B e f o r e :
LORD JUSTICE MUMMERY
LORD JUSTICE LATHAM
LORD JUSTICE CARNWATH
|| SHEPHARD & ORS
||- and -
||TURNER & ANR
Guy Fetherstonhaugh QC & Emily Windsor (instructed by Battens, Solicitors Limited) for the Appellants
George Newsom (instructed by Messrs. Stones) for the Respondents
Hearing dates : 5th & 6th December, 2005
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Carnwath :
- This is an appeal from a decision of the Lands Tribunal (Norman Rose FRICS) on an application under section 84 of the Law of Property Act 1925 ("the Act") to modify restrictive covenants. At issue was a proposal to erect a dwelling with associated works on land forming the curtilage of a house known as "Evergreen", 4 Orchard Close, Ottery St Mary, Devon ("the application land"). The application was made by the owners of Evergreen, Mr and Mrs Turner. There were objections from the owners of seven of the other properties in Orchard Close (six of whom are the appellants in the present appeal).
- The Tribunal described the area as follows:
"Orchard Close comprises a small cul-de-sac which runs north off Longdogs Lane. It was developed in the early 1950s by Drake and Gorham Limited – a manufacturing company which had moved its operations to Ottery St Mary from London after the Second World War – in order to house some of its managers and key staff. Orchard Close contains seven detached dwellinghouses, but the development also includes an eighth house, which abuts the eastern boundary of No.7 and is now known as The Hollies, Longdogs Lane. All eight houses are of similar construction, with pitched roofs and rendered elevations. They are arranged on two storeys and each contains three bedrooms, but they have different layouts and sizes and some have been extended and altered since construction. The close is characterised by simple dwellings linked by garages and curtain walls to form a largely unbroken façade. In 1955 the architect of the development, A R Lamb ARIBA AMTPI, was awarded the Housing Medal by the Ministry of Housing and Local Government in recognition of the merit of his design…
… The areas of the application land and of the neighbouring property to the west (No.3) are both approximately 0.25 ha. Nos.3 and 4 lie at the head of the cul-de-sac and are significantly larger than the sites belonging to the remaining objectors, which are typically less than 0.1 ha in size." (paras 8-10)
- The restrictions in question were imposed in a conveyance of the application land dated 20 October 1952. The conveyance contained, among others, the following covenants:
"1. The Purchaser shall not at any time use the said property for any other purpose than as a private dwellinghouse.
2. The Purchaser shall not do nor permit to be done upon the property anything which shall be or become a nuisance or annoyance to the owners or occupiers of the adjoining premises nor use the same for any illegal or improper or immoral purpose …
4. No caravan on wheels or building or other structure or erection whatsoever permanent or temporary shall at any time be placed built or erected upon any portion of the land coloured light pink and hatched green on the said plan".
The "land coloured light pink and hatched green" ("the hatched land") is roughly rectangular in shape, covering the part of the application land between the existing house and the hammerhead at the northern end of Orchard Close.
- On 14 June 2002 outline planning consent was granted on appeal for the construction of one single storey house or bungalow in the garden of the application land, subject to reserved matters which have subsequently been approved. The Tribunal described the proposal:
"… The site for which planning permission for the proposed bungalow was granted on 14 June 2002 has an area of 0.13 ha. It is roughly square in shape and currently forms the rear (northern) half of the back garden of No.4. It slopes downward in a northerly direction and lies within an area which contains a variety of house types and a mixed pattern of development.
Access to the proposed new dwelling would be by a 3 m wide driveway, which would connect with Orchard Close at the same point as the existing driveway and require demolition of the garage to No.4. That garage is of rendered brick or block construction with flat concrete roof set behind a parapet wall and a metal up and over door. It is attached on its west side to the garage to No.3 to form a single structure. The new vehicular access to serve the proposed replacement garage for No.4 would be formed by breaching the boundary wall at the front of the property to a width of 3 m and installing a new driveway with turning area and hardstanding on the east side of the property. The replacement garage would be 6 m x 4.5 m, with a pitched roof of no more than 4 m high. It would therefore fall within the scope of the Town and Country Planning (General Permitted Development Order) 1995 and would not require planning permission." (paras 10-11)
- In September 2002 the objectors commenced proceedings in the Exeter County Court for an injunction to restrain the applicants from carrying out the development in breach of the restrictive covenants. On 6 January 2003, an order was made declaring that the objectors were entitled to enforce the covenants by virtue of a scheme of development imposed in the 1952 conveyances. It was conceded by the applicants, and declared by the court, that the construction of a second dwelling-house on the application land would be a breach of the first covenant, and further that:
"The erection of any gate pillar(s), gate(s), garage or wall(s) on any part of (the hatched land) would amount to a breach of (the fourth covenant)."
The judge stayed the proceedings to enable the present application to be made to the Lands Tribunal for modification of the covenants.
The application to the Tribunal
- The application was made on 11th September 2003. It sought the modification of the restrictions:
"so as to permit the following user ("the User") subject to such variations (if any) as the Tribunal may authorise or require, namely
(a) the construction and use of a single storey dwellinghouse, with garage and driveway thereto, pursuant to planning permission granted on 14 June 2002 and subsequent approval of reserved matters;
(b) the construction and use of a replacement garage for the existing house and a driveway thereto;
(c) appropriate gateway pillars and walling at the road frontage."
The grounds relied on were paragraphs (aa) and (c) of section 84(1) of the 1925 Act (see below); paragraph (c) is no longer in issue.
- The development was described by reference to the appeal decision granting permission, the approved plans of reserved matters, and a layout plan 386/02/04E. The latter plan appears to have contained the only information given in the application about the proposed replacement garage and access to it, but further information was given in evidence by the applicant's expert witness (Mr Huntington-Whiteley FRICS). He referred to a revised plan ("386/02/04G") which showed an altered location for the garage 5.05m from the existing dwelling. He also gave the proposed dimensions for the garage, to support the claim that it would fall within the scope of the General Development Order, and therefore not require a specific planning permission. I proceed on the assumption that this evidence, and the revised plan, formed the basis for the Tribunal's description of this part of the development and of its decision on the merits.
- The Tribunal summarised the objectors' case (para 12). One of the points made related to the effect of the additional access, which had not been included in the planning application (because specific permission was not needed) and had not therefore been considered by the planning inspector. It was argued that:
"… the proposed user of the application land was not reasonable because of the squashed and restricted nature of the proposed two accesses to the site. Details of the access to the new garage serving the existing house on the site were not provided to the Inspector when he was considering the planning appeal for the proposed bungalow. They were first provided to the local planning authority on 23 December 2003, when a revised site plan was submitted in connection with the approval of the proposed landscaping scheme including boundary planting and fencing."
- More generally, it was claimed that the restrictions secured "practical benefits of substantial value" in the following ways:
"… the preservation of the view from their homes or gardens or the street scene of the close as a whole; the preservation of privacy and a sense of spaciousness and the prevention or restriction of overlooking and proximity; the prevention of the noise and artificial lighting that would be generated by the presence of a further house; the exclusion of the traffic and possible parking problems that would be generated by the presence of a further house; the right to object to intensification of development in contravention of the restrictions and to preserve the status quo and a sense of spaciousness; the assurance of the integrity of a well-maintained and successful building scheme, the erection of the proposed house materially altering the context in which future applications to the Tribunal would be considered; the prevention of the risk of any damage to the common sewer as the result of the construction of a new property; the prevention of the devaluation of the objectors' land and the prevention of nuisance and annoyance from building work during the construction period. "
- The Tribunal noted that, in a building scheme case, there is "a greater onus of proof upon any applicants for the modification of covenants to show that the requirements of section 84 of the Act are satisfied" (citing Gilbert v Spoor  Ch 27 and Re Bromor Properties Ltd's Application  70 P & CR 569). However, the Tribunal concluded that the requirements of ground (aa) were satisfied for the reasons given in the following passage (for ease of reference I will subdivide paragraph 25) :
"24. In my judgment, given the existence of the planning permission, the proposed use of the application land is reasonable, in the sense in which that word is used in paragraph (aa). Although the two proposed vehicular accesses would result in traffic leaving the application land close to the existing exits from Nos.3 and 5, the number of traffic movements is likely to be small in each case and the potential hazards seem to me to be very small and of the type which are commonly met with the exercise of normal care.
25. I consider that the effects of the proposed development upon the objectors' properties are likely to be as follows.
[i] The view of the bungalow would be slight in the case of Nos.3 and 5 and otherwise virtually non-existent. There would be no material interference with the privacy and sense of spaciousness of any of the properties apart from No.3, where the effect would be limited. The additional noise would be marginal, as would the long-term increase in on-street car parking. There would be little risk of damage to the common sewer, provided the condition that was suggested by the applicant during the course of the hearing was imposed. Although there might be an increase in artificial lighting, the applicant is also prepared to accept a condition minimising any such impact.
[ii] The removal of part of the front wall to form a vehicular access to the proposed replacement garage for the existing house, "Evergreen", would have an adverse effect on the character of the close by breaching its largely unbroken façade. That work, however, would not of itself breach the restrictions.
[iii] If the present application were successful, it might encourage an attempt to build a bungalow in the rear garden of No.3, or possibly a total of three or four bungalows in the combined rear gardens of Nos.3 and 4. Any such applications would be treated on their merits, both by the planning authority and this Tribunal. Whether the modification of any restriction would be ordered would be likely to depend largely on the impact of the proposed development on the amenities of the neighbouring houses. It seems to me, however, that it is extremely unlikely that this Tribunal would permit anything more than one further unit to be erected in the close, as any more intensive development would be likely to have a substantially adverse effect on those entitled to the benefit of the restriction." (para 24-5)
- The Tribunal accepted Mr Huntington-Whitley's evidence that the proposed modification would not reduce the open market values of the objectors' properties generally, and would increase the value of No.3 by creating a significant hope value. He bore in mind that alterations had been made to houses in Orchard Close in breach of restrictive covenants; but noted that these works were "all minor in nature compared with those which are currently under consideration". He concluded:
"… I do not consider that the ability to prevent the limited adverse effects which I have identified in paragraph 25 above constitutes a practical benefit of substantial value or advantage to the objectors which is secured by the relevant restrictions. The objectors would suffer some disturbance while the proposed building works were being undertaken. It seems to me, however, that such disturbance would not be substantial and could effectively be dealt with by the award of compensation. I therefore conclude that the requirements of paragraph (aa) are satisfied." (para 26)
- Accordingly, he ordered that the restrictive covenants should be modified:
"… so as to permit the erection of one single storey house or bungalow on the application site, in accordance with the planning permission dated 14 June 2002 or any subsequent permissions which are the renewal of that permission and including any reserved matters approved pursuant to such permission or permissions."
He imposed conditions relating to the protection of a common sewer on the land, restrictions on artificial lighting, and the replacement of trees; and, in respect of the replacement garage, a condition requiring that it be "located as shown on page 8 of drawing No. 386/02/04G, revised 19 February 2004". He accepted that the objectors were entitled to compensation for the loss or disadvantage which they would suffer from the proposed modification:
"They would suffer temporary losses while the new house is in course of construction, in the form of noise, dust, disturbance and possible parking and access difficulties."
For these disadvantages, and for the loss of privacy to No.3, he awarded sums ranging from £200 to £700.
Grounds of appeal
- The grounds of appeal can be summarised as follows:
i) Thin end of the wedge The Tribunal applied the wrong legal test when considering the "thin end of the wedge" argument;
ii) Overall benefits Having regard to its specific findings as to the effects of the proposals (including effects in terms of visual impact, loss of privacy and noise), no reasonable Tribunal could have concluded that the overall benefits secured by the covenants were not of substantial value;
iii) The new access-way The Tribunal erred in law in disregarding the admittedly "adverse" effect of the access-way to the new garage, on the sole grounds that it would not "of itself breach the restrictions";
iv) Construction disturbance The Tribunal failed to evaluate the conflicting evidence as to the extent of disturbance arising from the construction works, and reached an unreasonable conclusion.
The statutory background
- Before considering those issues in more detail, it is necessary to set out, and make some general comments on, the relevant statutory provisions.
- Section 84 enables the Tribunal to modify restrictions on being satisfied of certain defined grounds. Only ground (aa) is relevant to the appeal:
"(aa) that (in a case falling within subsection (1A) below) the continued existence thereof would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impede such user…
(1A) Subsection (1)(aa) above authorises the discharge or modification of the restriction by reference to its impeding some reasonable user of land in any case in which the Lands Tribunal is satisfied that the restriction, in impeding that user, either –
(a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them;
(b) is contrary to the public interest
and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification."
Subsection (1B) requires the Tribunal to take into account the development plan and any pattern of grant or refusal of planning permission in the relevant area. Nothing in my view turns on that sub-section for the purposes of the present appeal.
- Paragraph (aa) was introduced by amendment by the Law of Property Act 1969. It replaced the second part of the former ground (a), which was in the following terms:
"… that the continued existence [of the restriction] would impede the reasonable user of the land for public or private purposes without securing practical benefits to other persons…"
The most significant changes for present purposes were the substitution of "some" for "the" in the reference to reasonable user; and the introduction of the criterion that the practical benefits should be "of substantial value or advantage". The changes followed a report of the Law Commission (Report on Restrictive Covenants Law Com No. 11 (1967)), which recommended a restatement of the Tribunal's powers –
"… in such terms as to enable it to take a broader view of whether the use of land is being unreasonably impeded…"
The wording proposed in the Bill did not follow precisely the wording proposed by the Commission.
- When introducing the Bill in the House of Lords, the Lord Chancellor explained that the existing provisions -
"… have been strictly interpreted, so that in practice it is rare for restriction to be modified or discharged unless it is obsolete or of no value to the person entitled to enjoy its benefits. In consequence the development of land is often either frustrated by restrictive covenants or carried out in breach of them. Some times excessive sums have to be paid to obtain release from covenants which are reflected in inflated prices charged for those developed land when it comes to be sold" (Hansard HL Vol 301, Col 583)
Later he commented on the new provision:
"Where at the present they can only act because the restriction confers no benefit, they would in the future be able to act where the benefit conferred by the restriction is not substantial. They would also, as result of the change made by Section 84 (1) (a), to be able to apply a more generous test in determining whether the restriction is one which impedes reasonable use and therefore ought to be lifted. But the predominant consideration would still only be the extent of the benefit conferred…" (Vol 302, Col 240)
- In cases under the amended provisions, the courts have emphasised the width of the considerations which may be taken into account. Thus, in Gilbert v Spoor  Ch 27, the Court of Appeal rejected any suggestion that "practical benefits" were confined to financial factors, and held that loss of a landscape view, visible from land in the immediate vicinity of the objectors' properties, was a sufficient reason to refuse modification. Eveleigh LJ said:
"….the words…are used quite generally. The phrase 'any practical benefits of substantial value or advantage to them' is wide. The subsection does not speak of a restriction for the benefit or protection of land, which is a reasonably common phrase, but rather of a restriction which secures any practical benefits. The expression "any practical benefits" is so wide that I would require very compelling considerations before I felt able to limit it in the matter contended for. When one remembers that Parliament is authorising the Lands Tribunal to take away from a person a vested right either in law or in equity, it is not surprising that the Tribunal is required to consider the adverse effect upon a broad basis." (p 32E-G)
- Before us there was some discussion of the meaning of the word "substantial". It is a Protean word, which must take its meaning from its context. The Concise Oxford Dictionary 9th Ed offers the following definitions: "of real importance", "of large size", "of solid material or structure". In the different statutory context of the Rent Acts, in Palser v Grinling  AC 291, 317, Viscount Simon considered the meaning of the word in the phrase "substantial proportion of the whole rent". In accordance with "one of its primary meanings"; he read it as "equivalent to considerable, solid or big". He accepted that the concept was imprecise, adding:
"… Aristotle long ago pointed out that the degree of precision that is attainable depends on the subject matter."
- The meaning of the word in the present context was touched upon in Re SJC Construction Co Ltd  28 P & CR 200, 204. The Tribunal (Douglas Frank QC), considering the modification of a covenant to allow the erection of six flats on a single dwelling plot, declined to allow it under (1A)(a) but did so under the "public interest" provision ((1A)(b)). Of the word "substantial" in sub-section (1A), he said that it required applicants to show –
"… that the benefit is not of any real importance in either money terms or in having some other advantage"
The application of the word "substantial" was, he said, "a question of fact and degree having regard to all the circumstances"; he continued:
"The question I have asked myself in this case is whether the benefits and advantages to the (covenantee) are of so little weight in relation to what is proposed by the appellants that they can regard as having no real importance."
He answered that question in the negative.
- With respect to Mr Frank QC, I think that his reformulation of the test may be open to some criticism, although I have no difficulty with his application of (1A) to the facts of that case. First, the words "of so little weight" may be seen as implying a very low threshold, which is not reflected in the dictionary definitions of the word, and in effect adds very little to the word "practical". Secondly, I am not sure that I understand what he meant by the words "in relation to what is proposed by the applicants". The "substantiality" of the benefits, as I understand paragraph (a), is to be judged by their practical value to the covenantee, not by comparison with the importance of the proposed development to the applicant.
- As I have said, he went on to hold that the modification should be permitted under the public interest provision, and awarded compensation of £9,500 to the objectors. The latter aspect was subject to appeal to the Court of Appeal, which upheld the award. Stephenson LJ commented:
"…the modification of this restrictive covenant clearly resulted in the respondents suffering the loss of a practical benefit of substantial value or advantage. For that substantial loss or disadvantage they were entitled to substantial compensation." (1975) 29 P & CR 322, 327.
There he seems to have been using the word "substantial" in the same sense as that used by Viscount Simon in the Rent Act case: that is "considerable, solid, big".
- I agree that this is a safer guide. However, I would prefer not to seek a substitute for the statutory language, nor to seek a degree of precision which Parliament has avoided. It was no doubt thought appropriate to leave it to the Tribunal, as an expert body, with the statutory function of promoting "uniformity of decision" (see Lands Tribunal Act 1949 s 4(1)), to apply the section in a commonsense way.
- Against this background, I turn to the grounds of appeal.
Thin end of the wedge
- The appellants say that, in considering the possible effects of future development, the Tribunal applied the wrong test. As it is put in their Skeleton Argument:
"The Tribunal should have assessed the importance to the appellants of maintaining the integrity of the building scheme (in terms of density, character and tranquillity). The Tribunal should further have considered whether the grant of the application, by opening a breach in a carefully maintained and successful scheme of development, would deprive the objectors of the substantial practical benefit of the assurance of the integrity of the scheme, and whether it could materially alter the context in which future applications would be considered".
In submission, Mr Fetherstonhaugh referred to the "ratchet effect" which would result from a modification, in that any new proposal would be considered in the context where a modification had already been allowed. It was necessary therefore to look at the totality of the effects of the existing proposal and any future proposals, both in general and in relation to their specific effects.
- It is not in dispute that one material issue (often described as the "thin end of the wedge" point) may be the extent to which a proposed development, relatively innocuous in itself, may open the way to further developments which taken together will undermine the efficacy of the protection afforded by the covenants. In McMorris v Brown  1 AC 142, 151, the Privy Council adopted a statement by the Lands Tribunal from Re Snaith and Dolding's Application  71 P&CR 104. The applicants had been seeking modification of a covenant, to enable them to build a second house on a single plot within a building scheme. The President (Judge Bernard Marder QC) said:
"The position of the Tribunal is clear. Any application under section 84(1) must be determined upon the facts and merits of the particular case, and the Tribunal is unable to bind itself to a particular course of action in the future in a case which is not before it… It is however legitimate in considering a particular application to have regard to the scheme of covenants as a whole and to assess the importance to the beneficiaries of maintaining the integrity of the scheme. The Tribunal has frequently adopted this approach….
Insofar as this application would have the effect if granted of opening a breach in a carefully maintained and outstandingly successful scheme of development, to grant the application would in my view deprive the objectors of a substantial practical benefit, namely the assurance of the integrity of the building scheme. Furthermore I see the force of the argument that erection of this house could materially alter the context in which possible future applications would be considered." (p 118)
- In the present case, the Tribunal clearly had this point in mind. The summary of the objectors' case referred to the argument that they would lose "the assurance of the integrity of a well-maintained and successful building scheme". The Tribunal addressed the point in paragraph 25[iii]. It was thought "extremely unlikely" that the proposed modification would lead to more than the possibility of one further unit in the Close. The Tribunal evidently took the view that the larger plots of number 3 and number 4 represented a special case within Orchard Close, because of their relative size and their position away from the main part of the Close.
- I find it hard to see in what way it is said that the Tribunal applied "the wrong test". He clearly took this issue into account; how he did so was a matter, not of law, but of professional judgment on the facts. His consideration could only be in general terms, since the specific effects would depend on the nature of the particular proposal in the future, which in turn would be subject to detailed control by the planning authority and the Tribunal. Furthermore, as Mr Newsom said, the effects of the first modification might not be all one way. For example, it might be that, in the future, in resisting further development behind No 3, the objectors' case might be strengthened by the support of the occupant of a new house at the rear of No 4.
- To summarise, the "thin end of the wedge" argument is relevant, but the issues it raises are ones of fact not law. The Tribunal considered the issue in this case. I find it impossible to say that his conclusion was irrational, so as to give rise to any possible challenge under the limited grounds available in this court.
- The second ground of appeal was not strongly pressed by the Mr Fetherstonhaugh in argument, and in my view he was right not to do so. In paragraph 25 the Tribunal dealt in turn with each of the benefits which had been claimed. Having done so, he looked at the overall position in paragraph 26, and concluded that the benefit of the ability to prevent these "limited adverse affects" was not "substantial". I cannot see how this conclusion raises any issue of law, nor that it was not reasonably open to the Tribunal.
The new access-way
- The third ground of appeal focuses on the Tribunal's acceptance that:
"The removal of part of the front wall to form a vehicular access to the proposed replacement garage would have an adverse affect of the character of the Close by breaching its largely unbroken façade."
The Tribunal commented:
"That work, however, would not of itself breach the restrictions".
- That approach, it is said, reveals a misunderstanding of the relevant test. The question posed by section 84(1A) is to be judged by reference to the nature and effects of the "reasonable user" which is impeded by the restriction. In this case, the relevant user is that defined by the application to the Lands Tribunal, which includes not simply the dwellinghouse, but also the related works, including the new access and garage. If the restriction has the practical effect of impeding those incidental developments, then that is a practical benefit to the objectors which should be taken into account, regardless of whether is directly within the terms of the restriction.
- Mr Newsom does not, as I understand him, dispute that the Tribunal must take account of the "reasonable user" as a whole, including the new garage and access-way. However, he says that the appellants have read too much into the Tribunal's words. By saying that the demolition of the wall would not "of itself" breach the restrictions, the Tribunal was not excluding it as a factor to be taken into account making his overall judgment in paragraph 26. It was one of the "adverse" effects the combined effect of which he found to be "limited".
- I have not found this an easy issue to resolve. In the first place, I have some doubt as to the particular effect the Tribunal had in mind. The "largely unbroken façade" which he identified earlier in the decision was a reference to the "simple dwellings linked by garages and curtain walls". From the photographs before us it seems clear that the low front wall, which would be pierced by the access to the garage, is not part of that "unbroken façade" but is a separate feature of No 4 and is not continuous. In so far as one can judge from the photographs, the breaking of this front wall by the new access would not appear to be a very significant intrusion. On the other hand, the removal of the existing garage to form the access to the new dwelling at the rear would represent a break in the relevant façade. It seems to me much more likely that this is what the Tribunal had in mind in this sentence.
- Furthermore, had the Tribunal been directing its attention to the access to the new garage, I would have expected some specific reference to the evidence of Mrs Oxenham, of 5 Orchard Close, who would be most directly affected by the new access and had complained of the potential nuisance and annoyance likely to be caused by the passage of vehicles. In fact this aspect was dealt with by the Tribunal separately in paragraph 24 when considering the reasonableness of the user.
- I proceed therefore on the basis that the particular "adverse affect" which the Tribunal identified was the removal of the existing garage and the resulting break in the "façade", which had been held to be a significant feature of the Close. It is common ground, as I understand it, that the demolition of this garage, and the formation of the access-way, are not in themselves in breach of any of the covenants. How if at all is this fact relevant to the Tribunal's consideration?
- It is clear from the wording of the section that the inquiry must begin by considering the proposed use as a whole. However, in considering the practicality and substantiality of the benefits to the objectors of being able to prevent that use, there must be an element of comparison with what would happen if the modifications are not allowed. If an equally damaging development could be carried out without breaching the restrictions, and there is evidence that it is likely to happen, then the apparent benefits of impeding the proposed development may be illusory.
- The correct approach was explained by the Privy Council in Stannard v Issa  AC 175. The case was decided under the equivalent legislation in Jamaica, which was based on the original section 84, but with some changes of wording. The word "substantial" was not used; the corresponding provision referred to –
"… practical benefits sufficient in nature or extent to justify the continued existence of (the restriction)".
The proposal was to erect six blocks comprising 40 residential apartments and amenities in what was held to be a "peaceful seaside enclave of a family nature". The judge had dismissed the application to modify the covenants, but this was reversed by the Court of Appeal, on the grounds that the judge should have taken into account the potentially damaging developments which could have been carried out without breaching the covenants.
- This approach was criticised by the Privy Council. Lord Oliver said:
"Given any set of restrictions it is not usually difficult to conjure up colourful or hypothetical examples of things which could be done within the framework of the covenants as they stand and which, if done, would substantially repair or defeat the purpose for which the covenants were imposed, but that is not an exercise which the court is enjoined by the section to undertake. What the court exercising this jurisdiction is enjoined to do is to consider and evaluate the practical benefits served by the restrictions. The purpose of these restrictions is obvious on their face. It was to preserve the privacy of each purchaser's plot and the quality of the totality of the sub-divisions by restricting housing density, by regulating commercial activity and providing a lower cost limit intended to ensure good quality development. Whether or not the covenants as drawn are sufficiently specific to achieve all these purposes in the face of a really determined attack by somebody intent on disturbing the peace of the neighbourhood is really immaterial. The undisputed evidence was that in fact all those plots which had been built on had in fact been developed by the erection of single storey private dwellings. It was the trial judge's opinion, after a view, that the land formed a peaceful seaside enclave of a family nature. That was the actuality and, with respect to them, the majority of the Court of Appeal, in positing the nightmare of a complex of medical centres or six-storey castles covering the entirety of the sub-divided lots, were ignoring altogether the practical effects of the restrictions and engaging in unnecessary flights of imagination in order to test whether the original intention of the restrictions was capable of achievements in all circumstances. In doing so they were, in their Lordships judgment, asking themselves the wrong question. The question is not "what was the original intention of the restriction and is it still being achieved?" but "does the restriction achieve some practical benefit, and if so, is it a benefit of sufficient weight to justify the continuance of the restrictions without modification?" (p 187-8)
- The question as posed in the last sentence was based on the wording of the Jamaica legislation (see above). Notwithstanding the different wording, however, the passage is valuable in the present context for two particular points. First, in judging the effectiveness of the protection provided by the covenants, one is concerned with practicality, not theory. A similar point was made by the President, George Bartlett QC, in a Lands Tribunal decision (Re Fairclough Homes Limited LP/30/2001). He said:
"…how the character of the area and the amenities would be affected by the modification of the restriction is not in my view to be judged by envisaging the worst that could be done without breaching the restriction and comparing it with what the proposed modification is intended to permit… In such a case as this, the provision, it seems to me, operates in this way. By preventing development that would have an adverse affect on the persons entitled to his benefit, the restriction may be said to secure practical benefits to them but if other developments having adverse affects could be carried out without breaching the covenant, these practical benefits may not be of substantial value or advantage. Whether they are of substantial value or advantage is likely to depend on the degree of probability of such other development being carried out and how bad, in comparison to the appellant's scheme, the effects of that development would be." (para 29-30).
Those passages are relied on by the appellants in the present case. Here, they say, if the present proposal is disallowed, there is no evidence of any practical likelihood of an alternative scheme to demolish or replace the garage. Without a second dwelling-house to the rear, there would be no practical or commercial reason for such work.
- Thus far, I would agree with them. However, this, in my view, is not the only point which emerges from Lord Oliver's statement. Central to it is the need to evaluate the practical benefits by reference to the nature and purpose of the particular restrictions, which in that case was "obvious on their face". The purpose of the present restrictions is also apparent on their face: in summary, to preserve the character and environment of the Close, by limiting density, preventing disturbing activity, and restricting building and other clutter in the garden areas in front of the houses. Notably absent is any restriction designed to protect the continuity of the facades. The "largely unbroken façade" may be an attractive feature of the Close, but its protection is not part of the contractual scheme of which the restrictions form part. At most it can only be an incidental and uncovenanted benefit of the achievement of the other contractual objectives. That does not mean that such a benefit is irrelevant. It does however mean that it is a factor which the Tribunal is entitled to give less weight in the overall judgment of substantiality.
- On balance I think that is what the Tribunal has done. I accept that on one reading of the relevant sentence he might be thought to have excluded this as a factor altogether. However, I think Mr Newsom is right that, if one reads paragraph 25 and 26 together, the Tribunal was treating this as one of the factors to be put into the overall judgment, although its weight was diminished by the fact that it was an incidental benefit rather than one secured directly by the restrictions. On this reading, there was in my view no error of law.
Disturbance during construction
- The Tribunal dealt with this issue very shortly, saying simply:
"The objectors would suffer some disturbance while the proposed building works were being undertaken. It seems to me, however, that such disturbance would not be substantial and could effectively be dealt with by the award of compensation."
- This ground of appeal was put initially as one of rationality: no reasonable Tribunal having found that the development would generate "some disturbance" could have concluded that this was not a practical benefit of substantial value. In argument, the point was developed rather differently, and to my mind more convincingly, as one of inadequate reasoning. The essence of the complaint was that the Tribunal had failed to grapple with the significant dispute between the experts as to the degree of disturbance that would be involved during the construction period, and, in any event, failed to give reasoned conclusions. The Tribunal member of course had his own expertise, which he was entitled to bring to bear. However, in doing so he needed to determine the critical issue which divided the experts.
- To deal with this ground, it is necessary, first, to outline the dispute between the experts as to the length and effects of the construction period; and, secondly, to consider what should be the approach of the Tribunal to temporary disturbance of this kind.
- There was expert evidence on both sides. The appellants' expert identified the potential sources of nuisance and annoyance as being increased traffic using Orchard Close to import materials and to remove excavated soil, and the actual construction process. His initial evidence was that the disturbance would be limited to about two months, being the period in which the site would be prepared, foundations laid and the walls and roof constructed; internal works and installation of services would not cause any disturbance. He considered that the additional traffic movements and construction noise would be no different to what might be caused by any extension or major repair scheme in Orchard Close. In a subsequent statement, in response to the objectors' evidence, he modified his view. He relied on a letter from a builder, Mr Wilkins, who gave four to six months as a reasonable estimate of the time required to build the new dwelling. Mr Fetherstonhaugh fairly makes the point that, since the appellants' expert had effectively abandoned his own view in favour of that of a builder who was not called as a witness, the applicants' case on this aspect was relatively weak.
- The objectors' expert gave an initial estimate of the construction period as "in the region of nine to twelve months". He stood by this view having seen Mr Wilkins' letter. In his own experience he thought that it would be "extremely rare" for a development of this type to be completed within four months. In this case he would expect the construction period to be much longer, for two reasons. First, the works were likely to be undertaken by a small local contractor who would be more likely to be subject to delays caused by availability of sub-contractors and materials. Secondly, the working area on the site is awkward and would be constrained by the narrowness of the access, the gradient, and the presence of mature trees and a sewer.
- Turning to the approach which should have been adopted by the Tribunal, both parties accepted that disturbance during construction was a material factor. However, the Lands Tribunal decisions on which they respectively relied led them to quite different conclusions as to the weight to be given to it.
- Mr Fetherstonhaugh relied on the decision of Mr Clarke FRICS in Re Diggens' Application (Number 2)  EGLR 1. That concerned a proposal to erect five houses on the rear gardens of properties, in breach of restrictions limiting development to one house per plot. In holding that the restriction did secure practical benefits of substantial advantage, the Tribunal referred to a number of factors, one of which was "the prevention of nuisance and annoyance during building works" (para 86). He cited two previous cases (one being Re Tarhale Limited – see below) in which this factor had been held potentially relevant; he noted that he had heard "little evidence on this matter"; but, having considered the physical relationship of the various properties, he concluded that the works "particularly if carried out in the summer" would cause nuisance and annoyance to three of the neighbouring properties. He found that prevention of such nuisance and annoyance was "a practical benefit" secured by the density restriction" (para 85). As I read the decision, he was treating this factor, not as of "substantial" value in itself, but as one of a number of factors which in combination amounted to practical benefits of substantial value or advantage.
- In response, Mr Newsom referred us to an earlier decision, also of Mr Clarke, Re Lee's Application (1996) 72 P & CR 439. This again concerned a proposal to erect a detached house in breach of a "one house per plot" restriction. The application failed on other grounds, but the Tribunal dealt specifically with the question of disturbance from building works. He accepted the estimate of the construction period as six months but he commented:
"I do not think that the prevention of a short term interference with the enjoyment of [the neighbouring house] by the stopping of adjoining building works can be a benefit of substantial value or advantage in relation to the long term enjoyment of the property (see Re Kershaw)"
- The decision there referred to, Re Kershaw (1976) 31 P& CR 187, was made by Douglas Frank QC. It related to a proposal to erect two bungalows on land separated from the objectors' land by the access driveway, and restricted by covenant to open space use only. Mr Frank accepted that during the period of construction, the objectors would –
"suffer considerably from the noise of builder's vehicles, from the construction of the driveway and by the general disturbance associated with building works".
He accepted that this would be "a considerable disadvantage" for as long as the work lasted - "say, about a year". He continued:
"One of the questions, perhaps the most important question I have to decide, is what weight I should give to this intensive inconvenience and noise generated by builders' traffic for this very limited period. Clearly for that period the restrictive covenant does secure practical benefits of substantial value or advantage to (the objector). On the other hand, I cannot think that such a literal construction of the section is intended, but rather one should look at the matter in a broader context and regard this as a short term, albeit intensive interference but small and not so substantial in relation to the overall long term enjoyment of the property" (p 189).
- Re Kershaw seems to have been overlooked in the Tribunal's more recent decisions. Instead reliance placed on Re Tarhale Limited (1990) 60 P&CR 368, a decision of Mr Victor Wellings QC, President. It concerned a proposal to erect two five bedroom houses on the garden of a plot for which only one plot was permitted by the restrictive covenant. It should be noted that there was a specific covenant relating to the use of the approach drive and preventing its use by lorries or heavy vehicles, apart from those required for a particular development. The objectors' evidence was that the numbers of vehicles used in the driveway during the construction period would be in the order of ten vehicles per day, and that they would suffer "substantial and intolerable nuisance" from noise, fumes and dust from builder's traffic using the driveway. Mr Wellings agreed with them. He refused the application under paragraph (aa) on the grounds that the restrictions secured practical benefits –
"… in preventing the intolerable nuisances, which on the evidence will occur during the construction period".
- Mr Wellings did not refer to Re Kershaw. Nor, in subsequent cases of the Tribunal, so far as appears from the decisions to which we have been referred, has there been any recognition of the difference between the two approaches, let alone any attempt to reconcile them. The current edition of Preston & Newsom: Restrictive Covenants, 9th Ed  deals with the issue in this way:
"….protection from intolerable nuisances during a construction periods can be a substantial advantage; but in general a short term intensive interference is likely to be considered small and not substantial in relation to the overall long term enjoyment of objectors' properties, justifying a modest award of compensation."
The "general" position is supported by reference to Re Kershaw. The first part ("protection intolerable nuisances") is supported by reference to Re Tarhale; and to Re Bromor Properties Limited  70 P & CR 569, another decision of Mr Clarke in which (following Tarhale) construction disturbance was treated as one of number of factors justifying refusal to modify.
- Since Re Kershaw had not been referred to by either party at the hearing, we invited further written submissions. We also drew attention to possible parallels with the approach of the common law to disturbance connected with temporary operations such as demolition and construction; they do not give rise to an action in nuisance provided they are carried out with reasonable care (see Andreae v Selfridge & Co  Ch 1).
- Counsel for the appellants have reviewed a number of subsequent decisions of the Tribunal in which the issue of construction disturbance has arisen. They submit that in none (apart from Re Lee) has Re Kershaw been treated as establishing a principle that construction disturbance is to be left out of account. It is a matter to be evaluated on the evidence, along with other factors. Furthermore, it is wrong in principle to discount a disturbance because it lasts months rather than years. That is particularly so where the covenant, as here (and unlike the covenant in Re Kershaw), is expressed to provide protection against "nuisance or annoyance", which by implication includes any form of annoyance, temporary or long term. The common law of nuisance is of no direct relevance, since the wording of such a covenant is deliberately designed to give greater protection than the common law (see Tod-Heatly v Benham  40 ChD 80).
- Mr Newsom, for the respondents, accepts that construction disturbance is material in the overall balance, as part of the "broader consideration of … all effects, both temporary and permanent…"; but, as he puts it:
"A disturbance in the short term has less impact than the same disturbance occurring permanently. Correspondingly, as with common law nuisance, an allowance should be made for works reasonably carried out to facilitate the ordinary use of land."
Re Kershaw, he submits, illustrates the correct application of that approach in a typical case.
- In reviewing these decisions, it is important to keep in mind that Tribunal decisions are not to be regarded normally as setting any precedent in relation to what must be essentially a question of fact and degree. However, one of the functions of a specialist tribunal such as the Lands Tribunal (made explicit by s 4(1)(b) of the Land Tribunal Act 1949) is to promote consistent practice in the application of the law to its specialist field. Unexplained inconsistency of approach may in certain circumstances amount to an error of law. In Re Kershaw Mr Frank QC purported to hold, as a matter of principle (rejecting a "literal construction"), that protection from short term disturbance arising from construction, although providing a "substantial" benefit during the construction period, had to be looked at in a broader context for the purposes of section 84. That guidance has not been consistently followed in subsequent cases, in which Re Tarhale appears to have been treated as authority for giving greater weight to this factor.
- In my view, account must be taken of the policy behind paragraph (aa) in the amended statute. The general purpose is to facilitate the development and use of land in the public interest, having regard to the development plan and the pattern of permissions in the area. The section seeks to provide a fair balance between the needs of development in the area, public and private, and the protection of private contractual rights. "Reasonable user" in this context seems to me to refer naturally to a long term use of land, rather than the process of transition to such a use. The primary consideration, therefore, is the value of the covenant in providing protection from the effects of the ultimate use, rather than from the short-term disturbance which is inherent in any ordinary construction project. There may, however, be something in the form of the particular covenant, or in the facts of the particular case, which justifies giving special weight to this factor.
- Viewed in this light, the approaches of the two cases can be reconciled. In Re Kershaw, where the covenant was directed simply to the protection of open space, Mr Frank QC was right in my view to put the emphasis on "the overall long-term enjoyment of the property"; and he was entitled to hold on the facts of the case that protection from the short-term, albeit "intensive", disturbance during the construction period was not sufficient to be regarded as a "substantial" benefit in its own right. By contrast, in Re Tarhale the covenants were designed to provide special protection against heavy construction traffic, and it was found, taking account of the physical relationship of the properties, that the disturbance from construction traffic would be "intolerable". On its own facts, I see no difficulty with the decision of Mr Wellings in that case. But it cannot be regarded as providing a precedent for other cases, on different covenants and different facts.
- In the present case, the appellants rely principally on a distinct form of covenant: one providing protection against acts causing "nuisance or annoyance". I agree with the appellants that such a covenant is intended to provide protection against temporary as well as long term annoyance, and further that it is not necessarily to be confined by analogy with the common law of nuisance. The cases give little guidance on the scope of such a covenant, other than that, like the law of nuisance, it is to be applied "according to robust and common sense standards" (per Megarry J, Hampstead and Suburban Properties Ltd v Diomedous  1 Ch 248, p 258). However, we have been referred to no authority in which ordinary construction works, carried out with reasonable care, have been held to involve a breach of such a covenant. Tod-Heatly was not such a case. (I note also that there appears to have been no finding to that effect by the Exeter County Court.) I do not think that such a covenant is to be equated with a covenant providing specific protection from construction disturbance.
- Against that background, I return to the decision in this case. It is a fair criticism of the Tribunal that there is no analysis of the conflicting evidence on the extent of the construction works. On the other hand, the surveyor member was well able to form a view as to whether there was anything exceptional about the site or the proposed works to treat this as a factor justifying refusal of modification. The reasoning could have been more fully expressed, but that by itself does not mean that the decision is erroneous in law. As I said in Railtrack plc v Guinness Limited  RVR 280 (para 51), a failure of reasoning may not in itself establish an error of law, but it may –
"… indicate that the Tribunal never properly considered the matter … and that the proper thought processes have not been gone through" (Crake v Supplementary Benefits Commission  1 AllER 498).
In this case, in my view there is nothing to show that this experienced Tribunal member did not fully understand the issue before him or that his decision is flawed in law.
- For the above reasons I would dismiss this appeal.
Lord Justice Latham:
- I agree.
Lord Justice Mummery:
- I also agree.
- As was held in the Exeter County Court, the restrictive covenants affecting the 8 houses in Orchard Close were imposed by a valid building scheme; each of the appellants is entitled to the benefit of the covenants, which have not been modified or breached since they were made over 50 years ago; and the building of a 9th house and garage by the respondents in part of the large rear garden of their property at No 4 Orchard Close would, in the absence of an order for modification, be a breach of the covenant in the scheme that
"1.The Purchaser shall not at any time use the said property for any other purpose than as a private dwellinghouse."
- The grounds of objection to the proposed modifications of the covenant canvassed by the appellant objectors before the Lands Tribunal were cumulatively considerable. The most serious concern, in my view, is the potential knock on effect of a modification precedent on a changed context in which further modification applications could be made by other residents, on the existing character of the close and on the integrity of the building scheme as a whole ("the thin end of the wedge" point). The continued observance of the covenants by the residents in the Close had maintained, and would continue to secure for all of the residents, practical benefits of space, privacy, greenery, peace and quiet in keeping with the distinctive character of a small, low density, prize-winning residential development. Modifications of the kind ordered by the Tribunal against the opposition of all the residents, save the respondent applicants, run the risk of diluting the effectiveness of covenants, downgrading the building scheme and creating a damaging domino effect.
- Despite initial doubts about the correctness of parts of the Tribunal's reasoning, I agree with Carnwath LJ that no error of law can be identified in the decision of the Lands Tribunal dated 5 April 2005. The order was made by the Tribunal in the exercise of wide powers to modify covenants under section 84 of the Law of Property Act 1925, as amended. There was no misdirection or misapplication of law in holding that the proposed modifications, while having some minor disadvantages, would not injure the appellants or affect the value of their properties, even taking account of "the thin end of the wedge" factor, or that the awards of compensation would adequately cover temporary disturbance caused by the building works. It could not be said that the Tribunal's decision was perverse in the sense that no reasonable tribunal would have reached the conclusions that it did on the various grounds of objection.
- In the absence of any point of law this court is not entitled to interfere with the modification order by disturbing either the Tribunal's findings of fact or its conclusions on matters of judgment and degree, which fall within the wide ambit of its discretionary power to modify restrictive covenants.
- The appellants can take some comfort, perhaps, in the statement of the Lands Tribunal, which has the relevant expertise in this special jurisdiction, that the modifications will not be the thin end of the wedge, as
"…it is extremely unlikely that this Tribunal would permit anything more than one further unit to be erected in the close, as any more intensive development would be likely to have a substantially adverse effect on those entitled to the benefit of the restriction."(paragraph 25)