If a Tribunal considers a developer has acted "cynically" (i.e. failed to engage with those known to have the benefit of a covenant or make any application to the Tribunal before undertaking works), this may well influence the decision of the Tribunal when considering whether to exercise its discretion to modify or discharge a covenant.

In this case, a developer built a house in infill which was formerly part of the garden of another large house. The land was subject to a restrictive covenant which was imposed in 1996:

"not to use the land…other than as garden land in connection with the adjoining property."

The developer obtained planning permission and commenced works. However it wasn’t until October 2022, when the project was well underway, that it made an application to the Upper Tribunal for discharge of the covenant.

Under s84(1) of the Law of Property Act 1925 (LPA), the Tribunal has the power to modify or discharge a restrictive covenant, and the grounds for doing so include where there is a change in the character to the subject property or that the covenant is obsolete, its continuation would impede the reasonable use of land and the discharge would not "injure" those with benefit. The developer made an application to discharge on this basis.

However, the Tribunal also needs to be persuaded to exercise its discretion to modify or discharge the restrictive covenant. 

Here the beneficiaries of the covenant argued the development blocked their previously open view and impinged upon their privacy. Consequently, they said the values of their homes had been adversely affected. 

The Tribunal found at the time the covenant was imposed, the purpose of the covenant would have been to preserve the boundary between a developed area and farmland. The existence of a new housing development encircling the land burdened by covenant meant it had become obsolete. In addition the Tribunal found the developer's use of the land, for the construction of a new house, was reasonable and the covenant impeded development. Although the covenant did have a practical benefit, in that it protected the beneficiaries houses from overlooking, the effect on their loss of amenity/value was not substantial. 

However, despite this, the Tribunal refused to exercise its discretion to discharge the covenant because of the developer's conduct.

There was no evidence the developer believed the covenant was spent or unenforceable and it continued with the construction work despite having made an application to the Tribunal. The developer failed to adhere to a process set out in the LPA. From this the Tribunal inferred the developer deliberately went ahead with the development without seeking agreement from those with the benefit of the covenant before making an application to the Tribunal. 

This decision sends a very clear warning to developers with a "build now, apply later" strategy. Ignoring those known to have the benefit of any restrictive covenants could be characterised as "cynical" by the Tribunal and result in them refusing to assist, even if they found it was in their power to do so.