The decision by the Upper Tribunal (Lands Chamber) (“the Tribunal”) in the case of HAE Developments Ltd v The Croft Ealing Ltd will be of significant interest to property developers. Property litigation specialist, James Holton, examines the recent case and comments on how the Tribunal dealt with an application to discharge a restrictive covenant over land.
Background
HAE Developments Ltd (“the Developer”) had planning permission to construct a three-storey building comprising of eight flats on its property in Ealing, London (“the Property”). The Property was situated on land originally part of the substantial garden of the adjoining property known as The Croft.
When part of The Croft’s garden was sold in 1955, restrictive covenants were imposed prohibiting the construction of anything except for a single dwelling house. Therefore, if the Developer built the proposed eight flats, then it would breach restrictive covenant and risk an injunction application or damages claim from owners of The Croft.
Over time, the character of the area changed and even The Croft had been converted into flats around a communal garden.
The Developer therefore made an application to the Tribunal to discharge the restrictive covenant on the basis that it was obsolete (“the Application”). The owners of The Croft flats opposed the Application (“the Objectors”).
Objections
The Objectors claimed that discharging the covenant would affect the character of the neighbourhood, cause nuisance to the surrounding properties and remove their privacy due to overlooking. The Objectors also raised issues relating to the intensification of the use of the existing building on the Property from a single family to one which could house up to 33 people.
The Tribunal’s Decision
The Developer succeeded with the Application. The Tribunal discharged the restrictive covenant on the basis that it was obsolete.
The Tribunal rejected the objection to protect the character of the neighbourhood on the basis that it had already changed significantly since the registration of the covenant. The conversion of The Croft into several blocks of flats, and the proximity of various nearby flats, rendered the covenant obsolete.
The Tribunal concluded that the development of the Property would not cause any loss to the owners of The Croft and therefore the Developer was not ordered to pay any compensation for the discharge of the covenant.
Did the Developer Recover its Costs?
In the Tribunal, the standard order is for each party to bear their own costs regardless of the outcome. The Tribunal may depart from this rule where one party has acted unreasonably, but such occurrences are rare.
The Developer applied for costs, arguing that the Objectors had acted unreasonably by rejecting offers to settle. However, the threshold for a costs order is high, and the Tribunal concluded that the Developer could not recover its costs as the Objectors had not acted unreasonably in opposing the Application.
Key Points
This case is part of a growing body of authorities where the Tribunal has modified or discharged a historic restrictive covenant to allow land to be developed.
The Tribunal rejected objections which it considered to be for the personal gain of neighbours and instead took a practical approach considering the change in the character of the neighbourhood.
DTM Legal LLP
Our specialist property litigation team support clients and their professional advisors in the resolution of restrictive covenant and party wall disputes. We appreciate the need for effective, objective-led action to protect your property interests which can include both litigation and alternative dispute resolution.
Author: Dimple Dhruve, Commercial Property Paralegal.
James Holton is named as a “rising star” in the Legal 500 and is a property litigation specialist. For further details on how to resolve a restrictive covenant dispute, please contact James at james.holton@dtmlegal.com or telephone 01244 354800.
