Tribunal modifies covenant restricting use of unprofitable pub

A tribunal has modified a covenant restricting the use of an unprofitable pub. The change means the premises can now be used as a convenience store for the benefit of the local community.

The pub was located on a housing estate and had been put up for sale as it was no longer profitable.

A potential purchaser wanted to turn it into a convenience store. However, the sale was conditional upon the release of the covenant, which prohibited use of the property for any purpose other than carrying on the business of hotelier and licensed victualler, and specifically prohibited its use as a shop.

Some residents objected to the covenant being modified because the pub was the centre of their community and the support it provided to residents would be lost if the restriction was discharged.

The Upper Tribunal (Lands) said the first issue to decide was whether the proposed change was reasonable. It held that it was because a shop was like a public house in terms of both how it was used by the public, and the effect on the local environment.

The second issue was whether preventing the change of use would secure any practical benefit to objectors.

The difficulty for the objectors was that they were trying to use a negative covenant to achieve the positive result of keeping the pub trading.

However, it would be quite open to the pub's current owner to simply close it, which would not breach the restriction. On the evidence, it was more likely than not that it would be forced to close in the foreseeable future.

Accordingly, the restriction did not secure practical benefits to the objectors in the way that they would like.

The application to modify the covenant was therefore granted because it was reasonable and to refuse it would bring no benefit to objectors.

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