I have sometimes come across blasé attitudes from developers when it comes to existing restrictive covenants on the title that may conflict with the proposed development – “the covenants are old I’m sure it will be OK” or “it’s fine let’s just get insurance” are a common response to raising a potential restrictive covenant issue. Alexander Devine Children’s Cancer Trust v Housing Solutions Limited [2020] UKSC 45 provides a useful warning to property investors and developers of the worst-case scenario that can arise when a restrictive covenant is intentionally breached, and an interesting discussion regarding public interest in the context of restrictive covenants.
Background law
The Law of Property Act 1925 section 84, provides amongst other things that a party can apply to the Upper Tribunal to discharge or modify a restrictive covenant if the covenant does not secure any practical benefits of substantial value or advantage, or is contrary to the public interest. In such instances the restrictive covenants can be modified or discharged, and money will be an adequate compensation for the loss or disadvantage (if any), which any such person will suffer from the discharge
or modification.
The facts of Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd
In this case, 13 affordable homes were built on land that was subject to a restrictive covenant. The restrictive covenant provided that the land could only be used for car parking and no building structure should be built on the land. The adjoining land that benefitted from the covenant was a children’s hospice, and some of the housing units overlooked the hospice's planned gardens and wheelchair walk.
After constructing the houses, the developer applied to the Upper Tribunal to modify the restrictive covenants on the grounds that it impended reasonable use of the land, was contrary to public interest and the beneficiary of the covenants could be compensated. The Developer sought to argue that the public interest in the affordable housing being in existence was sufficiently important and immediate to justify the modification of the restrictive covenant.
