The recent High Court case of Davies-Gilbert v Goacher  EWHC 969 (Ch) sets out the general principles to be followed when determining whether the refusal of consent by a landowner whose land benefits from a restrictive covenant is unreasonable.
The claimant owned a significant area of land in East Sussex (the “Estate”), part (but not all) of which benefitted from a restrictive covenant (“Covenant”). The defendants’ land was burdened by the Covenant.
The Covenant provided as follows:
”… NOT to erect upon any part of the property hereby conveyed any other messuage erection building or wall whatsoever without such previous written licence as aforesaid such licence not to be unreasonably withheld” (emphasis added).
The defendants wanted to construct two detached dwellings on their land. However, the claimant refused to consent to this for two reasons, namely that if the development were to proceed:
A number of considerations contributed to the claimant’s reasons including the:-
Despite the claimant’s refusal to consent to the proposal, the defendants proceeded to commence works in the belief that the claimant’s refusal was unreasonable.
The main issue in the case for the Court to decide was whether the claimant’s refusal to consent was indeed unreasonable. In arguing that it was not, the defendants essentially claimed (amongst other matters) that the claimant’s decision-making process was flawed for taking into account irrelevant considerations.
In reaching a decision, the Court helpfully distilled a number of general legal principles which can be applied in any given case where the reasonableness of consent under a restrictive covenant is in question.
Applying those principles to the claimant’s refusal, the Court held:
Amongst other matters, it took into account the impact of the proposal on the Estate (which included non-benefitted land) – an irrelevant consideration. Covenantees are not entitled to take account of matters that did not affect the benefitted land. Applying the above legal principles, as irrelevant considerations contributed to the first reason, that reason was unreasonable (or a “bad” decision).
That reason considered the effect of the scheme on the future use and commercial value of neighbouring land (which did benefit from the Covenant). That was a “free standing” reason not influenced by any irrelevant considerations. The Court concluded the claimant had followed a reasonable decision-making process and reached a reasonable conclusion (i.e. a “good” decision).
Overall, therefore, the claimant’s refusal of consent was reasonable. The claimant was awarded a declaration to that effect and injunctive relief (or such undertaking in lieu).
This case serves not only as a useful summary of the existing legal principles applicable to qualified covenants and dealing with reasonable decision-making – it also helpfully clarifies the approach to be taken with the concept of “irrelevant considerations” in the field of restrictive covenants.
For anyone advising in connection with applications for consent under covenants, this case will emphasise the importance of scrutinising not only the principle headline reasons for a refusal, but also the underlying considerations which may have influenced those. If challenged, those considerations will be of utmost importance for determining whether a decision is reasonable. It is therefore better to grapple with those at the outset.
A refusal will still be reasonable provided there is one “good” free-standing reason. From a practical perspective, the case therefore also highlights the benefit of giving several reasons for refusal.
The Judge in this case particularly welcomed the opportunity to undertake a site visit which the Judge comments had inevitably influenced the Court’s findings. Those advising in this area might also seek to introduce the same where appropriate to give greater context to the subject matter.
The principles in the case are likely to be relevant whether dealing with freehold or leasehold property.