The Claimant was bound by restrictive covenants attached to lots of a building scheme. The claim was thus dismissed.
The parties own adjoining plots of land. These plots were originally sold by the same vendor as part of several plot sales over a century ago, subject to restrictive covenants providing against the construction of more than “one or two detached residences” on each plot. The Claimant’s plot already had one house on it and the Claimant obtained planning permission to construct two more.
The Claimant sought a declaration that it was not bound by the restrictive covenant.
Whether the covenants were enforceable under a building scheme for the benefit of the other properties on the estate. In particular:
(a) Was there was a defined estate?
(b) Were the covenants for the benefit of other purchasers and not just the vendor?
The Judge confirmed that “for there to be an enforceable scheme it is necessary for the extent of the estate to be defined at the date of the crystallisation of the scheme”. Although the original conveyances of the parties’ plots did not define the estate, plans which defined the boundaries of the estate had been attached to sale contracts for other lots.
Although these plans were not always consistent in defining the boundaries of the estate, the differences were immaterial and the estate could still be defined. Furthermore, the judge was prepared to infer from the evidence that a plan of the estate would have been attached to the agreements for sale relating to the parties’ plots.
The Judge found that the “estate has many of the classic features of a building scheme”. In particular, there was a defined estate and it was laid out in lots, which is “cogent evidence of an intention that the covenant shall be for the common benefit of purchasers”.
Furthermore, there were substantially common covenants (any variations between the covenants were considered immaterial) which had existed for over 100 years and had been successfully upheld in previous litigation. These covenants provided value to the purchasers of the plots, not merely to the original vendor.
Accordingly, on the balance of probabilities, the judge concluded that there was an intention that the covenants should be for the common benefit of the purchasers and that a building scheme had been established. The restrictive covenants therefore bound the Claimant and the claim failed.
This case is a reminder of the issues that can arise in ascertaining parties' intentions in relation to historic restrictive covenants.
There may be more to come in this dispute. As well as the possibility of an appeal, the Claimant had already issued a separate application to the Upper Tribunal (Lands Chamber) for an order to modify or discharge the restrictive covenants (under section 84(1) of the Law of Property Act 1925) in the event that this claim found the covenants to be enforceable.
This article was written by Emma Humphreys
For more information please contact Emma on +44 (0)20 7203 5326 or email@example.com.