The benefit of a restrictive covenant that touches and concerns land belonging to the covenantee may run in equity in one of three ways: by an unbroken chain of equitable assignments, by express or statutory annexation, or through local law in the form of a building or development scheme.
Doberman v Watson [2017] PLSCS 185 concerned covenants that restricted the density of development on land that appeared to have been part of an estate, which had been sold off over time. The owners of the servient land wanted to construct at least one further dwelling on their land and applied for a declaration pursuant to section 84(2) of the Law of Property Act 1925 that the restriction no longer affected their property.
There was no evidence that any express assignment had taken place. So the question was: had the benefit of the covenant been annexed to the land that benefitted from it or was there a building scheme? The court answered both questions in the negative and ruled that the restriction was not enforceable.
The benefit of a covenant made on or after 1 January 1926 may be statutorily annexed to land by section 78 of the 1925 Act: see Federated Homes Ltd v Mill Lodge Properties Ltd (1979) 254 EG 39. However, where land forms part of an estate that is not comprised within a building or development scheme, the benefit of the covenants will not be annexed to estate land that has already been sold.
This means that the first purchaser of land on an estate will be liable to all the subsequent purchasers, but will be unable to enforce their covenants against them because the benefit of their covenants will be annexed only to land that remained unsold. And the last purchaser will be entitled to enforce the restrictive covenants given by all the previous plot purchasers, but will not be liable to any one because there is no land left to which the benefit of his covenants can be annexed.
In the present case, the servient owner’s predecessor in title had been the penultimate purchaser. Furthermore, Crest Nicholson Residential (South) Ltd v McAllister [2004] 2 EGLR 79 confirmed that land benefited by covenants must be identifiable from a description, plan or other reference in the document itself, or from other admissible evidence. That requirement had not been satisfied here. So there had been no annexation.
Restrictive covenants are mutually enforceable by all parties within a scheme of development, regardless of when the plots were sold. However, several conditions must be satisfied in order to create such a scheme. In particular, there must be a defined area within which the scheme operates. A purchaser of one parcel cannot be subject to obligations to purchasers of an undefined and unknown area. He must know the extent of his benefit and burden: Birdlip Ltd v Hunter [2016] EWCA Civ 603; [2016] PLSCS 187.
In the present case, there was no plan that covered the whole scheme. The original conveyance had stated that the covenant was to benefit and protect the vendor’s building estate but there was nothing to indicate the extent of that estate, such that there could be said to be a building scheme.
Allyson Colby is a property law consultant
