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[2004] EWLands LP_2_2003 (4 October 2004)

LP/2/2003

LANDS TRIBUNAL ACT 1949

RESTRICTIVE COVENANT - restriction to two detached bungalows not exceeding one storey in height – application to modify the restriction so as to permit the retention and completion of a partly constructed first floor extension on the sole property occupying the site – whether practical benefits of substantial value or advantage secured by the restriction – whether money will be adequate compensation for loss or disadvantage – Application granted on completion of landscaping scheme – compensation of £10,000 awarded to the first and second objectors and £2,500 awarded to the third objector– Law of Property Act 1925, s84(1)(a),(aa),(c)

IN THE MATTER of AN APPLICATION UNDER SECTION 84 OF THE

LAW OF PROPERTY ACT 1925

BY

BARRY WILLIAM ARTHUR COLES and

JILLIAN LESLEY COLES

Re: Glenfalls, The Glen, Saltford

Bristol, BS31 3JR

Before P R Francis FRICS

Sitting in Public at Bath County Court, Cambridge House,

Henry Street, Bath, BA1 1DJ

on

6 January 2004

Charles Auld, instructed by Mowbray Woodwards, solicitors of Bath for the applicants

Graeme Wood, instructed by Robert Howe, solicitor of Saltford, Bristol for the first and second objectors
 


The following cases are referred to in this decision:

Re Bass Limited's Application (1973) 26 P&CR 156

Re Zopats Developments' Application (1966) 18 P&CR 156

Re Gaffney's Application (1974) 35 P&CR 440

Gilbert v Spoor [1983] Ch.27

Re Henderson's Conveyance [1940] Ch 835

Re Munday's Application (1954) 7 P&CR 130

Re Gossip (1972) 25 P&CR 215

Re Wards Construction (Medway) Ltd (1973) 25 P&CR 223.

DECISION

1. This is an application by Mr Barry William Arthur Coles an Mrs Jillian Lesley Coles ("the applicants") under section 84 of the Law of Property Act 1925 ("the Act") seeking the modification of a restrictive covenant that affects the freehold land occupied by a bungalow known as Streamside (formerly Glenfalls), The Glen, Saltford, Bristol, BS31 3JR ("the application land"). The purpose of the application is to allow the completion of the construction of a first floor extension that was commenced in April 2003 pursuant to the grant of detailed planning permission, work upon which was suspended in October 2003 following an application for a High Court injunction made by the first and second objectors. Those proceedings were stayed pending the outcome of this application.
2. The first and second objectors are Keith William Dawe and Joanna Patricia Dawe of Glen Cottage, The Glen, Saltford. That property comprises a detached 3 storey private house which appears to have been constructed in the first half of the twentieth century, and occupies an elevated position immediately adjacent and to the south-west of the application land. The plot upon which it stands, at about 0.7 acres, is L-shaped, and the front and main side gardens abut the western and southern boundaries of Streamside.
3. The third objector is Mr George Frederick Wolland of Wychwood Garth, The Glen, Saltford, his property being a detached modern bungalow lying immediately to the west of Glen Cottage on a plot of about 0.43 acres. He did not appear, and was not represented at the hearing.

Background

4. No formal agreed statement of facts and issues was provided, but from the originating application, draft statement of facts prepared by the applicants, the expert witness reports, counsel's opening arguments and the evidence, I briefly set out the background below.
5. It is agreed that all of the land forming the application property, and the properties of the objectors, formerly belonged to one Ronald Kimber. By a conveyance dated 14 September 1964, Mr Kimber sold Glen Cottage and the land which is now occupied by Wychwood Garth to Mr Wolland, retaining the land now occupied by Streamside. Clause 2 of the 1964 conveyance stated:

2. THE VENDOR hereby covenants with the purchaser in manner following:

(a) For the benefit of the property hereby conveyed and to the intent that this covenant may so far as possible bind all persons who now are or shall hereafter become entitled to any estate or interest in the property edged blue on the said plan attached hereto that he and his successors in title will not without the written consent of the Purchaser or his successors in title erect upon the said land edged blue on the said plan attached hereto more than two detached bungalows or dwellings not exceeding one storey in height Together with one garage and greenhouse to serve each of them and Provided that none of such buildings shall be erected on the land hatched yellow on the said plan within forty feet of the fence marked B C

(b) Within six months from the date hereof and at his own expense to pull down the trees standing between the points marked D and E on the said plan.

3. IT IS HEREBY AGREED AND DECLARED that the Purchaser shall not be entitled to any right of light or air which will in any way prejudicially affect the free and unrestricted user of the adjoining land of the Vendor for building or for any other purposes but subject nevertheless to the covenant hereinbefore contained

6. There is no dispute that all the objectors have the benefit of the covenant set out in 2(a) above, and it is only that part relating to the number of storeys that is in contention, there being no argument in respect of the reference to the land hatched yellow. There was argument at the hearing in respect of (3), but it was only the relevant part of 2(a) that was the subject of this application.
7. Mr Wolland subsequently constructed the property known as Wychwood Garth within the grounds of Glen Cottage, and moved into it in 1984. Then, by a conveyance dated 16 November 1984, Mr Wolland sold Glen Cottage to the first and second objectors.
8. The applicants acquired and moved into Streamside in April 2001 and applied for planning permission to make substantial alterations to the property, including the provision of new bedroom and bathroom accommodation in an additional storey and an integral garage in the basement. Permission was granted on 30 October 2001, and after the applicants moved into accommodation at a nearby hotel that they own and run, partial demolition and new building works began in April 2002.
9. It is the applicants case (with which I deal in detail below) that they were unaware of the existence of the restrictive covenant and that it was not until their son (who was carrying out the building work) was approached by Mr Wolland in May 2002, that they were told about it. Following negotiations with the covenantors during the summer of 2002 (whilst the building works were continuing) the first and second objectors commenced proceedings in the High Court of Justice, Bristol Registry (Case number BS250543). They claimed, in summary:

(i) An injunction to restrain the Defendants [the applicants] carrying on with the erection of any building greater than one storey in height.

(ii) An order requiring the Defendants to dismantle that part of the building that they had so far erected where it exceeds one storey in height (disregarding the garage at basement level).

(iii) Further, or in the alternative, damages including, if appropriate, damages in lieu of an injunction.

A defence was served, and a hearing took place on 16 January 2003. The order of the court confirmed that upon the Defendants undertaking not to carry out any further work, other than that which was required to maintain the integrity of the building, and making application to the Lands Tribunal under the Act within 14 days (which they did) the matter would be stayed until the final determination of the Tribunal.

10. The application is for modification of the covenant, principally under para (aa) of section 84(1) of the Act, such as is necessary to allow the property as constructed by the applicants to remain in its present form, and to be completed in accordance with the planning permission. The grounds are that the covenant conveys no practical benefits of substantial value or advantage on the objectors, as the new second storey does not impinge materially on the view from the houses on the benefited land, neither does the accommodation built within the new storey materially overlook the benefited land.
11. Counsel for the applicants, Mr Charles Auld, called the first applicant, Mr Barry Coles, as a witness of fact and Mr A J Sproson FRICS, an Associate in the valuation department of King Sturge, in Bath as expert valuer. Mr Graeme Wood, counsel for the first and second objectors, called Mr Philip Furze, a partner in Crisp Cowley of Bath as valuation expert.
12. I inspected the application land, Glen Cottage and Wychwood Garth in the afternoon of 5 January 2003.

The Application Land

13. The application land is an irregular shaped plot extending to about half an acre, upon which the property now known as Streamside is constructed. It lies on the south side of The Glen, a residential cul-de-sac approached off the main A4 Bath to Bristol road on the edge of the village of Saltford. Streamside was formerly a detached bungalow with shallow pitch roofs and with a basement containing a utility room. The site slopes steeply upwards from front to rear and the boundaries onto Glen Cottage (which lies at a higher level, immediately to the south-west) are well screened with conifers, deciduous trees and shrubs. The extension works, which are the subject of this application comprise the addition of a new first floor to include bedroom and bathroom accommodation, together with a garage at basement level. For the purposes of this application, the parties agree that the basement does not constitute an additional floor.

Applicants' Case

14. In his witness statement, Mr Coles set out the background to the case (the salient facts being summarised above) and said that when he and his wife bought Streamside, they had not been advised of the existence of the restrictive covenant. The property was old fashioned and needed modernisation, as a result of which they applied for and obtained planning permission for substantial alterations, part of which included the provision of accommodation on a new first floor extension which oversailed part of the original bungalow. It was only after the works had commenced that they were made aware, by Mr Wolland, of the covenant. Mr Coles said that, although Mr Wolland had pointed it out, he had made it clear that he would not be seeking to enforce it, although he would be advising his solicitor so that he could "sort it out, and arrange compensation if appropriate".
15. Seeking clarification from his solicitor, Mr Coles said that he received confirmation of the covenant by letter of 15 May 2002, together with an admission that its existence may not have been pointed out at the time of the purchase. Before his solicitor could do anything about it, Mr Coles said that he received a letter dated 22 May 2002 from the first and second objectors' solicitors seeking copies of the plans, and saying that they thought the applicants were in breach, that opinion being confirmed in a subsequent letter of 20 June 2002. Mr Coles said that from the tenor of those letters it was clear that the objectors were seeking compensation rather than enforcement, so his solicitor wrote to the Dawes apologising for any discourtesy, and offering £1,000. It was, after all, only a minor modification that was needed. In any event, he said that he thought the Dawes could have been aware of what was planned before the work even started – they would have received notice of the planning application when it was made, and could have inspected the plans at the local planning department.
16. He stressed that the intimation by the Dawes that he and his wife were property developers and were seeking to complete the works for profit was untrue. If they had been, they could have built a second property on the land, without affecting the covenant. As to the suggestion that buying up property, modernising it and selling it on for profit was their business, Mr Coles explained in cross-examination that although he had bought a number of properties in the vicinity in recent years, they were all to do with his businesses which were now as a hotelier, and formerly running a residential nursing home. Streamside is, and was always intended to be, their sole residence and, he said, there was no intention to move once the works were completed.
17. Mr Coles said that whilst the Dawes had initially said that the new extension to Streamside interfered with their views, they were now saying that the windows overlooked their property and particularly the gardens. He said that this was not the case; due to the extensive screening created by the conifers and other trees along the rear boundary, it was not possible to see into either the rear garden or into Glen Cottage's accommodation – that being at a much higher level due to the steeply rising ground. It was acknowledged that one of the windows did overlook the front garden but this was principally the driveway to the Dawes' house, and thus there was no invasion of privacy. That driveway is also overlooked by a large number of other properties.
18. Mr Coles said that as he thought the modification of the covenant would be sorted out by the solicitors by payment of compensation, the amount of which, if necessary, surveyors could establish, he continued with the building works through the summer and autumn of 2002. He said if the objectors had been really concerned about the alleged intrusion of the first floor extension, they could have commenced the High Court proceedings very much earlier. As it was, no action was taken until 30 October 2002 by which time the shell of the new building was virtually complete. After the installation of the specially made windows, which arrived on site in November 2002 (that being necessary to keep the building weathertight), work was halted pending the outcome of this application.
19. In cross-examination, Mr Coles accepted that it was clear from the correspondence that was received from the Dawes' solicitors that they were very concerned about the works, and that they were protesting in the strongest possible terms. He insisted that the reason he continued with the works was because his solicitors had assured him they could resolve the matter by payment of compensation. However, he admitted that whilst he had instructed his solicitor to increase the offer which, he acknowledged, was derisory, he had not specified an amount. Mr Coles did not accept the suggestion that despite his knowledge of the objectors' concerns, he carried on regardless in an effort to bulldoze his way to getting the work completed, nor did he accept that the correspondence from his solicitor had been merely bluffs and delaying tactics.
20. Mr Sproson is a chartered surveyor, and an associate in the valuation department of King Sturge, International Property Consultants of Bath. He has 14 years valuation experience in the area, and his instructions were to consider whether the works for which the modification was being sought would cause any diminution in the value of the objectors' properties. He was also asked to comment upon what he thought would have been a reasonable payment for the applicant to have negotiated with the objectors for the modification or discharge of the covenant.
21. In his view the works for which the modification or discharge was required had no detrimental impact upon Glen Cottage. The first floor extension was already partially completed, and the effect, if any, could readily be seen. The substantial conifer screen that existed along the boundary between the two properties prevented any overlooking, and there was no question of loss of view from Glen Cottage, its windows being at a much higher level due to the topography of the land. Mr Sproson accepted that the new extension was more visually intrusive than what had been there previously, but in terms of overall appearance, he said the completed development would be much more attractive than the old, unmodernised bungalow as it was before the works started. He acknowledged that one of the bedroom windows in the new extension directly overlooked the driveway of Glen Cottage, but that area was already substantially overlooked by other properties, and it was thus only a minor irritation.
22. Mr Sproson said that in his opinion the value of Glen Cottage at 22 July 2003 was £475,000 whether the first floor extension to Streamside had been constructed or not. There was certainly no diminution in value caused by the works. Indeed, he said, the wording of the covenant was such that it allowed a second property to be built on the covenanted land, or as far as the existing bungalow was concerned, the original shallow pitch roof could have been replaced with one of a much steeper pitch (rising above the newly constructed roof line) without the covenant being breached. Any concern that the Dawes had regarding the extension works were, in Mr Sproson's opinion, personal to them and the bid that a prospective purchaser would make would not be adjusted because the extension exists.
23. Mr Sproson assessed the value of the applicants' property as at July 2003 on the assumption that none of the works existed at £335,000, and with the works completed in accordance with the plans, £600,000. It was estimated that the works would cost approximately £250,000, so there was only a very limited amount of profit that could be anticipated. Finally, he said that despite there being no diminution in value of Glen Cottage, or for that matter, Wychwood Garth which was even further away and not affected in any way, it would be reasonable to expect the applicants to pay a total of between £5,000 and £10,000 to the objectors for the removal or modification of the covenant. This was, in his view, a figure that could realistically be anticipated as fair compensation in a negotiation where all parties were willing.
24. In closing, Mr Auld submitted that, in their case for a simple modification of the covenant to allow the alterations already made to Streamside to remain, the principal argument falls within section 84(1)(aa). The fact that planning permission has been granted is very persuasive that the proposal is reasonable: see Re Bass Limited's Application (1973) 26 P&CR 156, and the continued existence of the restriction would impede that reasonable use of the land. Therefore, the question to be answered is whether the Tribunal can be satisfied (under section (1A)(a)) that the covenant "does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them".
25. Mr Auld said that the unusual wording of the restriction did not assist the objectors. There was no restriction as to the height of the bungalow, only to the number of storeys, therefore there would be, as Mr Sproson had said, nothing to stop the applicant constructing a new roof with its apex very substantially higher than that which exists on the partially completed extension. Perhaps, Mr Auld said, that was why the Dawes' appeared to have abandoned their original position that the extension will impede the view from Glen Cottage, now seeking to argue that the covenant prevents their property being overlooked. In that respect, it is important to note that what is being claimed by the objectors is that part of their garden will be overlooked. The part that will be partially overlooked is the front garden and driveway, and that is already overlooked by a substantial number of other properties. The objectors' concerns about further loss of privacy were overstated, and, Mr Auld said, in reality the situation will be no worse than it already is.
26. In Re Zopats Developments' Application (1966) 18 P&CR 156, a case where the circumstances were very similar to the instant application, the Tribunal (Erskine Simes QC) found for the applicant and said (at 159):

"I viewed the site and looked at it both from the garden and the house of Mr Kepple and in the light of that view I have arrived at the conclusion that both Mr Kepple and Mr Garlick are unduly pessimistic in their view as to the effect of the erection of the proposed house on the application site. It seems to me that the occupier of the proposed house is likely to be as anxious to secure his privacy as Mr Kepple, the view of whose garden is completely exposed to anyone in the garden of Chiltern Cottage. I cannot believe that the occupants of the proposed house will spend their days looking out of the bedroom windows. It is, I am satisfied, a case where the prospect terrifies while the reality will prove harmless. I think that Mr Scotsbrook is more realistic in his view that the value of Little Orchard will not be affected, while I am not satisfied that there will be any material effect on Mr Kepple's privacy.

I am therefore prepared to modify the covenants…..so as to permit the erection of a dwelling house and garage on the application site."

27. Even if there were some practical benefit, it has to be of substantial value or advantage to the objectors, and on this point Mr Auld referred to Re Gaffney's Application (1974) 35 P&CR 440 where the Tribunal discussed the phrase "substantial value or advantage". The Member (J H Emlyn-Jones FRICS) said (at 441):

"The word "substantial" cannot be interpreted in absolute terms – it is specifically related in the words of the section to the persons entitled to the benefit of the restriction; and although compensation awarded is to be expressed in money terms, what has to be "substantial" is not the sum of money but the value or advantage. In the present case, the value or advantage lies within the enjoyment of the occupation of 'Old Basing' by Mrs Lee. In my opinion, the true measure of its "substantiality" lies in the degree of depreciation in the value of that enjoyment. A depreciation of £1,500 in the value of a property worth £5,000 is not to be compared in degree with the same amount payable in the case of a property worth £45,000. In the one case, the loss or disadvantage represents 30% of the value of the whole; the value or advantage is clearly substantial. In the other case the proportion is three and a third per cent; I do not consider that a value or advantage expressed in this way can be substantial."

Mr Furze had valued the diminution in value of Glen Cottage at 5% so, Mr Auld said, even if I decide there is a benefit, it is not substantial in terms of Re Gaffney.

28. On the basis of the evidence therefore, and the realities of the situation, it cannot, Mr Auld said, be claimed that the restriction secures any kind of practical benefit of substantial value or advantage to the objectors under para (aa).
29. Under section 84(1)(a), Mr Auld said that the changes that had occurred in the neighbourhood since 1964 could be considered to have rendered the restriction obsolete. The wording of the covenant meant that loss of visual amenity from the objectors' property was not relevant. As he had already said, in connection with para (aa), it was only the question of privacy that fell to be considered, and any loss of that only related to the front garden of Glen Cottage. The construction of Mr Wolland's property, Wychwood Garth, had already taken away any privacy that there may have been and, furthermore, the additional houses that had been constructed on the opposite side of The Glen did likewise.
30. As to section 84 (1)(c), Mr Auld said that it appeared to be common ground between the experts that the proposed modification would have no effect upon the value of Wychwood Garth, and in Mr Sproson's'opinion, there would also be no diminution in the value of Glen Cottage. On the basis therefore that there will be no injury to anyone entitled to the benefit of the restriction, the Tribunal also has jurisdiction to modify the covenant under that section.
31. It was clear, Mr Auld said, from the application to the Lands Tribunal and from the early correspondence between the applicants' and the objectors' solicitors that the Dawes' were after financial recompense rather than, as was new being argued, for the restriction to be upheld; any recompense should reflect the reality of the situation and should therefore be minimal.

Objectors' Case

32. Mr Furze is a chartered surveyor, and a partner in Crisp Cowley, Chartered Surveyors of Bath. He has over 25 years experience in the valuation of residential property in the area, and had been instructed by the first and second objectors to provide his professional opinion as to the values of Streamside and Glen Cottage both prior to the extension works being carried out to Streamside, and after they have been completed. Both properties were inspected in July 2003 in the company of the applicants' expert.
33. He considered a number of comparables, including New House, Orchard Lea, The Glen, Saltford (sold at £435,000 in April 2003),; New House, The Glen, Saltford (sold £360,000 in August 2002); Northolt, The Glen (sold £340,000 in October 2002) and The Gables, 4 Tyning Road, Saltford (sold £459,000 with completion in July 2003). Mr Furze said he was advised that the applicants had purchased Streamside in April 2001 for £220,000, and as a check, he applied the Nationwide Building Society House Price Index for the intervening period. Taking the evidence in to account, he came to the view that Streamside would be worth £325,000 at July 2003 prior to any works being commenced (Mr Sproson's figure being £330,000) and when the extensions were completed, the property would be worth £625,000 (Mr Sproson: £600,000).
34. In his view, Glen Cottage had a value of £475,000 prior to the works (the same figure as Mr Sproson had applied). However, the value would be diminished by the fact that the balcony and rear facing windows in the new first floor extension would overlook, at an oblique angle, the rear of Glen Cottage. This would be particularly apparent in the winter months as many of the trees along the boundary were deciduous. The reduction in value caused by this potential intrusion was, he said, likely to be in the region of 5% and his figure for Glen Cottage assuming the extension to be completed in accordance with the applicants' proposals became £450,000.
35. In cross-examination, Mr Furze accepted that an attractive extension and improvement programme carried out to what had previously been a fairly plain, unimproved bungalow could indeed have a beneficial effect on Glen Cottage by generally lifting the tone of the area. He also acknowledged that, due to the thickness of the screening between the two properties, the rear garden of Glen Cottage could not be seen clearly from the new extension at Streamside, even in the winter.
36. In closing, Mr Wood said firstly, in connection with section 84(1)(a), that there could be no question of the covenant being obsolete. There had been no material change in the character of the neighbourhood or the property, the area remaining one of generally up-market dwellings that enjoyed a high degree of seclusion and privacy. It was accepted that there had been some increase in the density of development, particularly on the north side of The Glen, but this made the restriction all the more important. Under section 84(1)(aa), Mr Wood said that it was for the applicants to show that the restriction did not secure to the objectors any practical benefits of substantial value or advantage and that money would be adequate compensation for the loss or disadvantage that would be suffered by the discharge or modification of the covenant. He confirmed, in response to a question from me, that it was the objectors' principal case that the covenant should be enforced, and that the applicants be compelled to remove the first floor extension, rather than pay compensation for the modification that was being sought.
37. The restriction, Mr Wood said, did indeed secure the benefit of visual amenity, privacy and a severally spacious air to the location, and these are matters of substantial advantage and value. It is the privacy element that is central to this case; it is the objectors' sense of intrusion that will be enhanced if the extension is allowed to stay, rather than the fact that someone might or might not be standing at the first floor windows at Streamside, and peering into Glen Cottage's garden. The principles of what have and have not been held to be practical benefits of substantial value or advantage had been set out in a number of cases including Gilbert v Spoor [1983] Ch.27; Re Henderson's Conveyance [1940] Ch 835; Re Munday's Application (1954) 7 P&CR 130; Re Gossip (1972) 25 P&CR 215 and Re Wards Construction (Medway) Ltd (1973) 25 P&CR 223. Mr Wood said that these clearly point to the restriction here being of such value, but it was not a question of money. In monetary terms, even if there is little financial impact in terms of diminution in value of the objectors' property, no amount of money can compensate, in practical terms, for what will have been lost.
38. Finally, under section 84(1)(c), Mr Wood said that the applicants have to show that the modification or discharge of the restriction will not injure the objectors.

Conclusions

39. The application, although principally being argued under ground (aa), was also argued under grounds (a) and (c), and I deal with each in turn. The relevant provisions of section 84 state:

84-(1) The Lands Tribunal shall (without prejudice to any concurrent jurisdiction of the court) have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction on being satisfied-

(a) 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; or

(aa) that in a case falling within subsection (1A) below) the continued existence thereof would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impeded such user; or

(b) …..

(c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction.

and an order discharging or modifying a restriction under this subsection 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, that is to say either –

(i) a sum to make up for the loss or disadvantage suffered by that person in consequence of the discharge or modification; or

(ii) 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.

(1A) Subsection (1)(aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of the land in any case in which the Lands Tribunal is satisfied that the restriction, 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) ….

and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification.

(1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, 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 areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances.

40. Firstly, ground (a), which I think can be dealt with very shortly. I prefer Mr Wood's submissions on this point. Apart from some infilling here and there within The Glen (including the construction of Wychwood Garth in 1984) it seems to me that there have been few changes within the neighbourhood, and it remains, as agreed by the parties, a "generally upmarket area". The properties do generally enjoy good sized plots in mature surroundings, but as regards the high degree of privacy referred to by Mr Wood, I would temper that to "a modicum" in respect of many of the dwellings fronting The Glen. This is because of the lie of the land, and the fact that The Glen rises up on each side, resulting in many houses overlooking others, and gardens being visible from the road as they rise up the hillside. However, Glen Cottage is perhaps (especially as regards the house itself and particularly the private garden to the east), more secluded than most, much of this being due to the effective tree screening around the boundaries – notably that which separates the private side garden from Streamside.
41. The existence of the restriction that was placed on the covenanted land in 1964 is just as important now as it was then in retaining to the Dawes' the opportunity to control any development on land that could affect both the privacy enjoyed by the property and its garden. Even if there had been a material change in the neighbourhood the covenant could not, in my judgment, be deemed obsolete. Its purpose was clearly to afford protection to the owner of Glen Cottage from intrusive development upon the covenanted land, and to give him control over any building works that might be proposed. The application, as far as it goes under this ground, therefore fails.
42. I now turn to ground (aa), the main basis upon which this application is made. I do not think there can be any question that the continued existence of the restriction would impede the reasonable user of the land, in terms of the proposed (and partially completed) development. The extension and modernisation works which the applicants are undertaking are, in my judgment, not only reasonable, but constitute an improvement as to appearance over what was there before – as evidenced by the photographs of the bungalow prior to the start of the building works that were produced. Indeed, Mr Furze acknowledged that the works could have a beneficial effect on the area, and, on that general point, I agree with him. The fact that planning permission for the works has been obtained adds weight (see Re Bass Ltd's Application), and it is clear that the question of whether or not any of the new windows to the principal first floor rooms would seriously overlook Glen Cottage or its garden, or materially affect that property's privacy, was considered by the planning officer who dealt with the application. Condition 2 of the permission dated 30 October 2001 prevents the "installation of any additional windows, rooflights, openings or other alterations of the roof on the lower east side…" notwithstanding the provisions of the Town and Country Planning (General Permitted Development) Order 1995, and was to "safeguard the amenities of the adjoining occupiers from overlooking and loss of privacy."
43. The question therefore is: in impeding the extension that the modification would permit, does the restriction secure to the objectors practical benefits of substantial value or advantage? I agree that the key aspect here is the potential for loss of privacy and the extension works certainly, in my view, have no impact as regards views. If the restriction prevented works that resulted in either the principal accommodation within Glen Cottage or its private areas of garden being seriously overlooked, then it would be of substantial value and advantage. However, from my inspection of the properties and gardens, in the middle of winter when screening by trees, plants and shrubs is at its least effective, I do not think there is any serious invasion of privacy. It was not possible to see into the new first floor rooms at Streamside from any of the rooms in Glen Cottage and vice versa. The substantial number of mature conifers, shrubs and general planting on the boundary that separates Glen Cottage's secluded side garden from Streamside serve to screen the new extension (and for that matter, the rest of the property) to such an extent that, it is virtually invisible. That screening is, in the majority, within the ownership of the objectors' property and they will therefore have control over its maintenance.
44. In my view, the Dawes' concerns can be summed up in the extract from Re Zopats referred to by Mr Auld, where Erskine Simes QC said "It is, I am satisfied, a case where the prospect terrifies while the reality will prove harmless." Mr Wood said that it is the objectors sense of intrusion that will be enhanced if the extension is allowed to stay, but I think their concerns are over stated, and I am not satisfied that there will be any material affect upon Mr and Mrs Dawes' privacy within the house or within the private garden.
45. Where the new extension does have more impact is to the front garden and driveway of Glen Cottage. The new first floor accommodation on the west elevation of Streamside clearly overlooks this part of the property, and whilst I accept that that drive can be seen from many other properties, the new building is much closer than any of the others (except Wychwood Garth which is a similar distance). Mr Auld said that the construction of Wychwood Garth had taken away any privacy that there may have been within Glen Cottage's front garden, and that is certainly true, but it does not change the fact that the restriction can act to prevent any further overlooking. The applicants say, of course, that privacy within the front garden and driveway area is less important, and this seems to me to be a reasonable point but nevertheless the close proximity of the building is somewhat imposing. I conclude, therefore, that in preventing the extension, the restriction confers a practical benefit on the objectors.
46. The question is whether this practical benefit is of substantial value or advantage. Mr Sproson says there is no diminution in value, and Mr Furze said the value is reduced by £25,000, or about 5%, but he said this view was subjective and based upon his general experience. Even if I were to accept Mr Furze's opinion, Mr Auld said that 5% was not substantial (see Re Gaffney). In my judgment, the value of the benefit is principally in the eyes of the objectors and whilst, as I have said, I do not think they will suffer any invasion of privacy within the main house or in the private side gardens, there is some intrusion to the front garden. Whilst I think this would have little if any effect on the sale price that would be achieved if the property were sold, and if it did the reduction would certainly not be substantial, I have formed the conclusion that a figure of £10,000 would fairly compensate the Dawes for the loss or disadvantage they will suffer by this marginal loss of privacy. That sum cannot be considered to be substantial in terms of value, and I do not think either that the restriction can be considered to be of substantial advantage.
47. Mr Sproson expressed the view that between £5,000 and £10,000 would be appropriate payment to 'buy off' all three objectors but Mr Wolland, who had claimed £20,000 did not appear and was not represented. However, I do think that the new extension, which is clearly visible from his dining room overlooks that room and, at the same time, disturbs his views down the valley to the countryside beyond. Although, again, I do not think that there would be any affect on value if his property were to be sold, I consider that a payment to him of £2,500 would be a fair degree of compensation for obtaining his agreement to modify the restriction in the terms sought.
48. I find that, as the benefits are not of substantial value or advantage, ground (aa) is made out. However, I have found that there would be some, albeit slight, adverse effect upon the objectors, so it follows that ground (c) is not made out.
49. I have to consider, ground (aa) being made out, whether I should exercise my discretion in the applicants' favour. Relevant to this, in my view, is the fact that the applicants have carried out the extension works in breach of the covenant. While I accept that when the works were started they were not aware of this restriction, they were made aware of it and despite this they continued the works in open defiance of its terms. I have considered whether, in the light of this conduct, it would be appropriate for the Tribunal to refuse the relief that is sought. On balance, I do not think that it would be, in view of the very limited damage caused, and the fact that I find the evidence and correspondence produced at the hearing indicated that the objectors' real concerns were to be compensated for the proposed modification, rather than to secure the removal of the extension.
50. Finally, at the end of the hearing, I asked the parties to consider proposals for a suitable programme for additional screening along the rear boundary between Streamside and Glen Cottage, to be implemented if I were minded to grant the modification sought, and to provide their submissions by the end of January 2004. In this respect, the applicants have retained the services of a specialist landscape management company, and have obtained from them what is, in my view, an eminently sensible and worthwhile 'Boundary Landscape Management Scheme'. The applicants have said that they will undertake to carry out and maintain that scheme, but those proposals have proved unacceptable to the Dawes, their solicitor saying that any such works could be removed or destroyed at any time, and in any event, the proposals did nothing to assist the third objector, Mr Wolland. The Dawes suggested that the first floor windows at the rear of the new extension at Streamside should either be reduced in size or fitted with obscure glass. This was, not surprisingly in my view, unacceptable to the applicants, as the windows in question are full height patio doors that will give out on to a balcony when that work is completed.
51. The applicants also suggested that there be a restriction to prevent them (or their successors in title) substantially pruning, cutting down or damaging the existing trees on the common boundary (which I take to include the boundary onto the driveway as well as that onto the private side garden) between Streamside and Glen Cottage. Such a restriction, together with the proposed planting scheme seems to me to afford the covenantors adequate protection as I do not consider it necessary for further planting to be undertaken along the driveway boundary. I propose, therefore, to determine that, subject to satisfactory completion of the Berry Landscape Management scheme, as set out in their proposals dated 20 January 2004, the restriction at (2a) shall be modified as follows:

"…provided also that the building constructed in accordance with plans numbered 808/1, 808/2 and as amended by plan 808/2A attached to and forming part of planning permission number 01/01685/FUL of the Bath and North East Somerset Council dated 30 October 2001 shall not be in breach of this covenant."

52. In order to deal with the question of the ongoing protection to the boundaries once the scheme has been completed, and the modification is made as above and Clause 2(b) of the restrictive covenant now being obsolete, I propose to replace it with the following:

"2b. Not to substantially prune, lop, cut down, remove or otherwise damage the existing trees and shrubs on either of the common boundaries between Glen Cottage and Streamside (formerly Glenfalls) which, for the avoidance of doubt, shall also include the planting scheme undertaken in accordance with the Berry Landscape Management proposals dated 20 January 2004."

53. I also determine that the applicants shall pay the sum of £10,000 to the first and second objectors, and £2,500 to the third objector within 2 months of confirmation that the order confirming that the covenant has been modified.
54. What I have said so far concludes, as far as it is possible to do so at this stage, my determination of the substantive issues in this case. It is an interim decision, and a final decision will be produced when the landscaping works are completed and not before. This determination will then take effect as a decision when the question of costs is decided, and at that point, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and Order 61 rule 1(1) of the Civil Procedure Rules will come into operation. The parties are invited to make submissions as to the costs of this application and a letter accompanying this decision sets out the procedure for submissions in writing.

DATED 16 February 2004

(Signed) P R Francis FRICS

ADDENDUM

55. Since the interim decision was published on 16 February 2004, I have received confirmation from the objectors that the landscaping scheme referred to in para 50 above has been completed to their satisfaction. I therefore confirm the modifications to the restriction at 2a and 2b as detailed in paras 51 and 52.
56. I have also received submissions on costs. The applicants say that, as far as Mr and Mrs Dawe are concerned, they should be entitled to their costs up to 4 March 2003 when they lodged their notice of objection. Thereafter, they should pay the applicants' costs (including those of the hearing) because it had been their case that they did not wish to consider compensation for modification of the covenant, but were intent upon it being enforced, resulting in the need for the partially completed extension to be removed. The applicants, it was submitted, had succeeded and should therefore have their costs. As to Mr Wolland, it was accepted that he was entitled to any costs that he had incurred.
57. The applicants said that it was a fact that compensation had been offered to Mr and Mrs Dawe and whilst it was accepted that the £1,000 initially suggested by the applicants was an unrealistically low amount, an offer had been made by the Coles' solicitors in the (stayed) High Court action on 27 January 2003 pursuant to Part 36 of the Civil Procedure Rules. That offer, made on the premise that "our clients have a good prospect of having the covenant modified by the Lands Tribunal to allow what has already been built to remain" was not specific in terms of quantum but said: "We suggest that this sum will need to be determined by a surveyor and we accept that it is likely to be a significant sum well in excess of the £1,000 offered to date." It also offered to pay the applicants reasonable costs. It was submitted that, if Mr and Mrs Dawe had been prepared to negotiate, the sum recovered would have been at least as much as the figure of £10,000 determined by the Lands Tribunal. The proceedings before the Tribunal were, therefore, unnecessary.
58. For the objectors, their solicitor said that, as far as Mr Wolland was concerned there would be no claim for costs. As to Mr and Mrs Dawe, he said that Mr Coles had admitted during the hearing that the offer of £1,000 was derisory and that whilst he had authorised his solicitor to offer a greater sum, he had not given instructions as to the amount. No specific higher offer had, therefore, been transmitted to Mr and Mrs Dawe, and as the Tribunal had awarded ten times that amount, they should be entitled to their costs.
59. The Lands Tribunal position in respect of costs in section 84 cases was summarised in Re:Norwich and Norfolk University Hospital NHS Trust (2002) LP/41/2001 (Unreported) where the President, George Bartlett QC said:

"21. In any application for costs in a contested section 84 case it is important to bear in mind the nature of the proceedings. In such proceedings the applicant is seeking to have removed or reduced rights which were conferred on the objector or his predecessors by force of contract. If an objector successfully resists such an application he will usually be awarded his costs. The converse, that a successful applicant should normally receive his costs does not, however, apply. An unsuccessful objector may be ordered to pay part or all of the applicant's costs; there may be no order as to costs or he may receive part or all of his costs where, although the covenant is ordered to be discharged or modified, compensation is awarded to him. Which of these courses is followed by the Tribunal will depend principally on the nature or degree of the applicant's success and the conduct of the parties. In exercising its power to award costs, the Tribunal will always bear in mind the nature of the proceedings, which must ordinarily put an objector (who is defending a contractual right) in a more favourable position in relation to costs than the unsuccessful party in ordinary civil litigation."

60. In this case, the applicants succeeded in having the restriction modified, but the objectors were awarded compensation at an amount greatly in excess of the sum offered by the applicants (£1,000) and the amount put forward by them at the hearing (nil). The fact that an indication had been given by the applicants in their former solicitor's letter of 27 January 2003 to the effect that the initial offer was capable of being improved upon does not, in my view, assist the applicants in their quest for costs. No formal improved offer was made and, as I have concluded (para 49), the objectors' purpose was to achieve an amount to compensate them for the loss or disadvantage they would suffer from the erection of the extension. It was not unreasonable, in my judgment, for the objectors to resist the proposed modification in order to achieve proper compensation, and if the applicants had wished to protect themselves in relation to costs they could have made a higher offer.
61. Accordingly, I determine that the applicants shall pay Mr and Mrs Dawes' costs, such costs if not agreed to be the subject of a detailed assessment by the Registrar.

DATED 4 October 2004

(Signed) P R Francis FRICS