30.1 Restrictive covenants do not necessarily last forever. The right to enforce a restrictive covenant may be lost through want of registration, obsolescence, acquiescence, unity of seisin, merger or release. Statute has also intervened under section 84(1) of the Law of Property Act 1925 to enable applications to be made to the UTLC for the discharge or modification of restrictive covenants (either with or without compensation) in circumstances where the restriction is effectively obsolete or unreasonable or is impeding the reasonable use of land. In other words, where compelling economic and social reasons call for the discharge or modification of restrictions which impede the development of land for which planning permission will normally have been obtained, often where this will not cause any loss or disadvantage to those entitled to the benefit of the restriction or where only modest payments of compensation need be made by the covenantor to make up for such loss or disadvantage. This chapter addresses the equitable defences and statutory remedies which may be invoked by covenantors in order to overcome restrictions which materially interfere with the use of their land.
30.2 It is clearly open to a covenantee to agree to a release of a restrictive covenant in return for an immediate cash payment or other benefit and/or in return for an overage payment on the grant of planning permission or the eventual development and sale of the affected land (i.e a right to receive future payment, in addition to the original sale price, to be paid when the relevant land later increases in value). Astute landowners may choose to retain covenants on the sale of land in order to obtain windfall payments later on as and when land comes to be developed. The release of the covenant will constitute a disposal of an interest in land, and will be subject to the provisions as to writing and signing by or on behalf of each party to the contract.1
318 Restrictions on the Use of Land
CHANGE OF CHARACTER OF NEIGHBOURHOOD
30.3 The remedy under this head overlaps with the ground of obsolescence under section 84(1)(a) of the Law of Property Act 1925, and on which covenantors would usually rely. However, equitable defences exist which enable a court to find that covenants are no longer enforceable. This can arise where:
(a) there has been a general change in the character of the neighbourhood; or (b) where it would be inequitable to enforce the restrictions as, for instance, might arise where the claimants have acquiesced in past breaches or otherwise impliedly waived performance of the covenants. In order to succeed on point (a), the claimant must show that the character of the neighbourhood has so completely changed as to render the covenants valueless to the claimant so that an action to enforce them would be unmeritorious, not bona fide, and merely brought for some ulterior purpose. To succeed on point (b), the defendant must make out a sort of estoppel by showing that the claimant’s acts and omissions were such as to justify a reasonable person in believing that the covenants were no longer enforceable.2
ACQUIESCENCE
30.4 An injunction may be barred by conduct from which it may be inferred that a covenantee has waived his rights. Mere inactivity will never be enough, although lapse of time may be indicative of acquiescence. However laches (or delay) may be a defence to a claim for an injunction or other relief even though the circumstances do not amount to acquiescence.3It has been held that acquiescence will only deprive a person of a legal right where the covenantee’s conduct is of such a nature and in such circumstances that it would be dishonest and unconscionable of him to press for its enforcement.4It was essentially for this reason that a plaintiff lost his right to an injunction or damages arising from the
2Chatsworth Estates Company v Fewell [1931] 1 Ch 224. In this case, in order to keep their estate purely residential, covenants existed which prevented any house being used ‘otherwise than as a private dwelling-house’. However, the defendant had licensed a number of schools, some blocks of flats, a hotel and three boarding houses, and without the plaintiff’s knowledge about a half dozen other boarding houses also existed in an area which still remained mainly residential. Despite all this, the court found that these acts or omissions did not prevent the plaintiff from restraining the defendant from using his home as a guest house.
3Where, for instance, the defendant’s witnesses have died.
4Shaw v Applegate [1977] 1 WLR 970. In 1967, a purchaser covenanted not to use certain property as an amusement arcade. In breach of covenant, the purchaser began installing amusement machines after 1970. An assignee of the benefit of the covenant gave notice of the assignment to the defendant in 1973 shortly before he brought enforcement proceedings. It was found that there had been a breach of covenant since 1971, yet the claim to an injunction was dismissed on the ground that although it could not be concluded that the plaintiffs were acting dishonestly or unconscionably in seeking to enforce their contractual rights, in the circumstances (namely the failure of the plaintiffs to protest earlier, the lack of application for interim relief and the heavy investment made by the defendant) the appropriate remedy would be an order for an inquiry as to damages. However, it seems probable that the modern remedy on the same facts would be an award of damages on the Wrotham Park basis. See also Gafford v Graham [1999] 3 EGLR 75; Mortimer v Bailey [2004] EWCA Civ 1514; Harris v Williams-Wynne [2006] EWCA Civ 104 at
[36]–[39]; Coventry v Lawrence [2014] UKSC 13, [2014] AC 822; and see also para 29.27.
breach of a covenant which prevented the covenantor from using his home as a shop as he had known for 3 years before bringing his action that the defendant had been using his home as a ‘beershop’ and had himself purchased beer at the shop.5It has also been held that where a covenant prohibiting the use of any building as an inn, tavern or beerhouse had been openly and continuously broken for upwards of 24 years, a waiver or release of such covenant would be presumed.6
Reference should also be made to Gafford v Graham,7where an allegation of acquiescence was made out.
UNITY OF SEISIN
30.5 Restrictive covenants are extinguished if ownership and possession of the benefited and burdened land belong to the same person. The restriction will only revive when the benefited and burdened parcels pass into separate ownership and it requires to be recreated.8There was no extinguishment where the benefited and burdened properties were held by the same trustee on distinct trusts. The same rule applied when both properties were held by a public authority for different
5Sayers v Collyer (1884) 28 Ch D 103.
6Hepworth v Pickles [1900] 1 Ch 108. This case was followed in Attorney General of Hong Kong v Fairfax Ltd [1997] 1 WLR 149, which concerned a lease of property in Hong Kong for 999 years which contained a covenant which provided for the erection of residential villas in conformity with properties on the same street. The land was later subdivided into 28 plots. The defendant claimed that the covenant did not prevent the erection of multi-storey buildings and that the Crown, as landlord, had abandoned the covenant by acquiescing in the development on another (two and a half acre) plot which had been transformed into an area of high density, high rise, buildings. The Crown alleged that the proposed development would be a breach of covenant and claimed a premium in consideration for the waiver. Hepworth v Pickles was followed and an appeal by the Crown was dismissed as it had been aware of the extensive development on the other plot.
7(1999) 77 P & CR 73, CA, discussed at para 29.8. At [84] Nourse LJ said this, ‘As a general rule, someone who, with the knowledge that he has clearly enforceable rights and the ability to enforce them, stands by whilst a permanent and substantial structure is unlawfully erected, ought not to be granted an injunction to have it pulled down’. In this case an appeal was allowed and damages in lieu of an injunction were awarded. This was a case where acquiescence was made out, whereas in Harris v Williams-Wynne [2006] EWCA Civ 104, no acquiescence was found. Chadwick LJ distinguished Harris on the basis that whereas in Gafford v Graham the covenantee had been entitled to have plans submitted for approval (about which he had done nothing for 3 years despite being aware of the planning application), in Harris the covenant was not to erect buildings and the covenantee had been unaware of the breach before building work began. Chadwick LJ said that there is a distinction between a case where a covenantee knew that he could prevent building works before they had commenced by withholding approval to plans, and a case where a covenantee did not even become aware that there had been a breach of covenant until the building work had reached first floor level. In such a case, it is less obvious what a covenantee can do to enforce the covenant, and it may well be unrealistic to think that an injunction would be granted which would either require building work to be demolished or prevent its completion. So it was in Harris that acquiescence was rejected by the court and damages were awarded for breach of covenant.
8Texaco Antilles v Kernochan (Dorothy) [1973] AC 609 at 626; Re Tiltwood, Sussex [1978] Ch
269; Re Victoria Recreation Ground, Portslade’s Application (1981) 41 P & CR 119...
