Tenants' veto on development
Posted: 4th March 2013
A restrictive covenant entitling long leaseholders of a block of flats to veto building work on an adjoining plot of land has been ruled enforceable, although the High Court has implied a term into the covenant that tenants’ consent to the construction of a new house cannot unreasonably be withheld.
The leaseholders of a substantial Victorian property in central London successfully argued that the covenant, which dates back to 1966, conferred enforceable rights upon them and the management company that owns the freehold of the property which was sub-divided into six self-contained flats.
The court’s decision means that the owner of the adjoining plot, who bought it at auction in 2012, must submit plans, drawings and specifications of any building that she proposes to construct on it for prior approval by the tenants and the management company before planning permission can be sought.
After analysing the context in which the covenant was originally drafted, the court ruled that it cannot have been the parties’ intention to confer a complete and unfettered right to withhold consent for building on the plot ‘on a whim’. Business efficacy demanded that the right of veto be qualified and that consent could not be ‘arbitrarily or capriciously’ withheld, despite express wording to that effect.