Birdlip v Hunter [2016] EWCA Civ 603
Introduction
Most new builds will result in the buyer entering into a wide range of covenants with the developer. But when the developer has moved on, who can then enforce those covenants? A property owner is breaking the covenants by causing nuisance and annoyance; but can the affected neighbours bring an action? They can if a ‘building scheme’ can be shown.
A building scheme (or scheme of development) is a system of mutual covenants or ‘local law’ existing within a defined area, in which all the property owners enter into the same covenants with the intention that any owner can sue any of the others should there be a breach. But when does such a scheme exist?
The facts
In this case, Birdlip wished to build two houses on a plot on which a house had been built in about 1910. The property was subject to a covenant ‘not to build more than one dwelling’. A considerable area of surrounding land had been sold off by the common vendor subject to similar covenants. Mr and Mrs Hunter objected to the development. The only way the Hunters could enforce the covenant was if there was a building scheme.
At first instance H.H. Judge Behrens held that there was such a scheme. There had been at least 20 conveyances where the common vendor had sold off plots each containing similar restrictions over a defined period. Although the 1910 conveyance did not show the defined area within which the scheme was intended to operate, two agreements for sale in respect of other plots on the estate had been found. Each contained a plan and stated that ‘The Estate Boundaries are edged in red’. The 1910 conveyance land fell squarely within the estate as shown on these plans. However, the definition of ‘Estate’ in the two plans was not identical.
Birdlip appealed.
The Court of Appeal Judgment
The appeal was unanimously allowed and a declaration made that Birdlip’s land was not subject to a building scheme.
Lewison LJ set out the requirements of a building scheme:
(i) a defined area
(ii) a common vendor
(iii) each property burdened by restrictions intended to be mutually enforceable
(iv) the limits of the defined area must be known to each of the purchasers
(v) the common vendor bound by the scheme so he cannot dispose of plots within the defined area otherwise than on the terms of the scheme
(vi) the effect of the scheme is that it will bind future purchasers within the area.
But there was no reference in the 1910 conveyance to any estate of which the land formed part. There was no express provision that the covenants were to be mutually enforceable and covenants requiring ‘vendor’s surveyor’s consent’ to building work, pointed against a scheme. From this he stated that ‘…I would provisionally conclude that no scheme has been established. What, then, of the extrinsic evidence?….’. Whilst doubting whether a scheme could ever be proved by extrinsic evidence alone, Lewison LJ nevertheless considered what that evidence showed. He pointed out that it would ‘require cogent evidence to do so’ and that did not exist here because of the different definitions of the ‘estate’ in the 1908 and 1914 plans.
Conclusions
Statements in some cases suggesting that the intention to establish a scheme can involve a consideration of a wide range of evidence must now be viewed with caution. The starting point is always the conveyance itself. Extrinsic evidence may have a role to play, but it is a secondary one and, it is now very doubtful that a scheme can ever be established from extrinsic evidence alone.
And when selling off plots, the message is clear; state expressly in the transfer whether or not a scheme is intended and if it is, the area of land subject to it.
