Automated Summary
Key Facts
Housing Solutions, a housing association and registered provider of social housing, applied to the Upper Tribunal to modify restrictive covenants burdening Exchange House land at Woodlands Park Avenue, Maidenhead. The land was originally a car park where Millgate Developments Limited built 23 affordable houses in 2015 in knowing breach of the covenants. The Alexander Devine Children's Cancer Trust (Hospice Trust) owns adjacent hospice land and initially objected. Mr Bartholomew Smith, who inherited farmland adjacent to the site, also objects. Previous litigation included a 2016 Tribunal decision in Millgate's favour, followed by successful appeals by the Hospice Trust to the Court of Appeal and Supreme Court. The Supreme Court found the Tribunal erred in law by not properly considering Millgate's cynical breach of covenant. The Hospice Trust has now agreed to modification in consideration of payment. The Tribunal granted modification of the covenants to permit the existing affordable housing.
Issues
- Whether the Tribunal should exercise its discretion to modify the covenants in Housing Solutions' favour given that Millgate (the applicant's predecessor) committed a cynical breach of the covenant, despite the breach not affecting the Tribunal's jurisdiction and not causing harm to Mr Smith.
- Whether compensation should be awarded under section 84(1) of the Law of Property Act 1925 for the discharge or modification of the covenants, either to make up for loss suffered by the objector or for reduced consideration received for the land when the covenant was imposed.
- Whether the application should be struck out as an abuse of process because the matter was already settled by the Supreme Court, and whether Housing Solutions is estopped from making a further application to modify the covenants.
- Whether the Tribunal has jurisdiction to modify the restrictive covenants under section 84 of the Law of Property Act 1925, specifically whether the covenants secure practical benefits of substantial value or advantage to the objector Mr Smith under subsection (1A)(a), and whether the modification will injure him under subsection (c).
Holdings
The Upper Tribunal exercised its discretion to modify restrictive covenants burdening Exchange House land in Maidenhead, permitting the existing affordable housing built in breach of covenant. The Tribunal found the covenants secured no practical benefits of substantial value or advantage to the objector (Mr Smith), and the Hospice Trust consented to modification. The Tribunal rejected the argument that Millgate's cynical breach should prevent modification where the objector derives no benefit from the covenants and the public interest ground is not relied upon.
Remedies
The Tribunal granted modification of the restrictive covenants burdening the application land, permitting the retrospective lawful building of affordable housing that already stands on the land. No additional compensation was ordered as the modification would not injure the objector (Mr Smith derives no practical benefit from the covenants) and the applicant (Housing Solutions) had already paid £150,000 to the Hospice Trust in the earlier proceedings.
Legal Principles
- The Tribunal rejected the claim that res judicata prevented Housing Solutions from making a further application. Mr Smith was not a party to the Supreme Court decision, and the Supreme Court did not decide on subsection (1A)(aa) grounds. The Tribunal held it was open to Housing Solutions to make a further application as circumstances had changed - the objector with real benefit from covenants now consents to modification.
- The Tribunal rejected Mr Smith's estoppel argument that Housing Solutions was barred from applying to the Upper Tribunal. Housing Solutions never represented they would not apply to the Tribunal, and there was no basis for estoppel. The Tribunal held that Housing Solutions could negotiate with Mr Smith without reserving rights, and the Hospice Trust could accept settlement alone.
- The Tribunal acknowledged Millgate's 'cynical breach' of covenants but held that punishing this conduct should not be the primary objective where modification would not injure the objector. Millgate had already paid £150,000 compensation to the Hospice Trust. The Tribunal exercised discretion to modify covenants because Mr Smith derives no practical benefit from them, making it unconscionable to continue punishment in these circumstances.
Precedent Name
- Alexander Devine Children's Cancer Trust v Millgate Developments Limited [2018] EWCA Civ 2679
- Millgate Developments Limited and Housing Solutions Limited v Bartholomew Smith and the Alexander Devine Children's Cancer Trust [2016] UKUT 515 (LC)
- Alexander Devine Children's Cancer Trust v Housing Solutions Limited [2020] UKSC 45
- Re Bass Ltd's Application (1973) 26 P & CR 156
Cited Statute
- Tribunals, Courts and Enforcement Act 2007
- Law of Property Act 1925
Judge Name
- Mark Higgin FRICS
- Elizabeth Cooke
Passage Text
- In the absence of any evidence that Mr Smith's land has development value which would be diminished by the affordable housing on the application land, we find that the covenants in preventing that housing do not secure to Mr Smith any practical benefit.
- The Supreme Court found that Millgate by its wrongful action created the factual situation that gave the Tribunal jurisdiction under the public interest ground, and that the Tribunal had made an error of law in ignoring these factors.
- We have no hesitation in doing so. It is not for the Tribunal to pursue a mission of punishment where the modification of the covenants will not injure Mr Smith, where Millgate has already paid a heavy price for its misconduct, and where the cynical breach of covenant has made no difference to the fact of the Tribunal's jurisdiction.