Building scheme – Covenants restricting development – Defendants obtaining planning permission to construct new houses rear gardens – Claimants seeking to enforce restrictive covenants – Whether claimants entitled to injunction precluding development – Application granted
The defendants wanted to develop the rear gardens of their adjoining properties in a joint venture by constructing three detached houses. They obtained planning permission for the project and signed articles of agreement with a building contractor.
The claimants, who lived across the road, had objected to the development and, soon after the works commenced, they applied for an interlocutory injunction to restrain them. The defendants undertook not to continue with the building works pending the trial of a claim for a permanent injunction.
The claimants argued that all the properties in the road were subject to restrictive covenants that had been imposed as part of a building scheme, which would be infringed by the proposed development. The covenants were contained in a 1890 deed poll and were referred to in the first entry in the charges register when the properties were first registered.
The defendants denied the claims and submitted that the character of the area had changed so fundamentally that any scheme was no longer enforceable; further, there had been acquiescence in previous breaches of covenants that made it unconscionable to now enforce the covenants. The defendants further alleged that the claimants had breached a covenant in the building scheme which they now sought to enforce, when they reconstructed their double garage with rooms above.
Correspondence between the parties indicated that the defendants had considered an application to the Lands Tribunal (LT), under section 84 of the Law of Property Act 1925, to discharge or modify the restrictive covenants in the deed poll but failed to do so because of the expense.
Held: The application was granted.
The claimants were entitled to a final injunction precluding the defendants from constructing any dwelling-houses on their properties.
(1) The claimants had established the existence of a building scheme that contained restrictive covenants to which the defendants’ properties were subject. On the evidence, there was not only an intention to create a building scheme but also a clearly defined area in which the scheme was to operate: Baxter v Four Oaks Properties Ltd [1965] Ch 816, Lund v Taylor (1976) 239 EG 199, Emile Elias & Co Ltd v Pine Groves Ltd [1993] 1 WLR 305 and Reid v Bickerstaff [1909] 2 Ch 305 considered.
(2) The development proposed by the defendants would breach the express requirement in the deed poll not to build more than a single house or a pair of semi-detached houses on each plot, should the covenants remained enforceable: Briggs v McCusker [1996] 2 EGLR 197 referred to.
(3) The court had the power to rule that a covenant had ceased to be enforceable as obsolete, but it should be exercised only in a very clear case. The LT had a discretionary and more flexible power to discharge or modify restrictive covenants. The fact that section 84(9) of the 1925 Act contemplated a stay of enforcement proceedings, to enable the LT to consider exercising its powers, suggested that the primary forum for determining issues such as obsolescence was the LT, especially in the case of a building scheme such as the present that imposed identical covenants on 57 separate properties. However, the character of the area had not substantially changed from that envisaged when the building scheme was created, remaining predominantly residential with the majority of plots still comprising just one or two houses. Accordingly, the covenants had not been rendered worthless or their enforcement unfair: Chatsworth Estates Co v Fewell [1931] 1 Ch 224 and Bell v Norman C Ashton Ltd (1956) 7 P&CR 359 considered.
(4) The defence based upon the acquiescence of the claimants’ predecessors to previous breaches was rejected. The defendants should have been made aware of the existence of the covenants before they purchased their properties since the detail contained in the deeds must have alerted the Land Registry to their existence. Moreover, even assuming that the claimants had not maintained the building line in breach of covenant when carrying out their own extension, that breach was de minimis when compared with the proposed construction of three new houses.
(5) Finally, this was not an appropriate case for an award of damages in lieu of an injunction. There was no evidence that the threatened injury could be accurately estimated in money and it would not be oppressive to the defendants to grant the injunction since they could still enjoy their properties or sell them to the same extent as before the development was considered: Shelfer v City of London Electric Lighting Co (No 1) [1895] 1 Ch 287 and Regan v Paul Properties DPF No 1 Ltd [2006] EWCA Civ 1391; [2006] 3 EGLR 94; [2006] 46 EG 210 considered.
John De Waal (instructed by Kerwoods, of Redditch) appeared for the claimants; Frances Pigott (instructed by MJ Darby & Co, of Birmingham) appeared for the defendants.
Eileen O’Grady, barrister
