Building scheme – Restrictive covenant – Successors in title – Claimant company and defendants owning adjoining properties – Title deeds to claimant’s property containing restrictive covenants – Defendants seeking to enforce covenants to prevent claimant building dwelling houses on its property – Claimant seeking declaration that restrictive covenants not enforceable by defendants – Whether building scheme being established – Whether defendants entitled to enforce restrictive covenants as part of scheme of development to which predecessor party – Claim dismissed – Counterclaim allowed
The claimant and the defendants owned adjoining properties in Gerards Cross, Buckinghamshire. The claimant obtained planning permission to build two new detached dwelling houses on part of its land. The title deeds to the property contained restrictive covenants. It was not in dispute that, if those covenants were enforceable, and not modified, they would prevent the development from going ahead. The defendants objected to the development and contended that they were entitled to enforce the covenants as part of a scheme of development to which their predecessor had been a party. The claimant contended that there was no such scheme and that the covenants were unenforceable.
The claimant applied for a declaration, under section 84(2) of the Law of Property Act 1925, that the restrictive covenants were not enforceable by the defendants. The defendants counterclaimed on the basis that they were enforceable. A master dismissed the claimant’s application for summary judgment. The claimant sought permission to appeal. However, that application was heard, and the parties agreed to treat the hearing of that application as the trial of the action.
The claimant submitted that there was no defined estate, the claimant’s land did not have the benefit of the scheme and it had not been established that the restrictive covenants enured for the benefit of the other purchasers as opposed to the vendor.
Held: The claim was dismissed. The counterclaim was allowed.
(1) The matter before the master had been whether the claimant’s claim was suitable for summary judgment under CPR 24. He had been plainly right to consider that the question whether there was a building scheme which the defendants were entitled to enforce was arguable. The 1908 “Plan of Building Sites”, the lotting of the plots, the similarity of the covenants and the covenant specifically referring to the mutual benefit of all purchasers were more than enough to make the defendants’ claim arguable. Accordingly, an appeal against the master’s decision refusing summary judgment had no real prospect of success and permission to appeal would be refused: Elliston v Reacher [1908] 2 Ch 374 applied.
(2) Modern authorities emphasised that the key to a building scheme was reciprocity of obligation and the intention to create such reciprocity. The existence of a power to vary covenants was equivocal. The existence of the power was just one matter to be looked at in the context of the whole in deciding whether a scheme existed. The court’s task was to determine whether, as a matter of fact, there had been an intention at the time of crystallisation of the scheme that the covenants were to be for the common benefit of purchasers. It was well-established that extrinsic evidence was admissible for that purpose and none of the authorities suggested that that evidence should be given very little weight. Elliston v Reacher [1908] 2 Ch 374 and Jamaica Mutual Life Assurance Society v Hillsborough Ltd [1989] 1 WLR 1101 applied. Elias (Emile) & Co Ltd v Pine Groves Ltd [1993] 1 WLR 305, Stocks v Whitgift Homes Ltd [2001] EWCA Civ 1732; [2001] PLSCS 250 and Seymour Road (Southampton) Ltd v Williams [2010] EWHC 111 (Ch) considered.
(3) Looking at all the facts, the court was satisfied, on the balance of probabilities, and found as a fact, that it had been the intention that the covenants should be for the common benefit of the purchasers as well as for the vendor. Accordingly, the court was satisfied that a building scheme had been established.
Martin Hutchings QC and Jonathan Chew (instructed by IBB solicitors, of Uxbridge) appeared for the claimant; Wayne Beglan (instructed by SJS Law, of Putney) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read transcript: Birdlip Ltd v Hunter and another
