England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL

		Royal Courts of Justice Strand London WC2 Tuesday 3rd April, 2001

1. LORD JUSTICE KAY: This is an application for permission to appeal from a decision of Mr N Rose FRICS of the Lands Tribunal given by reasons dated 5 October 2000 with an addendum on costs dated 30 October 2000.
2. The necessity for permission to appeal caused me some difficulty, and indeed I was not entirely sure that there was any requirement for permission. However, the matter has been resolved by Robert Walker LJ in Girls Day School Trust (1872) v Dadak and Others Neutral Citation [2001] EWCA CIV 380. In that judgment, given as recently as 15th March 2001, Robert Walker LJ expressed the same view that I did, that the matter was far from straightforward, but having gone through the matter in some detail he concluded that permission was necessary. I see no reason to doubt his clear judgment in that matter.
3. The background is that the applicants applied to discharge or modify a restrictive covenant on land in their freehold ownership at Pandy Mill, Penmachno, Betws-y-Coed, pursuant to section 84 of the Law of Property Act 1925 ("the 1925 Act").
4. The land in question was sold to Mr and Mrs Davies by the Secretary of State for Wales under a conveyance dated 24 September 1992.
5. In July 1994 they applied for planning permission to convert a part of the premises, The Stables, into a dwelling house. Such permission was granted on 12 October 1994.
6. By a transfer dated 8 November 1996 part of the land including The Stables was gifted by Mr and Mrs Davies to Mr Murphy, their son-in-law.
7. Under the conveyance from the Secretary of State for Wales the purchaser covenanted inter alia for themselves and their successors in title for the benefit of the vendor's adjoining land:

"Not to erect any buildings or structure of any description on the property nor without the prior written consent of the Vendor to alter or enlarge the existing buildings thereon."

8. The Forestry Commission, which was responsible for the adjoining land objected that the proposed development of The Stables without its consent was in breach of the covenant in the conveyance. It made clear, however, that it would agree to the work upon payment of financial compensation.
9. The application to the Lands Tribunal was eventually put in three alternative ways:

(i) to discharge the covenant which I have already set out;

(ii) to vary it to read:

"Not to erect any new residential building or structure of any description on the property without the written consent of the Vendor, such consent not to be unreasonably withheld and to be given without any payment whatsoever."

(iii) to modify the restriction to permit the implementation of the planning consent already obtained.

10. The application was made under subsection 84(1)(a) and (c) of the 1925 Act and the decision of the Tribunal considered each separately.
11. Under paragraph (a) the issue was whether "by reason of the change 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".
12. It was first submitted that the Forestry Commission had changed the nature of the immediate area by felling and removing all mature conifers on its land to the west of the subject land in May/June 1999. However, Mr Rose accepted the Forestry Commission's contention that the applicants could not rely on the felling of trees to show that the neighbourhood had changed because they had been aware that this might happen at the time that they accepted the covenant. There was, therefore, no material change to render the covenant obsolete.
13. The applicants also relied on observations made by Denning LJ in Driscoll v Church Commissioners for England [1956] 3 All ER 802. However, having considered those observations and the judgments of the other members of the court, Mr Rose concluded that since the discharge of the covenant would remove from the objector any control over the erection of any buildings or structures on the land however close to the edge of the forest, the covenant could not be said to be obsolete.
14. Under subsection 84(1)(c) of the 1925 Act the issue was whether the Tribunal was satisfied:

"That the proposed discharge or modification will not injure the person entitled to the benefit of the restriction."

15. The objector put forward four reasons for the covenant having been imposed:

(i) to prevent development too close to the edge of the forest with possible damage to trees;

(ii) the objector wished to ensure that any buildings erected on the subject land would not be damaged by its own use of access roads to its forest;

(iii) to retain some control over amenity;

(iv) to share in any increase in value of the subject land should further development be permitted. The full development potential of similar properties was not pursued prior to selling, but the financial interest of the public could be protected by making a charge if work increased a property's resale value.

16. Mr Rose rejected the fourth reason and said that if it stood alone it would have been no proper basis for refusal to discharge or modify under paragraph (c). However, he concluded in the light of all the evidence, including a site visit, that the restrictive covenant provided a legitimate benefit to the objector, particularly under the first of the four reasons given. He therefore rejected discharge.
17. He went on to consider the two alternative modifications. The first proposed modification would remove any control over the erection, for example, of new agricultural buildings on the subject land. This could, he concluded, damage the objector's trees and hence it could not be said to meet the test provided in paragraph (c).
18. However, he concluded that the second proposed amendment to the covenant permitting the implementation of the planning permission would not cause any injury (save financial) to the objector and should be allowed.
19. The Forestry Commission requested that the Tribunal should make an award under sub-paragraph (ii) of paragraph (c) namely:

"A sum to make up for any effect which the restriction had, at the time when the restriction was imposed, in reducing the consideration then received for the land affected by it."

20. There was agreed evidence that the value of The Stables with and without a restrictive covenant in 1992 differed by £2,500.
21. Mr Davies, who put forward the applicants' application on his own behalf and on behalf of his fellow applicants, argued that he had been unaware of the inclusion of the restrictive covenant until delivery of the conveyance. It is undoubtedly right that the terms of the covenant were not those that had been indicated in the estate agent's particulars. However, the first two applicants had solicitors acting for them and a draft contract and conveyance in this form had been sent by the Treasury Solicitors to their solicitors on 26 February 1992, some months before the sale was completed.
22. Mr Rose found on a balance of probabilities that the first two applicants were aware of the restrictive covenant by the time they finally reached agreement on the purchase price of £57,000.
23. Mr Rose then considered the figure of £2,500, referred to as being the agreed difference in value. He concluded that not the whole sum was lost to the objector because they would still have the benefit of the restrictive covenant even after the development of The Stables. He concluded that a proper figure in relation to that for the difference in value with the different restrictive covenant in 1992 would be £2,000. He then considered what the situation was in relation to the change in the value of money from 1992 when the conveyance was signed, through to the time when the variation was to be made. He concluded that the proper increased figure allowing for inflation was £2,450 and he awarded that sum.
24. He was subsequently asked to consider the question of costs. He concluded that the fair order to make was that the applicants should pay one-half of the costs of the objector.
25. This appeal is brought on three grounds by Mr Davies himself. The grounds that he puts forward in his grounds of appeal are. Firstly, the respondent breached Article 8(2) of the European Convention of Human Rights and were aided and abetted by the Tribunal in this. In his skeleton argument he argues that the conduct of the Forestry Commission was such as to interfere with the applicants' right to respect for private and family life. I mean no disrespect to Mr Davies, who has conducted this application as well as any person could do so without any full understanding of the law, but I am afraid that point is totally misconceived. Article 8 of the Convention does not in fact give any remedy to him in relation to these matters. This is not an interference with his right to family life. It is an interference with his property rights in relation to the house that he owns.
26. Secondly, he argues that much of the evidence in the original application was ignored. I have looked at those matters with some considerable care. I have to come to the conclusion that the decision of the member was a perfectly proper decision. He has considered all those matters that ought to be taken into account and reached conclusions upon them. I cannot see that there is any evidence of significance which he has omitted which he ought to have considered.
27. The third ground is that the Tribunal should have decided the application on the written representations as submitted, without an oral hearing with its increased costs. It is to that ground that Mr Davies has directed his attention particularly today. His submission can be put very simply. He has in effect won - because he has had the restriction removed at the least to the extent that he required it to be removed - and has been able to go ahead, having paid the sum of £2,450, with the conversion for which he had obtained planning permission. However, not only has he had to pay the £2,450, but he has also been met with a very substantial bill for costs. The total bill was over £14,000, so that the order required him to pay over £7,000.
28. He complains about a number of things that occurred. Firstly, that the Lands Tribunal did not consider the matter on the papers. It is quite clear that the reason for that, as explained in a letter at the time, was that the member, having reviewed the matter on the papers, felt unable to reach a conclusion without hearing oral evidence on certain matters. I do not think he can properly be criticised in that respect. That inevitably was going to increase the costs. However, Mr Davies argues that the Lands Tribunal ought to have had regard to proportionality and ensured that the costs remained within reasonable limits bearing in mind the amount of money that was at stake and, he says, whether the Tribunal did or not, the Forestry Commission treated this matter as one might expect an organisation with substantial funds and never seem to have had regard to proportionality at all.
29. I think there is some justification for his complaint in that regard. However, that does not help him. The order made by the Tribunal is that he should pay one-half of the costs of the objector. It is not an order that he should pay any specific sum. The sum is to be dealt with, in default of agreement, by assessment by the Registrar of the Lands Tribunal. That assessment will enable him to put forward any arguments that he wishes that some of the fees sought ought to be discounted because the incurring of them was not justified having regard to the small sum that was at stake.
30. I make no comment, because it would be inappropriate to do so, as to what the outcome of such submissions will be. But at the end of the day, so far as costs are concerned, I simply have to answer this question: is it arguable that an order to pay one-half of the objector's costs was so outside the discretionary limits imposed upon the member that no such order could be made? I am afraid I do not think that that is arguable.
31. In those circumstances, I refuse permission.
32. There was an application for an extension of time. I would have granted that if it was appropriate to do so, because I think that there has been no significant delay and none that affected the objector in any event. But that becomes academic because of my conclusion in relation to permission.
33. I make it clear that in the forefront of my mind in considering this case throughout has been a desire not to put Mr Davies in a position where further costs inevitably would be expended against him. So that at the end of the day, instead of facing the potential bill that he has at the moment, he faced a more significant one. If I had granted permission, I am quite sure that it could not have helped him and inevitably it would have increased the costs that he would have had to pay.
34. For those reasons, I refuse this application.
ORDER: Applications for permission to appeal and an extension of time refused. (Order not part of approved judgment)