The recent Upper Tribunal decision in the case of Martin -v- Lipton and Others demonstrates the balance that the Upper Tribunal will seek to strike when deciding whether to modify a restrictive covenant affecting land.
Potential development land can sometimes be burdened by a restrictive covenant limiting development on that land.
One option available to developers when faced with such a covenant is to apply to the Upper Tribunal (Lands Chamber) (the Upper Tribunal) to discharge or modify the covenant under Section 84 of the Law of Property Act 1925.
As a preliminary, it is important to note that any such application to modify or discharge a covenant should be made before any development that might breach the covenant is undertaken. The Upper Tribunal will not look kindly on retrospective applications to try and modify or discharge covenants.
In the case of Martin v Lipton, the applicant, Mr Martin, wished to modify a restrictive covenant that stipulated that only one dwelling could be constructed on his land so that he could construct a second dwelling at the back of his property. His application was to modify the covenant (to allow two dwellings), rather than to discharge it.
There were 26 objections from owners of properties in the vicinity that had the benefit of the covenant. They were part of a so-called "scheme” of covenants that was aimed at preserving the character of the neighbourhood.
Mr Martin argued for modification of the covenant on the basis that it would impede his reasonable use of the land (i.e. for a second dwelling house). The objectors argued that the covenant should not be modified because it secured for them practical benefits of substantial value or advantage.
In addition, they argued that if Mr Martin’s application was successful, this would prompt further such applications that would then destroy the nature of the estate which the scheme of covenants was designed to preserve. This came to be known as the "thin end of the wedge” argument.
The Upper Tribunal looked at each of the objector’s arguments, but in the end decided to allow the modification because it was not convinced that the restrictive covenant secured any practical benefits of substantial value or advantage that would be significantly prejudiced by the modification.
What can we learn from this case?
Although this case concerned only one extra dwelling, it is a useful illustration of how the Upper Tribunal will look at an application to modify a restrictive covenant. In particular, it will look very carefully at arguments by objectors that modification will affect their views and constitute a “thin end of the wedge,” effectively opening the floodgates for further modifications or discharges. The Upper Tribunal would require clear evidence that it would, rather than general statements by objectors.
Finally, it is also worth noting that although the Upper Tribunal will not look at protection from temporary disturbance (from construction operations) as a ‘practical benefit’ that ought to be taken into account, it may well order compensation for such disturbance as part of any modification or, indeed, discharge.