Birdlip Ltd v Hunter & Anor

An enforceable building scheme may arise where land is sold by a common vendor under substantially uniform restrictions intended to benefit purchasers within a defined development. Common ownership and common covenants alone are insufficient. The relevant area and common intention are questions of fact, determined from the conveyances together with the circumstances of the sales. The area need not be identifiable from the conveyance alone, and the land need not have been laid out in identical lots. Different plans, altered lotting or modest boundary discrepancies do not necessarily defeat a scheme. At the summary-judgment stage, realistic prospects of proving such a scheme justify refusing disposal where further evidence may affect the factual conclusions.

Birdlip Limited, owner of Little Orchards, sought under section 84(2) of the Law of Property Act 1925 a declaration that restrictive covenants in 1909 and 1910 conveyances were unenforceable by the owners of neighbouring Ashlea House.

The application was made under Part 24. The claimant argued that the covenants were not sufficiently annexed, that one covenant burdened rather than benefited part of the relevant land, and that changed neighbourhood circumstances prevented enforcement. The defendants relied on a mutually enforceable building scheme affecting the estate shown on historical plans. The central issue was whether that case had realistic prospects at trial.

1. Application dismissed. The defendants had realistic, and on the available evidence strong, prospects of establishing at trial that the claimant’s land and Ashlea formed part of a mutually enforceable building scheme. The application was therefore inappropriate for summary disposal under Part 24.
2. The existence of a scheme is a question of fact. The court must consider all circumstances bearing on common intention, including the nature and uniformity of the restrictions, the method of sale, the contractual documents, the estate plans, the reservation of a power to vary restrictions, and the parties’ notice of the arrangement. Common ownership and common covenants, without more, do not establish a scheme.
3. Applying the guidance in Elliston v Reacher, the material supported the necessary elements: a common vendor; a defined area laid out for development; restrictions intended to apply generally and to benefit purchasers within the development; and purchases made with notice of that arrangement. Lotting is not an essential ingredient, and changes in lot size or shape do not defeat a scheme where the land was conveyed through the same general process.
4. The defined area need not be ascertainable from the conveyance alone. It may emerge from the conveyance read with the surrounding circumstances. The wording apparently benefiting a wider area or former estate land was not conclusive against a scheme within the estate shown on the relevant plan. The references to the former estate, the mutual-benefit explanation, the vendors’ exemption from enforcement, and the reservation to vary restrictions all supported mutual enforceability and the identified area.
5. The later-discovered 1914 plan did not establish, to the summary-judgment standard, that no scheme existed. It was substantially consistent with the earlier contractual arrangements and could reflect different plans used for different parts of one development. Apparent omissions might be errors or the result of the reserved power having been exercised. Any purchaser without notice of an excluded area might have an equitable defence, but that issue did not justify judgment for the claimant.
6. The court accordingly dismissed Birdlip’s Part 24 application for a declaration that the restrictions were unenforceable. The ultimate enforceability remained for trial.