Barriers to Development

1
Barriers to Development

• Andrew Olins
• Jon Mowbray
• Real Estate Dispute Resolution

2
Easements

• Jon Mowbray
• Real Estate Dispute Resolution

3
Case study

4
Case study

Greenacre
Redacre
F O O T P A T H
R O A D
Proposed development
Office
5
Acquisition of right of way

• Developer requires vehicular access over
  Redacre
• Understands that vendor (and its predecessors
  in title) have used strip of land marked orange
  for this purpose for a number of years
• Has a right of way been acquired?

6
Essential characteristics of an easement

• Dominant and servient land
• Right must accommodate the dominant land
• Dominant and servient owners must be different
  persons
• Must be capable of forming the subject matter
  of a grant

7
Acquiring easements

• Statute
• Express grant or reservation
• Implied grant or reservation
• Prescription

8
Prescription

• Common law
• - Since time immemorial (1189)
• - 20 years use raises rebuttable presumption
• - User must be as of right - nec vi, nec clam,
  nec precario
• Doctrine of Lost Modern Grant
• - Any 20 year period
• Prescription Act 1832
• - 20 years user - 40 years user

9
For what purpose can the right of way be used?

• Express grant
• - Construction of words
• - Context in which they are drafted
• - Courts usually construe widely (White v Grand
  Hotel Eastbourne (1913))

10
For what purpose can the right of way be used?

• Implied grant
• - for all purposes according to ordinary and
  reasonable use to which the dominant land might
  be applied at the time of the implied grant
  (Williams v James (1867))
• - Two stage test in McAdams Homes v Robinson
  (2004)
• (1) Radical change in character of dominant
  land and
• (2) Substantial increase in burden on servient
  land

11
Case study

Greenacre
Redacre
F O O T P A T H
R O A D
Proposed development
Office
12
Can you use right to access adjoining plot?

• Rule in Harris v Flower (1905)
• Generally not permissible to increase area of
  dominant land
• Ancillary use (National Trust v White (1987)

13
Case study

Greenacre
Redacre
F O O T P A T H
R O A D
Proposed development
Office
14
Right of way

• Redacre was expressly granted in 1960 a right
  of way on foot over the yellow land for purposes
  of accessing footpath through gate
• Gate has been locked for last 10 years
• Developer wants to build over this area

15
Has right of way been abandoned?

• Mere non-user, however long, not sufficient
• - Cook v Mayor Corporation of Bath (1868)
• Indication of intention to abandon
• - Williams v Usherwood (1983)

16
Can right of way be realigned?

• Not unless such a right is an express or
  implied term of the grant of the easement
• What if realigned route equally convenient?
• - Greenwich NHS Trust v London Quadrant
  Housing (1998)

17
Disturbance of easements

• Need to establish substantial interference
• Can right of way be exercised as conveniently
  as before?
• - BQ Plc v Liverpool Lancashire Properties
  Limited (2001)

18
Remedies for disturbance

• Abatement
• Action for nuisance
• - Injunction
• - Damages

19
Rights of light

20
Rights of light

• Proposed development of Greenacre will affect
  the amount of light enjoyed by the office block
  on Redacre
• Can Redacre stop the development of Greenacre?

21
What is a right of light?

• Easement
• The right to receive sufficient natural light
  through defined apertures to allow the use of the
  building for the ordinary purpose for which it
  could reasonably be put

22
Acquisition of right to light

• Express grant/reservation
• Implied
• Prescription
• - Common law
• - Doctrine of lost modern grant
• - S3 Prescription Act 1832 20 years counting
  back from when the action challenging the right
  is commenced

23
Infringement of right of light

24
When is the right of light infringed?

• If it falls below a level that is sufficient
  for the comfortable use and enjoyment of the
  building
• Severity of infringement
• - Consider the amount of light left
• - The 50/50 rule
• - Grumble point
• - Waldram diagrams

25
Availability of an injunction

• Shelfer principles
• (1) If the injury to the neighbours rights is
  small
• (2) If it is capable of being estimated in
  money
• (3) If it can be adequately compensated by a
  (small) money payment and
• (4) If it would be oppressive to the developer
  to grant an injunction
• Then damages may be awarded instead of an
  injunction

26
Availability of an injunction

• Equitable remedy at discretion of court
• Consider all factors
• - Personal effect on existing occupiers
• - Social utility of the offending development
• - Conduct of the parties
• Midtown Ltd v City of London Real Property
  Company Ltd Joseph ors v City of London Real
  Property Company Ltd (2005)
• Regan v Paul Properties (2006)

27
Damages

• Damages awarded in lieu of an injunction
• Court calculates the level of compensation by
  reference to a number of factors
• - Reasonable price for allowing the developer to
  buy off the right
• - Impact of the loss of light and general
  amenity
• - Loss of sky visibility and sunlight
• - General deterioration in the quality of the
  environment

28
Damages

• Tamares Limited v Fairpoint Properties Limited
  (2006)
• - Fair result of hypothetical negotiation
• - Seriousness of breach
• - Dominant owners significant bargaining
  position
• - Share of profit
• - Size of award should not prevent development
• - Did the deal feel right

29
Developers strategy

• Appoint experienced rights of light surveyor
• Ensure legal adviser has all necessary facts
  and works with rights of light surveyor
• Commission a relevant topographical survey of
  the site and neighbours buildings
• Undertake an early assessment of risks
• Communicate

30
Restrictive Covenants

• Andrew Olins
• Real Estate Dispute Resolution

31
How to get rid of restrictive covenants

• Buy certainty of outcome
• - Defective title insurance
• - Deed of release

32
How to get rid of restrictive covenants

• Is it enforceable?
• If so, can we get rid of it?

33
Is it enforceable?

• Marten -v- Flight Refuelling Ltd 1962 Ch. 115
• The covenant must be made for the benefit of the
  adjoining owners land
• Annexed by express words or implied by
  surrounding circumstances

34
Is it enforceable?

• Crest Nicholson -v- McAllister 2004 1 W.L.R
  2409
• The land with the benefit of the covenant needs
  to be readily identifiable from the deed

35
Is it enforceable?

• Declaration of unenforceability - Law of Property
  Act 1925 section 84(2)
• The Court shall have power on the application of
  any person interested -
• (a) to declare whether or not in any particular
  case any freehold land is, or would in any given
  event be, affected by a restriction imposed in
  any instrument or 
• (b) to declare what, upon the true construction
  of any instrument purporting to impose a
  restriction, is the nature and extent of the
  restriction thereby imposed and whether the same
  is, or would in any given event be, enforceable
  and if so by whom.

36
Where to apply?

• Lands tribunal
• Wide jurisdiction to discharge or modify
  restrictive covenants
• Section 84(1)
• Panel of experienced judges
• Useful website www.landstribunal.gov.uk

37
Who can apply?

• Freehold land
• Anyone interested in the freehold land affected
  by the covenant
• Wide category owners, mortgagees, purchasers
  under an uncompleted contract, option holders

38
Who can apply?

• Leasehold land Section 84(12)
• Anyone interested in the leasehold land
• Providing the lease is for more than 40 years AND
  (at least) 25 years of the term has expired

39
Who can object?

• Persons entitled to the benefit of the covenant
• - Usually, adjoining landowners
• - Certain statutory bodies e.g. local planning
  authorities where covenant is contained in an
  agreement made under TCPA 1990 section 106

40
Who can object?

• General rule
• - Distinction with the planning process
• - Not enough to complain that you will be
  adversely affected by a modification and/or
  discharge of the covenant

41
What can the Lands Tribunal do?

• Discharge
• - Nuclear option
• - Entire covenant is removed

42
What can the Lands Tribunal do?

• Modification
• - Less drastic option
• - Permits the Lands Tribunal (effectively) to
  rewrite the covenant
• - Lands Tribunal can add new restrictions if it
  is minded to relax the covenant - section 84(1C)
• - Pay careful attention to the wording of
  proposed modification

43
When to apply?

• Leasehold land
• section 84(12)
• Freehold
• Any time the age of covenant is irrelevant
• Newer covenants are more unlikely to be
  discharged or modified than older ones

44
When to apply?

• Response to enforcement proceedings
• The Court can stay enforcement proceedings
  pending determination of an application to the
  Lands Tribunal - section 84(9)

45
Grounds for discharge or modification

• 4 main grounds for applying for a discharge or
  modification of a covenant under section 84(1)
• Ground 1 - Obsolete covenant
• Ground 2 - Reasonable user impeded
• Ground 3 - Express or implied in agreement
• Ground 4 - No injury

46
Ground 1 - Obsolete covenant

• that 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."
• Section 84(1)(a)

47
Ground 1 - Obsolete covenant

• Truman, Handbury, Buxton and Co Ltd's Application
  1956 1QB 261
• Difficult ground to make out
• Test for obsolescence is strict
• It is necessary to identify the purpose behind
  
• the covenant AND established that the purpose
• is no longer capable of fulfilment

48
Ground 1 - Obsolete covenant

• 2 different types of change that may lead to a
  covenant to becoming obsolete
• Environmental (or physical) changes i.e.
  commercial area has become residential area
• Social changes i.e. society's view about alcohol

49
Ground 2 - Reasonable user impeded

• "that the continued existence of the covenant
  would impede some reasonable user of the land for
  public or private purposes and the Lands
  Tribunal is satisfied that the covenant, 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) .

50
Ground 2 - Reasonable user impeded

• 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 area"
• Section 84(1)(aa)

51
Hurdles to overcome

• Reasonable user of the land will be impeded
• Best evidence is a planning permission
• The objectors do not accrue a practical benefit
  of substantial value or advantage
• "Practical benefit" is construed very widely
• Does not include ability to extract ransom
  payment Stockport MBC -v- Alwiyah 1983 52 PCR
  278
• Covenant is contrary to the "public interest
• Rarely, if ever used
• Money will be adequate compensation

52
Ground 3 - Express or implied in agreement

• "that the persons of full age and capacity for
  the time being or from time to time entitled to
  the benefit of the restriction, whether in
  respect of estates in fee simple or any lesser
  estates or interests in the property to which the
  benefit of the restriction is annexed, have
  agreed, either expressly or by implication, by
  their acts or omissions, to the same being
  discharged or modified"
• Section 84(1)(b)

53
Ground 3 - Express or implied in agreement

• Express Deed permitting the changing user
• Waiver - through a failure to enforce the
  covenant

54
Ground 4 - No Injury

• "the proposed discharge or modification will not
  injure the persons entitled to the benefit of the
  restriction.
• Section 84(1)(c)
• "Sweep up" ground
• Prevents vexatious and frivolous objections -
  Ridley -v- Taylor 1965 1 LR 611

55
Compensation

• "an order discharging or modifying a restriction
  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
• a sum to make up for any loss or disadvantage
  suffered by that person in consequence of the
  discharge or modification or
• 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."
• Section 84(1)

56
Compensation

• An award of compensation is discretionary
• First head involves assessing the actual loss
  or disadvantage the person entitled to the
  benefit of the covenant at the time the Order is
  made
• (Usually) equates to the fall in value of the
  Objectors property

57
Compensation

• Second head
• Involves calculating the (additional) price that
  applicant would have paid for the property but
  for the covenant
• Available to the original covenantee (only?)

58
Questions?