Discharge of obsolete restrictive covenants affecting land

In Clarion Housing Association Limited v Mr B.C.Chitty and others the Upper Tribunal (Lands Chamber) considered an application to remove and modify a restriction on the use of land, mainly as there had been changes in the character of the property, or the neighborhood, which caused the restriction to become obsolete.

Relevant facts

The background was as follows:

• In 1975 land in a village in Kent was transferred to the local council.
• A covenant in that transfer provided that (2(a)) the land shall not be used other than as an old persons’ warden scheme with gardens and ancillary uses, and (2(b)) “no building… shall be erected… without the vendors’ written consent….” 
• Following the transfer the Council did indeed build an old persons’ warden scheme in accordance with the covenant.
• The years went by, and the land was transferred to a housing association.
• That housing association experienced difficulties in filling the scheme owing to “… the decreasing demand from older people for such accommodation…designed with bed sitting rooms with shared facilities, in locations with limited facilities, GP surgeries, shops and public transport.”
• In brief, “Such dated schemes no longer met the expectations of older people.”
• Also, the original vendors had passed away, and so could not give consent to building work.

Due to there being no demand for accommodation at the scheme, the landowner decided to demolish it and redevelop the site for general needs affordable housing.  

The application

To allow it to do so, the landowner applied to:

• amend restriction 2(a), by removing the reference to ‘old persons’ warden scheme’, and to widen the restriction to provide that the land would not be used other than for “residential and ancillary purposes”
• discharge 2(b) to remove the requirement to obtain the vendors’ consent to erect buildings, given that they had long since passed away.

It made use of part (a) of S.84(1) of The Law of Property Act 1925 (“Part (a)”) which applies in cases where changes in the character of the property, or the neighbourhood, or other circumstances which the Tribunal deems material, have caused the restriction to become obsolete.

In addition, it relied on part (aa) of the same Act (“Part (aa)”), which is satisfied if the restriction impedes some reasonable use of the land for public or private purposes. To succeed, the Tribunal must be satisfied that, in impeding that reasonable use, either the restriction secures no practical benefit to those with the benefit of the restriction, or it is contrary to the public interest.

Objections

A number of local residents objected, raising such points as:

• there was a need to maintain housing for elderly people in the village
• the village provided substantial services for the elderly
• they did not want a high-density development in the village.

A number of local residents objected, raising such points as:

Judgment

The Tribunal referred to an earlier judgment of the Court of Appeal for guidance as to what is meant by “obsolete”. That guidance provided that “…. if…the character of an estate …gradually changes, a time may come when the purpose [of the restrictive covenant] can no longer be achieved…When that time does come, it may be said that the covenants have become obsolete, because their original purpose can no longer be served….”.  

In relation to clause 2(b), the position was simple. The Tribunal noted that “The original vendors are dead and cannot give their consent [to building work on the land] …The purpose of the restriction [giving the vendors the ability to veto building on the land that they had sold] is incapable of achievement, and…has become obsolete”. The landowner’s application to discharge that covenant was allowed.

As to 2(a), the Tribunal noted that both the landowner and the objectors incorrectly assumed that the purpose of the restriction was to ensure that the land was used to accommodate older people. In fact, the restriction did not positively require the land to be used as an old persons’ warden scheme, but prevented it being used for any other purpose. As such, the restriction still had the effect of limiting the use for which the land could be made preventing, for example, the construction of a supermarket.

The Tribunal found that this restriction was not obsolete, and so the application for its modification under (a) was dismissed.

Consequently, the Tribunal went on to consider the public policy ground of Part (aa). There was no dispute that the proposed development of affordable housing was a reasonable use of the land. If the landowner’s proposals were to be implemented, land which was previously used for residential purposes would resume that use; the only difference being that those accommodated would no longer be exclusively older people. The current restriction impeded that intended use, rendering the landowner unable to let or sell the new units as it wished to.

The Tribunal was satisfied that, in impeding the proposed development, the restrictions secured no practical benefits to the objectors. They were not entitled to positively require the land to be used as an old persons’ scheme (as explained above), the argument that elderly occupants were likely to be less noisy than younger counterparts was rejected as was the argument that modification of the covenant would reduce the value of neighbouring houses.

Consequently, the tribunal allowed the application and saw no need to go on to consider whether, in restricting the proposed development, the restrictions would be contrary to the public interest, though it indicated that that it would have found in favour of the landowner (there being a need for affordable housing in Kent).

The Birketts view

Though not creating any new legal precedent, the judgment sets out a clear exposition of the Tribunal’s approach to matters such as these.

Some issues are open and shut (for example, there being no point in a covenant to seek consent from someone who has passed away).

The landowner was not successful in showing that the restriction on using the land for anything other than an old persons’ warden scheme was obsolete. However, comments made in support of that argument, such that the land could no longer be used for creating the scheme envisaged by the covenant of 1975, due to such schemes no longer being popular as a result of changes in the expectations of their target audience, were taken into account in deciding that the application should be successful under the Public Policy ground.   

The proposed development was a reasonable intended use of the land, and there was no practical benefit to the objectors in retaining the restriction.