Tribunal's warning to developers – don’t build first and apply later!
Eleanor Martin
Property Disputes Associate at Higgs LLP. Chair of Wolves and Black Country JLD
The case of Fosse Urban Projects v Whyte & Ors [2023] provided a valuable lesson to anybody who deliberately breaches a restrictive covenant, and only seeks to extinguish it when challenged.
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Fosse Urban Projects built a house on a piece of land on which there was a restrictive covenant: to only use the land as a garden for the neighbouring property. The parties who objected were neighbours across the road who also benefited from the covenant, as it prevented them from being overlooked.
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The developer applied to extinguish the covenant under three grounds of s84 of the Law of Property Act 1925. These grounds were that the restriction was obsolete due to surrounding development in the neighbourhood, that the covenant impeded reasonable use as nothing could ever be built on the land, and that there would be no injury to those entitled to the covenant if it was extinguished. However, construction work had already begun when the application was made, and continued throughout the process such that the new house was complete and occupied by the time of the final hearing.
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The Tribunal found that the developer was successful in establishing two of three of these grounds – but despite this, exercised their discretion and refused to extinguish the covenant.
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It did so because it found that the developer had deliberately breached the covenant, and had purposefully decided to take a chance that the neighbours would not seek to enforce the covenant. The developer did not give any evidence as to their intention however the Tribunal still felt able to infer that developing despite the covenant was not a genuine mistake, but a wilful act.
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Many companies and individuals may feel that ignoring a restrictive covenant in order to pursue a development or change their property is worth the risk that the covenant will not be enforced. However, this case shows that extinguishment of the covenant is not guaranteed, and acting first and asking later may be prejudicial to any application.
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Please get in touch on 01384 327 153 or [email protected] if you have any queries around restrictive covenants.