Case No: C3/2006/2088
Neutral Citation Number: [2007] EWCA Civ 570
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL 

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Tuesday, 1st May 2007
Before:

LORD JUSTICE CARNWATH
LADY JUSTICE HALLETT
and
LORD JUSTICE LAWRENCE COLLINS
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Between:

	DOBBIN	
Appellant	
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REDPATH & ANR	

Respondent	
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(DAR Transcript of 
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Mr P Coppell (instructed by Messrs Darling & Stephenson) appeared on behalf of the Appellant.

Mr C Zwart (instructed by Messrs Ward Hadaway) appeared on behalf of the Respondent.

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Judgment

Lord Justice Lawrence Collins:

1.	This is an appeal from a decision dated 30 August 2006 of the Lands Tribunal, Mr A J Trott, FRICS member, in which the member refused an application by the appellant, Mr Dobbin, seeking the nullification of a restricting covenant, pursuant to section 84 of the Law and Property Act 1995.  The appeal is under section 3, subsection 4, of the Lands Tribunal Act 1949, which permits an appeal by any person grievant on the basis the decision is erroneous on a point of law.

2.	Mr Dobbin has freehold land comprising an undeveloped plot adjoining and formerly part of 1 Briar Close, Darlington, County Durham.  The land is subject to a restrictive covenant imposed by a conveyance dated 12 September 1960 made between John Joseph Calder and Frederick and Lucy Winter in the following terms:

“No other building or erection other than the said dwellinghouse and outoffices shall be erected on the said land without the consent in writing of the Vendor.”

3.	It is accepted that the land, together with numbers 1-5 Briar Close, forms part of the building scheme.  Mr Dobbin sought modification of the restrictive covenant, so as to permit on the land the erection of a detached bungalow and private garage in accordance with the planning permission granted by Darlington Borough Council, as the local planning authority, on 26 August 1987.  There were two objections to that application by Mr John Lawson and Mrs Lilian Redpath as trustees of a certain comprising 3 Briar Close, and by Mrs Redpath as owner of 4 Briar Close.  Numbers 3 and 4 are effectively one property consisting of a house and garden.  Another objector, Blackwell Grange Golf Club, withdrew its objection and there was no objection to the application from any other member.

4.	Section 84 of the Law and Property Act provides, so far as material:

“(1) The Lands 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 use thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction on being satisfied – 
[And then a number of matters are set out, the relative ones for this purpose being …]
(aa) that (in a case falling within subsection 1(A) 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 
…
(c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction.
…  
1(A) 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 Lands Tribunal is satisfied that the restriction, in impeding that user, either –
(a) does not secure the person’s entitlement to the vendor for the benefit of any practical benefits or 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 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 Lands 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.”

5.	In coming to his decision, the member accepted that the existence of planning permission was very persuasive in determining the reasonableness of the user.  For the purposes of section 84(1)(aa), and he concluded first that the existence of valid planning permission, compliance with the development plan and the location of land within an established residential area, meant that the proposed user of the land was reasonable for purposes of section 81(1)(aa).  But, secondly, the mere fact that Mr Dobbin had planning permission and accorded with a development plan was not of sufficient public interest to override the objections.  

6.	He turned to the practical benefits conferred on the objections by the covenant and found the following:

“(2) That the continued existence of the Restriction, unless modified, would impede that reasonable user [J45].
(3) That it was not possible to see the… Land from either inside or the garden of 4 Briar Close [J46].
(4) That it was not possible to see the… Land (other than a birch tree that was to be retained) from 3 Briar Close [J46].
(5) That neither 3 nor 4 Briar Close would be overlooked by the proposed development [.
That impeding the proposed development did not secure any practical benefits to the objectors in terms of protecting an existing view or preventing overlooking.
That the restriction did not secure any practical benefits to the objectors in terms of preventing an increase in traffic generation or disruptive on street parking.
That the proposed development would not interfere with any noteworthy view enjoyed by the objectors, whether within or outside their properties.
That the effect of the proposed development upon the value of 3 and 4 Briar Close would be nominal.”

7.	He concluded that a low density of development and a pleasant, peaceful ambience in Briar Close were practical benefits secured by the restriction in favour of the objectors.  But if the proposed development were built, the density and development of the building scheme would rise by 20 per cent from approximately 11.5 dwellings per hectare to 14 dwellings per hectare.  But the residential density of the wide area, if it becomes 50 dwellings, was 14.48 dwellings ahead.  But the average plot size of the building scheme was approximately 769 square metres and it was probable that the land, and the land to the north of the application line, would be occupied together; giving a resultant plot size of 745.7 square metres, which was above the average for the existing dwellings.  

8.	His overall conclusion was that this was a small building scheme extended to only five plots.  It had come into effect in the early 1960s and had retained its integrity ever since.  Its original purpose could still be fulfilled.  Despite its small size, the building scheme had achieved the creation of a pleasant, quite cul de sac with low density residential development and the location of the proposed bungalow on that land would give that land a cramped, over-developed appearance.  This would be especially noticeable given the narrowness of the road.  It would occupy a site that was two-thirds of the average area of the other plots within the building scheme.  The density of the development of the scheme would increase by 20 per cent, although it would remain low and in harmony with that of the surrounding area.  But the building scheme creates a local environment which is steeped in character from that of neighbouring homes such as Briar Walk.  The density and character of the building scheme would be adversely affected were the proposal to be allowed and their maintenance was of practical benefit, a substantial advantage to the objectors.

9.	Accordingly, Mr Dobbin had failed to satisfy ground (aa) and having found that the restrictions secured practical benefit, a substantial advantage to the objectors, it followed that those objectors would be injured by the proposal of an application and the application was therefore refused.

10.	The only ground of appeal by Mr Dobbin is that the tribunal was wrong to refuse his application on the basis that a building scheme results in an increased resumption, in words of the member, that a restrictive covenant will be maintained.  There is nothing, it is said on his behalf, in the Law and Property Act 1925 or in any other statutory provision which expressly modifies the operation of section 84.1 where there is a building scheme.

11.	The particular passages in the decision of which complaint is made are where the member says “the existence of a building scheme also increases the presumption that the restriction will be maintained”, and “I do not consider that these policy issues [by which we meant the development plan, the planning issues], applied to an individual plot, outweigh the increased presumption under a building scheme that the restriction will be maintained.” 

12.	Mr Coppell for Mr Dobbin says that the member erred because most of his conclusions suggested that the restriction did not secure any practical benefit or substantial advantage to the objectors.  But it was on the basis of the general profession of the amenity of the area, and in particular the increased presumption under a building scheme that the restriction would be maintained, that the tribunal concluded that the restriction secured practical benefits of substantial objectors.  The argument was as follows:

1. Section 84 does not require or contemplate that the Lands Tribunal, being satisfied, should apply an increased presumption against satisfaction where the restriction arises under a building scheme.

2. The true task of the tribunal is to assess the evidence and once it is satisfied without any increased or special resumptions on that evidence decide whether it should exercise its power to discharge or modify the restriction.

3. There is nothing special in a restrictive covenant arising under a building scheme such that an application to modify it should face an increased presumption that it will be maintained.

4. The significance of a restrictive covenant imposed for a building scheme is its greater facility to bind successors in title.  It does not result in increased presumption against modification and discharge.

5. There is no basis for the presumption and decisions of this court.

6. But for the increased presumption required by the member of Mr Dobbin it is fairly likely that the tribunal would have been satisfied under ground a(a) and/or ground c.

7. Accordingly, the decision should be reversed or riveted to the Lands Tribunal.

13.	For the objectors, Mr Zwart says that section 84.1 requires the tribunal to grant the application of an interested party on being satisfied of the specified(?) matters and the onus is on the applicant.  The power under section 84.1 is broad, encompassing matters of law and equity and Lands Tribunal decisions turn on those facts.  The decision of the professionally qualified members of the Lands Tribunal is directed to the parties to the application, familiar as they are with the facts relevant for the issues, and there is no requirement for matters to be spelled out.

14.	Before the hearing opened, the parties agreed the existence of the fact of the building scheme and this was a building scheme application from the outset.  The existence of the building scheme does not detract from the words of the statute; the question of satisfaction is a matter of facts and degrees from the decision maker and so is right, and such matters are not for this court to interfere with.  The imposition of a presumption arises from the expression “on being satisfied” (section 84.1).

15.	I come to my conclusions.  The only question on this appeal is whether the member misdirected himself in applying what he described as an “increased presumption” under a building scheme.  A vendor may subdivide the area of land into a scheme of plots within the intention of selling those plots to individual members.  In such circumstances, it is common for the vendor to extract the same restrictive covenants from each purchaser in total, so as to preserve a value of each individual plot -- any residential amenity is seen as a whole.  In doing so, the vendor’s aim is to institute a scheme of neutrally enforceable covenants which will be valid for the purchaser’s and their successor’s entitlement.  If the vendor’s aim is realised, those covenants effectively create what has been called a “local law”, to preserve the character of the area of the scheme for the future.  The expression “local law” in this context derives from the judgment of Sir Herbert Cousins-Harding MR in Reid v Bickerstaff [1900] 2 (Ch) 305, 319.  

16.	In referring to an increased presumption in relation to building schemes, the member was echoing several Lands Tribunal decisions decided since 1995 when the phrase first appeared in Re Bromor Properties Ltd’s Application [1995] 70 P&CR 569, a decision of Mr P H Clark.  What Mr Clark was endeavouring to do was to summarise the effect of the decision of this court in Gilbert v Spoor [1983] (Ch) 27, a decision of the application of section 84.1 in the context of a building scheme.  In that decision, Eveleigh LJ said at page 32 that because the Lands Tribunal was authorised by section 84 to take away from a person a vested right, the Tribunal is required to consider adverse effects upon a broad basis.  He also emphasised the importance of the fact that the restriction in that case was intended to preserve the amenity and standard of layout(?) in general and was aimed specifically at density of housing.

17.	Waller LJ, echoing earlier cases, referred to the building scheme as local law and went on at page 35: 

“… the restriction has to be treated as a covenant within a building scheme or, as it is sometimes said, as local law.  If on a building estate a restrictive covenant is broken by any plot holder it is potentially an interference with the rights of all other plot owners.  It may be such that it is a momentary irritation to the owner of the land some distance away.  The nearer it is the greater the possibility of it being an interference to the amenities of owners.  If a building estate contains a pleasant approach with restrictions upon it and some building is done in contrary to those restrictions which spoils the approach, if then the owner of a plot complains about that breach, the fact that he does not see it until he drives along the road, in my opinion, does not affect the matter.  He is entitled to the estate being administered in accordance with the mutual covenants, or local law …”

18.	In Re Bromor Property Ltd’s Application the Lands Tribunal applied Gilbert v Spoor.  At page 579 the member considered the question of the existence of a building scheme arising out of submissions; its existence gave what is described as greater protection to those entitled to its benefit.  Having found that there was such a building scheme, he considered the question of its effect in this passage:

“… what is the effect of this finding?  Does it assist the objectors, adding strength to their objections and putting a greater burden of proof on the applicants?  I think that in general it does.  The existence of a building scheme establishes a system of local law applicable to the whole estate, so that those with the benefit of it can expect to see that law observed throughout the estate and can expect to be able to enforce it even though they may be affected only indirectly or temporarily by a breach.”

19.	He then set out Waller LJ’s conclusions and said:

“In short, I think that the effect of my finding of the existence of a building scheme is that there is a greater presumption that restrictive covenants will be upheld and therefore a greater onus of proof on the applicants to show that the requirements of section 84 are satisfied.”

20.	The same member said a year later, after referring to Gilbert v Spoor in Re Lee’s Application [1996] 72 P&CR 439:

“The effect of the building scheme is that there is a greater presumption that restrictions imposed under it will be upheld and therefore a greater burden of proof on the applicant to show the requirements of section 84 are met.  This is the background to this application.”

21.	In Reed Turner’s application the member, Mr Rose, held at paragraph 8 that:

“I bear in mind that in a case where a building scheme exists there is a greater presumption that restrictive covenants will be upheld, and therefore a greater onus of proof upon any applicants for the modification of covenants to show that the requirements of section 84 are satisfied.”

He again cited Gilbert v Spoor and Re Bromor Property Ltd in his application.

22.	That decision went to the Court of Appeal, where that passage was quoted by my Lord, Lord Justice Carnwath, without any criticism.  But it is fair to say that that decision did not in any way involve the correctness of that proposition.  It seems to me to be plain that all the member of the present application was doing was endeavouring to apply the guidance given by this court in Gilbert v Spoor.  It is true that since 1995, following Mr Clark’s summary in Re Bromor, members of the Lands Tribunal have referred to the increased presumption, which is probably more a matter of point of presumption.  As Waller LJ said in the case of a building scheme:

“All the plot owners have an interest and have an interest in the estate being administered in accordance with mutual covenants and local law.”

23.	It was that passage which Mr Clark in Re Bromore had in mind when he asked himself the question whether the existence of a building scheme added strength to the objections.  It was to that question he was giving the answer, based on Gilbert v Spoor, that there was an increased presumption.  Where there is no building scheme there may be a diminishing relationship as between the weight to be attributed to the source of the complaint and the physical distance of the objectors land interest.  By contrast, where there is a building scheme so long as the objector has an interest inside the physical compass of the building scheme, the location of the objector outside his or her land interest but inside the building scheme does not affect the matter, as Waller LJ pointed out.

24.	Consequently, there is a difference in approach to the application of the section 84.1 discretion, consequent upon the finding of a building scheme.  That said, I consider that the expression “increased presumption” is apt to this minute, although it has not been challenged since 1995 until now and no criticism, as I have said, was made of it in Reed Turner when that decision was taken in this court.  It would be better for the Lands Tribunal to consider the matter in terms of the weight to be attached to objections in the light of the special interest of the beneficiaries of covenants of the building scheme. 

25.	In the present case, the building scheme is a highly material in the exercise of professional judgment by Mr Trott in his consideration of the outstanding issues.  It is apparent from his decision that he had the context of the decision in Gilbert v Spoor and the statutory onus under section 84.1 well in mind.  He found that the original purpose in the building scheme was still being fulfilled and that, despite its full(?) size, that scheme had achieved the creation of a pleasant, quiet cul de sac with low density residential development.  The location of the proposed bungalow on the application land would give it a cramped, over-developed appearance and the density of the scheme would increase, even though it would still be low and in harmony with the wider surrounding area.  But the building scheme had created a local environment which was distinct in character from that of neighbouring roads; the density and character of the building scheme would be adversely affected.

26.	The question of weight was one for Mr Trott and I do not consider that there are grounds for interfering with his decision that the low density within the area of the building scheme was an important practical benefit, nor that the development plan which favoured residential development and higher density did not outweigh the importance of maintaining the building scheme.  

27.	The question, therefore, of whether the matter should be remitted does not arise and I would dismiss the appeal.

Lady Justice Hallett:	

28.	I agree.

Lord Justice Carnwath:
	
29.	I agree.  It is important no to turn into issues of law what are, essentially, planning judgments on amenity and other aspects.  I agree with Lord Justice Lawrence Collins that the use of the word “presumption” may be misleading and that it is probably better to speak in terms of the weight to be given to a particular consideration.  However, the member, after what seems to me an impeccable review of all the relevant issues, in paragraph 60 accurately applied the balance required by section 84(1B). That required him to have regard to the development plan and any ascertainable pattern for the grant of permissions, as well as the context in which the restriction was created or imposed.  He had regard to the development plan, which he acknowledged favoured the application, but on the other hand he was entitled to place weight on the fact that the restriction was imposed in the context of a building scheme or “local law”, following the guidance of the Court of Appeal in Gilbert v Spoor.  

30.	So, for those reasons and those given by my Lord, I also would dismiss this appeal.  

Order: Appeal dismissed.