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30th May 2018

A House or Flats?

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The recently reported decision of the Upper Tribunal Re Theodossiades (2017) UKUT 461 LC provides useful insight as to when the tribunal may exercise its discretion to modify a restrictive covenant application under section 84 of the Law of Property Act 1925 on the basis that the covenant impedes a reasonable user of land. If the application succeeds, a planned development will not be in breach of covenant.  A modification is permitted where the tribunal is satisfied that the person entitled to the benefit of the restriction does not secure any practical benefits of substantial value from it or that the restriction is contrary to the public interest. 

Under section 84(1)A  the tribunal must also consider whether money is adequate compensation  for the loss or disadvantage to the beneficiary if it decides to modify the restriction.

Mrs Theodossiades owned a large seven bedroomed property in Elstree Hertfordshire known as Gaisgill.  Gaisgill occupied the southern part of the original plot with another property Copperfields owned by a Mr and Mrs Smith occupying the northern part.  The properties were first sold in 1896 and 1900 and were subject to restrictive covenants restricting the purchaser to the erection of no more than two private dwelling houses.    This had resulted in a neighbourhood of 15 prestigious, low density properties although significantly, five had been built in breach of the restriction that there be no more than two houses per plot thus creating a precedent for sub division.

Mrs Pamela Theodossiades had obtained planning permission (on appeal) in 2012  to demolish Gaisgill and erect a two storey building consisting of six two-bedroomed apartments with roof and basement accommodation and underground parking.  Mrs Theodossiades’ application was opposed by the owners of three neighbouring properties as well as Mr and Mrs Smith of Copperfields.

The tribunal reviewed the history of the covenants, their integrity including doubts as to their enforceability and the character of the neighbourhood with consideration to how it had changed since the imposition of the covenants.  It noted that new building would be a symmetrical building which would give the impression of a single large dwelling house rather than a conventional block of flats.  It also noted that there was no enforceable restriction on the size or appearance of any development within Gaisgill.

The tribunal accepted the expert evidence from the objectors’ expert that six families living in the flats were likely to cause more noise and light pollution than even a large number of occupants living in Gaisgill and that this provided some modest practical benefit to the objectors.  However the tribunal decided that the practical benefits including the thin edge of the wedge argument were not of substantial value or advantage to the objectors.  As a result the tribunal allowed modification of the restrictive covenant so as to permit the development. 

By way of compensation, the tribunal found that only one of the objectors’ properties, Red Roofs, would be adversely affected.  It proposed a 10% reduction of the rental value for the entire 18 month construction period.  This amounted to £8,100.  After considering submissions from both sides, the tribunal determined that the objectors’ conduct had not been unreasonable and that the applicant should bear her own costs.

If you would like any more information regarding this case, please contact Barbara Judkins on 01 223 447432 or click here to email her.