Developments: When A Neighbour Can Unreasonably Withhold Consent

Summary and implications

Where a property is sold subject to a covenant stating that the buyer must obtain consent from the seller for any proposed development, but there is no express provision that consent cannot be unreasonably withheld, it is likely that the court will imply such a provision, as it did in a recent High Court case*.

Developers will welcome the decision. Provisions for consent in freehold covenants are often silent as to whether consent can be unreasonably withheld. The inference that consent cannot be unreasonably withheld may provide a bargaining position.

The claimants all had interests in 89 Holland Park

The claimants comprised the freehold owner of 89 Holland Park and six of the long leasehold owners of the flats in the building. The defendant was the owner of the adjoining land.

The claimants wanted to enforce restrictive covenants

The claimants were seeking to enforce the benefit of certain covenants contained in a 1968 deed (the Deed) (see the box below) which related to the development of the adjoining property.

The covenants required the claimants' approval of any plans, drawings and specifications before the defendant made a planning application and additionally before the defendant carried out any building work. The Deed was entered into by predecessors in title of both parties.

The 1968 Deed

Clause 2 (b) provides:

"The Building Owner [i.e. the owner of the defendant's land] shall make no applications to the appropriate Planning Authority nor apply for any other necessary permissions from the local or any other Body or Authority in respect of any plans drawings and specifications which have not been previously approved by the Adjoining Owner [i.e. the owner of the claimants' land] PROVIDED ALWAYS that if the Adjoining Owner shall approve the same but the Building Owner shall be required to modify or amend the same by the Planning Authority or any other Authority or if the Building Owner shall herself desire to amend the same then no further application shall be made by her to any such Authority unless the revised or amended drawings and specifications have been first approved by the Adjoining Owner".

Clause 3 provides:

"No work shall be commenced upon the building site before the definitive plans drawings and specifications of the said buildings have been first approved by the Adjoining Owner or his surveyor".

The defendant argued that the covenants were not binding

The defendant argued that the covenants were...