England and Wales Lands Tribunal

Dart v No Respondent [2006] EWLands LP_68_2005 (08 August 2006)

LP/68/2005

LANDS TRIBUNAL ACT 1949

RESTRICTIVE COVENANTS – proposal to modify occupancy restriction imposed by an agreement under section 52 of the Town and Country Planning Act 1971 – practical benefits of substantial value or advantage – implied agreement – application dismissed – Law of Property Act 1925, s84(1), grounds (aa), (b) and (c)

IN THE MATTER OF AN APPLICATION UNDER SECTION 84

OF THE LAW OF PROPERTY ACT 1925

by

JOHN LIONEL DART

Re: Land at Gurnard Marsh, Marsh Road, Gurnard,

Isle of Wight

Before: P R Francis FRICS

Sitting at: Newport Crown and County Court

1 Quay Street, Newport, IOW, P30 5YT

on

26 May 2006

Graham Wrigglesworth, solicitor, Bond Pearce LLP, solicitors of Plymouth for the applicant

Ranjit Bhose, instructed by Legal and Democratic Services, Isle of Wight Council for the objector

The following cases are referred to in this decision:

Re Martins' Application (1988) 57 P & CR 119

Re Hopcraft's Application (1993) 66 P & CR 475

Re Jones and White's Application (1989) 58 P & CR 512

Re Bass Limited (1973) 26 P & CR 156

Re Abbey Homesteads Ltd's Application (1986) 53 P & CR 1

Re Milius's Application (1995) 70 P & CR 427

DECISION

Introduction

1. The applicant in this case seeks the modification of a restriction (imposed under an agreement entered into in 1988 by his predecessor in title under section 52 of the Town and Country Planning Act 1971 ("the s52 Agreement") burdening land at Gurnard Marsh, Marsh Lane, Gurnard, Isle of Wight ("the application land"). The restriction, which was a condition of planning permission granted by Medina Borough Council on 23 September 1988 for a shop, tearoom and living accommodation, and is set out fully below, prevented the sale, letting or disposal of the site other than as a whole. The applicant now wishes to be able to separately dispose of a self-contained first floor flat which has subsequently been constructed above the tearoom pursuant to a further planning permission granted by Isle of Wight Council (successor to Medina) on 23 June 2003. The objector, Isle of Wight Council, says that the application land is in an area which is outside the development envelope of the development plan that was in force at the time of the 1988 application, and the Unitary Development Plan ("UDP") which is current and also applied when the 2003 application was made. Restrictions on residential development apply outside this envelope, and the permission granted in 2003 for the additional self-contained accommodation would not have been approved, they say, had it not supported (and been tied to) an acceptable commercial use of the application land. The council's policies in the UDP (particularly policies S1, S4, G5 and H9) are designed to prevent the proliferation of unnecessary dwellings outside the development envelope; the modification sought would jeopardise those policies and set an undesirable precedent which could create difficulties in resisting future residential development proposals.
2. Mr Wrigglesworth set out the applicant's case in legal terms and called Mr Dart who gave evidence of fact relating to his ownership of the application land, the planning history and his reasons for making the application. Mr Bhose appeared on behalf of the council and called Andrew John Pegram BA Dip TP MRTPI, Development Control Manager within Planning Services at Isle of Wight Council. I carried out an accompanied inspection of the site and immediate surrounding area on 25 May 2006.

Application land and surroundings

3. The application land occupies a beachfront position off Marsh Road, Gurnard on the north side of the island, about 2 miles east of the centre of Cowes. Its northern boundary of approximately 100 metres is formed by the mean high water mark (MHWM) on the foreshore, it has an average depth of about 47 metres and the whole of the southern boundary is on to Marsh Road, a narrow lane leading from Gurnard village. The overall site area is about 0.47 ha (1.1 acres) and is predominately level. The land currently contains, at the eastern end, the chalet style residential unit permitted in 1988 with an attached restaurant/tea room and associated facilities, and a substantial restaurant extension (partially completed). There is a self-contained flat above the extension extending also over the tearoom, which was originally single storey. The flat, permitted in 2003, comprises a large living room that enjoys spectacular views over the Solent and has patio doors giving onto a balcony/patio area. There is a kitchen/breakfast area, one double bedroom and a bathroom. There is an adjacent car park (25 spaces), an area of rough garden ground and a patio area adjoining the restaurant extension. The western end of the site (approximately 50% of the total site area) is taken up with a dinghy park (the users of which share the restaurant parking area at certain times), shower and wc facilities, storage, a slipway to the beach and, immediately behind the car park, a rigging area.
4. Much of the surrounding land, including the beachfront between the application land and the westernmost of the traditional houses on the edge of Gurnard, and the land on the opposite side of Marsh Road is taken up with small timber beach houses, many of which are occupied as holiday homes. A number of these units have in recent years been demolished and replaced with larger timber framed bungalows that have been sold and are occupied on a permanent basis.

Planning history

5. The following planning permissions are relevant to this application:

27 September 1988. TCP/12204C/M4381. Outline planning consent for the construction of shop/tea room and living accommodation to replace existing shop/tea room.

9 October 1991. TCP/12204D/M/10821. Approval of reserved matters (revised plans). The permission has been implemented.

12 May 1993. TCP/12204G/MB/1101. Planning consent for the use of part of the site for a windsurfing and dinghy sailing school. The permission has been implemented.

20 October 1993. TCP/12204J/MB/1609. Permission for conversion of roof space above living accommodation to provide 2 bedrooms, and alterations to provide kitchen facilities separate from the restaurant, subject to a condition that the bedrooms shall have a use incidental to the enjoyment of the private residential accommodation. The permission has been implemented.

9 January 2003. TCP/12204/N – P/01983/02. Planning permission for extension of restaurant area on ground floor, including 'turret' with link to existing balcony at first floor level.

23 June 2003. TCP/12204P – P/00768/03. Permission for revised scheme for enlargement of the restaurant to include the provision of a separate first floor flat over. The permission has been implemented in part, although the restaurant, kitchen areas and wc/cloakroom facilities have yet to be completed.

9 March 2004. TCP/12204K/MB/1867. Permission for single storey extension [to the tea-room] to provide restaurant/bar, kitchen, toilet and parking facilities. The permission has been implemented.

The restriction and modification sought

6. The 1988 permission was subject to a section 52 Agreement (completed on 23 September 1988, the same day as the application was approved) and provided, where material:

NOW IT IS HEREBY AGREED AS FOLLOWS:

1. THE Owners hereby covenant with the Council that they and their successors in title will at all times hereafter observe the following covenants

(1) the said living accommodation shall be occupied in connection with the operation of the said shop/tea room and the owners shall not sell let or otherwise dispose of the site other than as a whole

4. NOTHING contained in this Agreement shall affect the requirements of the Owner or his successors in title to obtain any necessary planning permission for any future development of the site or any part thereof

7. The grounds set out in the application under section 84(1) of the Law of Property Act 1925 were:

(aa) that unless modified the covenant would impede the use of part of the land as a self-contained flat and as a boat park area, that such use is reasonable, and that in impeding such use the restriction does not secure to the persons entitled to the benefit of it any practical benefits of substantial value or advantage.

(b) by its resolution at a meeting on 20 September 1994 to enter into a Deed of Variation to the original s52 Agreement in respect of the dinghy sailing school [that deed never having been completed], the persons of full age and capacity entitled to the benefit of the restriction have agreed, expressly or by implication, by their acts or omissions, to the modification of the restriction.

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

Case for the applicant

8. Mr Dart said that he purchased the application land in 1991, and as successor in title to the previous owner, acknowledged that he took on the obligations set out in the s52 Agreement. That agreement, according to the council's interpretation of it, prevents separate occupation of the recently constructed self-contained flat over the restaurant extensions. However, he said the agreement, as confirmed in the Planning Officer's report to Committee, was to secure that the living accommodation sought under the 1988 application would be occupied together with the proposed shop and tearoom. The permission granted in 1988 did not contemplate the subsequent application for the flat that he now occupies, and the 2003 permission for it recognised that it would be occupied separately from the commercial premises. The council would, when considering the application, have been aware of the fact that the additional unit was not required in connection with the restaurant/tea room premises as they continue to have their own residential accommodation.
9. At the time the 2003 permission was sought, the council officer dealing with the case was unaware of the s52 Agreement, and under delegated powers, granted permission for the separate accommodation unit on its own merits. It was, Mr Dart said, only after planning consent was given, that the council asked for a copy of the agreement. In response to that request, he sent a copy of it to a Mr C Boulder at the council on 8 July 2003, and in the accompanying letter said:

"I can see no reason for such an obligation and would appreciate you requesting the development control committee to agree to the removal of the Section 52 Agreement."

Mr Dart said that he had thought the s52 Agreement related only to the restaurant/tea-room and it's then existing accommodation rather than (effectively retrospectively) to the subsequently constructed first-floor flat permitted in the 2003 consent. As his expectation was to be able to let the restaurant/tea-room and its accommodation and occupy or let the flat as a separate unit, the request in the 8 July letter was intended to address and resolve the situation over which there was obviously some doubt. He had no interest in running the business, but wished to occupy the flat himself until, eventually, letting it separately when he goes to live abroad for part of the year, but the Agreement prevents him from doing that. In cross-examination, he accepted that the permission granted in January 2003 did not include the self-contained flat, but was for a first floor room and sea-view balcony to be accessed from the restaurant for the use of diners. However, the building control and health and safety aspects were so onerous, he said, as to make that impractical, hence the amended application for the flat. Asked why the restaurant and kitchen works had still not been completed, even though he had occupied the flat since October 2003, Mr Dart said that whilst accepting there had been nothing to stop him entering into negotiations for the letting of the business areas, he said he wanted to get this issue of his occupancy of the flat resolved before completing the project. Nevertheless, he said, he was indeed currently in negotiations with an interested party subject to the result if this hearing.

10. It was only his own occupation that seemed to be causing the problem, and in an attempt to resolve the issues, Mr Dart said that he had had discussions and meetings with Mr Pegram, who had expressed the opinion that a form of variation could be devised to allow the subletting of the restaurant/tea-room and accommodation whilst restricting the occupation of the flat to his own personal use, or perhaps for holiday lettings. This suggestion was unacceptable because of Mr Dart's wish to move elsewhere on his retirement for 6 months of the year, and he would thus need to let the flat out for holiday purposes when he was not in occupation. Whilst Mr Pegram had initially also been supportive of that option, the interpretation that had subsequently been provided by the council did not accord with his understanding of what had been tentatively agreed, and thus it had been necessary to proceed with this application.
11. Mr Dart said that the council contends that the restriction remains necessary and relevant in the light of the UDP to prevent "a proliferation of unnecessary dwellings outside the development envelope", and that there is a pattern of planning refusals in the vicinity. But that argument, he said, is not relevant to this application. The council's acceptance, in granting the 2003 permission, that the first floor flat need not be occupied in connection with the restaurant business, meant that control over its subsequent letting or disposal did not secure any practical benefit to the council and, furthermore, the modification as sought would not cause any injury either. If the council had been concerned, it could have imposed a planning condition that prevented the separate disposal of the first-floor flat, but it did not. Lifting of the restriction would allow for the reasonable use of the first-floor flat in a manner that was, Mr Dart said, entirely consistent with UDP Policy H9. That policy listed six circumstances where planning applications for residential development outside the defined boundaries of defined settlements will be allowed, and (c) states "for the conversion of a rural building, provided no other alternative use is feasible".
12. It was also a fact, he said, that the council has granted permission for the replacement of a large number of the timber beach houses with larger units that did not contain any occupational restrictions, despite many of them having previously been restricted to holiday use. Indeed, Mr Dart said, he had himself constructed 2 replacement units for sale in the open market on the south side of Marsh Road, immediately opposite the application land.
13. Regarding the part of the site that is occupied and operated as a dinghy sailing and windsurfing school, Mr Dart said that following the grant of planning permission in 1993, the council resolved to enter into a deed of variation to the s52 Agreement to allow that area to be released from its terms and conditions, and a draft was prepared by them in 1994. Whilst it was never completed, the council has recently confirmed that it has no objection to its modification in respect of that area. He concluded by saying that he could not see how being able to separately lease his boatyard, the restaurant and its accommodation, and his one-bedroom flat as three separate units could possibly injure the council.

Case for the objector

14. Mr Pegram said that the permission for a shop/tearoom and living accommodation granted in 1988 was effectively a replacement for a former commercial unit but included residential accommodation for a manager in addition. This aspect was of concern to the council in the light of the Cowes Local Plan (which had been adopted on 16 June 1988) and the report to the planning committee stated:

"…more contentious issue is, in my opinion, introduction of additional residential unit of accommodation in this area where further residential uses should be discouraged. However, as accommodation is to be tied in with shop and tearooms and use of land adjacent, it is considered that exception may be made in this instance".

Thus, the permission was made subject to a s52 Agreement tying the residential accommodation to the remaining part of the building and site.

15. The development plan currently (and at the time of the 2003 permission) in force for the Isle of Wight is the Unitary Development Plan adopted on 18 May 2001, and similar restrictive policies apply to development in the countryside. Mr Pegram listed 11 policies in the Plan which he considered to be particularly relevant in this case. Policies S1, G1 and H4 seek to restrict development to areas within existing settlements (the development envelopes) whilst policies G5 and H9 define categories of development that may exceptionally be permitted outside the defined settlements. These include appropriate retail tourist developments and residential accommodation essential to the operation of an approved tourist use. In relation to the application for the extension of the shop/tea-room which included the provision of a separate first-floor flat that received approval in June 2003 under the council's delegated powers, the case officer noted, in his justification for the decision, that although outside the development envelope, the proposal represented an acceptable form of tourist orientated development in accordance with the relevant policies of the Plan. Mr Pegram admitted that it appeared there had been an oversight in not taking the requirements of the s52 Agreement into account when considering that application, but put this down to "a simple error, and nothing more". This oversight did not, he said, in any way provide implicit agreement to a modification or discharge under ground (b) of the 1925 Act.
16. Mr Pegram said that the council accepted the proposed use of the land, if the modification were allowed, as reasonable and that s52 Agreement impedes the user as it prevents the disposal of the flat as a separate interest. However, in accordance with the relevant UDP policies, the restriction was considered entirely justified and, in any event, it did not prevent the occupation of the applicant or members of his family or like licensees. The occupancy restrictions are of substantial value or advantage to the council, he said, as any decision to approve unrestricted accommodation in the area would seriously prejudice the council's policies; for that reason also, money would not be adequate compensation. It would not be in the public interest to set aside policies, which seek to protect and enhance the built and natural environment, and as there are numerous similar s52 Agreements in force in the area, modification in this instance would create a 'thin end of the wedge' situation.
17. As to the permissions that had been granted, with no occupancy restrictions, for refurbishment or replacement of a number of the nearby beach chalets, Mr Pegram said that many of the consents applied to properties that had been constructed pre-planning acts and were not therefore subject to such restrictions in any event. Although several had historically been occupied principally for holiday purposes due to the nature and locations of the properties, they had not been subject to specific restrictions, and the council was, therefore, powerless to impose them. He pointed out that there had been no permissions granted for specific new developments in the vicinity, and the only ones that had been given were those where the council was unable to prevent replacements. An application for the replacement of 6 beach chalets close to the application land, and replacement with 3 detached houses had been refused by the council, and an appeal was dismissed.
18. In cross-examination, Mr Pegram accepted that there were existing residential properties on 3 sides of the application land, although there were questions over the lawful use of some of the properties to the east. He did not accept that, in accordance with UDP policy H9(f) – "the acceptable infilling of a small gap in an otherwise built up frontage or group of houses" an application for an unrestricted separate dwelling would be supportable. This was already a brownfield site which remained outside the development area. As to the fact that the council was no longer objecting to the dinghy sailing school being removed from the restriction, Mr Pegram said that that was not an inappropriate use – it was after all in a tourist area right next to the sea. Although it was a fact that, in terms of land use, the occupation of the flat as a separate unit was permitted, its removal from the occupancy restriction imposed by the s52 Agreement upon the whole site would mean it would no longer comply with UDP policies. The council's main concern, Mr Pegram said, was the effect that removing the restriction would have in terms of opposing future applications on other sites.

Submissions

19. Mr Bhose, for the council, said that the only permissions given for unrestricted residential use have been where the council has no control under the provisions of the planning acts or the UDP. Where they do have control, they take steps to ensure that they comply with policies – as demonstrated by the refusal on application and appeal relating to the demolition of 1-6 Beach Road Chalets, and their proposed replacement with 3 detached houses. In respect of the instant application, there were two discrete limbs to clause 1.1 of the s52 Agreement. Firstly, that "the said living accommodation" was to be occupied in connection with the operation of the shop/tea-rooms. The council accepted that the living accommodation referred to was that which was the subject of the 1988 planning permission, and not the flat that was permitted in 2003 – as confirmed to the applicant in a letter from the council dated 1 April 2005. Whilst it appeared that there was therefore no issue in respect of that limb, Mr Bhose said that it followed that there is, at present, nothing to prevent the applicant occupying the flat himself or allowing a friend or family member to occupy it on licence, even if not expressly connected with the operation of the commercial aspects of the site. However, it is the second limb that prevents the applicant from granting a separate tenancy, that stating that the owners were not to let or otherwise dispose of the site other than as a whole. If the applicant suggests that that limb does not apply to the flat, then such assertion is, he said, misconceived.
20. The construction of the Agreement was clear in that the application land, in its entirety, was not to be sold, let or otherwise disposed of save as one. Furthermore, clause 4 expressly contemplated that there might be future development of the "site or any part thereof" but no suggestion that this was in any way not to be the subject of the restriction against disposal. On the contrary, Mr Bhose said, it was contemplated that any further development that might take place would necessarily be subject to that restriction. Accordingly, if the applicant wishes to dispose of the flat by way of a long lease, or a formal tenancy, other than as part of a sale or letting of the whole, he must succeed in this application.
21. Mr Bhose said that whilst the council acknowledged that the granting of the 2003 permission under delegated powers may well have been an error on its part, in that there was no justification for an additional unit of accommodation on the application land, it does not follow that that the existence of the permission should absolve Mr Dart from the restriction. To allow the application, by means of the modification sought, would only compound the error that the council had made, and it did not follow that the application for modification should be successful as a result of the grant of the permission. This point was dealt with in Re Martins' Application (1988) 57 P & CR 119, Re Hopcraft's Application (1993) 66 P & CR 475 and Re Jones and White's Application (1989) 58 P & CR 512.
22. Martins' Application was a case where planning permission had been granted (on appeal) for the erection of a house on land that was subject to a restrictive covenant contained in an agreement between the landowner and the local authority made under section 37 of the Town and Country Planning Act 1962 (section 52 of the 1971 Act). That agreement restricted the use of the land to a private open space and prohibited the erection of a building on the land. The applicants sought, before the Lands Tribunal, discharge or modification of the covenant and contended that while the grant of planning permission did not determine how the Tribunal should deal with a covenant between two adjoining landowners, different considerations applied where the covenant derived its validity from a s37 (s52) Agreement. The purpose of such agreements was, they said, to regulate land use and once permission for development had been granted by the Minister on appeal, the purpose of the agreement was gone, and the covenant should be discharged. The Lands Tribunal dismissed the application. In dismissing an appeal from that decision, Fox LJ said, at 124:

"This construction [that once the planning position had been determined, the purpose of the s37 Agreement was gone] 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 effectively be possible 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."

After explaining the different procedures for appeal from a planning authority's refusal of permission, and for seeking modification or discharge of a restriction imposed under a s37 Agreement, he continued:

"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 only avoid its effect 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. 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."

Mr Bhose said that that judgment sums up what this Tribunal's decision should be.

23. The same result came in Hopcraft's Application where the only principal difference was that the planning permission had been granted by the council, rather than by the Secretary of State. Indeed, Mr Bhose said, in Jones and White's Application where the council had itself granted planning permission it was nevertheless held entitled to oppose the release of the restriction imposed under s52 and the Tribunal (V G Wellings QC and Dr T Hoyes FRICS) said (which is directly to the point in the instant case), at p512:

"The effect of the agreement is to give to the council a means of control of development additional to that provided by the 1971 Town and Country Planning Act, a means of control untrammelled by interference by the Secretary of State. The agreement has a further benefit to the council: it is enabled to consider matters from a subjective point of view whereas in exercising its functions in relation to applications for planning permission it must be objective.

The council is entitled to justify its refusal to agree to a variation of the section 52 agreement by whatever reasons appear to it to be relevant at the time when the question of variation arises even if those reasons have not been relied on before or on their face are contrary to a planning decision given by the council. The only qualification is that those reasons must not be fanciful or vexatious but real".

24. In respect of the grounds cited in this particular appeal, Mr Bhose said ground (aa) was the only one of real substance. Referring to the 7 questions that fall to be considered under this ground (see Re Bass Limited (1973) 26 P & CR 156), he said it was only 3 and 4 (whether impeding the proposed user secures practical benefits to the council, and if so whether those benefits are of substantial value or advantage) that were really in issue. Those questions need to be interpreted broadly, not narrowly (see Gilbert v Spoor [1982] 2 All ER 576). It was clear, for the reasons set out in the notice of objection and Mr Pegram's witness statement that the second limb of clause 1(1) of the s52 Agreement does secure to the council a practical benefit of substantial value or advantage. Further, as the council must maintain its position as custodian of the public interest, money would not be adequate compensation for the loss or disadvantage that would be suffered by the modification. The council's planning policies S1, S4, G5 and H9 are at stake as all are designed to prevent the proliferation of unnecessary dwellings outside the development envelope. An undesirable precedent would be set which could put the council in a position where it would be difficult, if not impossible, to resist further applications of a similar nature. If the modification were permitted, the result would be to allow the disposal of one unit of residential accommodation on the application land, wholly divorced from the owner, and from the operator of the business interests being run there.
25. The Tribunal cannot, in all conscience Mr Bhose said, be satisfied as required by s84(1A), the effect of that being that the statutory discretion to discharge or modify under s84(1)(aa) simply does not arise. Even if the Tribunal was to be against the council on all its points under ground (aa), and did consider exercising its discretion, it should be borne in mind that the applicant can still, even with the restriction in place, dispose of his interest in the flat (as part of the entirety), or he could use it for occupation by a manager of the business. It was also curious, Mr Bhose suggested, that the restaurant premises were still not completed and fitted out. If the Tribunal has any doubts about the true intentions of the applicant, it should not exercise its discretion.
26. As to ground (b) there was no doubt, in the minds of the council's officers, that Mr Dart was fully aware of the implications and effect of the s52 Agreement when the 2003 planning permission was obtained – as evidenced by the content of his letter of 8 July 2003. It was not feasible to suggest that due to the fact that the council's planning officer had apparently overlooked or been unaware of the s52 Agreement when recommending the 2003 planning application for approval, the council was agreeing to a modification. Indeed, as demonstrated by Mr Dart's solicitor's letter of 4 September 2003 seeking the council's interpretation of the meaning of the s52 Agreement in relation to the flat, there was no suggestion, nor has there been any since, that the council agreed with the modification as was now being sought.
27. Finally, as to ground (c), Mr Bhose said that if the council succeeded in its submissions under ground (aa), the applicant must also fail on that ground. Even if the applicant succeeds on ground (aa), he should fail on ground (c) as it is intended as a long-stop against vexatious objections to extended user: see Nourse LJ in Re Abbey Homesteads Ltd's Application (1986) 53 P & CR 1 at 12.
28. Mr Wrigglesworth, for the applicant, said it was accepted that the grant of planning permission for a development that was otherwise restricted by a section 52 Agreement did not bring about an automatic right to its modification or discharge. However, as set out by Fox LJ in Martins' Application, the Tribunal can and should take the existence of the planning permission into account. In assessing the evidence, the Tribunal needs to be objective in its consideration of whether the restriction secures to the council practical benefits of substantial value or advantage, and whether or not it would suffer injury if the modification were granted. If we conclude that no such practical benefits are secured, and the council would not suffer injury, then we have jurisdiction to grant the modification sought.
29. It was also accepted, within the context of the UDP, that the development permitted by the 2003 consent falls outside the settlement boundary for Cowes, but in respect of the policies cited by Mr Pegram, it was submitted that the wording allowed for exceptions to be made. For instance, policy S1 provides that new development will be concentrated within existing urban areas and policy G1 stated that in general development will be expected to be located within settlements defined in this plan by development envelopes. He said that policy H9 had more direct relevance to the use of the flat. It provides some scope for development outside settlement boundaries, including residential development that makes use of an existing building – H9(c), and the infilling of small gaps H9(f). There is no mention in those policies of the need for occupation to be in any way controlled, and H9(d) permits residential development where this is essential to the operation of an approved tourist use. It was reasonable to assume, therefore, that that in the absence of any other material considerations, in granting the 2003 permission, the development was considered to be in accord with the development plan.
30. Mr Wrigglesworth said that it was also common ground, in connection with the first limb, that the occupation of the flat was not restricted to use in connection with the shop/tea-rooms – that being acknowledged by the council in its letter of 1 April 2005. If the council had intended that the occupation of the flat should be restricted to use in connection with the business, it could have imposed such a restriction in the consent, or insisted upon a new section 106 Agreement. It was reasonable to conclude, therefore, that the council did not consider such an occupancy restriction necessary. The current occupation of the flat, by the applicant, was not in contravention of the s52 Agreement, or of any planning control and the modification of the restriction, as sought, would not result in a new dwelling in conflict with the UDP policies – that dwelling already exists. In granting permission for that separate dwelling, the council must be taken to have concluded that its occupation would not be in breach of the relevant development plan policies, notwithstanding that it lies outside the development boundaries. That position, Mr Wrigglesworth said, is wholly inconsistent with the council's resistance of the application for the modification.
31. He said that the cornerstone of the council's objection – the thin end of the wedge argument – might be understandable if it was intended to split the business areas and the accommodation that currently goes with it (under the 1988 permission). However, the position here is that that arrangement would remain intact and all that was required was for the applicant to be able to let the flat on lease when his own occupation was no longer required, or to separately let the restaurant/tea-rooms and its accommodation. The inability, without the modification being sought, for the applicant to grant a lease of the restaurant/tea-rooms and its associated accommodation, and separately let the flat, was impeding a use of the premises that the council acknowledges is both reasonable and in compliance with the development plan policies. The effect of the modification would not be to bring about a new dwelling in the countryside, and the council would not be injured by it (ground (c).
32. Under ground (b), the council has now said that it has no objection to the dinghy sailing school being removed from the s52 Agreement, and let or otherwise disposed of separately. This, together with the fact that unrestricted permission was granted for the flat in 2003 implies agreement under this ground.

Conclusions

33. The application for modification of the restriction imposed under the s52 Agreement was argued under grounds (aa), (b) and (c) and I will deal with each in turn. The relevant provisions of s84 are these:

84-(1) The Lands Tribunal shall (without prejudice to any concurrent jurisdiction of the court) have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction on being satisfied-

(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

(b) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed, have agreed, either expressly or by implication, by their acts or omissions, to the same being discharged or modified; or

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

and an order discharging or modifying a restriction under this subsection may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award under one, but not both, of the following heads, that is to say either –

(i) a sum to make up for the loss or disadvantage suffered by that person in consequence of the discharge or modification; or

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

(1A) Subsection (1)(aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of the 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; or

(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.

34. Before turning to the specific grounds upon which the application was made, I deal with a point of law. It is clear that, as Mr Dart said, the residential occupancy restriction imposed by the s52 Agreement related to the accommodation that was permitted under the 1988 permission for the shop/tea-rooms – it was that permission to which the agreement was subject. It follows, therefore, that that restriction, in terms of occupation, cannot extend to the self-contained flat permitted in July 2003, and the council accepts this fact. As Mr Wrigglesworth said, correctly in my view, if the council had wanted to restrict the occupation of the flat to a use in connection only with the business activities on the site, it could have done so either by a planning condition, or a new agreement (under section 106 of the 1991 Town and Country Planning Act). However, looking at the restriction as a whole, it is in my view unquestionable that the terms of the agreement do extend to the flat, and indeed would do so in respect of any other development permitted on the site (under clause 4) in respect of disposal. Clause (1) clearly states, after dealing with the occupancy restriction: "…and the owners shall not sell let or otherwise dispose of the site other than as a whole" [my emphasis]. In that regard, I agree with the council's submissions that there are two distinct limbs to clause (1). The occupancy restriction is the first limb, and that, on its own, does not appear to be in dispute. It is the second limb, which serves to prevent the applicant granting separate tenancies of the flat and the restaurant/tea-rooms, which is the principal issue.
35. There is some doubt in my mind as to whether the part (or limb) of the restriction in clause (1) that does apply to the flat falls within the jurisdiction conferred by section 84(1) of the Act. Similar doubts were expressed when the question arose, in broadly similar circumstances, in Re Milius's Application (1995) 70 P & CR 427. That was a case where the applicant sought (under ground (aa)) the discharge of a restriction affecting a flat above a shop in Anglesey. The restriction, imposed by the local authority when the property was sold to the applicant under the right to buy provisions in Part V of the Housing Act 1985, prevented disposal without the written consent of the council. That consent would not be withheld if a sale was arranged to a person who, in the previous 3 years, had resided or had his principal place of work within the area. The applicant contended that he had been unable to sell the property, as purchasers were put off by the restriction, and lending institutions refused to give loans where such a restriction was in place. The application was dismissed, on the grounds that, as the local authority saw it as an important objective of policy to keep affordable housing available to meet specific local needs (which it was entitled to do under section 157 of the 1985 Act), the restriction did secure to the council, and to the public that it represented, a practical benefit of substantial value or advantage for which money could not provide adequate compensation.
36. In expressing his doubts, the President, HH Judge Marder QC said, at 427:

"…That section [84(1)] relates to "land affected by any restriction […] as to the user thereof or the building thereon[…]" which in my view means that the Tribunal may only consider a covenant which has the effect of imposing a restriction on the user of the land, or the buildings on land.

As was pointed out on the council's behalf the particular restriction imposed in this case (the terms of which are set out earlier in this decision) does not purport to restrict the user of the property in any way, but is a restriction on the 'relevant disposal', in effect a conveyance of the freehold or the grant of a lease for more than 21 years (see Housing Act 1985 section 159). Such a disposal is prohibited without the consent of the council, which consent may not be withheld in the event of a sale or lease to a person qualified by work or residence as a 'local person'.

It is perhaps arguable that the user of the property may in practice be limited or restricted by the restriction on free disposition of a legal interest. On the other hand some limitation on user may be seen as a possible indirect consequence of the restriction on disposal and not as the effect or the purpose of the covenant. As Mrs Williams [solicitor for the objecting authority] put it, reasonable user of the property could not be said to be impeded by this restriction, but only if an application for consent to a disposal were unreasonably refused. The issue is not without difficulty, and I am unaware of any direct judicial authority."

He said that the point was not argued before him, and it appeared to him unnecessary to decide it since, assuming the Tribunal had jurisdiction in respect of the application, he had reached the conclusion on other grounds that the application could not succeed and must, therefore, be dismissed.

37. In the present case, the second limb is in terms restrictive of disposal rather than of user, and on the face of it would not appear to fall within section 84(1). However, the council did not contend that the Tribunal had no jurisdiction to modify the restriction, and in view of the conclusion I have reached on the points that were argued, I see no need for me to reach a view.
38. Although Mr Dart said that he had thought the s52 Agreement related only to the restaurant/tea-rooms and its associated accommodation, I am satisfied from the evidence that he was sufficiently aware of its implications from what he said in his letter when sending a copy of it to the council on 8 July 2003. In the paragraph that preceded the quote given in para 9 above, he said:

"Further to our telephone conversation this afternoon, I enclose a copy of the section 52 Agreement entered into by the previous owners of 31 Marsh Road. The agreement requires the landowner or any future landowner not to sell, let or otherwise dispose of the site other than as a whole".

Furthermore, by dint of the fact that he had previously applied to the council for a deed of variation to permit the separate disposal if the dinghy sailing school by way of letting, he must have been fully aware that, under the agreement, he was unable to dispose of the site other than as a whole.

39. It is the fact that the occupancy restriction does not extend to the flat that prevents Mr Dart, whilst he or a member of his family can occupy it, from being able to let it on a separate tenancy if he wishes to let the restaurant and its accommodation to another party. The council has conceded, in its letter of 1 April 2005, that there is nothing to prevent Mr Dart from granting a tenancy of the restaurant/tea-rooms and their accommodation whilst remaining in occupation of the flat. They also appear to have indicated, in the without prejudice negotiations between the applicant and Mr Pegram, that they may be prepared to accommodate arrangements for holiday lettings (as this would form an acceptable tourism linked use) but that is unacceptable to Mr Dart. On the question of acceptable tourism linked uses, this appears to be why the council has acceded to the applicant's request for a modification in respect of the dinghy sailing school. As Mr Pegram said, quite rightly in my judgment, such a use must be appropriate on a beachfront site, right next to the sea. This impacts upon ground (b), which I consider later.
40. Turning now to the specific grounds, on (aa), it is agreed that the continued existence of the restriction impedes the reasonable user of the flat, but the council says that the restriction does secure to it practical benefits of substantial value or advantage in preventing the flat being disposed of separately. The value, as Mr Bhose said, is in protecting the council's planning policies under the UDP. Allowing the unrestricted occupation of a residential unit of accommodation in the countryside would clearly contravene those policies, and would potentially set a precedent for other applications, he said. On the other hand, Mr Wrigglesworth said that the modification would not be permitting a new residential unit in the countryside. It already exists, and the planning permission with which it complies does not contain a condition restricting its occupation. In response to that, Mr Bhose said the council has admitted that the planning officer who was considering the application appeared to have overlooked the s52 Agreement and may have made a mistake in recommending the application when, as Mr Pegram had said, there were no exceptional circumstances to warrant permission being granted. However, he said it could not be right for the Tribunal to compound an error made in 2003.
41. With that officer not being called to give evidence his reasoning for recommending the application could only be the subject of speculation or assumption and this Tribunal could not give any weight to such. Whilst I have some sympathy with Mr Wrigglesworth's arguments, and undoubtedly the applicant is constrained to some extent by the situation as it currently stands, I find the council's arguments altogether more persuasive. Mr Bhose's references to Re: Martins' Application, Hopcraft's Application and Jones and White's Application are, it seems to me, entirely apposite, and I repeat part of the quotation by Fox LJ in Martins' Application thus:

"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 granting 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."

I am satisfied in the light of these authorities, the evidence before me, and considering the final paragraph of the quotation from Jones and White's Application recited in para 23 above, the council is justified in its refusal to agree the proposed modification and, that in doing so, it is not being vexatious or fanciful.

42. Whilst it seems to me that the council has been caught out to some extent by the situation that has arisen, in that it could, indeed, have imposed an appropriate planning condition when granting consent in 2003, it remains fully protected under the 'second limb' of clause (1) of the agreement. It is that protection that it seeks to uphold, and in my judgment, the ability to prevent the first floor self-contained flat from being disposed of other than as a part of the tourist related business that operates on the site must be a practical benefit of substantial value or advantage. Although in strict planning terms, the flat is unrestricted as to who can occupy it, and if it were not for the s52 Agreement, Mr Dart would be free to dispose of it in whichever way suited him best, the fact is that the restriction does exist, and has done throughout his ownership. As Mr Bhose pointed out, the applicant is free to dispose of the flat as part of the whole, is free to occupy it himself, and, it appears, the council might be sympathetic to an application to allow it to be used for holiday lets at times when Mr Dart does not require it for himself. It is only the ability dispose of it, either under the terms of a shorthold tenancy, or indeed by the sale of a long-lease that is prevented, and if such were permitted, it would to all intents and purposes effectively extinguish an altogether, in my view, appropriate restriction which was imposed, in the first place, for good reason. For the reasons given by the council, I do not consider that money would be adequate compensation.
43. I am sure that the wording of the UDP policies recited by Mr Wrigglesworth does indeed allow the council some discretion in granting planning permission for residential development outside defined settlement boundaries in exceptional circumstances, and it may be that in granting the 2003 permission, the officer dealing with the application under delegated powers considered such circumstances existed. However, I am considering here an application under section 84 on what the council describes as a brownfield site, and exists as a tourist related shore-side commercial development with associated residential accommodation. Although there are a large number of properties on 3 sides of it that are in unrestricted residential use, the site can in no way be described as residential, and I accept the council's submissions as to why, in specific circumstances it has allowed applications for the replacement of former beach chalets with new residential units. The fact that no residential applications have been allowed in the vicinity in circumstances where the planning authority was able to resist them is an important consideration.
44. In all the circumstances therefore, I find that the application under ground (aa) is not made out, and fails.
45. In respect of ground (b), as I have mentioned above, I do not consider that the council's agreement to modify the restriction in respect of the dinghy sailing school can, in all the circumstances, possibly signify either express or implicit agreement to the modification as sought. Neither can the grant of planning permission for the flat in 2003, for the reasons set out when dealing with section (aa) above. Finally, there is no doubt in my mind that any such modification would injure the council (ground (c) in that it has, as it said, a duty to uphold the public interest and such a modification would represent the thin end of the wedge. The application therefore fails on all grounds.
46. The parties are now invited to make submissions on costs, and a letter about this accompanies this decision. The decision will become final when the question of costs is decided, and not before.

DATED 8 August 2006

(Signed) P R Francis FRICS