Great Jackson Street Estates Ltd v Manchester City Council [2023] UKUT 189 (LC)
Background
This case is of interest as it illustrates the different roles that a local authority may have in a property development where it has both the role of landlord and a role as the planning authority.
It illustrates the importance of maintaining a clear separation of the different roles of a local authority whether that relates to its planning or highways or property management function. This separation allows the proper operation of such roles and upholds fairness in decision-making and transparency.
The Case
Great Jackson had plans to redevelop the site into a major residential scheme. They applied for planning permission and were granted permission in 2021 for the development.
The terms of the current lease of the site from the Council (the Landlord) to Great Jackson (the Tenant) contained covenants which prohibited works without the Landlord's consent. It also imposed restrictions on development and the future use of the site without the Landlord's consent and imposed various restrictions on the Tenant relating to waste storage, subletting, nuisance and use of hoardings.
The Lease covenants restricted the ability of the Tenants to develop the site and therefore Great Jackson applied to the Upper Tribunal for the modification of eleven covenants to enable the development to be carried out without the consent of the Council.
The Upper Tribunal found for the Council and the covenants were not modified.
Key Takeaways
Where agreement cannot be reached between the covenantor and covenantee to modify or discharge a covenant it is open for the covenantor to apply to the Upper Tribunal under s.84 (1) of the Law of Property Act 1925 for modification or discharge of that covenant. S.84 (1) gives the Upper Tribunal power to discharge or modify a restrictive covenant provided that certain conditions are met. The Upper Tribunal had to be satisfied that one of the following grounds was proved:
- the covenant is obsolete (s.84 (1) (a));
- the covenant impedes some reasonable use of the land (s.84 (1) (aa));
- agreement (s.84 (1) (b)); or
- no injury will be caused (s.84 (1) (c)).
Great Jackson relied on ground (a), (aa) and (c) in their application.
The Upper Tribunal found as follows:
- the restrictions were not obsolete. The Council (as Landlord) had a legitimate strategic interest in retaining control over use of the land and ensuring any development was carried out with appropriate safeguards;
- although the restrictions restricted Great Jackson's proposed use of the land, they also secured to the Council (as Landlord) a substantial benefit.
- modifying the restrictions would cause the Council (as Landlord) to lose its practical control over the redevelopment of the site – causing injury to the Council (as Landlord).
Wearing Different Hats
It is important to remember where the local authority is landlord that although it may grant planning permission (wearing it's LPA hat) for a development, it may not be prepared in its role as landlord (wearing it's property management hat) to relinquish control over what development can be carried out at a property or how a site can be used .
It is also a reminder that planning permission and restrictive covenants on land are independent of each other. The grant of planning permission does not override any restrictive covenants that affect the land.
