Sale of land – Restrictive covenant – Building scheme – Claimant seeking declaration that defendant in breach of covenant in transfer of property – Claimant contending sale of property pursuant to building scheme – County court striking out claim – Claimant appealing – Whether judge wrong to conclude that claimants had no real prospect of establishing building scheme involving them and defendant – Appeal dismissed
Upper Tolhurst Farm in East Sussex was owned by the Mulleneux family (parents and children). In 1996, the children offered for sale, as a whole or in three lots, Upper Tolhurst Farmhouse and two adjoining properties, an oasthouse and a barn. The oasthouse and the barn were offered for conversion into dwellings. At the same time, two additional lots (Lots 1A and 2A), comprising land adjacent to the farmhouse and the oasthouse, were offered for sale by the parents.
The claimants purchased the oasthouse and Lot 2A on 25 October 1996. The defendant purchased the barn on 29 November 1996. The farmhouse and Lot 1A were sold to H, again on 29 November 1996. The transfer of the barn to the defendant contained a covenant to “…comply at all times with all planning conditions and requirements of the Local Planning Authority or any other statutory or other competent authority relating to the property”.
The claimants contended that the defendant had failed to comply with that covenant and sought a declaration that the defendant was in breach of covenant and an order requiring the defendant to demolish that part of the barn that did not comply with planning permission. The only basis advanced for the contention that the claimants were entitled to enforce the restrictive covenant was that the sale of each of the farmhouse, the oasthouse and the barn was effected pursuant to a building scheme.
On 28 October 2016 the defendant issued an application under CPR Part 24 to strike out the claim for breach of covenant on the grounds that it had no real prospect of success. The county court struck out the claim. The claimants appealed, contending that the judge was wrong to conclude that the claimants had no real prospect of establishing at trial that there was a building scheme involving them and the defendant.
Held: The appeal was dismissed.
(1) The overall burden lay on the defendant to establish grounds that the claimants had no real prospect of success at trial, but where the defendant produced credible evidence in support of the application, the claimants had an evidential burden of proving some real prospect. In this case, there was no real dispute as to the underlying facts, and the issue was the extent to which inferences could be drawn from those facts. It was necessary to balance the possibility that the evidence available at trial might be more extensive than that currently available and the fact that it was not enough to justify refusing summary judgment that something might turn up at trial. The judge’s conclusion that the area which benefited from the covenants in the conveyance to the defendant was not sufficiently defined was made on the basis of the evidence then before him. Neither the conveyance nor the deed of gift was in evidence before the judge but there was no reason to doubt their authenticity. It was consistent with the overriding objective of doing justice to have regard to those documents, particularly as it was only by doing so that the court could safely reach a conclusion as to the meaning of a key term in the conveyances. However, the submission that the area of land intended to be benefited was sufficiently defined by the conveyance and the deed of gift begged the question whether there was the necessary intention to impose a system of mutual covenants and, if so, between the owners of which land. The judge’s conclusion was reached not merely on the basis of the lack of definition of geographical area, but also on the basis of lack of intention to create a scheme at all.
(2) There was no document, at the time of the sale by the children, which disclosed any express intention that the purchasers of the three plots would be bound by any mutual covenants. Nor was there anywhere an express reference to a building scheme. The critical question, so far as the defendant was concerned, was whether there was any evidence to suggest that there was an acceptance by her of the benefit and burden of mutual covenants with the purchasers of the oasthouse and the farmhouse or that her purchase was “on the footing” of such mutual covenants. Cogent evidence was required to establish the existence of a building scheme from extrinsic evidence. Even taking a commercial view of the purpose of the covenants in the conveyances to the claimants and to the defendant, there was insufficient indication of an intention to impose mutual covenants on the purchasers of the three plots. Taking a commercial view of the covenants, it could not be inferred that they could have been intended to benefit any land other than the other two plots being sold by the children: Nottingham Patent Brick and Tile Co v Butler (1885) 15 QBD 261; (1886) 16 QBD 778, Elliston v Reacher [1908] 2 Ch 374 and Birdlip Ltd v Hunter [2016] EWCA Civ 603 considered.
(3) Where there was no express indication of any intention for mutual covenants between separate purchasers, the circumstance that covenants in the relevant conveyances were capable of benefiting both the land concurrently being sold and retained land of the vendor (and/or other third parties) rendered it substantially more difficult to infer that there had to have been a scheme of development. There was no indication given anywhere that the legal effect of the covenants was to be any different depending on whether they benefited one of the other two properties or some other part of the retained land. Even taking a commercial view of the terms of the covenants in the conveyances to the claimants and the defendant, the claimants did not have a real prospect of establishing at trial that the purchasers of each of the farmhouse, the oasthouse and the barn accepted that the benefit of covenants they were entering into would inure to the owners of the other properties, and that they would correspondingly enjoy the benefit of covenants entered into by those other purchasers.
Martin Hutchings QC (instructed by William Graham Law Ltd, of Cardiff) appeared for the claimants; Brie Stevens-Hoare QC and Lina Mattsson (instructed by Leslie Trevor Ltd, of Tunbridge Wells) appeared for the respondent.
Eileen O’Grady, barrister
To read a transcript of Khoury and another v Kensell click here
