Section 84(1)(aa) and Strategic Control: Practical Benefits of Restrictive Covenants in Urban Redevelopment

Introduction

The Court of Appeal’s decision in Great Jackson St Estates Ltd v Council of the City of Manchester [2025] EWCA Civ 652 concerns the interplay between planning authority rights and restrictive lease covenants under the Law of Property Act 1925. Great Jackson St Estates (“Great Jackson”) holds a long lease of redundant warehouses on Plot G in a designated high-quality residential area of central Manchester. The freehold and planning authority—the City Council—has actively promoted redevelopment across adjacent plots under a City Centre Strategic Plan. Great Jackson obtained planning permission for two 56-storey towers but was refused the Council’s consent under a series of restrictive covenants in the existing lease. After negotiations for a new 250-year lease with development milestones broke down, Great Jackson applied under section 84 of the 1925 Act to modify or discharge eleven covenants. The Upper Tribunal refused relief on all grounds, principally because the covenants secured “practical benefits of substantial value” to the Council by enabling it to ensure timely and orderly completion of the redevelopment. Great Jackson appealed.

Summary of the Judgment

The Court of Appeal unanimously dismissed Great Jackson’s appeal. It held that:

Under section 84(1)(aa) and (1A), a restrictive covenant must be shown to impede a reasonable user of the land, and the objector must not derive practical benefits of substantial value from that impediment.
The Manchester Council’s ability to withhold consent under the existing covenants until assured of timely commencement and completion of the redevelopment constituted a “practical benefit” of substantial advantage. It enabled the Council to further its uninterrupted strategic development plan and to mitigate the risk of stalled or partial redevelopment.
Financial “bargaining power” alone does not qualify as a practical benefit; here the benefit lay in real‐world control over the timing, form and completion of the works.
The Upper Tribunal’s discretionary refusal to modify or discharge the covenants was properly exercised, particularly given ongoing commercial negotiations for a new lease tailored to secure development milestones and forfeiture rights.

Analysis

1. Precedents Cited

The Court of Appeal’s reasoning builds on longstanding authorities about section 84:

Gilbert v Spoor [1983] Ch 27: emphasized the breadth of “any practical benefits of substantial value or advantage” and held that protection of a view constituted a practical benefit.
Stockport MBC v Alwiyah Developments (1986) 52 P&CR 278: drew a clear line between practical benefits and mere financial bargaining positions, rejecting a covenant that only secured additional sale proceeds as a practical benefit.
Edgware Road (2015) Ltd v Church Commissioners [2020] L&TR 13: confirmed that covenants safeguarding an estate’s strategic plan—here, use restrictions preventing a hotel—afforded a substantial practical benefit of control over the wider estate.
Caledonian Associated Properties Ltd v East Kilbride DC (1985) 49 P&CR 410: distinguished on grounds that it focused on planning permission uncertainty rather than deliverability under an existing lease term.
Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd [2020] UKSC 45: affirmed the Upper Tribunal’s discretion under section 84 and the cautious approach to relief once jurisdictional grounds are met.

2. Legal Reasoning

The Court’s legal analysis turned on the statutory test in section 84(1)(aa) and (1A) of the Law of Property Act 1925:

Has Great Jackson shown that the covenants impede some reasonable user of the land?
- Yes—redevelopment into high-density residential towers.
Does compliance with the covenants confer any practical benefits of substantial value to the Council?
- The Court held that the Council’s power to withhold consent unless rigorous development milestones and forfeiture provisions were agreed secured a genuine, non-pecuniary benefit: control of timing, completeness and form of the project in line with the City’s strategic plan.
If practical benefits exist, is money an adequate compensation?
- Not addressed in detail, as the Council’s benefit was non-monetary control, and the Tribunal concluded no jurisdiction to modify.
Discretionary considerations under section 84(1C) were properly left unexercised:
- The Upper Tribunal correctly declined to impose substitute conditions or remold Grove Jackson’s covenant modifications (“Clause X”), since those proposals did not address viability, deliverability or completion milestones.
- It was inappropriate to disrupt commercial negotiations on a bespoke new lease structured to protect public and private interests alike.

3. Impact

This decision clarifies and reinforces:

Planning authorities that hold the freehold and benefit from restrictive covenants may rely on those covenants to secure strategic public objectives—timely, complete, orderly redevelopment—beyond statutory planning controls.
Section 84(1)(aa) protects legitimate estate-management and public-policy aims: “practical benefits” extend to control mechanisms, not only private amenities or mere financial leverage.
The Upper Tribunal’s discretion under section 84 remains broad but must be cautiously exercised, particularly to avoid overriding ongoing commercial negotiations that encompass wider public-interest considerations.
Leasehold covenants remain a potent tool for local authorities to ensure comprehensive urban regeneration when coupled with statutory planning schemes.

Complex Concepts Simplified

Restrictive Covenant: A promise binding successive owners of land not to use it in specified ways without the landlord’s consent.
Section 84(1)(aa) and (1A): A statutory mechanism allowing the Upper Tribunal to modify or discharge restrictive covenants if they impede a “reasonable user” and confer no substantial practical benefit (or are contrary to the public interest).
Practical Benefit: A real-world advantage flowing from compliance with a covenant—such as protecting views or ensuring construction milestones—not mere bargaining power or potential sale proceeds.
Development Milestones and Forfeiture Rights: Contractual safeguards obliging developers to start and finish works by set dates, with the landlord empowered to terminate the lease on default.
Section 84(1C): Permits the Tribunal, when modifying a covenant, to add reasonable conditions to replace relaxed provisions—but does not authorize wholesale rewriting of commercial accords.

Conclusion

The Court of Appeal’s decision affirms that planning authorities who hold landlord rights under long leases can legitimately use restrictive covenants to safeguard strategic urban-development objectives. The power to withhold consent under those covenants until robust milestones and completion assurances are in place constitutes a substantial practical benefit under section 84(1)(aa). This judgment underscores the synergy between statutory planning controls and private-law covenants in delivering comprehensive, timely and orderly regeneration schemes. Developers and local authorities alike must recognize that section 84 relief is limited where non-monetary, public-policy objectives are served by existing restrictions and where appropriate remedial conditions can be negotiated under a fresh commercial lease framework.