Alexander Devine Children's Cancer Trust v Housing Solutions Limited [2020]
By Stephen Dean and Elizabeth Nicholls
Introduction
The Supreme Court's judgment in Alexander Devine Children's Cancer Trust v Housing Solutions Limited [2020], which was handed down last week, is an essential case to bear in mind when considering the modification of restrictive covenants on burdened land for the purposes of development. For the first time, the Supreme Court has considered Section 84 of the Law of Property Act (1925) as part of appeal proceedings, which gives the Upper Tribunal discretion to discharge or modify restrictive covenants where specified grounds are satisfied to enable development on land.
Facts
A restrictive covenant prevented the development of land adjoining the Alexander Devine Children's Cancer Trust Hospice in Maidenhead (the Trust). The restrictive covenant was in place to ensure that the terminally ill children on the Trust's land could enjoy the use of the grounds in private. Millgate Developments were engaged to build 13 properties on the adjoining land for a provider of social housing (Millgate). The Trust had previously objected to the development, however Millgate proceeded to build the properties in breach of the restrictive covenant. Crucially, an alternative plot could have been used for the development.
The case went to the Upper Tribunal where Millgate argued that the building of the housing was in the public interest under s84, and that this justified the breach of the restrictive covenant. The Tribunal recognised that there was an immediate and important need for social housing and found in Millgate's favour. However, this decision was reversed in the Court of Appeal, and upheld by the Supreme Court.
Supreme Court Decision
The Supreme Court held that the 'cynical breach' of the restrictive covenant fundamentally altered the position in relation to the public interest, as Millgate were fully aware of the restrictive covenant before development began. The Supreme Court ruled that it would be wrong to allow a developer “to secure the modification of the covenant in reliance on the state of affairs created by their own deliberate breach”. Furthermore, the Supreme Court raised that had Millgate respected the rights of the Trust and applied for planning permission on an alternative plot within its land bank (where the covenant did not burden the land), an application to modify the covenant under s84 would not have been necessary and the dispute could have been avoided. In any event, had Millgate applied under s84 before starting the build on the adjoining land, it was likely the developer would not have been able to satisfy the 'public interest' ground under s84, as planning permission could be granted for an alternative plot.
Lessons
The decision has important implications for developers seeking to rely on the public interest limb of s84. It highlights the importance of seeking to discharge any restrictive covenants prior to a build, or even before planning permission is sought, and how the conduct of a developer can play a key role in securing such modifications.