Great Jackson St Estates Limited v The Council of The City of Manchester

Under section 84 of the Law of Property Act 1925, a restrictive covenant may secure a practical benefit of substantial value or advantage even where the benefit is non-pecuniary and involves control over the manner and timing of development. Mere enforcement of a covenant, or bargaining power used to obtain money or a new lease, is insufficient. The benefit must flow from compliance with the covenant rather than its discharge. Whether the statutory conditions are met is an evaluative judgment. The commonly used questions for structuring that evaluation are helpful but are not a rigid checklist. A public authority acting as landlord may take account of its wider public duties when assessing the practical benefit secured by leasehold covenants.

Great Jackson held a lease of a Manchester development site containing covenants restricting redevelopment and requiring the Council’s consent. The Council was both freehold owner and planning authority. Great Jackson obtained planning permission for two residential towers but could not agree with the Council the terms of a proposed longer building lease, which included development milestones and forfeiture provisions.

Great Jackson applied to the Upper Tribunal under section 84 of the Law of Property Act 1925 for modification or discharge of eleven covenants. The Upper Tribunal rejected the application, holding that the covenants secured the Council a substantial advantage by enabling it to prevent uncontrolled, incomplete or untimely development: [2023] UKUT 189 (LC). The central issue on appeal was whether that control constituted a practical benefit of substantial value or advantage under section 84(1)(aa) and (1A).

Asplin LJ gave the judgment, with Baker LJ and Nugee LJ agreeing.

1. Appeal dismissed. The Upper Tribunal made no error of law in holding that the covenants secured practical benefits of substantial advantage to the Council.
2. Section 84(1)(aa) and (1A) require an evaluative assessment. The questions distilled in Re Bass’ Application provide a useful framework concerning reasonable use, impediment, practical benefits, substantial value or advantage, public interest and compensation. They are not a mandatory checklist.
3. The phrase practical benefits is broad. Mere enforcement of a covenant and consequent control of land use is insufficient. Control may nevertheless qualify where the covenant operates as a substantive tool of estate or development management. The benefit must arise from compliance with the covenant, not from its discharge or from bargaining power used to obtain a premium or other quid pro quo.
4. The covenants enabled the Council to withhold consent until safeguards addressed the risks that the development would not commence, proceed in a timely manner or be completed. That benefit was distinct from the Council’s negotiating position concerning a new lease. It was substantial because it furthered the Council’s strategy for orderly development and mitigated non-pecuniary risks.
5. It was legitimate to take account of the Council’s wider public duties when considering the benefit secured to it as landlord. The proposed modifications under section 84(1C) did not address the Council’s concerns and would have provided no substantive safeguards. The Court therefore declined to exercise that power. The Upper Tribunal’s hypothetical exercise of discretion, the viability issue and the adequacy of compensation did not arise for decision.

• Court of Appeal (Civil Division) — Appeal dismissed. The Court upheld the Upper Tribunal’s decision: [2025] EWCA Civ 652.
• Upper Tribunal (Lands Chamber) — Application under section 84 of the Law of Property Act 1925 rejected: [2023] UKUT 189 (LC).