Birdlip Ltd v Hunter & Anor

An enforceable building scheme requires a defined area and reciprocal obligations between purchasers. The area must be defined when the scheme crystallises, but it may be established by inference from plans, lotting, conveyances and surrounding circumstances. Covenants need not be identical, and a power to vary them is equivocal rather than fatal. The central question is whether, viewed as a whole, the evidence shows an intention that the restrictions should operate for the common benefit of purchasers as well as the vendor.

Birdlip Ltd owned Little Orchards, adjoining Ashlea, owned by Mr and Mrs Hunter. Birdlip proposed to build two houses on land subject to restrictive covenants limiting development. It sought a declaration under Law of Property Act 1925, section 84(2), that the covenants were unenforceable because no building scheme existed.

Birdlip had previously sought summary judgment. Master Bowles held that the Hunters had a strong arguable case and directed a trial. The parties then treated the permission hearing as the trial. The central issues were whether the estate covered by the alleged scheme was defined, and whether the covenants were intended to be mutually enforceable for the benefit of purchasers.

1. Summary judgment and trial. Master Bowles was right to conclude under CPR 24 that the Hunters’ case was plainly arguable. His views were not binding at trial, where the court had to make the factual findings.
2. Defined estate. An enforceable building scheme requires the extent of the estate to be defined when the scheme crystallises. The 1908 plan, attached to a sale agreement, identified lots for sale and also purported to define the estate by red lines. The court inferred that materially similar plans existed when the first lots, Little Orchards and Ashlea, were sold. The differences in the 1914 plan did not displace that conclusion.
3. Reciprocity and common benefit. The authorities establish that reciprocity is fundamental. The estate was laid out in lots and was subject to substantially common covenants. Lotting was cogent evidence of an intention that the covenants should benefit purchasers, although the inference could be weaker where lotting was incomplete. Differences in permitted house numbers, building values and wording were immaterial in context.
4. Other provisions. The vendor’s power to vary was equivocal and carried no material weight either way. The provision explaining that surveyor approval was for the mutual benefit of purchasers supported an intention of reciprocal rights. The covenants were not imposed solely for the vendors’ benefit.
5. Considering the evidence as a whole, the court found on the balance of probabilities that the covenants were intended to benefit the purchasers as well as the vendor. A building scheme was established. Birdlip’s claim failed and the counterclaim succeeded.

The judgment describes an earlier summary judgment application before Master Bowles. Permission to appeal from that interlocutory decision was refused after the matter was treated as the trial of the Chancery action. This judgment was a first-instance trial decision.