Restrictive covenants – Building scheme – Successors in title – Appellant and respondents owing adjoining properties – Conveyances of appellant’s property containing restrictive covenants – Whether respondents entitled to enforce covenants to prevent appellant from building houses on its property – Whether scheme of development established – Appeal allowed
The appellant and the respondents owned adjoining properties on land in Gerards Cross, Buckinghamshire. The land in question had all been developed early in the last century, beginning in 1906 after it was acquired by common owners. The appellant’s title to its property derived from two separate conveyances from those common owners, dating from 1909 and 1910 respectively, which set out a series of covenants given by the purchaser. Various other conveyances of land in the area contained similar covenants.
The appellant obtained planning permission to build two new detached houses on part of its land. That development was prohibited by the covenants in the 1909 and 1910 conveyances. The respondents sought to enforce the covenants so as to prevent the development from going ahead. They claimed that the covenants formed part of a building scheme involving mutually enforceable restrictive covenants.
The appellant applied to the court for a declaration, under section 84(2) of the Law of Property Act 1925, that the respondents were not entitled to enforce the restrictive covenants. It contended that the requirements for a scheme of development were not met since there was no defined estate, its 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 common owners as vendors.
Dismissing the claim, the judge found that: (i) it could be inferred that, when the first lot was sold in 1906, there was a plan in existence which defined the boundaries of the estate; and (ii) there was a scheme of mutual covenants affecting the properties within those boundaries. He accordingly found that a scheme of development existed: see [2015] EWHC 808 (Ch); [2015] PLSCS 110. In reaching that conclusion, he took into account not only the 1909 and 1910 conveyances but also contracts for the sale of two other plots in 1908 and 1914 respectively, to which plans were attached showing numbered lots, each with a price attached, within an area marked in red. The appellant appealed.
Held: The appeal was allowed.
(1) The characteristics of a scheme of development were that: (i) it applied to a defined area; (ii) owners of properties within that area had purchased their properties from a common owner; (iii) each of the properties was burdened by covenants which were intended to be mutually enforceable as between the several owners; (iv) the limits of the defined area were known to each of the purchasers; and (v) the common owner was itself bound by the scheme, which crystallised on the occasion of the first sale of a plot within the defined area, with the consequence that the common owner was not entitled to dispose of plots within that area otherwise than on the terms of the scheme; and (vi) the effect of the scheme would bind future purchasers of land falling within the area, potentially forever.
(2) There were two prerequisites of a scheme of mutual covenants. First, the land to which the scheme related had to be identified. That requirement was readily explicable given that reciprocity was central to the idea of a scheme. A purchaser of one parcel could not be subject to an implied obligation to purchasers of an undefined and unknown area but had to know both the extent of his burden and the extent of his benefit: Reid v Bickerstaff [1909] 2 Ch 305 and Whitgift Homes Ltd v Stocks [2001] EWCA Civ 1732; [2001] PLSCS 250 applied. Second, there had also to be an acceptance by each purchaser of part of the land from the common owner that the benefit of the covenants into which he had entered would enure to the vendor and to others deriving title from him, and that he would correspondingly enjoy the benefit of covenants entered into by other purchasers of part of the land. Whether those two components existed was a question of fact as to the intention of the parties: Jamaica Mutual Life Assurance Society v Hillsborough Ltd [1989] 1 WLR 1101 and Nottingham Patent Brick & Tile Co v Butler (1886) 16 QBD 778 applied.
(3) Given that a scheme of mutual covenants was designed to last potentially for ever, one would expect that intention to be readily ascertainable without having to undertake laborious research in dusty archives searching for ephemera more than a century old. The area of land to which the scheme applied would usually be ascertainable from the terms of the conveyance or other transactional documents in question and, where the conveyance or other transactional documents gave no indication of the land to which the scheme applied, no scheme would usually be found to exist: Renals v Cowlishaw (1879) 11 Ch D 866, Reid and Elliston v Reacher [1908] 2 Ch 374 applied.
(4) Although schemes of mutual covenant had usually been found to exist in cases where there was something in the conveyance or other transactional documents to alert a purchaser to the existence of the scheme, it was possible for the existence of a scheme may be inferred purely from the circumstances surrounding the initial sales. One particular circumstance was where the common vendor intended to sell the whole of his land simultaneously, such as by auction, since, in that kind of case, there was no point in taking restrictive covenants unless they were intended to be mutually enforceable by the purchasers: Nottingham Patent Brick applied. However, the mere fact that a series of conveyances contained similar covenants was not enough to lead to the inference that a scheme of mutual covenants existed: Re Wembley Park Estate Co Ltd’s Transfer [1968] Ch 491 applied. The existence of an express power to vary covenants was equivocal. Considered in isolation, such a provision was equally consistent with the presence or absence of a scheme. If there were other clear pointers towards the existence of a scheme of mutual covenants, then the presence of such a stipulation was not a contra-indication. On the other hand, if there were no such clear pointers, the inclusion of such a stipulation provided support for the conclusion that there was no scheme: Whitgift Homes applied.
(5) In the instant case, no scheme of mutually enforceable covenants had been established. The relevant factors included the following: (i) the 1909 and 1910 conveyances did not define any estate of which the land conveyed formed part; (ii) the conveyance plan showed no lots but only the particular property conveyed; (iii) the conveyance did not refer to any other plan; (iv) the covenants were expressed to be given, not for the benefit of the land now said to be subject to the scheme, but for a far wider area in three different parishes; (v) there was no express provision in the conveyances that the covenants were to be mutually enforceable as between purchasers of different parts of the land from the common owners; (vi) some of the covenants were positive covenants, which were very unlikely to have been intended to be enforceable by individual original purchasers, and which could not have been enforceable against subsequent purchasers; (vii) the covenants themselves included a number of different geographical descriptions; and (viii) the stipulations include power for the vendors to vary the covenants. Those considerations pointed to a provisional conclusion that no scheme had been established. No different conclusion could be reached purely by reference to extrinsic evidence that was now more than a century old. That would be an unsatisfactory state of affairs given that the existence of enforceable restrictive covenants was potentially a perpetual interference with the right of successive property owners to do as they pleased with their own property. Assuming that the existence of a scheme could be proved by such evidence alone, it would require cogent evidence to do so, and none existed in the instant case.
Martin Hutchings QC (instructed by IBB Solicitors, of Uxbridge) appeared for the appellant; Wayne Beglan (instructed by SJS Law) appeared for the respondent.
Sally Dobson, barrister
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