BARBARA MARY PENNINGTON LP/22/2000

UPPER TRIBUNAL
LANDS CHAMBER
LP/22/2000Case No LP/22/2000
Between
BARBARA MARY PENNINGTONApplicant
Before
N J Rose FRICSDate 25 September 2001Property: 1 Warning Tongue Lane, Bessacarr, Doncaster DN4 6TBCatchwords: RESTRICTIVE COVENANT - restriction to use as private residence only - application to amend this limitation so as to permit occupation of not more than 2 bedrooms by paying guests - whether change in character of area - whether injury to objectors - application refused - Law of Property Act 1925, s84(1)(a) (aa) (c) (1A) (1B)
[1]This is an application by Mrs Barbara Mary Pennington (the applicant) under section 84 of the Law of Property Act 1925 (the Act), seeking the modification of a restrictive covenant affecting freehold land consisting of a dwelling house at 1 Warning Tongue Lane, Bessacarr, Doncaster, DN4 6TB (the application land) so as to permit the premises to be used in part as bed and breakfast accommodation.[2]The application land has an area of about 0.15 hectare. It occupies a corner plot at the junction of Warning Tongue Lane (C96) to the east and, to the west, the main Bawtry Road (A638). It is situated at the southern tip of the main built-up area of Doncaster. On the site stands a four bedroom bungalow. To the west is another bungalow - 317 Bawtry Road - and to the north a split-level dwelling, 3 Warning Tongue Lane. These two properties and the application land are served by a joint vehicular access from Warning Tongue Lane. The application land also has another vehicular access, constructed by the applicant in about October 1999. This is located within the southern part of the site’s frontage to Warning Tongue Lane. It serves a parking/manoeuvring area in the south-east corner of the site.[3]The relevant restriction was imposed by a conveyance dated 8 February 1972 which contained, among others, the following covenant:
“Not to use the property hereby conveyed other than as a single private residence and not to make any structural alterations to the existing buildings or erect any other buildings except in accordance with plans elevations and specifications approved by the Vendor Provided Always that this covenant shall not prevent the completion of the said bungalow and premises now in course of construction.”
[4]The covenant was expressed to be for the benefit of the Vendor and his successors in title and the owners for the time being “of the said plots Numbers 1 and 3 and the property marked ‘existing house’ on the said plan.”[5]Plots 1 and 3 are now known, respectively, as 317 Bawtry Road (No.317) and 3 Warning Tongue Lane (No.3). The ‘existing house’ is now known as 5 Warning Tongue Lane (No.5).[6]The objectors asserted, both in their original notices of objection and through their counsel at the hearing, that the application land, together with No.317and Nos.3 and 5, was the subject of a building scheme and that assertion was not contested by the applicant. It is agreed that the objectors represented at the hearing are entitled to the benefit of the restriction. The objectors are Mr Stephen Smith, who lives with his wife at No.3 and Mr and Mrs John James Tucker who live at No.317. 3[7]In May 2000 Mr Smith applied to the Sheffield County Court for an injunction restraining the applicant from carrying on the business of a guest house or any other trade on the application land in breach of two restrictions, including that imposed by the conveyance of 8 February 1972 and from using the property otherwise than as a private dwelling house. The claim was stayed by a Consent Order dated 25 July 2000 in the light of the applicant’s undertaking to file an application to this Tribunal for the discharge or modification of the covenant in the conveyance of 8 February 1972.[8]The resultant application relied upon paragraphs (a) and (c) of section 84(1) of the Act for discharge of the restriction and paragraphs (a), (aa) and (c) for its modification. In her final submissions to me, however, the applicant withdrew her application to discharge the restriction.[9]Planning permission for the continued use of the application land for the purposes of a dwelling house and for the provision of bed and breakfast accommodation was granted on 15 March 2000. That consent was granted by an inspector appointed by the Secretary of State for the Environment, Transport and the Regions. It followed an appeal by the applicant against an enforcement notice served by Doncaster Metropolitan Borough Council, alleging the unauthorised use of the property by providing bed and breakfast accommodation and was subject to the following conditions:
“(i) no more than 2 bedrooms shall be occupied at any one time by paying guests; (ii) the use for the provision of bed and breakfast accommodation shall cease unless within two months of the date of this letter 3 parking spaces (2.5m x 4.5m) have been clearly marked out within the parking area next to Bawtry Road at the western end of the road frontage; (iii) once marked out the spaces shall be used solely to provide parking for paying guests as long as the bed and breakfast use lasts and the associated manoeuvring area shall be kept free for that purpose.”
[10]At the hearing the applicant appeared in person. She gave evidence herself and called Mr C M Barnsdale, FRICS IRRV to give expert evidence. Mr Giles Maynard-Connor of Counsel appeared on behalf of the objectors. He called Mr Smith and, as an expert witness, Mr P Swindin, FRICS. On 5 September 2001, the day following the hearing, accompanied by representatives of the parties, I inspected the properties owned by the applicant and the objectors and the immediately surrounding area.[11]From the evidence and my inspection I find the following facts. The applicant has lived on the application land since December 1974, at which time her family consisted of herself, her husband and her son. Her daughter was born in April 1975. Her husband suffered a nervous breakdown in 1988 and has not worked since. She and her husband were divorced in 1990. At the present time the applicant’s son works abroad and her daughter, who has a mental disability, lives in a residential care home. The applicant has responsibility for maintaining the property and running her bed and breakfast operation alone. 4[12]During 1997 she looked into the possibility of establishing a bed and breakfast operation from her home and approached an officer of the local planning authority for advice. In a letter dated 18 April 1997, signed by the Director of Planning and Design Services, Doncaster MBC, she was advised that the use of two bedrooms to provide bed and breakfast accommodation would not constitute a material change of use and that planning permission would not be required “so long as not more than 6 persons are resident in the property and living together as a single household at any one time.”[13]On this basis, the applicant went ahead with her bed and breakfast operation. Her first guest arrived on 12 May 1998. The growth of the business, however, was slow and the number of occupied bedrooms during the first eighteen months never exceeded two. There was never any complaint from any guest.[14]In October 1998 the applicant erected an unilluminated sign reading “Ashcroft Lodge Guest House” adjacent to the grass verge of Bawtry Road. Some twelve months later she developed the small car park for her bed and breakfast guests at the southern end of her home. Neither the highway authority nor the local planning authority objected to this car park, which is largely hidden from view from the objectors’ properties.[15]Notwithstanding the letter of 18 April 1997, enforcement action was taken by the local planning authority, requiring the bed and breakfast use to cease, on 11 October 1999. The resulting appeal and deemed application for planning permission culminated in the grant of conditional planning permission referred to earlier.[16]In an effort to screen the movement of guests from the view of people in No.3, the applicant decided to use the south-facing door serving her dining room/lounge for the reception and departure of guests, rather than the main front door which faces north-east. This decision resulted in an expenditure of some £2,000, including the provision of a footpath and three low level lighting units between the car park and the door to the dining room/lounge. Meanwhile, the applicant continued to use her own front door and garage in the usual way. All four bedrooms are situated along the southern side of the applicant’s house.[17]Income from the bed and breakfast operation between 12 May 1998 and 31 May 1999 totalled £3,152, resulting in a net loss of £8,193. In the year ending 31 May 2000 the income was £15,084 and the net profit £3,461.[18]The application, as amended at the hearing, is for modification of the covenant so as to permit the implementation of the planning consent dated 15 March 2000. It is made under paragraphs (a), (aa) and (c) of section 84(1) of the Act and I shall consider each in turn. Under paragraph (a) the issue is whether: 5 “by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete.”[19]In her original application, the applicant stated that the area was entirely residential at the date the restriction was imposed. There were now within a 100 yard radius of the application land the following properties: a sewage pumping station, Roy Bollond skip hire, Parrot’s Corner nurseries, the Hare and Tortoise public house and a car body repair shop. In addition there was another bed and breakfast operation in Saxton Avenue, within a very small radius and without a private car park. In her written report the applicant also referred to the proposed Doncaster international airport. She added in oral evidence that a company search had suggested that the registered addresses of certain limited companies were at residential properties in the area. Finally, she relied on the grant of planning permission for the proposed use as an indication that the restriction was outdated, since it was based on the latest development plan, which was periodically changed to reflect the habits and philosophy of the local planning authority.[20]As Mr Maynard-Connor pointed out, the onus is on the applicant to show that the relevant requirements of section 84(1) are satisfied. In my judgment that onus has not been discharged with regard to the question of obsoleteness, for several reasons. Firstly, it is not suggested that there have been any material changes in the character of the application land itself. Secondly, it is clear that the pumping station was in existence prior to the imposition of the restriction in February 1972. Its existence today is therefore not relevant to paragraph (a). Thirdly, it is common ground that the application land and the objectors’ properties form part of one of the prime residential areas of Doncaster. Immediately to the south the character of the area changes completely, to one of largely open countryside. The Hare and Tortoise public house and Parrots Corner nurseries are both situated within that area of countryside. They are plainly in a different neighbourhood from the application land and are therefore not relevant for the purposes of paragraph (a). The same consideration applies to the bed and breakfast operation at Saxton Avenue and the proposed international airport, which are or will be situated respectively more than 1 mile and more than 2 miles away. As for the skip hire business and the body repair shop, the applicant agreed in cross-examination that both had now moved to a different location.[21]It is in my view clear that there has been no significant change in the character of the neighbourhood since the restriction was imposed even if - which has not been established by the evidence - a few properties have changed from residential use in that time. The area was largely, if not wholly of a high-class residential nature and it remains so. The fact that certain houses in the area might be the registered offices of limited companies is immaterial. The applicant was not able to identify any house which displayed a brass plate identifying the company name and she agreed that otherwise there were no visible signs of any company. In any event, this point would only be of potential relevance if the number of registered companies had increased significantly since 1972 and there was no evidence to that effect. Nor does the fact that planning consent has been granted, or the fact that the provisions of development plans are periodically updated indicate, one way or the other, whether there has been a change in the character of the neighbourhood where the application land is located. 6[22]Mr Maynard-Connor referred to Re Davis’ Application (1957) 7 P & CR 1 and Re Truman, Hanbury, Buxton and Co Ltd’s Application [1956] 1 QB 261. In Re Truman, Romer LJ said:
“… I cannot see how, on any view, the covenant can be described as obsolete, because the object of the covenant is still capable of fulfilment, and the covenant still affords a real protection to those who are entitled to enforce it.”
In the present case, I am satisfied that the object of the covenant was to create a scheme of observable regulations to govern the application land and three other properties in the immediate vicinity, with a view to maintaining their character as high quality residential dwelling houses. There is no evidence to suggest that that object can no longer be fulfilled, nor that the covenant has ceased to afford real protection to the owners of the other properties. The application under paragraph (a) therefore fails.[23]The applicant also relies on paragraph (aa). Here the issue is whether “…(in a case falling within subsection (1A) below) the continued existence [of the restriction] 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 … and an order discharging or modifying a restriction under this subsection may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award under one, but not both, of the following heads, that is to say, either -(i) a sum to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification;(ii) a sum to make up for any effect which the restriction had, at the time when it was imposed, in reducing the consideration then received for the land affected by it. (1A) 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 to persons entitled to the benefit of it any practical benefits of 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 the 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 7 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.”[24]The objectors accept that the proposed use of the application land is reasonable and that it is impeded by the covenant. In the course of her closing submissions, the applicant said that her guests brought money into the Doncaster economy, which had been declining for a long time, and that the Doncaster Metropolitan Borough Council Unitary Development Plan (the UDP) stressed the importance of the provision of a range of hotel accommodation aimed at both business and leisure tourism. She suggested that there was a shortage of the quality of accommodation that she was providing.[25]Mr Maynard-Connor objected to this late submission on the ground that the applicant had not previously suggested that, in impeding the proposed use, the covenant was contrary to the public interest. I consider that objection to have been justified. In any event, there was no evidence before me to suggest that the public interest required that bed and breakfast accommodation be provided on the application site.[26]Mr Barnsdale and Mr Swindin agreed that the values of No.3 and No.317, assuming continuation of the restrictive covenant, were £265,000 and £190,000 respectively. In his expert report, Mr Swindin expressed the view that these values would each be reduced by 7.5% if the covenant were modified in accordance with the application. In his opinion, the principal factor affecting the diminution in value was the introduction of an obtrusive business use into a quality residential area. Mr Barnsdale in his report suggested that such modification would have no effect upon the saleability or value of either property.[27]Both experts changed their original positions to a certain extent in the course of the hearing. In cross-examination, Mr Barnsdale accepted that modification would have a modest effect. It would adversely affect saleability and may well result in a lower price being achieved. In answer to a question from me, Mr Swindin agreed that the effect on value would be modest and not substantial.[28]In my judgment this evidence is insufficient, on its own, to establish that the restriction, in impeding the proposed bed and breakfast use, secures to the objectors practical benefits of substantial value to them. It is, however, also necessary, if she is to succeed, for the applicant to demonstrate that practical benefits of substantial advantage are not secured to the objectors. Mr Maynard-Connor referred to the decision of this Tribunal in Re Stevens’ Application (1963) 14 P & CR 59, where Mr Erskine Simes QC said:
“It is possible … that the possibilities of further development … might enhance its value if the proposed development took place, but as this Tribunal has more than once pointed out, the benefits conferred by a restrictive covenant need not be financial.”
[29]He also referred to Gilbert v Spoor [1983] Ch 27, where Eveleigh LJ said: 8 “The words of section 84(1A)(a), in my opinion, are used quite generally. The phrase ‘any practical benefits of substantial value or advantage to them’ is wide. The subsection does not speak of a restriction for the benefit or protection of land, which is a reasonably common phrase, but rather of a restriction which secures any practical benefits. The expression ‘any practical benefits’ is so wide that I would require very compelling considerations before I felt able to limit it in the manner contended for. When one remembers that Parliament is authorising the Lands Tribunal to take away from a person a vested right either in law or equity, it is not surprising that the Tribunal is required to consider the adverse effects upon a broad basis.”[30]The cases of Re Bass Ltd’s Application (1973) 26 P & CR 56, Re Teagle’s & Sparke’s Application (1963) 14 P & CR 68 and Re Ghey and Galton’s Application [1957] 2 QB 650 were also cited.[31]In the course of his evidence Mr Smith said that, although the bed and breakfast guests were all supposed to use the dedicated accessway and car park which had been provided for them, he estimated that twenty per cent in fact used the shared driveway and parked in the car park which was intended for the applicant’s personal use. Moreover, in the course of the previous six weeks, three cars had driven onto his property and their occupants had asked him questions about the adjoining bed and breakfast facilities. He did not suggest that such incidents were on a massive scale, but they resulted in a loss of privacy which should not be happening. He also alleged that the applicant had on numerous occasions breached the planning condition restricting the number of bedrooms used for paying guests.[32]The applicant insisted that she had at all times complied fully with condition (i) of the planning consent. She also questioned whether all the cars using the shared driveway, about which Mr Smith had complained, were in fact driven by visitors to her property.[33]I have come to the conclusion that, for present purposes, it is not necessary for me to resolve that particular dispute. If the restrictive covenant were fully observed, the common driveway could still be used by the applicant for her own vehicle and by others living with her or visiting her for theirs. As Mr Barnsdale pointed out, it was entirely possible for a family unit occupying the application land to own three cars and the covenant would not be breached if they all used the common access road. In my opinion, it is that degree of use of the joint access which should be used as the comparator when deciding whether the use alleged by Mr Smith is materially worse. For the purposes of that exercise, I shall assume in his favour that on occasions three cars arrive at the property driven by bed and breakfast guests, and that a further two vehicles also arrive, driven by relatives or friends of those guests. Even making that rather extreme assumption, based on Mr Smith’s estimate of a twenty per cent use, only one of the five vehicles would use the common access road. In my view, such a degree of use of that road by bed and breakfast guests, combined with the applicant’s own use, is no more than might reasonably be expected if the application property were used strictly as a single private residence. 9[34]It is true, of course, that this analysis disregards the use of the guests’ car park. In my view, however, such use is not relevant, since it is no part of the objectors’ case that the guests’ car park is a cause of concern to them.[35]I attach more significance to Mr Smith’s evidence that people have recently been driving onto his property at approximately fortnightly intervals to enquire about available accommodation in the adjoining house. I accept that evidence, in the light of the applicant’s own evidence that she is away from home for about twenty per cent of the time. In my view, any owner of the application property, who used it for the limited commercial use that is proposed, would probably be absent from time to time, and this would result in approaches being made by potential paying guests to the owner of No.3.[36]Mr Maynard-Connor also referred to Re Henman’s Application (1972) 23 P & CR 102 and to the following passage in the decision of this Tribunal (Mr P H Clarke FRICS) in Re Page’s Application (1996) 71 P & CR 440:
“Nevertheless, I still find that the restrictive covenant secures a valuable benefit to the objectors. This is the right to prevent further residential development on land which once formed part of the Lodge and grounds and to insist on the enforcement of a restriction, imposed on sale, in order to maintain the status quo.”
[37]I respectfully agree with that approach. Accordingly, I accept Mr Maynard-Connor’s submission that the building scheme of which the application land forms part provides an assurance to existing owners of the four houses concerned that those houses will continue to form an exclusive estate of high quality residences only. Moreover, in the light of Mr Swindin’s evidence and my own site inspection, I am satisfied that the clear evidence of a commercial use of the application land which is now manifest has an adverse effect on what would otherwise be the general perception of the locality as a high quality residential area.[38]Finally, it was submitted on behalf of the objectors that to modify the covenant as requested would represent the thin end of the wedge. If the building scheme were broken, it would become easier for the owners or proposed purchasers of any of the four houses to introduce further commercial uses. None of the evidence or submissions on behalf of the applicant suggested that that submission was unfounded and I accept it.[39]To summarise the position on ground (aa), I have found that the proposed modification of the covenant is likely to result in a modest reduction in the value of the neighbouring houses; loss of privacy by way of continued, albeit occasional, approaches to No.3 from persons enquiring about the bed and breakfast accommodation in the temporary absence of the proprietor; that the maintenance of the building scheme assures the owners of the houses to which it is subject that they will continue to live on a high quality residential estate; that the proposed use would have an adverse effect on the general perception of the area and that the proposed modification would make it easier to seek the discharge or further modification of the covenant so far as it relates to the application land and the remaining three houses. In my judgment, considering the matter on the broad basis suggested by Gilbert v Spoor, the cumulative effect of these considerations is such as to establish beyond question that, in 10 impeding the proposed use of the application land, the restriction secures to the persons entitled to the benefit of it practical benefits of substantial advantage. In the light of this finding, it is not necessary for me to determine whether money would be adequate compensation for the loss which the objectors will suffer from the modification.[40]I have not overlooked the fact that planning permission has been granted for the proposed use following a hearing at which the applicant and Mr Smith both gave evidence. The question that I must answer is, however, different from that which faced the planning inspector. In his decision letter, the inspector stated that the appeal site fell within a residential policy area defined by the UDP. That stated that within such areas “the establishment of non-residential uses of appropriate scale will be permitted provided the use would not cause unacceptable loss of residential amenity through, for example, excessive traffic noise, fumes, smells or unsightliness.” The fact that the proposed development would not cause an unacceptable loss of residential amenity, etc. for the purposes of forming such a planning judgment does not mean that the ability to prevent such a use is not a practical benefit of substantial advantage for the purposes of subsection (1A)(a).[41]As for subsection 1B, in my view the provisions of the UDP do not have the effect of removing the benefits of substantial advantage that are secured by the restriction.[42]The final ground upon which the applicant relies is paragraph (c). If she is to succeed under this provision, the Tribunal must be satisfied “that the proposed modification will not injure the persons entitled to the benefit of the restriction.”[43]It follows from my finding on paragraph (aa) that the proposed modification would cause such injury in various ways. Accordingly, the requirements of paragraph (c) are not satisfied.[44]As the applicant has not succeeded in establishing any of the grounds relied upon, I have no jurisdiction to modify the restriction and I dismiss the application. It is therefore not necessary for me to exercise the general discretion that the Tribunal has in such proceedings. Were it necessary, I would have had regard to three matters among others. The first is that, if the application were granted, the proposed use of the application land would still be in breach of a covenant contained in a conveyance dated 7 April 1920, which restricts its use to a private dwellinghouse and usual outoffices. Although the objectors to the current application do not have the benefit of that covenant, the appellant indicated that she was aware of the identity of the company which did. She has, however, made no application for the modification of that covenant, which relates to an area which includes the application land and Nos. 3,5 and 317. I consider that those entitled to the benefit of that covenant would be prejudiced if the present application were granted, and that decision made inroads into a scheme of covenants that had hitherto been unbroken. That factor points against the exercise 11 of my discretion. Two factors pointing in favour are, firstly, the fact that the applicant is a single lady, seeking to earn a living following a divorce and, secondly, the fact that she has taken steps to minimise disturbance to her neighbours, by providing a separate access door and car park for the use of her bed and breakfast guests.[45]A letter on costs accompanies this decision, which will take effect when, but not until, the question of costs is decided. Dated: 25 September 2001 (Signed) N J Rose ADDENDUM[46]I have received written submissions from the parties on costs.[47]The objectors ask for their costs. They submit that the general rule that an unsuccessful party will be ordered to pay the costs of a successful party should be followed in this case, since the applicant’s application was dismissed on every ground relied upon. Moreover, the hearing was conducted on the basis that the applicant was seeking a discharge or modification of the covenant and the application to discharge was not withdrawn until the applicant’s final submissions. Thus, the objectors have been forced to incur costs in contesting the application and their objections have been fully vindicated. The objectors also refer to the applicant’s decision to change representatives and experts and the late submission of evidence which resulted in the objectors incurring further expenses.[48]The applicant suggests that each party should be responsible for its own costs. She says that she is not in a financial position to pay the costs incurred by the objectors. She alleges that Mr Smith brought the proceedings against her (presumably, the application for an injunction) knowing that it would be a costly exercise. She also questions why he waited so long and incurred more costs.[49]The applicant says that her only income is now from two rental properties, purchased with the proceeds of her divorce settlement. In the year ended 5 April 2001 these produced a net income of only £4,530. She still owes the Legal Aid Board £6,500 as a result of her divorce settlement in 1997, which came 7 years after her divorce absolute. This debt is charged against her property. By contrast, she suggests that Mr Smith is a wealthy man and can easily absorb his costs. 12[50]The objectors’ opposition to the application has been successful and I do not consider there is any reason why they should be deprived of their costs. If, as the applicant suggests, the objectors’ costs have been increased unnecessarily, that is a matter to be reflected in the assessment of costs. If, as she also suggests, she would find difficulty in meeting a liability for the objectors’ costs, that is a matter that might be relevant to how those costs are to be paid.[51]Accordingly, I order that the objectors shall recover their costs of the application from the applicant. Such costs are to be agreed or, in default of agreement, assessed on the standard basis by the Registrar of the Lands Tribunal in accordance with the Civil Procedure Rules. Dated: (Signed) N J Rose 13