance decision of the Upper Tribunal (Lands Chamber). The decision stated that any appeal to the Court of Appeal required permission and had to concern a point of law.