Restrictive covenants – a company may reasonably withhold consent on aesthetic grounds

A recent Court of Appeal decision (89 Holland Park (Management) Limited -v- Hicks [2020] EWCA Civ 758) held that it was possible to object to a neighbour’s proposed works to land or property on aesthetic grounds, provided the refusal was reasonable.

This significant decision adopts a practical approach to determining the scope of restrictive covenants and how the interests of a beneficiary might be protected.

Purpose of restrictive covenants

Restrictive covenants typically restrict land from being used for a particular purpose or from being developed in some way. The deed which creates the covenant must show an intention that the burden or obligation should bind successors.

Problems frequently arise with the construction of restrictive covenants that can mean the covenants are unenforceable. This raises questions such as (1) who is required to provide consent? or (2) can that consent can be withheld?

Restrictive covenants often make provision for those with the benefit of the covenant to consent to any proposed work. Usually such consent cannot be unreasonably withheld.

When to withhold consent?

Withholding consent on grounds that the proposed works will damage the structure or integrity of the property, or that the proposed works will amount to a loss of privacy or light is fairly common.  This note considers withholding consent on the grounds of aesthetics.

Can a company refuse consent on the basis of aesthetics?

The Court of Appeal has provided some useful clarification in the case of 89 Holland Park (Management) Limited -v- Hicks [2020] EWCA Civ 758.

Facts

Holland Park (Management) Ltd (HPML) was the freehold owner of 89 Holland Park, a large victorian building divided into five flats. Each flat was held under a long lease and each leaseholder was a shareholder of HPML.

Under a deed dated 10 July 1968, the restrictive covenants prevented the leaseholders from:

  • applying for planning or other permissions without the property owner's consent to the plans, drawings or specifications (Planning Covenant)
  • commencing work on the site without the Property owner's consent to the definitive plans, drawings and specifications of the buildings (Works Covenant).

Ms Hicks planned to build a house on a plot of land she owns at the rear of 89 Holland Park. She sought approval for the construction of a single storey entrance pavilion, described as being a glass cube structure, located at the eastern end of the plot, leading to a subterranean structure that covers most of the plot.

HPML gave four grounds for refusing consent under the Planning Covenant:

  • Architectural design, aesthetics and heritage
  • Destruction of trees
  • Excessive disruption and loss of amenity during the works
  • Construction and engineering issues

High Court decision

Ms Hicks applied to the High Court which held that HPML's only interest was in the common parts, the external structure of the building and the freehold reversion and as HPML could not take into account any interests of the leaseholders. This meant that HPML was not entitled to refuse consent based on aesthetics or environmental grounds. since these grounds had nothing to do with HPML's interest. As aesthetics or environmental grounds were not open to HPML, it was not necessary for the Court to consider whether the grounds were reasonable.

Court of Appeal decision

HPML appealed the decision. The key issue was whether HPML could withhold consent on aesthetic grounds. The Court of Appeal held that the restrictive covenant also benefitted the leaseholders and that if HPML was not able to take their views into account it would render the covenant “almost worthless”.

The court decided that HPML could refuse consent on aesthetic grounds as it would be extraordinary if it could not take into account what a proposed building would look like. The Court of Appeal held that a refusal on aesthetic grounds was a potentially valid reason for refusing consent, but that the reasonableness of the decision would need to be considered.

The Court of Appeal remitted the matter back to the High Court for the judge to consider whether the aesthetic reasons were reasonable ones.

Summary

It is clear from this case that it might be possible to object to a neighbour’s proposed works on aesthetic and environmental grounds, but that such a refusal must be reasonable and will always be dependent on the facts of each particular case.

For more information on this topic, please contact Stuart Nevin, Senior Associate or any member of the ALG NI Litigation and Dispute Resolution team.

Date published: 24 August 2020