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Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd

Section 84 of the Law of Property Act 1925 is an important piece of legislation for developers. It gives the Upper Tribunal the power to discharge or modify restrictive covenants on land.

On 6th November 2020, the Supreme Court handed down its judgment in the case of Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd, which concerned this power of the Upper Tribunal.

Background
  • Millgate Developments Limited (“Millgate”) was the developer of the land in question. It built houses and bungalows on the land in breach of certain restrictive covenants. Those restrictive covenants provided that:
    • no building, structure or other erection of whatsoever nature shall be built, erected or placed on the land; and
    • the land shall not be used for any purposes whatsoever other than as an open space for the parking of motor vehicles.
  • Alexander Devine Children’s Cancer Trust (“the Trust”) had built, prior to the Millgate development, a hospice on adjoining land that enjoyed the benefit of the restrictive covenants.
  • Having built the development, Millgate then sold its land to Housing Solutions Limited (“HSL”), a provider of social housing.
  • Although Millgate was aware of the restrictive covenants, and of objections to the development by the owners of the neighbouring property, it only made 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.
  • The Upper Tribunal was therefore presented with a fait accompli.
  • The Trust objected to Millgate’s application.
  • The Upper Tribunal held that the restrictive covenants, in impeding the continued existence and occupation of the houses and bungalows, were contrary to the public interest and should be overridden.
Decision in the Court of Appeal

The Court of Appeal reversed the decision in the Upper Tribunal. The Court of Appeal found that the Upper Tribunal should have taken into account that Millgate had built on the land knowingly in breach of the covenants.

Decision in the Supreme Court

Again, the Supreme Court concentrated on the relevance of Millgate’s ‘cynical breach’ when making its decision.

It was held that the breach could have been avoided if Millgate had applied for planning on nearby land and this would have avoided the need to discharge or modify a restrictive covenant. In addition to this, if had Millgate applied under section 84 prior to building the development, the “contrary to public interest” argument would not have arisen.

The Supreme Court made it clear it was not in the public interest to permit a developer to “secure the modification of the covenant in reliance on the state of affairs created by their own deliberate breach”.

What does this mean for developers?

It is a clear warning sign to developers to seek advice and, if necessary, apply to modify or discharge a restrictive covenant at the earliest opportunity. The Court will now look closely at whether a developer has knowingly and cynically breached a restrictive covenant when making any decision.

For further information, please contact Alex Clarke in our Real Estate Disputes Team.

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