Ian Quayle explores a recent tribunal decision addressing the modification of restrictive covenants to permit the use of a residential property as a children’s care home. Ian examines the legal principles applied, the balance between private property rights and public interest, and the tribunal’s rationale in granting the modification. 

Case Reference & Balli Link 

Coven Care Homes Ltd v Hockney & Ors [2024] UKUT 384 (LC) (03 December 2024) 

http://www.bailii.org/uk/cases/UKUT/LC/2024/384.html 

Summary 

Restrictive covenants – Modification – Change of use – Applicant seeking modification of property on residential estate from private dwellinghouse to children’s care home under section 84(1)(aa) and (c) of Law of Property Act 1925 – Whether discharge or modification of covenant causing injury to anyone – Whether covenant preventing reasonable use of land without securing any real advantage for anyone – Application granted. 

Facts 

The property at 2 Redwing Close was a four-bedroom house in a cul-de-sac of four similar houses on a small residential estate in Hammerwich, Staffordshire. The property was one of 20 detached homes completed in 1988. In January 2023, the current owner let it to the applicant, initially for a term of six months, but subsequently for a further term of two years from 30 June 2023. The applicant ran two small care homes for children with learning difficulties and complex needs, each registered with Ofsted, the body responsible for standards in children’s homes, to provide care for up to two children aged between 7 and 18.  

Issues 

All the houses on the estate were bound by covenants which restricted their use to private dwelling houses only and prohibited the carrying on of any business or trade. The covenants bound the land and any occupier of the land, not just the owners who agreed to it. It therefore bound the applicant. All the remaining houses on the estate had the benefit of the covenants.  

Decision 

Following complaints from neighbours objecting to the alleged breach of covenant, the applicant asked the tribunal to exercise its power under section 84(1)(aa) and (c) of the  

Law of Property Act 1925 to discharge or modify the covenants to permit the use of the house as a small care home for two children. Held: The application was granted.  

(1) In determining whether a restriction ought to be discharged or modified on ground (aa), the tribunal was required to take into account the statutory development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the area. It also had to have regard to the period at which and the context in which the restriction was imposed and any other material circumstances. The tribunal might direct the payment of compensation to make up for any loss or disadvantage suffered by the person entitled to the benefit of the restriction, or to make up for any effect which the restriction had, when it was imposed, in reducing the consideration then received for the land affected by it. To succeed in its alternative case on ground (c), the applicant had to demonstrate that the proposed modification of the restriction would not cause injury to those entitled to the benefit of it. “Injury” in that context meant any adverse impact on the property of an objector or on their enjoyment of their property. It was not restricted to something which caused a diminution in the value of the property in financial terms: Ridley v Taylor [1965] 1 WLR 611 considered.  

Although the applicant in the present case had only a relatively short-term tenancy (which it hoped to renew if the application succeeded), it had sufficient standing to make the application for modification in its own name. Section 84(1) authorised the tribunal to modify a covenant “on the application of any person interested in any freehold land” which was affected by a restriction arising under a covenant. It was not necessary for an applicant to be the freeholder. It was sufficient that they had some interest in the land. That condition was satisfied in this case by the applicant’s two-year tenancy, which had more than six months still to run: Ridley considered.  

(2) In considering a modification of the covenant to permit the existing business use to continue, the question was whether that modification would cause injury to any person entitled to the benefit of the covenant. That required consideration of any impact which the proposed modification might have on neighbours by continuation of the current use; and any effect which the relaxation might have on the enforceability of the covenants which bound other properties on the estate, either by creating the impression that the restrictions need not be observed, or by encouraging others to seek modification of their own covenants.  

It was relevant that the use of the property as a children’s home was not an obvious use. Any application to the tribunal by another homeowner to relax their own covenant would be determined on its merits and would be neither more nor less likely to be granted if the present application succeeded. Nor was there any real risk that other residents might decide that they could now ignore the covenants which applied to their own properties.  

(3) It did not matter that the applicant sought to make a profit from the use
of the property. It was a small, recently established company running two homes with ambitions to open a third but no expectation of growing beyond that.  

Restrictive covenants existed in a legal landscape which allowed any person bound by a covenant to apply to the tribunal to have it modified or discharged. The covenants which bound houses on the estate would continue to protect  

the pleasant residential environment even if they were modified to permit the continued use as a children’s home. The objectors had not identified any injury which they would sustain if the proposed modification was permitted.  

(4) Having decided that ground (c) was made out, it was not necessary to consider ground (aa). However, the tribunal had a discretion to modify the covenant only to the degree necessary to enable the current use to continue without leaving open the possibility of different business uses in future. Here the tribunal was satisfied that this was an appropriate case to exercise its discretion. The fact the applicant’s proposed modification was in furtherance of the common good weighed in favour
of modification. The availability of supported accommodation for young people who needed to live apart from their own families was one aspect of a civilised and compassionate society. The property was suitable to provide that sort of accommodation and the public interest in its use for that purpose was a good reason to modify the covenant. In all the circumstances, this was an appropriate case to exercise the discretion to modify the covenant: Alexander Devine Cancer Trust v Housing Solutions Ltd [2021] EGLR 1 considered.