As any law student will tell you, the benefit of a restrictive covenant attaches to land and can be enforced by successive owners of that land provided certain well-rehearsed conditions are met. However, section 8 of the National Trust Act 1937 enables the National Trust to enforce restrictive covenants without needing to satisfy the all of these criteria. This can cause headaches for property developers by removing a developer’s ability to take an informed legal view on the risk posed by a covenant before committing to a project or, giving them little opportunity to defend themselves in the usual way. In the event of enforcement by the Trust developers have struggled to obtain modification or release of covenants in the Upper Tribunal because the injury caused to the Trust cannot be quantified in monetary terms. However, a recent case of Re Thames Valley Holdings Ltd (2011) LTL 30/8/2011: [2011] UKUT 325 (LC) brought a ray of opportunity to developers looking to utilise land burdened by National Trust covenants. This case emphasised the importance of considering cases brought by (or against) the National Trust on an individual basis. The case demonstrated that it would be inappropriate to take a standard view that covenants imposed by the Trust could not be modified on the basis that financial compensation for the injury caused by such modification would not be adequate where the party with the benefit of the restrictions is a custodian of public interest.
The case dealt with a piece of land within the immediate vicinity of a 15th century manor which was subject to restrictive covenants imposed in 1945 whereby the development of any nature on the land must obtain prior approval of plans from the National Trust. Applications for such approval were made in 1979 and 1991 both of which were rejected on numerous grounds. A further application was then made on the basis that the setting of the property (and development site) had been significantly altered by the maturity of a parade of trees between the two properties (which would screen any imposing view of the developed units) and that the potential public interest in the development had been increased by the need for housing in the area. The National Trust opposed the new application on the grounds that this further petition was an abuse of process. The Trust’s argument was not upheld on the basis that there had been material changes in the circumstance of the case since the previous application and the courts therefore sought to rule as to whether a modification of covenants would be acceptable.
In considering the applicant’s request, it was found that there were two aspects of the public interest to be considered; that represented by the National Trust and that represented by planning considerations in granting planning permission for the development. In deliberating these points together with the Trust’s argument that money cannot provide adequate compensation where injury caused by the modification of covenants is suffered by the public interest, it was upheld that ‘if there is loss or disadvantage to the National Trust in terms of their interest as custodians of our national heritage, a reasonable sum of money can be awarded to them in compensation for the loss. This money can then of course be used by them towards their general expenses of protecting and promoting our heritage in other localities or other ways.
This case serves as a useful reminder that covenants and other private law matters capable of frustrating projects which have been considered and approved by the planning system can be tackled. Other recent cases dealing with matters such as rights of light and village green applications, are striving to deal with the problems encountered when private entities seek to control development plans. Perhaps this case highlights once again the question of whether the current planning system adequately manages the concerns of the public and the challenges faced by developers in delivering housing and infrastructure in a viable way. If the public continue to take matters into their own hands after the public forum has closed and planning permission has been granted, is the public consultation stage of the planning process fit for purpose? In any event, with increased legal uncertainty surrounding so many aspects of property development, we will see an increased reliance on title insurance to manage legal and practical risk.
Dean Bedford
Lead Underwriter and Licensed Conveyancer
CLS Ltd
dean@clsl.co.uk
