Restrictive Covenant Discharged to Facilitate Residential Development

In a significant High Court decision, Mr Justice David Nolan has granted an order discharging a restrictive covenant which had prohibited the development of residential lands in Co Limerick, marking the court's first written judgment on the exercise of the jurisdiction under s.50 of the Land and Conveyancing Law Reform Act 2009.

Background

The plaintiff, a property development company , as freehold owner of a plot of land in Co Limerick which was surrounded by several housing developments, sought to develop the lands in accordance with planning permission obtained on 10 August 2020 for the construction of 10 houses, an access roadway, and ancillary site works. However, a restrictive covenant registered on the plaintiff's folio — arising from a Deed of Transfer dated 13 July 2016 — prohibited use of the land for any purpose other than a single private or professional dwellinghouse.

In those circumstances, the plaintiff applied to the High Court pursuant to s.50 of the Land and Conveyancing Law Reform Act 2009 seeking discharge of the covenant on the grounds that continued compliance with it would constitute an unreasonable interference with the use and enjoyment of its land.

The Court's Analysis

Mr Justice Nolan conducted a detailed consideration of the factors prescribed under s.50(2)(a)-(i) of the 2009 Act, which require the court to balance the interests of the dominant and servient owners before exercising its discretion to discharge or modify a restrictive covenant. In broad terms, the "dominant" land is the land which has the benefit of the covenant — that is, the land whose owner is entitled to enforce it — while the "servient" land is the land which is burdened by the covenant and whose owner must comply with its terms.

The court had regard to the following key factors:

• No party sought to uphold the covenant. The first defendant was no longer trading and had not participated in the proceedings. The second defendant was in liquidation, with its liquidators taking a neutral position. The court found this to be a material consideration.
• Limited benefit to the dominant land. Having considered JA Pye (Oxford) Ltd v UK [2007] 46 EHRR 1083 and S v United Kingdom ECHR 10741/84, the court was satisfied that the covenant had been created for the purpose of conferring a commercial benefit on the second defendant rather than any real benefit to the dominant land.
• Surrounding development. The court noted that development had accelerated on the surrounding lands, leaving the servient land as something of a wasteland, principally as a consequence of the covenant.
• Planning context. The modification or discharge sought was consistent with the surrounding development and conformed with the Limerick Development Plan 2022-2028. The Regional Spatial and Economic Strategy identified Newcastle West as a "Key Town." The court also accepted expert planning evidence that planning permission would not be granted for a single dwelling on the servient lands — a fact the court found to be very relevant.
• Public interest. Given the objectives of the Local Area Plan and National Planning Framework, and An Bord Pleanála's opinion that the proposed development would not adversely impact on the residential amenities of adjoining properties, the court was satisfied that the discharge of the covenant would be in the public interest.

Delivering judgment, Mr Justice Nolan concluded:

"In my opinion a fair balance has been struck between the right of the dominant owners, the rights of the Plaintiff to use and enjoy the land without unreasonable interference, and the general interests of the public and local community in circumstances where there is a national shortage of housing and a growing population."

Accordingly, the High Court made orders discharging the covenant.

Case Commentary

This is a noteworthy decision as it represents the first written judgment from the Irish High Court on the exercise of the s.50 jurisdiction under the Land and Conveyancing Law Reform Act 2009, and will be of interest to practitioners advising on the discharge or modification of restrictive covenants.

It should be noted, however, that the case turns firmly on its own particular facts. Several features combined to make this an unusually strong case for discharge: no party sought to uphold the covenant; the dominant owner appeared to derive no real benefit from it; the surrounding lands had been substantially developed; and the covenant had been in place for a relatively short period. Practitioners should therefore be cautious about treating this decision as establishing a general presumption in favour of discharge in analogous circumstances.

Of particular note is the significant emphasis placed by Mr Justice Nolan on the fact that planning permission had already been obtained for the proposed development. The court treated the grant of planning permission — which itself conformed with the Limerick Development Plan 2022-2028 and the broader National Planning Framework — as a highly material factor in its overall balancing exercise. This underscores the practical importance, when pursuing an application under s.50, of securing planning permission in advance of, or in conjunction with, proceedings. Applicants who can point to a subsisting, unconditional planning permission will be considerably better placed to satisfy the court that discharge or modification is warranted. The court presumably placed weight on this factor given that the planning process affords the public a statutory opportunity to engage with any proposed development.