Covenant Not Overridden by Planning Permission

When homeowners wished to build a first-floor extension over their garage, they obtained planning permission to do so. They were not best pleased, therefore, when the estate management trust for their estate refused to allow the alteration and they challenged its right to deny them permission.

The issue arose because each property on the estate was subject to a restrictive covenant to the effect that any development of a property on the estate could only take place with the permission of the estate management trust. The property owners argued that the estate management trust’s decision should follow that of the local planning authority or, if this were not the case, they should be allowed to build the extension subject to agreeing a compensation payment to those people affected by the development.

The Upper Tribunal rejected this argument and an appeal was made to the Court of Appeal.

The Court considered that if Parliament had intended that a management trust or company could not gainsay a development that had been approved by the local planning authority, it would have been a simple matter for planning law to state this. It does not, save in the situation in which a compulsory purchase takes place, in which case the planning authority’s decision does hold sway. The trust was therefore entitled to take its own view.

The Court also accepted that the role of the trust was to act in the public interest. The homeowner did not have the right to demand that a payment in compensation be accepted in exchange for the grant of the trust’s permission. The trust had every right to conclude that a payment of money would not be sufficient compensation for the loss of local amenity. The appeal was therefore dismissed.

Although this case involved residential property, it may well have ramifications for commercial premises.

Planning law is a difficult area: seek our advice at an early stage of any proposed development.