Recently, a national housebuilder sought consent from a third party to its development plans. This raised issues covered by two not so well known but very useful Court decisions*.
The housebuilder has a development site that drains surface water through a drain under an adjacent railway line. The site is burdened by a covenant in favour of Network Rail that requires it to obtain the approval of Network Rail to any development plans for the site. In essence, to ensure that such plans won’t adversely increase the flow of water through the drain and impact on the railway.
The covenant is drafted such that there is no statement requiring Network Rail to act in a reasonable and timely manner in consenting to the housebuilder’s plans.
Is there anything the developer could do to prevent Network Rail holding them to ransom by refusing consent?
In short, yes. Whilst in many scenarios (particularly landlord and tenant law) the absence of wording along the lines of “such consent not to be unreasonably withheld or delayed” may give a party an absolute right to refuse consent, the High Court has, in very similar circumstances to these, implied a term into a covenant such that the third party was to act reasonably (and promptly) in granting consent*.
The same point was made in a case decided by the Court of Appeal**, giving the principle greater weight, albeit with facts less analogous to the housebuilder’s case.
In each case the rationale is that certain covenants implicitly recognise the prospect of development on burdened land and are imposed to protect the operation or use of the benefitting land (in this case, the operation of the railway). Contrast this to a covenant where the purpose is to restrict development on the burdened land e.g. a “no build” covenant.
The Court of Appeal ruled that:
“the question to be asked in all cases is whether… a capricious or unreasonable withholding of consent would amount to a destruction of the thing granted… It seems to me pointless to impose the requirement to submit plans in the first place [for approval of the benefitting party] if the [benefitting party] has the right to reject them arbitrarily – whether or not on reasonable grounds and regardless of the merit of the proposed [works] on its merits.”
While the examples mentioned above are not recent cases (2005 and 1988), they are useful tools in the armoury of the developer who, pursuant to a covenant on title, requires the consent of a third party to a development. Such cases inevitably turn on their own facts but where a covenant has been imposed to protect the operation or amenity of third party land then the cases are a useful starting point in trying to force that third party into a considered response.
*Rickman v Brudenell Bruce
**Cryer v Scott Brothers (Sunbury) Ltd.