FELTON HOMES LIMITED LP/3/2003

UPPER TRIBUNAL

LANDS CHAMBER

LP/3/2003

Case No LP/3/2003

Between

FELTON HOMES LIMITEDApplicant

Before

N J Rose FRICS

Richard Lander (instructed by Mr C M Brand, solicitor, of Heswall) for Applicant

Nicholas Riddle (instructed by Hill Dickinson, solicitors, of Liverpool) for Objector

Venue Merseyside Valuation Tribunal, 2nd Floor, Cunard Building, Pier Head

Date 20 October 2004

Hearing 19 and 20 October 2004

Property: “Farnley”,, 3 Croft Drive West,, Caldy,, Wirral,, Merseyside, CH48 2JQ

Catchwords: RESTRICTIVE COVENANT – modification – discharge – restriction limiting development on plot to one dwellinghouse – application to amend to permit dormer bungalow in rear garden – no interference with objectors’ amenities – change in character of estate as some areas developed to greater density – many covenants on estate no longer enforceable – whether restriction obsolete – whether grant of application would result in break-down in system of covenants – Law of Property Act 1925, s.84(1)(a)(aa)(c).

[1]This is an application by Felton Homes Limited (the applicant) under section 84 of the Law of Property Act 1925 (the Act), seeking the modification or discharge of three restrictive covenants affecting freehold land containing a dwellinghouse known as “Farnley”, 3 Croft Drive West, Caldy, Wirral, Merseyside, CH48 2JQ (the application land) so as to permit the erection of a detached dormer bungalow on part of the rear garden.

[2]The restrictions in question were imposed in a conveyance of the application land dated 4 March 1960 by The Caldy Manor Estate Limited (CMEL) to Eric Charles Sweeting. The conveyance contained, among others, the following covenants by the purchaser: “(a) No shops or any erections other than one private dwellinghouse with its necessary outbuildings shall be built upon the said land or any part thereof (b) such dwellinghouse shall be detached with a floor area of at least one thousand five hundred feet super exclusive of garage and erected within eighteen months from the date hereof and shall have the land hereby conveyed attached appurtenant and exclusively belonging to it … (d) the said dwellinghouse (with its offices appurtenances and land) shall be used as one private residence only and shall not be used for the letting of apartments and no part thereof shall be let or sub-let or used separately from the whole … (g) no building shall be commenced on the said land without plans showing the site of the proposed building with sections and elevations thereof having been first submitted to and approved in writing by the Vendors or their architect or surveyor for the time being and all such buildings such be in conformity with such plans and a fee of three pounds three shillings shall be payable to the Vendors for such approval of plans and elevations”.

[3]On 7 January 2000 outline planning consent was granted for the construction of a detached dormer bungalow in the rear garden of the application land subject to reserved matters. The reserved matters were approved on 31 March 2000. The applicant now seeks the modification of covenant (a) to read “No shops or any erections other than two private dwellinghouses with their necessary outbuildings shall be built upon the said land or any part thereof”. It also seeks the consequential discharge of covenants (b), (d) and (g). In the course of the hearing it was agreed that covenant (g) was unenforceable, CMEL having been dissolved on 11 November 1985. 3

[4]Mr Richard Lander of counsel appeared on behalf of the applicant. He called Ms Wendy Grundy, development director of the applicant, as a witness of fact. He also called one expert witness, Mr P J Hitchcock, MA, FRICS, a partner in Messrs Hitchcock Wright and Partners of Liverpool.

[5]The objections were led by Mr and Mrs Barry Holland of Butts Mead, 6 East Farm Mews, Caldy. Mr Holland gave factual evidences on behalf of himself, his wife and the remaining objectors, each of whom lives in Caldy. They are Nigel and Jan Dowd (Westwinds, The Steeple), Colin and Christine Langford (Ailsa Craig, 3 The Steeple), Mr S M Gibson (20 Mereworth), Richard and Toni Camilleri (2 Heatherleigh), Stephen and Anita Lansdown (1 Meadowgate), Philip and Josephine Ratcliffe (Bancroft, 33 Barton Hey Drive), Christopher Glyn Jones (15 Barton Hey Drive) and Jennifer Yvonne Jones (4 Jellicoe Close). It is agreed that all these objectors are entitled to the benefit of the restrictions. Mr Nicholas Riddle of counsel appeared for Mr and Mrs Holland. In addition to Mr Holland he called, as expert witness, Mr C C Hubbard, BSc, FRICS, managing partner of Messrs Edmund Kirby of Liverpool and elsewhere. Mr Langford and Mrs Ratcliffe gave evidence briefly towards the end of the hearing and were cross-examined. Following the hearing, on the afternoon of 20 October 2004, I inspected the application land accompanied by the two expert witnesses. Facts

[6]Mr Hitchcock and Mr Hubbard prepared a statement of agreed facts, in the light of which I find the following facts. The Caldy Manor estate comprises an area of land of approximately 243 hectares (600 acres) which was formerly held with Caldy Manor by Caldy Manor Estate Ltd (CMEL). That company acquired the area in 1906. Since 1906, the estate has been progressively developed for housing, with plots being sold off by CMEL for development. It now comprises about 464 dwellings and 9 apartments in the former Caldy Manor. On disposal of individual plots CMEL imposed restrictive covenants. These typically, but not always, were on the following terms: “No shops or any erections other than one private dwellinghouse with its necessary outbuildings shall be built upon the land or any part thereof” (in some instances more than one dwellinghouse was permitted or a separate lodge was permitted)… “the said dwellinghouse (with the offices appurtenances and land) shall be used as one private residence only and shall not be used for the letting of apartments and no part thereof shall be let or sublet or used separately from the whole. Such house shall be detached and set back at least 15 yards from any road abutting thereon and the said house shall be of the yearly rental value of £ - / shall be not less than 1,500 feet super”… (this is an example, a variety of wording was used to describe the scale, nature and value of the houses to be built). Typically, the plans for any buildings were subject to approval by CMEL.

[7]Caldy is on the west side of the Wirral peninsula and is developed around the old village and manor which dates from the late 17th century. It is located about a mile to the south of West Kirby at which the Merseyrail system terminates. It is about 3 miles south of Hoylake 4 and 6 miles west of Birkenhead. Liverpool city centre is about 8 miles to the east and the city of Chester lies about 17 miles to the south east. The tidal Dee estuary marks the western boundary of the Caldy estate, while the (approximately) eastern boundary is provided by the A540 Chester to West Kirby trunk road, known here as Column Road in its northern section and Telegraph Road in the southern section. To the north west, the estate is bounded by the National Trust property known as Caldy Hill. The southern boundary line runs from the A540 to the coast across open country.

[8]The estate today is virtually fully developed. Development from 1906 to the late 1960s was by way of disposal of individual plots, in most instances for the purposes of the construction of single dwellings. The application land was one of the last plots to be sold. Disposals from 1969 onwards were in large parcels to housing developers.

[9]The pattern of restrictive covenants changed when the areas known as The Green and Gleneagles were disposed of by CMEL. In particular, the area known as Gleneagles is subject to building schemes.

[10]The application land is located towards the western edge of the estate. The plot has a frontage of about 34m to Croft Drive West, a depth of about 91m and an area of about 3,096m2. “Farnley” is a brick built detached house with a double garage, erected in the early 1960s and set back about 15m from Croft Drive West. Title documentation from HM Land Registry shows the title to the application land now split into two plots. One includes the existing house and the other covers the rear section of the plot and provides for a drive between 1 and 3 Croft Drive West. An existing access is available to the proposed drive. Ground (a)

[11]The application is made under paragraphs (a), (aa), (b) and (c) of section 84(1) of the Act, although the applicant did not proceed with (b). I shall consider each of the remaining paragraphs in turn. Under ground (a) the issue is whether “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.”

[12]Mr Hitchcock considered that the whole of Caldy, being a distinct residential area, should be considered as the neighbourhood of the application land. Prior to its dissolution in 1985 CMEL disposed of properties in a way which had produced two different patterns of development in Caldy. Firstly, there were the areas of piecemeal development where disposals took place in individual parcels of land over many years during the period up to about 1960. The application land was among the last of such disposals. Secondly, other much larger areas had been developed following comparatively recent disposals to developers. These areas included Gleneagles and The Green which had been developed during the last 30 years or so. Within these areas, to which Mr Hitchcock referred as “building scheme areas”, the plot sizes 5 were much smaller, typically around one quarter of an acre or less. All the objectors’ properties were situated within the Gleneagles area, apart from that of Mr and Mrs Holland.

[13]The covenants affecting the application land were in substantially similar terms to those imposed from 1907 onwards by the then landowners. The covenants of that period could be considered obsolete in view of the changing social and market conditions which had led to an ongoing trend for smaller plot sizes in residential areas. Factors which had contributed to this change included the high price of land, planning restrictions and a market preference for smaller gardens with the associated reduced maintenance responsibilities. This trend was illustrated in the neighbourhood in a number of instances, but particularly at Gleneagles. Development in this area and in other areas appeared to involve a regime of restrictive covenants different from those relevant to the individual disposals from 1907 to 1960. Indeed, CMEL did not consider it necessary themselves to control the density of development in these areas when they sold them to developers. Subsequently, development at Gleneagles had produced plot sizes typically between one-third and one-eighth of an acre.

[14]The trend towards smaller plots in Caldy had been recognised by the Lands Tribunal which made a consent order in 1972, modifying restrictive covenants on land at Inglewood, Caldy Road to enable detached dwellinghouses to be erected on plots of three-quarters of an acre on part of the land and half an acre on part. Most of the residential development enabled by this order now fronted onto Caldy Chase Drive, where the plot sizes were typically about half an acre. Nineteen dwellinghouses were permitted by the order, where only eleven had been allowed before.

[15]In recent years there had been a trend towards selling off and developing smaller plots subdivided from larger areas and including some tandem developments. Most noticeably 1 Croft Drive West, immediately adjoining the application land, had been sub-divided and developed with an additional dwelling to the rear fronting Croft Drive. In addition, Mr Hitchcock identified a number of properties which did not have their own full road frontage and which were approached via private driveways running alongside other properties.

[16]Mr Lander submitted that the changes in the development pattern at Caldy which had occurred since the application land was sold in 1960 meant that the original principle of one house per large plot could no longer be achieved in its entirety, because Caldy was now an area of mixed properties. Apart from the owners of the very small number of plots sold after the application land – who had not objected – those entitled to the benefit of the covenant did not own houses on large plots of the type initially developed in Caldy which the covenant was intended to achieve, namely individual houses on large plots. The purpose of the covenant was not to provide a right to those – including all the objectors – who lived in more modest properties within Caldy to restrict the density of development in other areas of the village.

[17]Mr Hubbard concluded from the nature of the covenants imposed by CMEL that that company’s intention had been to create a popular and desirable residential area, optimising property values and offering a high environmental quality. He considered that the approach adopted to development of the estate had been very successful in achieving the original 6 objectives and the covenants had, with very few exceptions, been maintained. Caldy was now renowned in the region as a most desirable residential neighbourhood.

[18]Single detached dwellinghouses on plots of about 3,000m2 (the application land is 3,096m2) remained very popular and would sell readily for owner occupation at good prices. Since the parcelling of land in Caldy for sale was initiated in 1907 there had been a number of different phases of disposals. Development of each of these phases had generally followed particular patterns. Mr Hubbard produced a plan on which he had identified eight such areas, six of which had been developed for residential purposes. The application land fell within an area which he termed “Croft Drives”. In Mr Hubbard’s opinion there had been no significant change in the character of the general neighbourhood of the Caldy Manor estate, or of the Croft Drives area, since the restrictive covenants were imposed in 1960 to suggest that the restrictions were obsolete. They continued to constitute a quite effective way of preserving the special character and nature of the Caldy estate, which was one essentially of a low density area of good quality housing. Whilst there had been an increased density on more recently developed areas, the application land was situated in a section of the estate developed primarily in the 1920s and 1930s and characterised by plots of between 3,000m2 and 4,000m2. The current density was crucial to the character of the area that the covenants sought to protect. The wide frontages to this section of Croft Drive West were also an important part of that character. The average plot frontage to this section of Croft Drive West was about 37m. The whole nature of the Caldy estate was such that different densities were appropriate in different sections of the estate and the current application should be considered in that context.

[19]Mr Hitchcock considered that the neighbourhood which must be considered for the purposes of ground (a) was the whole of Caldy. Mr Hubbard did not disagree with that view and I accept it.

[20]Mr Lander submitted that the purpose of the restrictions was to maintain Caldy as an area of individual properties on large plots. Mr Riddle, on the other hand, submitted that the purpose was the more general one suggested by Mr Hubbard, namely the creation of a desirable residential area, optimising property values and offering a high environmental quality. Although the position is not clear-cut, in my judgment Mr Lander’s submission on this issue is to be preferred.

[21]Mr Lander further submitted that the neighbourhood of Caldy had changed from a high class residential area, almost entirely consisting of large private detached houses on large plots, to a high class residential area consisting of a variety of different types and sizes of private houses on different types and sizes of plots. Mr Riddle’s submission on this issue was that the changes in the character of the neighbourhood were of little significance. As Mr Hubbard had explained, Caldy could be divided into several discrete areas of distinctive character. All the development had been engineered so as to preserve high standards in the area being developed. Although the types of development had differed from area to area, there had been no pattern of allowing an area which had been developed in a particular way to acquire a different character by subsequent development of a kind alien to that area. 7

[22]On the evidence I find that there has been a significant change in the character of the neighbourhood since 1960, in the manner suggested by Mr Lander. It is therefore necessary to consider whether these changes mean that the restrictions ought to be deemed obsolete.

[23]A restrictive covenant is obsolete if its object is no longer capable of fulfilment (see Truman, Hanbury, Buxton and Co Limited’s Application

[1956] 1 QB 261

). The question, therefore, is whether the change in the high class residential character of Caldy, from one consisting mainly of detached houses on large plots to a variety of house types on different sizes and types of plots, means that the original purpose of the covenants can no longer be served. That purpose, as I have found, was to maintain Caldy as an area of individual properties on large plots. The answer to that question, in my judgment, is to be found by considering two of the six developed housing areas into which Mr Hubbard divided Caldy. (His total of eight areas included two used for a variety of recreational and agricultural purposes). The first area, which he termed King’s Drive/Caldy Road, consists of the developed lands and the National Trust land to the north of Caldy Road, fronting either King’s Drive or Caldy Road and a section to the south of Caldy Road. The second area, which Mr Hubbard described as Croft Drives, comprises the developed and some undeveloped lands fronting Croft Drive West, Croft Drive and Croft Drive East up to shortly before the junction with Links Hey Road. It includes the application land. King’s Drive/Caldy Road contains 70 plots ranging from 717m2 to 10,035m2. The average plot size is 4,244m2. Croft Drives contains 86 plots of between 492m2 and 14,070m2, with the average being 3,618m2.

[24]Thus, in these two areas of Caldy, accounting for approximately a third of the total residential units on the estate, the restrictions have ensured that the average plot size is larger than the application land, which itself is of a size which was considered acceptable in 1960. It may be that, at some future date, sub-divisions of the existing plots in Croft Drives and King’s Drive/Caldy Road will have taken place in such numbers that those areas could no longer be said to be characterised by detached houses on large plots. In that connection, Mr Lander was in my judgment right to suggest that, since many of the old covenants on the estate did not contain any reference to benefited land, they were no longer enforceable (see Crest Nicholson Residential (South) Limited v McAllister

[2004] 1 WLR 2409

, considered at greater length later in this decision). The question of obsoleteness, however, falls to be considered as at the date of this decision. At that date I am satisfied that, in a significant part of Caldy, including the area in which the application land is situated, the restrictions are still serving their original purpose. They are therefore not obsolete and the application under ground (a) fails. Ground (aa)

[25]Under ground (aa) the issue is whether the Tribunal is satisfied “that (in a case falling within subsection (1A) below) the continued existence thereof 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… (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 – 8(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 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.”

[26]It is agreed that the proposed development would constitute a reasonable user of the application site for a private purpose and that it is impeded by the continued existence of the restrictions. The applicant does not suggest that any question of public interest arises. The issues between the parties are whether the continued existence of the restrictions secures to the objectors any practical benefit of substantial value or advantage to them and, if not, whether money would provide adequate compensation.

[27]Mr Hitchcock did not believe that the restrictive covenants secured any benefit of substantial value or advantage to the objectors. The proposed development on the application land would not result in any material change to the street scene in Caldy, since there would be no new road access and the new dwelling would be barely visible behind the existing dwelling. The plot sizes of the new dwelling and the retained dwelling would be similar to, and in keeping with the plot sizes of many of the modern houses in Caldy, including those in Gleneagles. In addition, the immediately adjoining property, 1 Croft Drive West, had been subdivided into two plots, each of approximately 0.4 acres, pursuant to a planning permission granted in 1988.

[28]Mr Hitchcock gave details of another ten properties, which he said showed a trend in recent years of selling off and developing smaller plots sub-divided from larger areas and including some tandem developments.

[29]Mr Hitchcock also referred to the policies for the Caldy conservation area contained in the Wirral Unitary Development Plan (UDP). The conservation area was designated in October 1974, although its boundaries had subsequently been changed. The principal planning objectives for this area were stated to be to:

“(i) retain the character of a low density, maturely landscaped suburb with substantial houses in large grounds; (ii) retain the unifying features of design, layout and building materials within the old village core; 9 (iii) preserve the unity of strongly enclosed boundary treatment incorporating high walls, dense landscaping or dark-stained, close-boarded, timber fences in the area outside the old village core; and (iv) preserve, wherever practicable, views of the Dee estuary and of the North Wales coast beyond. Only primarily residential uses will be permitted within this Area.”

[30]The reasoned justification for this policy included the following statement:

“The development of the wider area was first regulated by the owning control of the Caldy Manor Estate Company, but has latterly been regulated through design and density controls applied by the Local Planning Authority. Policy CH11, therefore, provides for these controls to be maintained in order to respect the established architectural and landscape standards elsewhere within the estate.”

[31]In the course of cross-examination Mr Hitchcock accepted that the various types of development that had taken place in Caldy had contributed to the charm and amenity of the area and that the restrictive covenants had had a big influence in making Caldy such a desirable place in which to live.

[32]Mr Holland said that he was the founder chairman of the Caldy Society, elected to that position on the Society’s formation in September 1985, and continuing as Chairman ever since. Prior to its dissolution in 1985, or at least until the resolution to wind it up in 1979, CMEL had been active in preserving the Caldy area. The Society was formed shortly after the dissolution of CMEL, principally for the purpose of replacing CMEL in the role it had previously taken regarding the maintenance and preservation of the quality of the area.

[33]From the time of the formation of the Society until 1996 the Society concentrated its efforts concerning the maintenance and preservation of the village on planning control. The members of the committee and, he believed, the residents, were under the impression that the planning system ought to be sufficient to preserve the village. They were influenced in this by the fact that Caldy was a conservation area and much of the village was subject to planning controls requiring a normal minimum of one acre of land on each house site. In addition, it was felt to be distasteful to consider legal action if it could be avoided. They therefore tried to fulfil the aims of the Society by using the planning system.

[34]The results were disappointing and he could see that pressures to develop Caldy were increasing and planning control did not seem to be adequate to meet the residents’ wishes. Matters came to a head in 1996 when the local planning authority gave planning consent for the erection of two dwellinghouses on land (until then unbuilt on) beside and behind a house called The Malverns in Croft Drive East. The Society had previously been under the impression that dwellinghouses would not be allowed in this area unless they had the minimum of approximately one acre of land attached to them, but the planning permission for two houses on the second plot of the Malverns breached this. 10

[35]At this point the Society decided it could no longer rely solely on planning. It sought legal advice and, as a result of correspondence between the respective solicitors, the owners of The Malverns did not proceed with their previous intention to breach the covenants by building two extra dwellinghouses. They built one dwellinghouse only on the undeveloped land. Nevertheless, because of the position of the two existing houses on the site, the residents and Mr Holland were fearful that a breach might occur in the future if the system of covenants should show signs of breaking down.

[36]Since the Society first sought legal advice in 1996 concerning. The Malverns there had been five extraordinary general meetings of the Society exclusively given over to a consideration of the covenants. The last three meetings in April and June 2003 and October 2004 were principally concerned with the application land.

[37]The meeting on 3 June 2003 was attended by approximately 125 local residents and there was extensive discussion of the proposed discharge/modification. Strong views were expressed and all residents who spoke expressed concern that the proposal was damaging to the area. The fact that near neighbours were prevented from objecting because of the dates of their conveyances from CMEL was discussed, as was the need to rely on other objectors who derived their title from later conveyances from CMEL. Those present considered the proposal constituted a very dangerous precedent. The meeting resolved unanimously that the Society should support the objectors and a financial appeal was launched and supported enthusiastically.

[38]Since that meeting Mr Holland had heard numerous residents express great concern over the proposed changes to the covenants affecting the application land. Everyone to whom he had spoken in any detail on the topic considered the proposed changes to be a total transformation of those covenants. Most local residents believed that the most important covenants on virtually all the Caldy properties were those allowing only one dwellinghouse per plot and preventing commercial use.

[39]There were approximately 150 subscribing members of the Society, all of whom lived within Caldy. Since 1996 each of the five general meetings had either unanimously or overwhelmingly approved the Society’s proposals for enforcing the general scheme of covenants and the particular covenants concerned, either in relation to The Malverns or latterly to the application land. He did not recall one single person voting against enforcement at any of the five extraordinary general meetings that he had chaired.

[40]In the course of cross-examination Mr Holland accepted that his property was located on the edge of Caldy village, about one mile from the application land; that the development proposed by the applicant would have no physical impact on his property; that approximately 12 plots had been sold individually after the covenants were imposed on the application land and that not one of the owners of those plots had objected to the application although they were entitled to do so; that no objections had been made by the owners of properties in The Green; that only a limited number of objections had been received from Gleneagles and only one from East Farm Mews, although the owners of all properties in those three locations were entitled to 11 object; and that there had been a number of breaches of the scheme of covenants, in some cases without attracting any protest from the Society.

[41]In his two expert reports, Mr Hubbard commented on various developments which had occurred in breach of the restrictive covenants on the estate or pursuant to deeds of modification or release granted by CMEL. He concluded that CMEL had adopted a consistent approach, which did not demonstrate any intention to abandon or amend the general scheme of covenants and the levels of density of development considered appropriate for the various areas of the estate, and that the limited number of unauthorised breaches did not undermine the integrity of the system of covenants.

[42]In his closing submissions Mr Lander argued that what he termed the objectors’ “thin end of the wedge” argument was misconceived, for two reasons. Firstly, so far as the integrity of the scheme of covenants was concerned, the thin end of the wedge had been reached and passed a long time ago. Secondly, the present case would not set a valuable precedent for future cases. The uniformity of development of individual houses on substantial plots in Caldy had already gone, because the pattern and density of development had changed significantly after the sale of the application land and there had already been a number of developments in the older parts of Caldy which did not conform to the original one property, one plot principle. The uniformity of the scheme of covenants throughout Caldy had already gone, because the latter developments were not subject to a similar scheme of covenants. Furthermore, Crest Nicholson meant that a large proportion of the Caldy covenants were no longer enforceable and there was therefore no longer an intact or virtually intact scheme of covenants in Caldy as a whole. As for the suggestion that the present case would set a precedent, there was no evidence that there were other applications waiting to be made. There had already been a number of sub-divisions of plots and tandem developments, some in breach of covenant, some following consensual modification of the covenant and some not involving a breach of covenant at all. Yet there was no evidence of the floodgates opening as a result of these developments.

[43]Moreover, Caldy was subject to a strict planning regime. There was no evidence to suggest that there was any realistic prospect of planning requirements for Caldy being relaxed in the future.

[44]The fact that the covenant in this case did not secure practical benefits did not mean that it would not do so in other cases. Any subsequent developer would have to seek release or modification of the covenants, and each case would fall to be considered on its own merits.

[45]Furthermore, since it was agreed that the character of Caldy had not been adversely affected by the Gleneagles development or any of the other developments which did not correspond with the old covenants, it was impossible to argue that the present proposal would do so. So far as the potential precedent was concerned, the present case was most unusual in that the history of disposals by CMEL had resulted in a situation whereby there were no properties in the immediate area of the application land which could have the benefit of the restrictive covenants. 12

[46]The three objectors who gave evidence made it clear that their concern was that, if the present application succeeded, it would form a precedent which could lead to the collapse of the general system of covenants in Caldy. Before I state my conclusions as to whether that concern is justified, I should deal with two matters upon which importance was placed by one or other of the parties. The first arises from the fact that a large number of people were present at the commencement of the hearing to support the objectors, who were not objectors themselves. Mr Riddle submitted that it was proper for the Tribunal to take into account the views of the numerous other residents who, in consequence of the nature of the system, did not have the benefit of these particular covenants but who had expressed their wish that the system should be preserved. Although they could not formally object to the application, the strength and sincerity of their views demonstrated the correctness of the assertion made on behalf of those who were objectors that there was in existence a working system of covenants that was producing desirable results.

[47]I do not accept that submission. Section 84(3A) of the Act makes provision for directions as to who are to be “admitted (as appearing to be entitled to the benefit of the restriction) to oppose the application”. To give those not entitled to the benefit of the covenants a voice in any application would run counter to that provision. Indeed, in the present case such directions were given under section 84(3A) and a preliminary hearing was due to take place. The applicant then consented to the admission of the current objectors, plus one who withdrew shortly thereafter and another who withdrew more recently. It would in my judgment be perverse to refuse to allow persons not entitled to the benefit of the covenants to oppose the application and then take into account their interests in determining the application. Moreover, it would be contrary to the principles of natural justice to take into account the interests of those whose “evidence” was not given on oath and could not be challenged.

[48]Similarly, the Caldy Society is not a body which has any standing in these proceedings. I therefore discount the evidence of Mr Holland and Mr Hubbard, insofar as they purported to speak for the Society.

[49]The second preliminary matter is this. Mr Lander pointed out that those entitled to the benefit of the covenant (save for the owners of the few plots sold after the application land – who had not objected) did not own the individual houses on large plots of the type initially developed at Caldy. He submitted that the purpose of the covenant was not to provide a right to those in more modest properties within Caldy to restrict density in other areas. I accept that submission. My findings as to the purpose of the covenant have been stated in paragraph 20 above. The question I have to decide, however, is whether the restriction secures practical benefits, irrespective of whether or not those benefits were originally intended.

[50]As I have mentioned, the application land forms part of an area, which Mr Hubbard described as Croft Drives, which contains 86 plots averaging 3,618m2. That average is consistent with the plot size which CMEL had in mind for Caldy as a whole when the restriction was imposed, and it is the result of the scheme of restrictive covenants, with limited exceptions, having been enforced. A similar situation exists in the area described as King’s Drive/Caldy Road, where plot sizes currently average 4,244m2. It is true that a substantial number of the covenants in both areas are not enforceable, because they do not clearly define 13 the benefited land. But that has not in practice yet led to a significant break-down of the density restrictions. In Crest Nicholson, Chadwick LJ said:

“In its later decision in the Federated Homes case [1980] 1 WLR 594 this court held that the provisions of section 78 of the 1925 Act had made it unnecessary to state, in the conveyance, that the covenant was to be enforceable by persons deriving title under the covenantee or under his successors in title and the owner or occupier of the land intended to be benefited, or that the covenant was to run with the land intended to be benefited; but there is nothing in that case which suggests that it is no longer necessary that the land which is intended to be benefited should be so defined that it is easily ascertainable. In my view, that requirement, identified in Marquess of Zetland v Driver [1939] Ch 1 remains a necessary condition for annexation.”

[51]Thus, the specified densities in two areas of Caldy – which account for about one-third of the total residential units in the village – have, with a limited number of exceptions by way of authorised or unauthorised developments, been maintained over many decades despite the fact that, at least since the judgment of the Court of Appeal in Zetland v Driver in 1939, many of the covenants which imposed those restrictions had been technically unenforceable. It is quite possible that, at some future date, unenforceability will result in developments taking place in Croft Drives and Kings Drive/Caldy Road which change the nature of those areas, so that they are no longer characterised by single houses on large plots. Until that happens, the scheme of covenants in these areas will in my judgment continue to contribute to the charm of Caldy, to the benefit of all its inhabitants, including the objectors.

[52]I should add that, after Mr Holland had completed his evidence, I asked the experts to prepare a schedule showing, in respect of each of the remaining properties in Croft Drive West, the neighbours in the immediate vicinity who would be entitled to object to a proposal to modify the restrictive covenant so as to permit tandem development. The purpose of this request was to ascertain whether the applicant was justified in arguing that the present case would not establish a precedent, because the adverse effects on the amenities of those neighbouring properties would be real, in contrast to the present case, where the objectors’ properties would suffer no such problems. The experts were unable to agree the appropriate heading to be given to part of the schedule. In particular, whereas Mr Hubbard referred to the neighbouring plots as being “entitled to object to a breach development proposal”, Mr Hitchcock referred to the “ostensible right of various owners to object”. Since I have found that a significant number of covenants in the area are unenforceable, I prefer Mr Hitchcock’s suggestion. I am indebted to the experts for responding to my request with the same attention to detail that they displayed in preparing and giving their evidence. In the event, however, the difference between them on this point is not relevant to my decision, in view of the conclusion I have reached that there is an effective system of covenants in Caldy which would be threatened if the current application were successful and the control of density of development left entirely to the local planning authority.

[53]I therefore find that the objectors’ concerns are well-founded and that, in impeding the proposed development, the relevant restrictions secure to those entitled to the benefit of them, practical benefits of substantial value or advantage to them. The application under ground (aa) therefore fails. 14 Ground (c)

[54]The issue under para (c) is whether the Tribunal is satisfied “that the proposed discharge on modification will not injure the persons entitled to the benefit of the restriction.”

[55]In view of my conclusions on ground (aa), it is clear that the proposed modification or discharge would injure the objectors. Ground (c) is therefore not made out.

[56]Since the applicant has not succeeded in establishing any of the grounds relied upon, the application is dismissed. The parties are now invited to make submissions as to costs, and a letter relating to this accompanies this decision. This decision will take effect when, but not until, the question of costs has been determined. Dated 2 December 2004 N J Rose FRICS Addendum I have received written submissions on costs.

[58]The objectors, Mr and Mrs Holland, ask for their costs, to be assessed on the standard basis. The general rule is that the successful party ought to receive its costs. The Hollands, who in practice led the opposition to the application, were the successful parties on all the substantive issues and should obtain their costs.

[59]The applicant submits that there are substantial grounds for departing from the general rule. Firstly, Mr Holland was responsible for the publication of a newsletter by the Caldy Society in July 2003, which sought contributions of £100 per household by way of non- returnable gift to the Society. As a result of the donation of funds to the Caldy Society for the express purpose of funding the expenses of Mr Holland, the applicant submits that Mr Holland has either not incurred costs or, alternatively, that such costs as have been incurred should be reduced by the amount received by way of gift to the Caldy Society. 15

[60]Secondly, the applicant submits that the conduct of the matter on behalf of Mr Holland was such that it would be inappropriate to exercise the discretion to make an award of costs in his favour. His solicitor failed to respond to the applicant’s solicitor’s request to provide leading counsel’s advice on the enforceability of the restrictive covenants at Caldy; failed to provide information in reply to a written request on 20 January 2004 for details of witnesses to be called at the hearing apart from Mr Hubbard; did not disclose the intention to call Mr Holland until 6 October 2004; did not make available Mr Holland’s 52 page witness statement until 3 pm on the day before the hearing; neglected to reply to the Registrar’s listing questionnaire for nearly six weeks and then provided an incomplete account of unavailable dates, resulting in a substantial delay in the hearing; and failed to send the other objectors a copy of the applicant’s letter dated 23 September 2004, offering to settle without prejudice save as to costs. Moreover, Mr Holland unreasonably refused to accept that offer.

[61]Thirdly, copies of all 450 registered titles in Caldy were submitted by Mr Hubbard. It was not necessary to compile details of all such titles, very few of which were expressly referred to by Mr Hubbard; it was unnecessary to submit details of titles in the Gleneagles area, other than in relation to the objectors’ properties and it would have been sufficient to illustrate, by way of a small number of examples, the restrictive covenants affecting other properties. Consequently, the applicant was put to the unnecessary expense of perusing every title. Furthermore, the plan originally produced by Mr Hubbard which cross-referred to his title documentation was replaced by another plan, causing the applicant to incur additional expenses in verifying the details of both plans.

[62]The applicant submits that in view of the funding secured from the Caldy Society and the conduct of the matter by or on behalf of Mr Holland, no award of costs should be made. Alternatively, if costs are awarded in favour of Mr Holland, they should be reduced in view of the funding received by the Caldy Society and the conduct of the matter by or on behalf of Mr Holland. The applicant also asks the Tribunal to exercise its discretion to award costs in its favour, in view of Mr Holland’s unsuccessful application for an extension of time for making objections by 17 potential objectors and the unnecessary work carried out by the applicant as a result of excessively detailed evidence of registered titles.

[63]It is agreed that Mr and Mrs Holland should pay the costs of and incidental to the application for an extension of time. With that exception, I do not consider that there is any good reason to depart from the general rule that Mr and Mrs Holland, being successful parties, should receive their costs. The reasons for this conclusion are as follows. The donations to the Caldy Society were made on the basis that, if Mr and Mrs Holland were successful and obtained an order for costs, the surplus funds would be used to finance the defence of future attacks on the covenants. In my judgment, it cannot properly be said that the Hollands did not incur costs merely because they were assisted in funding those costs, during the period before a costs order was made, out of funds provided on that basis. The advice from leading counsel which the applicants’ solicitors asked to see was privileged material and therefore not disclosable. Although it would have been helpful for the Holland’s solicitors to have provided a copy of Mr Holland’s witness statement at a much earlier stage, no direction had been given by or sought from the Tribunal as to the prior disclosure of such statements, the point was not raised by the applicant at the hearing and no prejudice to the applicant has been identified. The delay in responding to the listing questionnaire, whilst regrettable, cannot be said to have 16 increased the costs of the proceedings. The suggestion that a hearing could have been avoided if the Hollands’ solicitors had circulated the letter of 23 September 2004 is unfounded. The terms of settlement proposed were that all the objectors should withdraw their objections. The Hollands were certainly not prepared to do so, and a hearing would have been inevitable even in the unlikely event of all the other objectors agreeing to withdraw. The suggestion that it was unreasonable of the Hollands to refuse the offer of settlement in the letter of 23 September 2004 is equally unfounded. The objectors have achieved a better outcome than if they had agreed to withdraw their objections. Whether or not it was reasonable for Mr Hubbard to submit copies of all 450 registered titles, or for him to replace his original plan with another, are matters relevant to the assessment of costs, not their award.

[64]Mr and Mrs Holland will pay the costs of and incidental to the application for an extension of time. Otherwise, the applicant will pay the costs incurred by Mr and Mrs Holland. Such costs if not agreed are to be the subject of a detailed assessment by the Registrar of the Lands Tribunal on the standard basis. 20 January 2005 N J Rose FRICS 17