A cynical s.84 hunt – Harrison-Ellis v Hunt [2025] UKUT 295 (LC)

In September the Upper Tribunal (Lands Chamber) handed down its decision in Harrison-Ellis v Hunt [2025] UKUT 295 (LC), which was an application pursuant to s.84(1), Law of Property Act 1925, for the modification of a restrictive covenant inter alia preventing the raising of the height, and the addition of dormer and/or non-dormer windows in the eastern slope of the roof, of the Applicant’s house.

The Applicant’s house (Hillside) was subject to the following restrictions:

“3(2) Not to erect or cause or permit to be erected on the remainder of the land hereby conveyed any other building than one single storey dwellinghouse with the usual outbuildings and appurtenances thereto but so that the Purchaser shall be at liberty to incorporate in the roof of any such dwellinghouse bedroom accommodation with dormer windows provided that the said dormer windows shall be situated on either the western or the southern slopes of the roof of the said dwellinghouse and not the northern or eastern slopes thereof.

3(3) That the height of any such building hereafter to be erected on the land hereby conveyed shall be limited so that no part thereof shall rise above the existing level of the ridge of the roof of the said single storey dwellinghouse known as “Chesil Bank”.”

When the Applicants purchased Hillside, in March 2020, it was a single storey bungalow, albeit with accommodation in the roof space.  They have developed the house, utilising the accommodation in the roof space so that it now has a first storey, converting it from a single storey bungalow to a two-storey dormer bungalow, incorporating front and rear facing dormer windows, and a non-dormer (‘velux’ type) window facing towards the front.

Shortly before completing the purchase, the Applicants discovered that Hillside is subject to the restrictions.  They wrote to the Respondents directly, drawing their attention to the restrictions, and making clear their intention to develop the house.  They sought discussion with the Respondents.  The Respondents, however, made a positive decision not to respond or to engage with the Applicants.

The Applicants completed the purchase in March 2020 and again sought to discuss their development plans with the Respondents.  The Respondents declined to engage.  The Applicants submitted their planning application in April 2020, and hand-delivered a letter to the neighbouring properties, including the Respondents’, notifying them.  No protest, objection or comment was made by the Respondents.  The planning application was granted permission in June 2020 and the development works were carried out between July and December 2020.

Nothing happened thereafter for over two years.  Then, in February 2023 – over two years after the development had been completed – the Respondents took exception to the development, threatening “proceedings for immediate mandatory injunctive relief.”

The Objectors say that the development breached the above restrictions in four ways:

• what has been built is a two-storey dwellinghouse when only a one-storey is permitted;
• two large dormer windows have been installed on the eastern slope of the roof, when these were not permitted;
• a velux window has been installed on the eastern slope of the roof when the restrictions do not permit any windows on the northern or eastern slopes; and
• the height has been increased 1.2m above ridge height of Chesil Bank (the next door property referred to in the restrictions).

A central plank of the Objectors’ case was that even if the Tribunal found that it does have jurisdiction to modify the restrictions, it should not exercise its discretion to do so because the Applicants had attempted to mislead them, and then carried out the works without making an application to the Tribunal, knowing that they would be in breach of the restrictions.  They said that in their letter to the Objectors, the Applicants had misrepresented (whether knowingly or otherwise) the substance of the restrictions.  The Objectors asserted that the Applicants acted in bad faith and cynically.

The first case relied on by the Objectors was Alexander Devine Children’s Cancer Charity Trust v Housing Solutions Ltd [2020] UKSC 4, where the applicant had constructed 13 affordable homes on land burdened by a restrictive covenant.  The applicant knew of the restrictions, but went ahead and built anyway, applying for modification after the event.  The Supreme Court confirmed that an application under s.84(1) involves two stages: first, the jurisdictional stage (considering whether one of the grounds is made out); and secondly, the discretionary stage.

The application was refused at the discretionary stage, the Upper Tribunal describing the applicant’s conduct as “highhanded and opportunistic”.  In the Supreme Court, Lord Burrows said that this is what some commentators, especially in the context of breach of contract, described as “cynical”, and in line with this he adopted the phrase “cynical breach” as a useful shorthand for “deliberately committing a breach of the restrictive covenant with a view to making profit from so doing”.  Deterring cynical breaches is important, and noting that once a ground is made out, the discretion to refuse an application should be “cautiously exercised”, the Supreme Court dismissed the applicant’s appeal.

The Objectors also relied on Fosse Urban Projects Ltd v Whyte [2023] UKUT 286 (LC), another case in which modification was refused on the basis of cynical breach.  The applicant, a property developer, applied to the Upper Tribunal having built a house in breach of a restriction not to use the land otherwise than as a garden.  The developer satisfied the first, jurisdictional, stage – unusually, it made out ground (a) and well as ground (aa).  However, the application was refused at the discretionary stage.  The applicant had adduced no evidence which would demonstrate that its breach was not cynical, and the Upper Tribunal inferred that the developer was aware of the existence and enforceability of the restriction and that the breach was deliberate: “In my view the applicant’s ‘build first and apply later’ approach can be properly characterised as cynical.  I therefore decline to discharge or modify the covenant to sanction the development”.

In Harrison-Ellis v Hunt, the Applicants denied that they had misled the Objectors, or acted cynically.  Conversely, they pointed out that at all material stages they had sought to engage with the Objectors:

• they wrote a letter to the Objectors, in which they said that they were thinking of buying Hillside, and had been made aware of the restrictions. They summarised the covenants, although the summary was not very accurate.  They said that they would like to have the restrictions removed and offered to provide the documentation referencing the covenants.  The letter was sent to the Objectors, but they positively decided not to reply;
• the Applicants’ architect also got a mutual acquaintance to speak to the Objectors, to ask them to meet with the Applicants to discuss the restrictions;
• the Applicants also hand-delivered a letter to their neighbours, outlining their plans and intention to make a planning application (although the Objectors denied having received it).
• building work started in late June 2020 and was completed in early December 2020. In December 2020 the Objectors were having plans prepared for an application for planning permission for the demolition of the bungalow on their land (Korobe) and the construction of a new house.  He went to see the Applicants to discuss his plans, and expressed no issue with the development of Hillside.  Contrariwise, the Tribunal held that the Objectors expressed approval of the development and expressed the hope that the Applicants would not object to their plans.

Thus, the Objectors had positively refused to engage with the Applicants, and did not take any issue with the development of Hillside until around January 2023, over two years after the completion of the development.  The Tribunal soundly rejected the Objectors’ argument; the Applicants were not cynical.  On the contrary, the Applicants had attempted to “engage, to seek permission, to provide information and to devise a development that was satisfactory to all”.  The Tribunal noted that, “In failing to engage with that letter the objectors missed a golden opportunity, and it is not right to penalise the applicants now for the Objectors’ inaction”.  Indeed, the Tribunal noted that the first Objector wished he had replied to the Applicants’ letter, and the Tribunal agreed that, “much trouble would have been prevented had he done so”.

Moreover, as the Tribunal noted that, “the Objectors appear to have been perfectly happy about Hillside until January 2023.  They had no interest in the content of the restrictions until they took offence at the bin store.  Their reaction to the bin store makes it clear that had they been the slightest bit unhappy about the extension of Hillside they would have taken steps to check the content of the covenants while the development was happening and before it was completed.  They would have accepted the Applicants’ offer of a copy of the covenants.  They would then certainly have spoken up and asked for the development to stop had they not been happy.  It is not right to penalise the Applicants now, when reversing the extension will be expensive and destructive, for the Objectors’ failure to act.”

The Tribunal expressed further consternation as to the Objectors’ failure to engage: “We do not understand why the Objectors waited so long before finding out about the content of the restrictions when they could so easily have done so long before.  We do not suggest that their indignation at the development is entirely insincere, but we take the view that it is exaggerated, in light of the fact that they were clearly unbothered until January 2023.”  Thus, the Tribunal considered the Objectors’ expressed indignation at the development to have been somewhat insincere, albeit not entirely insincere.  Ultimately, the Tribunal concluded that carelessness or naivety on the part of the Applicants was, “far outweighed by the unfairness of the Objectors’ behaviour”.

It was apparent to the Tribunal that, in reality, the Objectors were largely motivated by the fact that they simply “do not like the look of Hillside”.  Put simply, “whether the Objectors like the look, design or quality of Hillside is irrelevant”.  Thus, the Objectors’ assertion that the Applicants had acted in bad faith and cynically was rejected.

The Applicants’ expert valued the diminution in value of Korobe by the development of Hillside at £13,000.  The Objectors argued for a significantly higher £230,000 (being 10% of the agreed value of Korobe once its development is completed).  In the event, the Tribunal rejected the Objectors’ position as to the correct level of compensation:

“We see no evidence to support Mr Kempton’s view that the restrictions secure benefits worth £230,000. He said that “the best he could do” was to take a percentage figure, but he has provided us with no help in relating that figure to the reality of the property market. We regard it as not only unsupported by evidence, but also greatly out of proportion to the effect upon the value of Korobe of the extension of Hillside”

The Tribunal concluded that “the benefits conferred by the restrictions, in terms of protecting Korobe from the visual impact of Hillside as it now is and from the effect of the extended Hillside on the privacy of the occupiers of Korobe, are not of substantial value”, and had “no hesitation” in exercising its discretion to modify the restrictions so as to permit the development of Hillside as it stands, subject to payment of £25,000 compensation.  Thus, the application succeeded on ground (aa).

There are salutary lessons here not only for developers who have proceeded with a development in breach of restrictive covenants, but also for those with the benefit of the covenants.  Those with the benefit of the covenant should engage with the developer, if engagement is sought, and should give timely thought to making a protest and seeking injunctive relief as soon as the development works start.  If they do not engage, or if they wait until after the development is completed, they risk a finding by the Tribunal that it is they who have been insincere and acted cynically.

Article by Andrew Skelly