The Court of Appeal has handed down its judgment on yet another case involving an application to modify restrictive covenants under Section 84 of the Law of Property Act 1925, this time concerning two large apartment towers to be constructed on the site of redundant warehouse buildings.
Section 84 of the Law of Property Act 1925 allows freeholders and long leasehold owners to apply to have restrictive covenants released or modified where they are deemed obsolete or where they impede the reasonable use of land for public or private purposes and the covenants in question do not secure any practical benefits of substantial value or advantage to those entitled to the benefit or where they are contrary to public interest or where money is adequate compensation for suffering from any discharge or modification.
In this case, Great Jackson St Estates Limited (GJSE) were the lessee of two redundant warehouse buildings in Manchester. Their landlord was Manchester City Council (MCC), who was also the relevant local planning authority responsible for development control.
GJSE applied to MCC for planning permission to construction two 56 storey residential towers on the site of the redundant warehouses. The development would provide 1,037 apartments and would cost around £350m to implement.
GJSE’s lease of the site prevented the development being undertaken and although MCC were prepared to grant GJSE a new lease on terms which would permit the development the terms proposed were not agreeable to GJSE who therefore applied to the Upper Tribunal (Lands Chamber) to modify 11 of the covenants contained in the lease pursuant to Section 84 of the Law of Property Act 1925.
MCC objected to GJSE’s application on grounds that, amongst other things, there was a real risk that the proposed development would not be completed in a timely fashion or not completed at all. MCC were essentially concerned that GJSE had the ability and funding to do what they wanted to do.
GJSE’s application was dismissed by the Upper Tribunal and they appealed to the Court of Appeal.
The Court of Appeal upheld the Upper Tribunal’s decision, finding that MCC had a legitimate strategy (as a local authority) in continuing to influence the use of the land and to secure its orderly and appropriate development.
This case is a clear illustration of the breath of the considerations that must be taken into account when considering the practical benefit of a restrictive covenant in the context of an application made under Section 84. The judgment emphasises that the Court does not want to intervene in a local authority’s right as a landlord to manage strategic development as part of its wider duties.
