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12th November 2020

Subsequent Modification of Covenant Refused

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A developer has failed in its application to the Supreme Court to modify a restrictive covenant. 

The developer had built 13 affordable homes on land on which it knew building was prohibited. It then applied to modify the restrictive covenant on the basis that it impeded a reasonable use of land and that it was against the public interest to demolish the newly built affordable housing.  The developer’s application to modify the covenant was successful in the Upper Tribunal (“UT”). The beneficiary (the trust of the neighbouring children’s hospice) appealed the decision.   

The Court of Appeal and now the Supreme Court have overturned the UT’s decision. The breach of covenant by the developer was deliberate. The UT had failed to take into account that had an alternative planning layout been used, there would have been no need to modify the covenant.  In addition, the public interest test could only be satisfied as the affordable housing units had already been built which was in breach of the covenant. The decision reflects that the courts are reluctant to allow those who knowingly breach a restriction to then profit from that breach.

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