The Alexander Devine Children's Cancer Trust v The Alexander Devine Children's Cancer Trust v. Millgate Developments Ltd (CA)

Woolley Hall

Exchange House

The Alexander Devine Children's Cancer Trust v The Alexander Devine Children's Cancer Trust v. Millgate Developments Ltd (CA)

Facts of the case Barty Smith, the son of a local farmer, inherited extensive agricultural land to the south of Maidenhead. In 2012 he gifted land worth £500k to the Alexander Devine Children's Cancer Trust (the Trust) for the construction of a children's hospice. Planning permission was obtained for the hospice to be built with gardens and a wheelchair path. Charity then had to wait to raise funds before the building could take place. Construction started in 2015.

Facts of the case Millgate - developer of high-end residential scheme set in 24 acres park and woodland – Woolley Hall As part of planning consent for this scheme it was obliged to provide 23 afforadable homes In 2013 purchased a greenbelt site - Exchange House

Facts of the case Part of the Exchange House site was encumbered by a restrictive covenant preventing: erection of buildings of any type; and use of the land for any purposes other than open parking space for motor vehicles. Millgate was aware of and ignored the existence of the restrictive covenant. March 2014 planning permission to build 23 afffordance housing units on the Exchange House site. This was linked to its application for planning Woolley Hall.

Facts of the case The Trust did not object to the Exchange House planning application. Approved planning application involved building : 9 two-storey houses close to the boundary of the hospice land whose upper windows would overlook the gardens and wheelchair path plus 4 bungalows (in breach of the restrictive covenants); and block of 10 residential flats (on land unaffected by the restrictive covenants). Barty Smith was unaware of Millgate's planning application for Exchange House. He became aware of the development on flying over the land on 30 August 2014 when saw the new foundations.

Facts of the case Barty Smith consulted a solicitor and wrote to Millgate on 26 September 2014 (a) referring to the restrictive covenants and (b) requiring Millgate to halt the construction works. Millgate continued to build. Millgate entered into an agreement to sell the social housing units at Exchange House to Housing Solutions in May 2015. Sale was conditional on there being no reasonable risk of an injunction being granted to stop or demolish the development.

Facts of the case In July 2015 properties were completed and Millgate applied to the Upper Tribunal seeking modification of the restrictive covenants pursuant to Section 84 to allow the 9 houses and 4 bungalows to remain and be occupied. In February 2016 the Section 106 Agreement entered into by Millgate was varied. It permitted Millgate to pay £1.6m to the council if Millgate's application to the Upper Tribunal was unsuccessful and it could not provide the social housing units. In Novemeber 2016 Upper Tribunal gave its decision.

Section 84 (1) LPA 1925 Background Section 84(1) Law of Property Act 1925 Upper Tribunal has discretion to "wholly or partially …. discharge or modify" any restrictive covenant so long as at least 1 of 4 specified grounds is satisfied. Relevant ground in this case was section 84(1)(aa): covenant impedes some reasonable use of the land; and impeding that use is contrary to public interest; and money would be adequate compensation

Upper Tribunal decision Upper Tribunal held that the restrictive covenants could be modified pursuant to Section 84. Millgate ordered to pay £150k compensation for cost of landscaping works to screen the hospice garden plus loss of amenity. Exchange House site transferred to Housing Solutions one day before the last day on which the Trust could appeal. Trust applied to Court of Appeal appealing the decision of the Upper Tribunal.

Court of Appeal decision Tribunal wrong to assume the grant of planning permission meant the development was in the public interest. Questions whether planning permission should be granted and whether upholding a restrictive covenant is contrary to the public interest are different. It is in the public interest that contracts should be honoured and not breached and property rights should be upheld and protected. Beneficiary of a restrictive covenant is not required to object to the grant of planning permission in order to be able to enforce it.

Court of Appeal decision In considering public interest, the Upper Tribunal: should have taken into account the Section 106 option open to Millgate of paying £1.6m to the council and thus allowing the provision of social housing elsewhere without breaching the restrictive covenants. should consider whether the applicant has tried to negotiate a waiver of a restrictive covenant or tested the public interest argument in a Section 84 application in advance of breaching the covenant.

Court of Appeal decision CA criticised Millgate's "high handed" and "opportunistic" approach and its attempt to gain advantage by presenting a fait accompli in terms of fully constructed buildings. CA commented that Millgate had acted with its eyes open and completely at its own risk. It was therefore appropriate and in conformity with the public interest that it should bear the risk. Appeal allowed. Millgate faces prospect of having to demolish its social housing development.

Take away points CA has sent a strong message to developers to respect the rights of other private landowners. They should: engage with the beneficiaries of restrictive covenants go to the Upper Tribunal Provision of social housing is not a "get out of jail free" card. Make sure you and your client are aware of the relevant time limit for appeals …. (applicable to any sort of proceedings)

What happened to Millgate's Woolley Hall commercial development subject to the Section 106 Agreement?