The Alexander Devine Children's Cancer Trust v Millgate Developments Ltd & Ors, Court of Appeal - Civil Division, November 28, 2018, [2018] EWCA Civ 2679

Resolution Date:November 28, 2018
Issuing Organization:Civil Division
Actores:The Alexander Devine Children's Cancer Trust v Millgate Developments Ltd & Ors
 
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Case No: C3/2017/0336

Neutral Citation Number: [2018] EWCA Civ 2679

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE UPPER TRIBUNAL

(LANDS CHAMBER)

[2016] UKUT 0515 (LC)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 28/11/2018

Before:

LORD JUSTICE UNDERHILL

(Vice President of the Court of Appeal (Civil Division))

LORD JUSTICE SALES

and

LORD JUSTICE MOYLAN

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Between:

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Emily Windsor (instructed by Key IP Limited) for the Appellant

Michael Driscoll QC (instructed by DAC Beachcroft LLP) for the Respondents

Hearing date: 4 October 2018

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JudgmentLord Justice Sales:

  1. This is an appeal against the judgment of the Upper Tribunal (Lands Chamber) (Martin Rodger QC and Paul Francis FRICS) ([2016] UKUT 0515 (LC)) by which it granted an application by the first respondent (``Millgate'') under section 84 of the Law of Property Act 1925 to modify restrictive covenants which prevented residential development on an area of open land so as to allow such development.

  2. Millgate was the developer of the land in question. It built houses and bungalows on it in breach of the restrictive covenants in their unmodified form. It later sold them to the second respondent (``Housing Solutions''), a provider of social housing, for use as affordable housing. Millgate did this in order to satisfy a planning obligation imposed on it by the local planning authority, the Royal Borough of Windsor and Maidenhead (``the Council''), in respect of a much bigger and more valuable housing development by Millgate in the vicinity, at a site called Woolley Hall. Millgate has given an indemnity against any loss which might be suffered by Housing Solutions if it is unsuccessful in these proceedings. Housing Solutions joined in the proceedings as a ``person interested'' in the land. Mr Driscoll QC acts for both Millgate and Housing Solutions on this appeal.

  3. Although the developer, Millgate, was aware of the restrictive covenants and of objections to the development by owners of neighbouring property which had the benefit of the covenants, it only brought its application under section 84 to clarify whether it could build on the land after it had already constructed nine two storey houses and four bungalows on the site in breach of the restrictive covenants, thereby presenting the Upper Tribunal with a fait accompli. The Upper Tribunal held that the restrictive covenants against development of the land, in impeding the continued existence and the occupation of the houses and bungalows, were contrary to the public interest, as that term is used in section 84(1A)(b) of the 1925 Act and should be overridden. There are a number of indications in the Upper Tribunal's judgment that it might well have come to a different view if Millgate had made its application before the houses and bungalows had been built and that it was the risk that (having in fact been built) they might have to be demolished if the Upper Tribunal did not accede to Millgate's application which was the decisive factor for the Upper Tribunal in its decision to accede to Millgate's application.

    Section 84 of the Law of Property Act 1925

  4. Section 84 provides in relevant part as follows:

    ``84 - Power to discharge or modify restrictive covenants affecting land

    (1) The Upper Tribunal shall ... 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-

    (a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Upper 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

    (b) [modification or discharge is agreed by relevant persons]; 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 any 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 land in any case in which the Upper 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..

    (1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Upper Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances.

    ...''

    Factual background

  5. The land in question affected by the restrictive covenants (``the application land'') is close to Maidenhead. It is located in an area designated as Green Belt in the applicable development plan.

  6. The restrictive covenants in issue are contained in a conveyance dated 31 July 1972 made between John Lindsay Eric Smith (``Mr John Smith'') as vendor and Stainless Steel Profile Cutters Ltd (``SSPC'') as purchaser. Mr John Smith was a local farmer who owned extensive open agricultural land to the south of Maidenhead. SSPC owned some industrial buildings (later known as Exchange House) on land adjacent to the application land (I will call this land ``the unencumbered land''). By the conveyance, the application land was transferred to SSPC making, in combination with the unencumbered land, a rectangular plot of land (``the Exchange House site'') running between fields owned by Mr John Smith to the east and a road to the west called Woodlands Park Avenue.

  7. The conveyance provided that SSPC covenanted for the benefit of the owners for the time being of the land then belonging to Mr John Smith situated within three quarters of a mile of the application land that at all times thereafter it would observe and perform certain stipulations which include the restrictive covenants in issue. Those restrictive covenants provide as follows:

    ``1. No building structure or other erection of whatsoever nature shall be built erected or placed on [the application land].

  8. The [application land] shall not be used for any purposes whatsoever other than as an open space for the parking of motor vehicles.''

  9. In due course, Mr John Smith's son Bartholomew (``Mr Barty Smith'') inherited the adjacent agricultural land from his father. In December 2011 he proposed gifting the part of that land which lay along the border of the application land to the trustees of the Alexander Devine Children's Cancer Trust (I will refer to them as ``the Trust'') for the construction of a hospice for children who are seriously ill with life-limiting conditions and their carers. I will refer to this land as ``the hospice land''. Mrs Fiona Devine is the co-founder and chief executive of the Trust.

  10. The plans for the hospice were developed to make full use of the hospice land, including with recreational areas and a pleasant wheelchair path around its circuit. Planning permission was granted for the construction of the hospice on 2 December 2011. In March 2012 Mr Barty Smith gifted the hospice land to the Trust. However, construction of the hospice had to await the raising of adequate funds from charitable donations.

  11. We were not told when Millgate acquired the Exchange House site. It seems this happened in the first part of 2013. Millgate was aware of the restrictive covenants at the time it acquired the site, presumably as a result of its own investigation of title at that time. Millgate did not adduce evidence to suggest that it made any attempt to identify persons with ability to enforce the restrictive covenants; the Upper Tribunal found that Millgate's solicitors, DAC Beachcroft, could readily have identified Mr Barty Smith and the Trust as beneficiaries of the restrictive covenants if they had tried; and it drew the inference (which is not challenged) that Millgate either took no steps to find out who the beneficiaries were or knew the identity of some or all of them and chose not to raise the issue of the restrictive covenants before beginning to build in breach of them: [50]-[51].

  12. In July 2013 Millgate applied for planning permission to build 23 affordable housing units on the Exchange House site. This was linked to Millgate's application for planning permission to build 75 housing units on the Woolley Hall site for commercial sale. In due course, in March 2014 the Council granted planning permission for both developments, with the permission for the Woolley...

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