Small v Oliver & Saunders (Developments) Ltd.

Restrictive covenants expressed to benefit and be annexed to retained estate land may benefit every part of that land, unless a clear contrary intention appears. A building scheme requires a defined area, sufficiently identified reciprocal obligations, and proof that purchasers accepted the reciprocal benefit and burden. Common ownership and substantially uniform covenants are insufficient without reciprocity.

Using land burdened by a covenant restricting use to private dwellinghouses as access to a separate dwellinghouse may constitute a breach. A permanent injunction may be refused where it would be oppressive, particularly after substantial development undertaken without culpable risk-taking. Damages may instead be assessed by reference to a hypothetical negotiated release, apportioned among persons entitled to enforce the covenant.

The claimant owned No 12 Beech Hill, including a garden extension forming part of the land retained by the original vendor when No 8 Beech Hill was transferred in 1925. That transfer imposed restrictive covenants, including a restriction on use otherwise than as private dwellinghouses and associated purposes.

The defendant acquired No 8 and developed a new house on rear land. Access to it crossed the original land at No 8. The claimant sought to enforce the covenants, relying principally on a building scheme and alternatively on annexation. The issues were entitlement to the benefit, breach, injunctive relief and damages in lieu.

1. Benefit of the covenant. The words providing that the covenants should benefit and be annexed to the remainder of the estate were words of express annexation. In the absence of a clear contrary indication, annexation to identified retained land benefited every part of that land. The claimant therefore had the benefit through annexation to the garden extension at No 12.
2. Building scheme. The relevant principles require a common vendor, sale in lots, common benefit and reciprocity. The area and nature of the scheme must be sufficiently identified, and reciprocity must be proved. It was not enough to infer reciprocity merely from the common vendor and substantially uniform covenants. Neither a scheme covering the estate nor a mini-scheme covering plot 9 was established.
3. Breach. Construing the covenant in its executed form as referring to private dwellinghouses, the use of the original land at No 8 as access to a house on the rear land was use otherwise than for the permitted purposes. The wording covered the property, not merely the building upon it. The same result followed even if the singular wording was adopted.
4. Remedy. The conditions identified in Shelfer v City of London Electric Lighting Co were satisfied, but an injunction would be oppressive. The defendant had not knowingly taken a calculated risk of breaching the covenant, and the claimant had not clearly identified the access breach before substantial work had occurred. Damages were therefore substituted for an injunction.
5. Damages were assessed by reference to a hypothetical negotiation immediately before construction, starting with the development profit, allowing 35 per cent as the negotiated share, and dividing the result among 48 persons notionally entitled to enforce. The award was £3,270. Refusal of the injunction permanently relaxed the covenant only for access to the existing new house, not for future development.