Restrictive covenant: a limited and personal modification justified

In an application to discharge restrictions which prevented a domestic garage being used for a dog grooming business, the Upper Tribunal decided that a limited modification of the restrictions could be justified.

The restrictions would be modified only to the extent required to enable the applicant’s current business use to continue; and the modification would be personal to the applicant. When the house is sold, the garage would revert to domestic use.

In the Matter of an Application by Paul Holden, the applicant, Mr Paul Holden, purchased his house on a housing estate in 2012. The house had a detached double garage converted by Mr Holden for use as a dog grooming parlour. In 2015, the local authority granted planning permission for a 1m by 1m non-illuminated advertising sign to be erected on the house and planning permission for a change of use of the garage from domestic to a dog grooming parlour. However, when the house was sold to Mr Holden, the transfer included several restrictions, including a restriction on carrying on any trade or business on the property, and a restriction on displaying signs without the permission of the transferor.

The applicant applied for the restrictions to be discharged, bearing in mind that none of his neighbours objected, relying on grounds (a) and (c) of section 84(1) of the Law of Property Act 1925 which invests in the Upper Tribunal the power to discharge or modify restrictive covenants over land.

The Upper Tribunal stressed that, to succeed under ground (a) of section 84(1) of the Act, the applicant must be able to demonstrate that there had been material changes in the character of the land that is the subject of the application, or changes in the character of the neighbourhood, or that there had been some other change in material circumstances.  The applicant simply said that the restrictions were obsolete, even though he entered into them less than four years before his application to the Tribunal. There was little significant change in the character of the land over that time and there were no other attempts on the estate to convert garages to commercial use, so the restrictions could not be considered obsolete. The application under ground (a) was refused.

Of more merit was ground (c) – that the proposed discharge would not injure those entitled to the benefit of the restrictions. The breach of covenants was found not to be an obstacle to the success of the application and the Tribunal was satisfied that the sort of moderate intensity business use conducted by Mr Holden need not represent a threat to the scheme of protection afforded by the covenants.

The Tribunal decided that grounds for a discharge were not made out, since to give the applicant or his successors carte blanche for any business use would be much more likely to cause injury or disturbance to neighbouring owners. But a limited modification of the restrictions was justified.

In the applicant’s favour, there were the planning permissions, the lack of objection to the application, and the fact that the application land was unusual (it was at the entrance to the estate, on probably the largest plot, with a generous parking provision).  In the judgment, it was decided that the risk that granting the application would lead to the disintegration of the protection afforded by the covenants could be avoided in two ways.  First, by modifying the restrictions only to the extent required to enable the applicant’s current use to continue.  Secondly, by making the modification of the restrictions personal to the applicant.