England and Wales Court of Appeal (Civil Division) Decisions

Court of Appeal

		10 May 1988

1. Giving judgment, FOX LJ said: This is an appeal by Mr and Mrs Martin ('the applicants') from a decision of the Lands Tribunal (Mr V G Wellings QC) refusing their application for the discharge or modification of a restrictive covenant. The case is concerned with the ambit of the tribunal's powers under section 84 of the Law of Property Act 1925 to modify or discharge restrictive covenants where the covenant is created by what is generally called a section 52 agreement, ie an agreement entered into under section 52 of the Town and Country Planning Act 1971.
2. The applicants own 228 Harley Shute Road, St Leonards, East Sussex, which is a house and garden. The land which is subject to the covenant is part of the garden. It is L-shaped, the foot of the 'L' being at the south-eastern end of the garden of no 228. The remainder of the 'L' (ie the perpendicular arm) adjoins the western boundary of the garden; it is about 170 ft long, has a frontage of about 60 ft to Harley Shute Road and an area of about 0.2 of an acre. I refer to it as plot 3. The applicants wish to develop that plot.
3. The houses in Harley Shute Road in the vicinity of plot 3 are all detached houses with substantial gardens. No 228 was built in about 1928; the other houses on the same side of the road (with the exception of no 218, which was built in the 1960s) were built in the 1930s. The houses on the other (ie north-west) side of the road were built in the 1960s.
4. I should mention that the next house to no 228 is no 224; there is no 226. Provision was, it seems, made for a water supply branch to plot 3. The applicants accordingly believe that the original developer contemplated that a house should be built on plot 3.
5. In October 1965 the Borough Council of Hastings granted to the predecessor in title of the applicants outline planning permission for the erection of two houses in the garden of no 228. One of these would be on plot 3 (though with a somewhat narrower frontage to the road than the frontage of plot 3) and the other in a position with access to Gillsman's Hill (a road which runs into Harley Shute Road from the east).
6. In 1960 the then owner of no 228 wished to change the position of the permitted houses and applied for planning permission for two detached houses with access to Gillsman's Hill.
7. There then followed discussions with the planning authority regarding the existing planning permission on the land fronting Harley Shute Road. The authority was concerned lest it should have to pay compensation if that permission were revoked.
8. In the autumn of 1966 it was agreed that the existing permission should be revoked without compensation. In fact, however, that agreement was not given effect to. Instead, the parties entered into an agreement ('the agreement') under section 37(2) of the Town and Country Planning Act 1962. Section 37 was in the following terms:

37. (1) A local planning authority may, with the approval of the Minister, enter into an agreement with any person interested in land in their area for the purpose of restricting or regulating the development or use of the land, either permanently or during such period as may be prescribed by the agreement; and any such agreement may contain such incidental and consequential provisions (including provisions of a financial character) as appear to the local planning authority to be necessary or expedient for the purposes of the agreement.

(2) An agreement made under this section with any person interested in land may be enforced by the local planning authority against persons deriving title under that person in respect of that land, as if the local planning authority were possessed of adjacent land and as if the agreement had been expressed to be made for the benefit of such land.

(3) Nothing in this section or in any agreement made thereunder shall be construed --

(a) as restricting the exercise, in relation to land which is the subject of any such agreement, of any powers exercisable by any Minister or authority under this Act so long as those powers are exercised in accordance with the provisions of the development plan, or in accordance with any directions which may have been given by the Minister as to the provisions to be included in such a plan, or

(b) as requiring the exercise of any such powers otherwise than as mentioned in the preceding paragraph.

(4) The power of a local planning authority to make agreements under this section may be exercised also --

(a) in relation to land in a county district, by the council of that district;

(b) in relation to land in the area of a joint planning board, by the council of the county or county borough in which the land is situated,

and references in this section to a local planning authority shall be construed accordingly.

The section has now been replaced by section 52 of the 1971 Act with modifications which are not material.

9. The agreement was entered into on February 27 1967 and was made between the Mayor, Aldermen and Burgesses of the Borough of Hastings (which and its successors I will call 'the corporation') of the one part and William Fletcher of the other part. Mr Fletcher was then the owner of the freehold of no 228. The agreement recited, inter alia, as follows:

The Owner has made application for Planning Permission . . . for the erection of two dwellings on the said land hatched pink and hatched pink and blue and concurring with the opinion of the Corporation that it would be inappropriate by reason of the excessive density of buildings which might thereby ensue for the Corporation to grant such Planning Permission whilst the Planning Permission . . . granted by the Corporation on the fourteenth day of October one thousand nine hundred and sixty five for the erection of two dwellings on the said land . . . remains exercisable the Owner has requested the Corporation to enter into this Agreement.

The operative part of the agreement provided as follows:

NOW THEREFORE it is hereby agreed by and between the parties hereto in pursuance of Section 37 of the Town and Country Planning Act 1962 that the said land hatched blue shall not be used for any purpose other than as a private open space and that accordingly no building, structure or erection (other than fencing a summer house or garden shed if the owner shall so require) shall be placed thereon.

The land hatched blue is the L-shaped land and accordingly includes plot 3.

10. On March 7 1967 the corporation granted planning permission to the former owner for the erection of two dwellings each with access to Gillsman's Hill. On May 12 1967 the minister approved the agreement. Subsequently the two houses permitted by the planning permission of March 7 1967 were erected on two plots forming part of the garden of 228 Harley Shute Road (but excluding plot 3). The two plots were then sold off.
11. No 228 and the residue of its land (including plot 3) were bought by the applicants in 1978. In May 1983 the applicants applied for planning permission for the erection of a two-storey detached house with garage on plot 3. The application was refused on the grounds that plot 3 had inadequate width to accommodate a two-storey dwelling and would constitute a cramped form of infilling development which, together with the loss of mature trees, would result in an unacceptable loss of visual amenity.
12. The applicants appealed to the Secretary of State for the Environment, whose inspector in August 1984 granted outline planning permission for the proposed development. The decision letter contained, inter alia, the following observations:

12 It is my view that, while this development has aroused concern, to allow it to proceed would not put in jeopardy the visual environment of the area. Even though the proposed dwelling and its site will be smaller than its neighbours I am satisfied that careful and sensitive handling of its appearance and siting at detailed stage should ensure a satisfactory and compatible design. This I consider to be of importance because there is no doubt that the area has distinctive qualities that arise from the siting, scale and well-considered details of these houses and their gardens. The question of the possible cramped appearance of the site and the effect of the development on its neighbours I consider is of equal importance.

13 The houses opposite the site are smaller, narrower and are sited above the road with open-front gardens so that they are more open to view. Whereas the houses on the appeal-site side of the road are set below road level with shallow but mature gardens enclosed by dense hedges to their front. They are less open to view and are almost without exception broad-fronted houses that nearly fill the widths of their sites and they present an almost continuous but varied facade that follows the sweep of the road. To fill a gap in this development with a house that follows a similar pattern of height and building-line is, in my view, acceptable even though it may be marginally smaller. The retention and protection of the trees that front the site play an important part in this consideration and I am imposing a condition to that effect. If care is taken I see no reason why they should be harmed so that they can continue to provide privacy to the site and at the same time enhance the environment of the street

. . .

13. It is common ground that as a matter of the law of restrictive covenants and having regard to the provisions of section 37 of the 1962 Act, the covenant contained in the agreement is enforceable by the corporation against the applicants.
14. Notwithstanding the grant of planning permission upon the appeal, the corporation is not prepared to release the applicants from the provisions of the agreement. The applicants then applied to the Lands Tribunal to discharge or modify the provisions of the agreement. The grounds relied upon by the applicants are those in (a), (aa) and (c) of section 84(1) of the Law of Property Act 1925, that is to say:

(a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete; or

(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; or . . .

(c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction . . .

15. The corporation in its notice of objection to the application stated:

The section 37 Agreement was freely entered into by the owners of the land in 1967 and in the intervening years there has been no change in circumstances which would cause the local planning authority to change its view that it is in the interests of the amenities and the environment of the area that this piece of land remains undeveloped.

16. The Lands Tribunal dismissed the application under all the heads relied upon. The applicants now appeal.
17. When a restrictive covenant is entered into between owners of adjoining, or otherwise affected, lands the fact that the owner for the time being of the burdened land subsequently obtains planning permission to develop that land in a manner which is prohibited by the covenant does not entitle him to ignore the covenant. The benefit of the covenant is an interest in land and it is not extinguished by the acts of a planning authority. The position under a section 37 (or section 52) agreement is no different. Such an agreement creates a fully effective restrictive covenant which operates in just the same way as if the local authorities concerned were the owners of adjoining land for the benefit of which the covenant was taken. In either case if the owner of the burdened land wishes to be rid of the covenant he must, in the absence of agreement with the dominant owner, obtain a discharge or appropriate modification of the covenant under section 84 of the Law of Property Act 1925.
18. Basically, the submission on behalf of the applicants is that, upon an application to the Lands Tribunal under section 84, while the grant of planning permission does not determine how the tribunal should deal with a case where the covenant was entered into between adjoining landowners, quite different considerations apply when the covenant derives its validity from section 37 (or section 52). The argument, in substance, is this. It is said that a section 37 agreement is entered into by a planning authority under statutory powers in the town and country planning legislation and for a planning purpose (ie to restrict or regulate the development or use of land). In these circumstances, it is contended that where the minister, by his inspector, has finally determined from a planning point of view that the erection of a house on the site was acceptable, then the purpose of the section 37 agreement has gone and the covenant should be discharged. This construction is, in my opinion, based upon a misapprehension. There are, it seems to me, two statutory regimes. One is the power of the planning authority under section 37 (and now under section 52) to enter into an agreement regulating the development and use of land by way of restrictive covenant in circumstances where, under the general law, it would not be possible effectively to do so because of the rules as to the running of the burden and benefit of covenants. The other is the power of the planning authority under section 29 of the 1971 Act (and section 16 of the 1962 Act) to grant planning permission. These regimes are subject to different procedures. If a person is dissatisfied with the planning authority's refusal of planning permission, his remedy is to appeal to the Secretary of State under section 36 of the 1971 Act (section 23 of the 1962 Act). If a person who is bound by the provisions of a section 37 agreement wishes to escape from them he must go to the Lands Tribunal and persuade the tribunal that it is a proper case to exercise its jurisdiction to discharge or modify the covenant under section 84. Nobody was obliged to enter into a section 37 agreement. If an applicant for planning permission was offered permission upon terms that he entered into a section 37 agreement he could appeal to the Secretary of State. But if he chose to enter into the agreement he (and his successors in title) must accept that he can avoid its effect only through the statutory procedure under section 84. Thus, it seems to me that, while the two regimes impinge upon each other to some extent, they constitute different systems of control and each has, and retains, an independent existence.
19. In my view, the applicants' contention is wrong in so far as it suggests that the granting of planning permission by the Secretary of State necessarily involves the result that the Lands Tribunal must discharge the covenant. The granting of planning permission is, it seems to me, merely a circumstance which the Lands Tribunal can and should take into account when exercising its jurisdiction under section 84. To give the grant of planning permission a wider effect is, I think, destructive of the express statutory jurisdiction conferred by section 84. It is for the tribunal to make up its own mind whether the requirements of section 84 are satisfied. The grant of permission by the Secretary of State is no more conclusive of that than is, for example, the deemed grant of planning permission under the provisions of the General Development Order. All the facts of the case have to be examined by the Lands Tribunal. There is nothing in the Town and Country Planning Acts 1962 or 1971 which suggests that these are intended to interfere in any way with the jurisdiction of the Lands Tribunal under section 84.
20. I come, then, to the question of what the Lands Tribunal actually decided.
21. So far as para (a) of section 84(1) is concerned, the learned member, Mr Wellings, observed that the purpose of the restriction, as appears from the recitals to the agreement, was to prevent excessive density of building on the original curtilage of no 228. Mr Wellings, who himself had inspected the site, accepted the evidence of Mr A W Constantine MRPTI ARICS, the deputy borough planning officer of the corporation, that the new house, if built, would have a cramped appearance to the detriment of the visual amenity of the area and that a cramped appearance is a manifestation of excessive density. Mr Wellings also observed that the inspector, who merely granted outline planning permission, did not explain how the cramped appearance of the house might be overcome; and there was no material before the Lands Tribunal to determine that question. It followed that the purpose of the covenant could still be achieved. Accordingly, the member took the view that the purpose of the restriction could still be achieved and it should not be deemed obsolete. He so held.
22. I see no ground for interfering with that conclusion. The test for obsoleteness is whether the original object of the restriction can still be achieved (Re Truman, Hanbury, Buxton & Co Ltd's Application [1956] 1 QB 261; Driscoll v Church Commissioners for England [1957] 1 QB 330).
23. Prima facie the original object could be achieved and there was no adequate evidence displacing that. The mere fact of the inspector's conclusion does not displace it. It is, in my view, no answer to say that the inspector thought the development was acceptable. The question whether a restriction is obsolete has to be determined by the Lands Tribunal on the evidence before it.
24. As regards para (aa) this applies only in a case within subsection (1A) of section 84, that is to say when the restriction either confers no practical benefit of substantial value upon the person entitled to the benefit of it or is contrary to the public interest and, in either case, that money will be adequate compensation for the discharge of the covenant. The member took into account the decision of the inspector but did not think that the restriction was contrary to the public interest having regard to the cramped appearance which the new house would give.
25. As to benefit, the member was of the opinion that it is a practical benefit to the corporation to prevent detriment to the visual amenity of this part of its area and that this was of substantial advantage to the corporation for which money would not be an adequate compensation.
26. I should observe that Mr Constantine had given evidence that, while the proposed house would cause no problem of overlooking, it would be visually unacceptable because the width of the plot is inadequate and, in the context of the existing properties in the area (which have a distinctiveness because they have a more relaxed density than houses built at a later date), it would constitute a cramped form of development. The insertion of another house in the group at the north-eastern end of Harley Shute Road would be detrimental to the amenities of that group. The amenities of the neighbourhood, which the corporation had a duty to protect, would be prejudiced thereby. He knew of no means by which the cramped appearance could be overcome. Mr Constantine was also of the opinion that one or two mature trees would go in the course of the development.
27. In my opinion, the member was entitled to reach the conclusions which he did and I see no basis for disturbing those conclusions.
28. Finally, there is para (c), namely that the proposed discharge or modification would not injure the corporation. The member rejected that, since he was of the opinion that the interference with visual amenity would be an injury to the corporation in its capacity as custodian of the public interest. In my opinion, that was a conclusion which the member was entitled to reach.
29. The member said that money would not be an adequate compensation to the corporation for the discharge of the covenant. I think that must be right. If the covenant is of value to the corporation for the protection of the public interest in the preservation of the amenities, it is difficult to see how a money payment could be adequate compensation. Money compensation seems wholly inappropriate.
30. In the circumstances, in my judgment the appeal fails and should be dismissed.
31. BALCOMBE LJ and SIR FREDERICK LAWTON agreed and did not add anything.

The appeal was dismissed with costs. Leave to appeal to the House of Lords was refused.

The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.