Summary

The guidance given by Lord Sumption in Coventry (t/a RDC Promotions) v Lawrence [2014] UKSC 13, a nuisance case in which an injunction was claimed to restrain noise created by a use authorised by planning permission, was not appropriate guidance in a determination of whether upholding a restrictive covenant was contrary to the public interest under the Law of Property Act 1925 s.84(1A)(b).

Facts

A charitable trust running a children's hospice appealed against a decision to grant an application by the respondent property developer under the Law of Property Act 1925 s.84 to modify restrictive covenants which prevented residential development on land adjoining the hospice.

The covenants prohibited the use of the application land for building. The developer built 13 affordable houses on the application land pursuant to an obligation it had to the local authority under a section 106 agreement. The agreement alternatively provided for the developer to make a payment to the authority to allow the authority to build affordable housing. The developer had been aware of the covenants but only brought its s.84 application after building the houses. The Upper Tribunal held that the covenants, in impeding the continued existence and occupation of the houses, were contrary to the public interest under s.84(1A)(b). In that decision, it applied by analogy the approach suggested by Lord Sumption in Coventry (t/a RDC Promotions) v Lawrence [2014] UKSC 13, a nuisance case in which an injunction was claimed to restrain noise created by a use authorised by planning permission. It therefore took into account, in considering the public interest, the fact that planning permission had been granted.

Held

Coventry approach - Lord Sumption's approach in Coventry was not appropriate guidance in the instant case. His view had not been endorsed by the other justices. For s.84 applications, s.84(1B) provided focused relevant guidance as to the significance of the position under the planning regime. Lord Sumption's guidance, given in a different context, was not compatible with that statutory provision. Rights protected by the law of nuisance were infused with ideas of reasonableness, to which the grant of planning permission might have a bearing, whereas covenant rights were not. Lord Sumption's guidance was addressed to a stage of analysis which was distinct from that arising under s.84. Even if a covenant was upheld after a s.84 examination, whether an injunction should be granted remained to be determined in any court proceedings brought to enforce that covenant. The issues arising at each stage were not identical. The questions of whether planning permission should be granted and whether upholding a covenant was contrary to the public interest were different, arising in different contexts, Bass' Application, Re [1973] 4 WLUK 32 approved. At the "contrary to the public interest" stage in s.84(1A)(b), the tribunal should have regard to whether the applicant had made fair use of opportunities to negotiate a waiver of the covenant or test the public interest arguments on a s.84 application in advance of acting in breach of the covenant. The way in which an applicant behaved in building on the land, including its dealings with the holder of covenant rights, was relevant to whether the s.84(1A)(b) test was satisfied, SJC Construction Co Ltd v Sutton LBC [1974] 2 WLUK 28 approved. In the instant case, as the developer had deliberately circumvented the proper procedures for testing the trust's rights under the covenants, the tribunal could not properly be satisfied that it was contrary to the public interest for the covenants to be maintained. It was in conformity with the public interest that the developer should bear the risk of wasting its resources in building on the land. However, a tribunal was not always obliged to assess the s.84(1A)(b) question by ignoring any actual construction in breach of covenant. There could be reasons why a developer could not practicably have made a s.84 application. It was appropriate to bring into account the rights-based and procedural dimension of the public interest in the interpretation of s.84(1A)(b) in order to secure protection of contractual rights which were sought to be overridden on a s.84 application. Parliament had not intended that such rights could be deliberately ignored by an applicant, leaving it to the tribunal's discretion whether to override them, Coventry considered (see paras 51-67 of judgment).

Section 84(1B) - The tribunal had erred in its application of s.84(1B). It had wrongly treated s.84(1B) as supportive of its view as to the public interest. The land was in the green belt, raising a strong presumption against its development. Section 84(1B) also required the consideration of any other material circumstances. Such circumstances included the developer's failure to test the public interest question before breaching the covenants (paras 68-69).

Alternative affordable housing provision - The tribunal had failed to have proper regard to the availability of alternative affordable housing provision, namely the possibility of making a payment to the local authority, and so had erred in assessing whether the covenants would be contrary to the public interest (paras 72-73).

Developer's conduct - The tribunal had failed to attach sufficient weight to the developer's deliberately unlawful and opportunistic conduct. It had not identified any public interest factor sufficient to outweigh that matter in the exercise of its discretion. The proper response should have been to refuse the s.84 application, Colls v Home & Colonial Stores Ltd [1904] A.C. 179 applied (paras 77-84).

Appeal allowed