Birdlip Ltd v Hunter & Anor

A scheme of mutually enforceable restrictive covenants requires a defined area, a common vendor, reciprocal covenants, and knowledge by purchasers of the scheme’s limits. Similar covenants and a common development history are insufficient. Transactional documents should identify the area; extrinsic evidence may identify a verbal description, but century-old extrinsic evidence alone must be cogent. Conflicting plans, unexplained changes to estate boundaries, vendor-control covenants and a power to vary may show that no scheme was intended. A perpetual restriction cannot be imposed on purchasers who could not know the extent of the burden and benefit.

Birdlip owned land in Gerrards Cross and had planning permission to build two houses. The respondents sought to enforce restrictive covenants affecting the land. The covenants appeared in conveyances made in 1909 and 1910 and were similar to covenants in other conveyances in the area.

The High Court, HH Judge Behrens, held that the covenants formed part of a scheme of mutually enforceable covenants, relying principally on standard conditions of sale and a 1908 plan. Birdlip appealed. The central issue was whether the scheme’s area was sufficiently defined and known to the purchasers, particularly in light of a materially different 1914 plan.

Disposition

The appeal was allowed unanimously. Lewison LJ gave the leading judgment, with Laws LJ and Gloster LJ agreeing. The respondents had not established a scheme of mutually enforceable covenants and therefore could not enforce the restrictions against Birdlip.

1. A scheme requires a defined area, sales by a common owner, covenants intended to be mutually enforceable, knowledge by purchasers of the area’s limits, and a common owner bound from the first sale. The two essential prerequisites are identification of the land and acceptance by each purchaser of reciprocal benefits and burdens: Jamaica Mutual Life Assurance Society v Hillsborough Ltd [1989] 1 WLR 1101.

2. The requirement for a defined area protects reciprocity. A purchaser must know the extent of both the burden and the benefit. Conveyances and transactional documents will ordinarily need to alert purchasers to the scheme. Extrinsic evidence may identify a verbal description under ordinary evidential principles, but, if the scheme is proved solely by century-old extrinsic evidence, cogent evidence is required.

3. The 1909 and 1910 conveyances contained no reference to an estate or to another plan, did not expressly provide for mutual enforcement between purchasers, used inconsistent geographical descriptions, and included positive obligations, vendor-consent provisions and a power to vary. Similar covenants alone were insufficient. Vendor-control provisions could point against a scheme, while a power to vary was equivocal: Re Wembley Park Estate Co Ltd’s Transfer [1968] 1 Ch 491; Lund v Taylor (1976) 31 P & CR 167; Whitgift Homes Ltd v Stocks [2001] EWCA Civ 1732.

4. The 1914 plan showed boundaries inconsistent with the 1908 plan. A purchaser relying on the 1914 plan could not know the wider area said to be subject to the scheme. The suggestion that further inquiries would have been made assumed the very intention that required proof. The judge’s explanations for the conflicting plans were speculative and did not amount to permissible inference. The evidence therefore fell materially short of establishing a scheme.

5. The Court of Appeal had admitted fresh evidence, but the conclusion was reached without relying on it.

• Court of Appeal (Civil Division): On 28 June 2016, the appeal was allowed. [2016] EWCA Civ 603.
• High Court of Justice, Chancery Division: HH Judge Behrens held that the respondents had established a scheme of mutually enforceable restrictive covenants.