Stafford-Flowers, re: 182 Brambles Chine Estate

Factual and Procedural Background

This decision concerns an application made on 3 June 2013 by the Applicant for the discharge of a restrictive covenant affecting a bungalow within a holiday estate comprising 278 units located on the Isle of Wight. The covenant restricts use of the land to holiday purposes only and prohibits occupation during specified winter periods totaling 74 days annually. The Applicant acquired the freehold in 1998 and has occupied the property as their principal residence year-round in breach of the covenant.

The objector is the management company responsible for the estate and adjacent land, representing the interests of the majority of freehold owners subject to similar covenants. The management company sought to enforce the covenant, resulting in injunction proceedings in the County Court, where an injunction was granted to prevent occupation during the restricted periods. The enforcement was stayed pending determination by this Tribunal.

The Applicant seeks full discharge of the covenant to allow unrestricted year-round occupation, while the objector proposes a modification permitting occupation except overnight during the restricted periods. The Tribunal conducted a hearing in October 2014, received witness evidence from both parties including expert planning and valuation evidence, and undertook a site inspection.

Legal Issues Presented

1. Whether the restrictive covenant should be deemed obsolete under section 84(1)(a) of the Law of Property Act 1925 due to changes in the character of the property or neighbourhood.
2. Whether the continued existence of the restriction impedes reasonable user of the land under section 84(1)(aa) and (1A) and if so, whether the restriction secures practical benefits of substantial value to the objectors or is contrary to the public interest.
3. Whether the discharge or modification of the restriction would cause injury to the persons entitled to its benefit under section 84(1)(c).
4. The applicability of issue estoppel arising from prior County Court injunction proceedings.
5. The appropriateness of modifying the covenant to remove holiday use restrictions but retain overnight occupation restrictions during specified periods.

Arguments of the Parties

Applicant's Arguments

• The original planning permission and covenant were designed to promote tourism through holiday use, but the local holiday market has substantially declined, making the restriction obsolete.
• Increasing numbers of properties are owner-occupied year-round, reflecting a change in character of the estate and neighbourhood.
• The holiday use restriction imposes an artificial limitation that depresses property values and hinders full enjoyment of the properties.
• Certificates of Lawful Use granted by the local planning authority confirm continuous residential use without enforcement action, supporting reasonableness of full-time occupation.
• The objector’s fears of "thin end of the wedge" are overstated; only a limited number of owners would seek similar relief, so the practical benefit to the objector is minimal.
• The management company’s plans for development and sale of adjacent land would benefit from removal of restrictions.
• The removal of the holiday use restriction but retention of night-time occupation restriction is not opposed by the objector and should be accepted.

Objector's Arguments

• The estate retains its essential character as a holiday park; the chalets are suitable only for temporary occupation and lack facilities for permanent residence.
• The restriction is necessary to preserve the peaceful nature and character of the site and prevent it becoming a standard residential estate.
• Enforcement of the covenant reflects the agreement and expectations of the majority of freehold owners who purchased with knowledge of the restrictions.
• The prior County Court injunction decision precludes the Applicant from arguing obsolescence due to issue estoppel.
• The "thin end of the wedge" concern is significant; discharging the covenant would likely lead to many further applications and undermine the scheme and management company’s ability to maintain the estate.
• The local planning context and policies strongly support retention of holiday accommodation and restrict unrestricted residential development in this location.
• The infrastructure, including access roads and services, is inadequate for full residential use and would require substantial costly upgrades.
• The management company has a mandate from a majority of members to oppose discharge and preserve the covenant.

Table of Precedents Cited

Court's Reasoning and Analysis

The Tribunal considered the grounds for discharge or modification under section 84(1)(a), (aa), (b), and (c) of the Law of Property Act 1925. The Applicant’s original reliance on obsolescence under ground (a) was overtaken by the objector’s concession on parts of the restriction, but the Tribunal nonetheless addressed it and found no sufficient change in character to deem the covenant obsolete. The estate, despite demographic and social changes, retains its essential character as a holiday park, and the chalets remain unsuitable for full residential use.

The Tribunal gave careful consideration to the doctrine of issue estoppel arising from the prior County Court injunction. However, it concluded that the evidence before it was more extensive and different in nature, and the question of issue estoppel did not ultimately preclude its own assessment. Nevertheless, the Tribunal agreed with the County Court’s conclusions that the covenant was still enforceable and necessary.

Under ground (aa), the Tribunal applied the six-part test from Re Bass Ltd’s Application to assess whether the restriction impeded reasonable user and whether the benefits secured by the restriction were substantial. It found that residential occupation including overnight use was a reasonable user, and the restriction impeded this. However, the key issue was whether the restriction secured practical benefits of substantial value. The Tribunal accepted the objector’s submission that the restriction preserves the character of the estate and prevents a fundamental change that would cause injury to the members.

The Tribunal gave significant weight to the “thin end of the wedge” argument. It found that allowing the discharge would likely result in numerous further applications, undermining the scheme of covenants and the management company’s ability to maintain the estate’s character and infrastructure. This would cause injury to the objectors and other residents.

The Tribunal also considered the planning context, noting local policies strongly favour retention of holiday accommodation and restrict unrestricted residential development in this location. The infrastructure and access were inadequate for full residential use without costly upgrades. The covenant’s purpose and the scheme of private rights remained relevant and material.

Given these factors, the Tribunal concluded that the restriction should not be wholly discharged. However, in light of the objector’s concession regarding daytime occupation and removal of the holiday/leisure use restriction, the Tribunal exercised its discretion under section 84(1C) to modify the covenant to permit occupation except between 5pm and 10am during the restricted periods, thus preserving the overnight restriction.

Holding and Implications

The application to discharge the restrictive covenant is refused.

The Tribunal grants a modification of the covenant to permit occupation of the property at all times except overnight between 5pm and 10am during the periods from 15 November to 19 December and 4 January to 14 February each year.

This decision preserves the essential character of the estate as a holiday park and protects the interests of the objectors and other residents by maintaining the overnight occupation restriction during the specified periods. The Tribunal’s ruling prevents the erosion of the covenant scheme and potential injury to the management company and its members. No new precedent is established beyond the immediate effect on the parties, and the Tribunal invites submissions on costs.