Stephen Jourdan KC and Martin Dray appear in s.84 appeal
Stephen Jourdan KC and Martin Dray were instructed by Martin McKeague and David Manda of Walker Morris.
On 19 May 2025, the Court of Appeal handed down judgment in Great Jackson Street Estates Ltd v The Council of the City of Manchester [2025] EWCA Civ 652. The case related to restrictive covenants in a lease of two warehouses with 60 years unexpired. The tenant sought a modification order under s.84 of the Law of Property Act 1925 to permit the residential development of the site. The landlord, Manchester City Council, wished the residential development to proceed, but under a new long lease which would include an obligation to start and complete the development within a specified time. The Upper Tribunal rejected the application and the tenant appealed.
The tenant argued that the Tribunal ought to have granted the application under the limited benefit ground in s.84(1)(aa). The Tribunal had held that the restrictions secured a practical benefit of substantial advantage to the Council, by preventing the development going ahead unless the tenant satisfied its concerns. Those concerns were not pecuniary in nature but were “aimed at ensuring one of the last pieces of the development jigsaw slots into place”.
On appeal, the tenant argued that the Upper Tribunal was wrong in law to hold that the Council’s power to prevent the development from taking place save under a new lease on the terms required by the Council was a “practical benefit” for the purposes of s.84(1)(aa). It argued that the “practical benefits” referred to in s.84(1)(aa) are benefits which will be enjoyed as a result of the covenant being complied with, and the proposed reasonable user not being put into effect. The ability to impose terms on how the reasonable user is put into effect is not a “practical benefit” as it will only arise if the reasonable user is put into effect. Rather, the need to control how the reasonable user is put into effect is addressed by the Tribunal’s powers to impose terms as part of making the modification order. In any event, the ability to use a restriction to prevent the reasonable user from being put into effect unless the applicant agrees to enter into a new lease is not a “practical benefit” for the purposes of s.84(1)(aa).
The Court of Appeal disagreed. It held that the Tribunal was entitled to decide that it was a practical benefit for the Council to be able to prevent the uncontrolled development of the site and to mitigate the risk that the tenant might not commence the development and continue it in a timely fashion or might leave it unfinished.
The judgment can be downloaded here.
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