Where there is a building scheme, restrictive covenants will be mutually enforceable by all parties within the scheme, regardless of when plots are sold. As a result, purchasers of plots that are sold earlier can enforce restrictive covenants against purchasers who buy later (even though the benefit of restrictive covenants is not usually annexed to land that has already been sold).
The conditions that must be satisfied to create a building scheme were laid down in Elliston v Reacher [1908] 2 Ch 374. There must have been a common vendor who, before selling the land, laid it out for sale in lots subject to restrictions that are consistent only with there being a building scheme. In addition, the parties must have intended the restrictions to be mutually enforceable and to be for the benefit of all the lots.
Birdlip Ltd v Hunter [2016] EWCA Civ 603; [2016] PLSCS 187 reminds us that 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.
The covenants in this case were more than 100 years old and were imposed by conveyances spanning a period between 1908 and 1914. The conveyances did not define the estate and there was evidence to suggest that there were significant differences between the plans of the estate that were attached to contracts for sale of land on the estate at the beginning and end of this period. In addition, although the restrictions in the conveyances were in substantially the same form, the vendor had reserved the right to vary the covenants, or to choose not to enforce them. Were these factors fatal to the existence of a building scheme?
The trial judge thought not, but the Court of Appeal disagreed. Lewison LJ explained that, in the case of a scheme of mutual covenants designed to last potentially for ever, the parties’ intentions must be readily ascertainable without having to undertake laborious research in dusty archives, searching for ephemera more than a century old. So the covenants themselves – and the extent of the land to which they apply – must be readily identifiable from the conveyances of the land.
However, the existence of an express power to vary covenants is equivocal. If there are other clear pointers towards the existence of a scheme of mutual covenants, then the presence of such a stipulation is not a contra-indication. On the other hand, if there are no such pointers, the inclusion of such a stipulation provides support for the conclusion that there is no scheme.
Lewison LJ noted that the conveyances had described the parcels conveyed without referring to the estate of which they formed part and that the plans used showed only the properties themselves. The seller had reserved the benefit of the covenants for land in three different parishes and the covenants were not expressed to be mutually enforceable as between the different purchasers. Furthermore, the existence of the conflicting plans, and the vendor’s power to vary the covenants, suggested that there had not been any intention to create a building scheme.
Allyson Colby is a property law consultant
