Over the Moon – Restrictive Covenants Within Building Scheme Upheld by High Court

01 Jan 2018

The Chancery Division of the High Court has held that it could infer the existence of a building scheme on the ‘Moon Estate’ in Gerrards Cross and dismissed an application under s84(2) of the Law of Property Act 1925 for a declaration that restrictive covenants imposed under the scheme were unenforceable by neighbouring landowners. His Honour Judge Behrens QC inferred the existence of the scheme from the imposition of “substantially” similar restrictive covenants imposed in a series of conveyances over 100 years ago, which were found to apply in respect of a defined estate area and to be mutually enforceable between the purchasers of the land.

Wayne Beglan of Cornerstone Barristers successfully defended the application on behalf of Andrew and Michelle Hunter, residents of the estate who seek to limit the scale of a proposed redevelopment of a site within the estate by the Claimant, Birdlip Ltd.

The judgment will make a welcome contribution to the case law in respect of estate building schemes, which remains relatively scarce to date. The Court’s reliance on historical evidence to establish a building scheme may be of interest to residents and objectors seeking to restrict construction of higher-density housing on older estates.

The Moon Estate comprises a number of plots of land which, from 1906 onwards, were sold as sites for the construction of residential housing. The plots were subject to covenants which specified, among various other restrictions, that only one or two houses of a specified minimum value could be constructed on each plot, subject to the approval of architectural plans by the vendors’ surveyor. It was common ground that if these restrictions were found to amount to a building scheme, the Defendants and any other landowners within the estate would be entitled to enforce the benefit of the covenants against the Claimant.

Applying the criteria set out in Elliston v Reacher [1908] 2 Ch 374 and restated in Jamaica Mutual v Hillsborough [1989] 1 WLR 1101 (PC), the Court agreed with the Defendant that the “classic features” of a building scheme could be inferred from: (a) the existence of a defined estate boundary which was identified by the Court from the evidence; (b) the division of the estate into lots; (c) the imposition of covenants which were “substantially the same” in a number of conveyances of land across the estate; and (d) the inference of an intention for the covenants to enure for the future benefit of all purchasers of the land on the estate.

The Court expressly rejected the Claimant’s submissions that it would be speculative to infer anything other than an intention by the original vendors to protect their own commercial interests through the use of restrictive covenants during the building out of the estate.

The Court relied on purely historical evidence to infer the building scheme, which may be illustrative for future cases. Documentation included the original Indentures for the parties’ respective properties; 18 conveyances of other lots on the estate between 1906 and 1914 which included “substantially the same” restrictive covenants; standard form agreements for the sale for two other properties in the estate; and plans of the estate dated 1908 and 1914, one of which the Court relied on to identify its boundaries.

The claimant is seeking permission to appeal to the Court of Appeal.

Wayne was instructed by SJS Law on behalf of Andrew and Michelle Hunter.

Birdlip Limited v Andrew Pennington Harvard Hunter and Michelle Hunter [2015] EWHC.