Carl Edward Williams v Aaron John Thompson-Hall & Ors

Under section 84 of the Law of Property Act 1925, a covenant is not obsolete where its purpose remains achievable despite changes in the property or its use. A restriction on business use does not necessarily prevent modest home administration connected with work carried on elsewhere. For the ground based on impeding reasonable use, the Tribunal assesses practical benefits against the use sought and its incremental effects on the benefited land. The covenant here gave some privacy and security advantage, but not one of substantial value. Once a jurisdictional ground is established, the discretion to modify should be exercised cautiously and should not punish conduct unless it is egregious and unconscionable.

The Applicant and his wife owned and occupied The Old Coach House, a former coach house adjoining Ystrad Hall. They used two bedrooms for a seasonal bed and breakfast business, and the Applicant undertook site supervision work from self-employment. The Objectors owned and lived at the Hall, which had the benefit of a 2003 covenant restricting development, occupation and business use at the Property.

The Applicant sought discharge or modification of the covenant to permit the bed and breakfast use. The parties also disputed whether the Applicant’s administrative work at home breached the covenant. The Objectors’ enforcement proceedings were stayed by consent while the Tribunal determined the application under grounds (a), (aa), (b) and (c) of section 84 of the Law of Property Act 1925. The issues included whether the covenant was obsolete, whether the proposed use was reasonable and deprived the Objectors of substantial practical benefits, and how the Tribunal should exercise its discretion.

1. The covenant was not obsolete under section 84(1)(a) of the Law of Property Act 1925. Its overriding purpose was to preserve the Hall’s amenity by limiting use of the Property to residential occupation compatible with the Hall. The neighbourhood had not materially changed, and the covenant remained capable of serving that purpose. The Tribunal applied the four-part approach set out in Adams v Sherwood [2018] UKUT 411 (LC).

2. The covenant did not prevent the Applicant from using the Property as an administrative base for his self-employment. Low-level administrative work consistent with ordinary residential use, connected with work carried on elsewhere, is not necessarily business use prohibited by a covenant. The Applicant’s site supervision, travel to work, and associated administration did not amount to running a building company from the Property. The tools and materials there were consistent with continuing renovation works.

3. The two-bedroom bed and breakfast use was a reasonable use for the purpose of section 84(1)(aa). The fact that it required no planning permission indicated the minor nature of the change. The Tribunal assessed the practical benefits against the actual use sought, rather than a hypothetical use of three separate dwellings. The Objectors obtained some additional privacy and security from limiting the entry of guests, but the use was seasonal and guest movements were modest. Given the existing right of way, the Hall’s exposure to ordinary visitors and pedestrians, and the limited incremental effect of the bed and breakfast, the benefit was not of substantial value or advantage. The ground was made out.

4. Ground (b) was not made out. The former owner’s indication that the Applicant need not worry about the covenant, and her apparent non-enforcement, did not establish agreement to discharge or modify it. As ground (aa) was satisfied, the Tribunal did not determine ground (c).

5. The discretion to refuse relief after a jurisdictional ground is established should be exercised cautiously. The Applicant’s status as an original covenantor and his past breaches were relevant, but not decisive. The Tribunal considered the covenant’s age and the circumstances of the breaches. It accepted that the Applicant acted in good faith following his conversation with the former owner, and his conduct was not egregious or unconscionable. The Tribunal modified the covenant rather than using its discretion to punish him.

6. The modified covenant preserves single-family residential occupation, while allowing administrative and clerical tasks associated with Mr Williams’s self-employment and the letting of no more than two bedrooms to paying bed and breakfast guests. The application was granted subject to the applicants’ acceptance of the further provisions. Compensation was fixed at £10,000.

The Objectors’ covenant enforcement proceedings were stayed by consent so that the Applicant could pursue this application under section 84 of the Law of Property Act 1925. This judgment determined the application; no earlier decision on it is stated.