Aidan Gregory McDonagh & Anor. v Karen Reeve

A restrictive covenant prohibiting the erection of additional buildings on retained land ordinarily concerns buildings erected in addition to an existing building. It does not, without clear words, prevent the alteration, extension or replacement of that existing building, or impose limits on the size or footprint of a substitute building.

Construction requires textual and contextual analysis, including the natural meaning of the words and relevant circumstances known at the date of the covenant. Commercial common sense cannot justify departing from the natural meaning merely because the result appears inconvenient or absurd. A convention-based estoppel requires detrimental reliance or circumstances making it inequitable to resile from the shared assumption.

The claimants owned Rose Cottage, which was subject to a 1958 restrictive covenant benefiting adjoining land. The covenant provided that no additional buildings should be erected on the retained land.

The claimants sought a declaration that demolishing Rose Cottage and replacing it with a substantially larger building, authorised by planning permission, would not breach the covenant. The defendant argued that any replacement building was additional to the original building, or alternatively that a replacement could not exceed the original building’s size and footprint. She also relied on an alleged convention-based estoppel arising from a 1988 deed.

The central issues were the proper construction of the covenant and whether the 1988 dealings created an estoppel binding successors in title.

1. Estoppel. No convention-based estoppel arose from the 1988 deed. The defendant had not relied on the parties’ apparent understanding of the covenant in acquiring or dealing with 4a. The 1988 parties had not shown detrimental reliance, or another circumstance making it unconscionable or inequitable for the owners of Rose Cottage or their successors to resile from that understanding.
2. Construction. The covenant had to be construed objectively by textual and contextual analysis. Relevant considerations included the natural meaning of the words, the surrounding circumstances known when the covenant was entered into and commercial common sense. The court should not readily depart from the natural meaning merely because the provision operated harshly or produced an allegedly absurd result. The court must give effect to the agreement made, rather than rewrite it.
3. Meaning of the covenant. In context, “no additional buildings whatsoever” meant no buildings erected in addition to, or as well as, the existing Lodge/Rose Cottage. The covenant did not regulate Rose Cottage itself. It therefore did not prevent its alteration, extension or replacement, and did not limit the size or footprint of a substituted building.
4. The covenant’s context supported that conclusion. The retained land was largely open and the covenant protected sea views and prevented overbuilding. It was not part of a building scheme, and clear and specific words would have been expected for a substantial interference with the owner’s use of his own land.
5. The claimants were accordingly entitled to implement the planning permission and replace Rose Cottage with the proposed building. The declaration sought was granted in substance.