Restrictive covenant – Benefit – Building scheme – Applicant landowners applying to discharge or modify restrictive covenants preventing erection of more than one dwelling house on land – Neighbours opposing application – Preliminary issue arising – Whether objectors having benefit of covenants entitling them to object – Whether objectors proving building scheme giving them benefit of covenants – Preliminary issue determined accordingly
The applicants owned a property at 2 Woodland Way, Petts Wood, Orpington, Kent. Like the surrounding houses, it was subject to a covenant requiring them not to build more than one dwelling house on their land and not to cause a nuisance to their neighbours.
They obtained planning permission to demolish their house and build two new ones. They applied to the Upper Tribunal under section 84 of the Law of Property Act 1925 to discharge or modify the restrictive covenants insofar as they prevented the planned development.
The area had been developed as a garden suburb for London commuters in the late 1920s and early 1930s. The covenants were imposed by a 1931 conveyance for the benefit of the unsold land which remained in the hands of the vendors. The objectors’ properties had been sold in 1929 and 1928 respectively and did not form part of the residue of the vendors’ estate in 1931 when the applicants’ property was sold.
Therefore, the objectors were only entitled to object to the discharge or modification of the covenants if they could demonstrate the existence of a building scheme under which all the landowners within a defined area had the burden of similar covenants and were able to enforce the covenants against each other, regardless of the date at which each plot was sold by the original vendor.
A preliminary issue arose whether the objectors had the benefit of those covenants so that they were entitled to object.
Held: The preliminary issue was determined accordingly.
(1) The requirements of a building scheme 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 that defined area were known to each of the purchasers; (v) The common owner was himself bound by the scheme, which crystallised on the occasion of the first sale of a plot within the defined area, with the consequence that he 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. A purchaser of one parcel could not be subject to an implied obligation to purchasers of an undefined and unknown area. He had to know the extent of his burden and the extent of his benefit.
It had to be proved that the restrictions were intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor; and that both the plaintiff and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme, whether or not they were also to enure for the benefit of other lands retained by the vendors: Elliston v Reacher [1908] 2 Ch 374 and Birdlip v Hunter [2016] EWCA Civ 603; [2016] EGLR 42 applied.
(2) Not only was the area to be defined but the obligations to be imposed within that area had to be defined. Those obligations need not be identical. A building scheme was not created by the mere fact that the owner of an estate sold it in lots and took varying covenants from various purchasers. There had to be notice to the various purchasers of the local law imposed by the vendor upon a definite area: Reid v Bickerstaff [1909] 2 Ch 305 and Lund v Taylor [1976] 2 EGLR 106 applied.
In the present case, the objectors stated that the applicants’ property, and their own, formed part of the Petts Wood estate and that the sales particulars for the auctions of lots within the estate as well as the conditions of later sales stipulated that the purchaser was to enter into covenants for the benefit of all the lots. However, where a contract stated that the conveyance would contain covenants by the purchaser, the vendor and the prior purchasers of other lots, then one would expect to see a conveyance containing such covenants by those several persons, and none had been produced. The conveyance contained only covenants by the purchaser with the vendor and its successors in title and they contained no statement to the effect that covenants were to be enforceable across the whole estate.
(3) The objectors had been unable to show the defined area to which a building scheme applied and that that was known to each of the purchasers. The 1931 conveyance referred to an estate plan but it could not be identified and there were no documents available to ascertain the extent of the vendors’ ownership in 1931 or what the purchaser would have supposed was the area to which the building scheme would apply.
Accordingly, the objectors had not been able to prove that there was a building scheme such that they had the benefit of the covenants sought to be discharged or modified in this application. There was no defined estate. And there was no evidence that the covenants “were intended to be mutually enforceable as between the several owners”: see Birdlip; nor that the covenants “were to enure for the benefit of the other lots included in the general scheme, whether or not they were also to enure for the benefit of other lands retained by the vendors”: see Elliston.
(4) That did not mean that the covenants would automatically be discharged or modified. The tribunal had to be satisfied that it had jurisdiction to do so because the conditions set out in section 84 of the Law of Property Act 1925 were satisfied, and then decide whether to exercise its discretion to do so. The tribunal would give directions to the applicants about the determination of their application.
Kevin Leigh (instructed by Direct Access) appeared for the applicants. The objectors did not appear and were not represented.
Eileen O’Grady, barrister
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