Restrictive covenants and planning PDF Print E-mail
Wednesday, 01 February 2012 17:14

Michael Fahy considers the recent Court of Appeal decision of Zenios v Hampstead Garden Suburb Trust Ltd [2011] EWCA Civ 1645 on the Lands Tribunal's refusal to modify a restrictive covenant.

The Court of Appeal has upheld the decision of the Lands Tribunal – now the Upper Tribunal (Lands Chamber) – to refuse to modify restrictions prohibiting alterations to the external appearance of any house within the suburb without the consent of the Hampstead Garden Suburb Trust Ltd (the “Trust”).

This case is a useful reminder that planning law and estate management schemes can operate as independent dual systems of control. Developers should ensure they obtain both planning permission and consent from those with the benefit of a restrictive covenant, as the mere existence of planning permission will not override the authority of those benefiting from a restriction.

The appellants wanted to construct a first floor extension over their garage and argued that, under Section 84(1) of the Law of Property Act 1925, the Lands Tribunal should have modified or discharged the terms of the restrictive covenant preventing their development for the following reasons:

  1. the planning authority had already granted planning permission to construct the extension and the Trust’s decision should be driven by this decision; and
  2. in any event, the payment of money would be an adequate compensation for any loss or disadvantage.

Power to make independent decisions

The Judge ruled that it was for the Trust to reach its own independent view on the application and that it was entitled to arrive at the decision at which it did. It was held that the planning authority’s decisions “fall to be considered” but do not drive the decision to be made by the Trust. The Judge went on to comment that there was nothing unorthodox in a state of affairs where there are two controls, the local planning authority and the Trust, rather than just one upon the implementation of proposals such as these. Moreover, it was held that, if it were Parliament’s intention for the decisions of a planning authority to prevail in such circumstances, then one would expect that to be specifically provided for in the legislation.

Money as compensation

The Court confirmed that the Trust had a duty to act for the promotion of the public interest on behalf of those in the amenities of the area in question. It was ruled that the damage to the public interest represented by the Trust could not sensibly be compensated by money. While reaching its decision, the Court differentiated between the loss of amenity to an individual (where money could perhaps be an adequate compensation) and the loss of amenity to the public as a whole (where money could not be an adequate compensation).

Consequently, the appeal was dismissed.

Appropriation by local authorities

Local authorities are in the unique position of being able to override private rights such as restrictive covenants under Section 237 of the Town and Country Planning Act (“TCPA”) 1990, as described in Kate Silverman’s article in Local Government Lawyer.

Further amendments to this power have been introduced by the Planning Act 2008. Paragraph 4 of Schedule 9 to that Act amends Section 237 of the TCPA so as to authorise the use of land which has been acquired or appropriated by a local authority for planning purposes, even if the use interferes with a private right or is in breach of a restriction as to the user of land arising by virtue of a contract. This change was introduced following the anomaly decision of Thames Water Utilities v Oxford City Council [1999] 1 E.G.L.R. 167 where it was held that the express wording of Section 237 did not override private rights triggered by a material change of use as distinct from the carrying out of works etc. as stated in section 237.

Therefore, if a local authority appropriates land for planning purposes, the current position is that the erection, construction, and carrying out of any works on the land or use of the land is authorised if it is done in accordance with the planning permission, notwithstanding that it may interfere with private restrictions. The effect of this is that private rights are overridden and converted into claims for monetary compensation.

Michael Fahy is Head of Real Estate at Steeles Law. He can be contacted on 020 7421 1720 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

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