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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Whitgift Homes Ltd & Ors v Pauline Stocks & Ors [2001] EWCA Civ 1732 (22 November 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1732.html
Cite as: [2001] EWCA Civ 1732, [2001] 48 EGCS 130, [2001] NPC 169

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Neutral Citation Number: [2001] EWCA Civ 1732
Case No: A3 2000 2679 CHANF

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION (Mr Justice Neuberger)

Royal Courts of Justice
Strand,
London, WC2A 2LL
Thursday 22nd November 2001

B e f o r e :

LORD JUSTICE JUDGE
LORD JUSTICE JONATHAN PARKER
and
MR JUSTICE BODEY

____________________

WHITGIFT HOMES LIMITED & ORS

Appellants
- and -


PAULINE STOCKS & ORS

Respondents

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Mr Jonathan Clay (instructed by Messrs Gowen & Stevens for the Appellants)
Mr William Henderson (instructed by Messrs Dawson & Co. for the Respondents)

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    LORD JUSTICE JONATHAN PARKER:

    INTRODUCTION

  1. This appeal raises questions as to the reciprocal enforceability of similar restrictive covenants imposed on neighbouring properties forming part of a single developed estate.
  2. The first-named appellant, Whitgift Homes Ltd, is a property developer which at the material time had an option over two residential properties known as 14 and 16 Ruffetts Close, South Croydon. Whitgift Homes Ltd is the first defendant in the action. The second-named appellant, Mr Terence O'Callaghan, is the owner of 16, Ruffetts Close. He is the second defendant in the action. The third and fourth defendants in the action, Mr and Mrs Hinkley, were at the date of the trial the owners of 14, Ruffetts Close, but they have since sold that property and are not parties to the appeal. The appellants appear by Mr Jonathan Clay of counsel.
  3. The respondents (the claimants in the action) are fifty-five owners of adjoining or adjacent properties. They appear by Mr William Henderson of counsel.
  4. It is common ground that the appellants and the respondents derive title from a common owner, a company called Walton Heath Land Company Ltd, which developed the area as a residential estate in the 1920's and early 1930's. I will refer to that company hereafter as "the developer".
  5. By a Conveyance dated 11 March 1932 the developer sold off what is now 16 Ruffetts Close (in the Conveyance it was called "Oakdene") to a predecessor in title of Mr O'Callaghan. By a Conveyance dated 23 March 1932 the developer sold off 14 Ruffetts Close to a predecessor in title of Mr and Mrs Hinkley. Each of these Conveyances contains restrictive covenants. The appellants proposed to develop 14 and 16 Ruffetts Close in a manner which (it is common ground) would breach certain of those covenants. In the action, the respondents seek to enforce those covenants against the appellants.
  6. A restrictive (that is to say, negative) covenant affecting freehold land is enforceable between parties other than the original covenantor and the original covenantee if the party seeking to enforce it is entitled to the benefit of it and the party against whom it is sought to be enforced is subject to the burden of it.
  7. The burden of a restrictive covenant will "run with the land" that is to say, a successor in title of the original covenantor will be bound by the covenant if the covenant was taken for the protection of other land retained by the covenantee and if the successor in title of the covenantor had notice of it when he purchased. No issue arises as to notice in the instant case; the titles to both 14 and 16 Ruffetts Close are now registered at H.M. Land Registry, and the restrictive covenants are entered on the Charges Register.
  8. The benefit of such a covenant will pass to a successor in title of the covenantee if it relates to (the old expression was "touches and concerns") his land, and if it has been either assigned to him or "annexed" to his land. (There were no such assignments in the present case.) "Annexation" in this sense can only occur in circumstances where the land to which the benefit of the covenant is said to be annexed was in the ownership of the original covenantee at the date when the covenant was entered into. Thus the effect of annexation in a case where the developer of an estate sells off the various developed plots subject to restrictive covenants is that the first purchaser will not be able to enforce the covenants entered into by the purchasers of any of the other plots, whereas the last purchaser will be able to enforce the covenants entered into by all the other purchasers. Hence in the instant case the owners of those of the respondents' plots which were sold off by the developer before it sold off 14 and 16 Ruffetts Close cannot claim the benefit of the covenants by annexation.
  9. However, if the available evidence establishes the existence of a scheme under which similar restrictive covenants imposed on a number of properties in a defined area are mutually and reciprocally enforceable as between the respective owners for the time being of those properties (commonly referred to as a "building scheme"), then the owner for the time being of each of those properties will be able to enforce the covenants against the owners for the time being of each of the other properties subject to the scheme. Thus, in the case of an estate which is sold off by a developer in various plots, the owner for the time being of each plot will be able to enforce the covenants against the owners for the time being of all the other plots, regardless of whether such plots were sold off by the developer before or after his own plot. Hence in the instant case if such a scheme exists each of the fifty-five respondents will be able to enforce the covenants affecting 14 and 16 Ruffetts Close.
  10. In the action, the respondents claim primarily that a scheme exists, with the consequence that they are all entitled to enforce the covenants. The appellants deny that any such scheme exists. I will refer to this issue hereafter as "the scheme issue". In the alternative, the respondents claim that the owners of those of the respondents' properties which were sold off by the developer after the sales of 14 and 16 Ruffetts Close are entitled to enforce the covenants on the ground that the benefit of the covenants is "annexed" to their properties. In the event, there are only three such properties, namely 10 and 12 Ruffetts Close and 63 Croham Valley Road. The appellants also deny that claim. I will refer to this latter issue hereafter as "the annexation issue".
  11. The trial of the action took place before Neuberger J. He resolved both the scheme issue and the annexation issue in favour of the respondents.
  12. At an early stage in his judgment, the judge accurately summarised the relevant principles as follows (at p.13E to p.14B):
  13. "(1) For a subsequent purchaser of the land subject to the covenant to be bound by the covenant there are three requirements: (a) the covenant must be negative in nature; (b) the covenant must be either (i) for the protection of land retained by the covenantee or (ii) part of a scheme; and (c) the subsequent purchaser must have notice of the covenant.
    (2) For a subsequent purchaser of other land to be able to enforce the covenant there are also three requirements: (a) the covenant must, to use the old expression, touch and concern his land; (b) the [benefit of the] covenants must have passed to him by (i) annexation (ii) assignment or (iii) pursuant to a scheme; and (c) there must be no good ground for depriving him of the right to enforce the covenant."
  14. The judge went on to point out that no issue arose in the instant case in relation to (1)(a), 1(c) or 2(c) in his formulation. Effectively, that left the scheme issue and the annexation issue.
  15. On the scheme issue, the judge found that the appellants' properties and the respondents' properties (I will refer to them hereafter without, I hope, causing offence as "plots") were developed and sold off by the developer as part of a scheme under which covenants entered into by purchasers from the developer were intended to be enforceable by the owners for the time being of other plots, regardless of the order in which the plots were sold off.
  16. On the annexation issue, the judge concluded that, on the assumption that no scheme existed, the necessary conditions for annexation of the benefit of the covenants were satisfied in relation to the three properties already mentioned.
  17. Accordingly by his order dated 14 July 2000 he declared that the respondents (that is to say, all of them) were entitled to enforce the covenants against the persons from time to time interested in 14 and 16 Ruffetts Close respectively. It was further declared that the proposed development of 14 and 16 Ruffetts Close would constitute a breach of the covenants, but, as noted earlier, no issue arises as to the second of those declarations: it is common ground that the proposed development would breach the covenants.
  18. The judge gave permission to appeal.
  19. By their grounds of appeal the appellants contend:
  20. (by ground 1) that the judge erred in law in finding that the covenants imposed on 14 and 16 Ruffetts Close vested in and could be enforced by the owners of 10 and 12 Ruffetts Close and 63 Croham Valley Road;

    (by ground 2) that the judge erred in law in finding that the benefit of the covenants were annexed to those three plots; and

    (by ground 3) that the judge erred in law in finding that a scheme existed.

  21. Thus both the scheme issue and the annexation issue are raised once again on this appeal.
  22. THE FACTUAL BACKGROUND

  23. I now turn to the factual background in more detail.
  24. In 1924 the developer, which was a member of the Costain group, acquired a substantial area of land in South Croydon, extending to some 440 acres. The plots on which 14 and 16 Ruffetts Close now stand and the plots now owned by the respondents are situated in the Northern part of that land. Following its acquisition of the land, the developer started to develop it as a residential estate. The Southern part of the land was developed first. In 1926, at (it would appear) a relatively early stage in the development, the developer sold off some 260 acres of undeveloped land forming part of the land which it had acquired in 1924, lying to the East of the area which was being developed. That left the developer with an area of land the general shape of which the judge described (at p.5G) as:
  25. ".... an irregular shape, rather like an upside down Italy, somewhat attenuated in the centre".
  26. This irregularly shaped piece of land was developed by the developer over a period of some years, from about 1925 until 1932, with developed plots being sold off as the development proceeded. In other words, it was this piece of land which formed the residential estate to which I referred earlier.
  27. There are in evidence three brochures produced by or on behalf of the developer with a view to selling off the various plots on the estate. Only one of them bears a date, being dated January 1928. The judge concluded (and there is no dispute about this) that the dated brochure was in fact the second in time of the three brochures, one of the others having been produced in about 1927. It is thought that the third brochure must have been produced shortly after the second brochure, in about 1929.
  28. The 1927 brochure is entitled "Croham Heights". On the front of it is a photograph of the estate, showing only the Southern part to have been developed at that time. It also includes the name of Richard Costain & Sons, Ltd. It refers to the estate as a "planned estate", "laid out on generous lines", in which "every house is well set back in a spacious garden". It further states:
  29. "In by far the greater portion of the Estate only six houses will be erected to the acre. In a smaller portion, where it is permissible to erect 12 houses to the acre, only nine to the acre have been built."
  30. Under the heading "Value", the brochure proclaims:
  31. "At Croham Heights the home seeker obtains the utmost value in the house itself. The discriminating purchaser does not choose his house merely from the standpoint of accommodation. He considers the investment point of view. Croham Heights offers the advantages which attach to an attractive district, the desirability of which is beyond question. The surrounding property, the residential restrictions, the trend of building and the planning of the Estate itself all point to a maintaining and increasing the value of the properties."
  32. Against the exhortation "Visit the Estate" the brochure states:
  33. "Layout plans etc. can be seen and further information given at our London Offices and Estate Office, which are open during ordinary business hours, the latter being also open on Saturday afternoon."
  34. The 1927 brochure also contains a "Plan of the Estate", which shows the estate divided up into more than 500 individual plots. The plots shown are not of uniform size, and the plan does not appear to include any buildings on the plots. In the course of his judgment the judge described this plan (at p.30D) as "not merely schematic". Certainly it is more than a mere diagram, but equally it falls well short of being a scale drawing of a proposed development.
  35. The plan shows the road layout as then proposed (although as constructed it was somewhat different). More significantly, the plotting as shown on the plan in the Northern part of the estate does not include what subsequently became Ruffetts Close: the layout of the plots in that area as shown on the plan differs significantly from the layout of the estate as eventually developed.
  36. The two later brochures take the matter little further for present purposes.
  37. It is not in dispute that the Southern and central parts of the estate were developed earlier, and to a greater density, than the Northern part. As the judge said (at p.6D-F):
  38. "It seems that by 1926 some 250 houses had been built in the Southern area and sold off, whereas the Northern part appears to have been developed a little later. The great majority of the houses were built by [the developer] and sold off to individual purchasers. However, some sites containing a number of plots were sold off by [the developer] with a view to houses being developed by purchasers."
  39. The judge then went on to describe Ruffetts Close, as follows (at p.6F):
  40. "The two plots with which these proceedings are directly concerned are in the Northern area of the estate. They are 14 and 16 Ruffetts Close. Ruffetts Close was not shown on the plan in the first or second brochures. It is a small cul-de-sac with, it would appear, seven pairs of semi-detached houses four set on larger sites than almost any other house on the estate, and three set on sites which are large by the standards of the estate generally. As a result of the inclusion of Ruffetts Close it appears that the sites of some other houses shown on the plan in the first brochure have either been reduced or have ceased to exist."
  41. By a Conveyance dated 11 March 1932 the developer (defined as "the Company") conveyed 16 Ruffetts Close to a Miss Langley, a predecessor in title of Mr O'Callaghan. Miss Langley was defined as "the Purchaser". Clause 2 in the operative part of the Conveyance reads as follows:
  42. "FOR the benefit of the Company's Estate at Croydon the Purchaser (with intent to bind all persons in whom the land hereby conveyed shall for the time being be vested, but not so as to be personally liable for the breach of any restrictive covenant after she has parted with the said land) hereby covenants with the Company that the Purchaser will observe and perform the stipulations and conditions set out in the Second Schedule hereto and will not commit or suffer any breach thereof."
  43. The Second Schedule to the Conveyance is headed "Stipulations and Restrictions". Paragraphs 1 and 2 read as follows:
  44. "1. No building other than a Private dwellinghouse with suitable outbuildings appurtenant thereto shall be erected on the said land or any part thereof."
    2. No building or erection shall be set up on the said land nearer than 25 feet to the road in front thereof."
  45. Paragraph 3 provides (among other things) that not more than one dwellinghouse shall be erected on the land.
  46. It is common ground that the proposed development would breach those restrictions.
  47. Paragraphs 5 and 6 contains restrictions which are personal to the developer in so far as they refer to the consent or approval of "the Vendors".
  48. Paragraph 8 contains a positive obligation to maintain a boundary fence.
  49. Paragraph 9 imposes an obligation on the purchaser to bear a reasonable proportion of the costs of maintaining the road known as Ruffetts Close pending its being taken over by the local authority.
  50. The final restriction, in paragraph 10, is in the following terms (so far as material):
  51. "The Vendors shall not be in any way restricted as to the mode of laying out user or enjoyment of any adjoining or neighbouring land which belongs or may hereafter belong to them ....."
  52. The expression "the Vendors" is not a defined expression, but in context it can only refer to the developer.
  53. By a Conveyance dated 23 March 1932 the developer conveyed 14 Ruffetts Close, which adjoins 16 Ruffetts Close, to a Mr Ailsby, a predecessor in title of Mr and Mrs Hinkley. This Conveyance is in all material respects in the same terms as the Conveyance of 16 Ruffetts Close.
  54. I turn now to the respondents' plots.
  55. The judge described the respondents' plots as follows (at p.9D-G):
  56. "Almost all of the claimants own houses on plots in a triangular site ("the site") in the Northern part of the estate. That site is bounded by three roads, Ballards Way to the North, Crest Road to the East, and Croham Valley Road to the South West. Ruffetts Close runs off Croham Valley Road, North to Ballards Way and is therefore within the site. There are a total of about 90 houses on the site. About 35 of them are owned by claimants in these proceedings, the remaining five claimants owning houses on the other side of roads bordering the site."
  57. The judge then turned to the three respondents' plots which were sold off by the developer after the sales off of 14 and 16 Ruffetts Close, namely 10 and 12 Ruffetts Close and 63 Croham Valley Road. The judge recorded that 10 Ruffetts Close was conveyed away on 13 September 1932 by a Conveyance the terms of which were in all material respects similar (though not identical) to the terms to the Conveyances of 14 and 16 Ruffetts Close; that 12 Ruffetts Close was conveyed away on 25 July 1932 [the reference to 5 March 1932 at p.10B of the judgment is an error] subject to covenants which were effectively identical to those contained in the Conveyances of 14 and 16 Ruffetts Close; and that 63 Croham Valley Road was one of five plots conveyed on 5 August 1932 on substantially the same terms as those contained in the Conveyance of 10 Ruffetts Close.
  58. The judge went on to note that he had been referred to approximately one hundred other Conveyances, virtually all of which related to other plots in the Northern part of the estate. He noted that some of those Conveyances contained a statement in clause 2 that the benefit of the covenants should run with the land, and that some included the additional words after the reference to the developer's estate in Croydon "or the part thereof for the time being unsold". In two of the Conveyances the covenant in clause 2 was expressed to be with the developer, with no reference to land to be benefited. In two cases the covenant was expressed to be imposed "with the object of affording the [developer] and its successors in title full and sufficient indemnity but not further or otherwise".
  59. The judge also noted that in two cases more than one plot in the Northern part of the estate was conveyed to a developer. By way of example, the judge referred to a Conveyance dated 19 November 1930 which conveyed eight plots to the North of Ruffetts Close. The Conveyance contained covenants in substantially the same form as those imposed on other plots on the estate, save that the restriction on building was framed as an obligation not to build more than eight dwellinghouses on the land conveyed, coupled with stipulations that each house was to have "an equal frontage" and was to be semi-detached.
  60. The judge noted that he had seen only two Conveyances of plots in the Southern or central parts of the estate. In one case a plot in the Southern part of the estate was conveyed by the developer on 1 September 1925 to a Mr Costain, and some six months later it was conveyed by Richard Costain and Sons Limited and Mr Costain to a Mr Burton. The Conveyance to Mr Costain contained only limited covenants, but the subsequent Conveyance to Mr Burton contained covenants in favour of Richard Costain and Sons Limited, their successors and assigns, in similar form to those contained in the Conveyances of 14 and 16 Ruffetts Close, but with the omission of paragraph 9 of the Second Schedule (the obligation to bear a proportion of the cost of maintaining the road known as Ruffetts Close pending its adoption by the local authority). In the other case, a plot in the Southern part of the estate was conveyed to a purchaser on 23 August 1927. As to this Conveyance, the judge commented (at p.12F-G):
  61. "Although the covenants are very similar indeed to those contained in the Conveyances of numbers 14 and 16 [Ruffetts Close], at least in the extract in the Land Registry, the covenant does not expressly state with whom it is entered, let alone what land it is intended to benefit."
  62. Finally so far as the factual background is concerned, I should record that in 1933, that is to say following the completion of the development of the whole estate, the developer was placed in voluntary liquidation.
  63. THE JUDGMENT

    The annexation issue

  64. In his judgment, the judge addressed first the question whether the covenants which are sought to be enforced relate to, or "touch and concern", the respondents' plots, this being a question which (as noted earlier) is common to both the annexation issue and the scheme issue. He concluded that they do. He listed the factors which led him to that conclusion. First, he referred to the fact that the Conveyances of 14 and 16 Ruffetts Close each state expressly that the covenants are entered into "for the benefit of the [developer's] Estate at Croydon". Secondly, it seemed to the judge "inherently unlikely" that the sort of negative covenants imposed by the Second Schedule to each Conveyance would have been other than for the benefit of land. Thirdly, the judge took the view (at p.15E) that:
  65. ".... the fact that the covenant is for the benefit of a very large estate should not stand in the way of such a conclusion."
  66. In this connection the judge referred to a number of authorities, but given Mr Clay's limited challenge to this part of the judgment (a challenge which I will consider in due course) it is not necessary to refer to them in this context. It is, however, material to note that the judge concluded, on the authorities, that extrinsic evidence is admissible for the purpose of identifying the land to be benefited. Mr Clay does not seek to quarrel with that proposition, but he does submit that the judge gave too much weight to such extrinsic evidence as is available in the instant case. I shall return to this aspect.
  67. The judge then turned specifically to the question of annexation. On this aspect the respondent's case was (and is) that, given that the covenants relate to the land retained by the developer when each plot was sold off, annexation is effected by the operation of section 78 of the Law of Property Act 1925. Section 78(1) provides (so far as material):
  68. "A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title ...., and shall have effect as if such successors .... were expressed."
  69. Basing himself on the decision of this court in Federated Homes Ltd v. Mill Lodge Properties Ltd [1984] 1 WLR 594, the judge posed the questions (a) whether there were any words in the Conveyances imposing the covenants, or any surrounding circumstances, which negatived the conclusion that the benefit of the covenant runs with the covenantee's land, and (b) whether it could be said that the benefit of the covenant was annexed to the whole of the land retained by the covenantee but not to any particular part of it.
  70. As to question (a) the judge concluded (at p.19D) that:
  71. ".... there was no reason justifying the view that the covenants were not intended to run with the land retained by the [developer] at the time of the Conveyances of 14 and 16 Ruffetts Close".
  72. At p.20D he said:
  73. "Furthermore, if the purpose of the covenant was to assist [the developer] in selling off the remaining lots on the estate which it had not sold at the relevant time, that would seem to support the view that the benefit of the covenants ran with the retained lots when they were sold."
  74. As to question (b) the judge concluded that, on the authority of Federated Homes, the benefit of the covenant ran with each part of the land retained by the developer when the covenants were taken. On this appeal, Mr Clay does not seek to submit that if the benefit of the covenants is effectively annexed to the whole of the retained land, nevertheless it is not annexed to a particular part of it.
  75. The judge accordingly held that the respondents succeeded on the annexation issue, with the consequence that the owners of 10 and 12 Ruffetts Close and 63 Croham Valley Road were entitled to enforce the covenants.
  76. The scheme issue

  77. Addressing the scheme issue, the judge began by setting out the relevant principles as expressed in the authorities. Referring to a passage from the judgment of Parker J in Elliston v. Reacher [1908] 2 Ch 374 at 384, where Parker J set out the factors which (as he put it) "must be proved" if a building scheme is held to exist, the judge commented (at p.25D):
  78. "Clearly these rules are, with respect to Parker J, no more than general guidance. The fact that there is not a single estate owner from whom all subsequent purchasers can trace title is not an absolute requirement. First, I can see no good reason why two owners of adjoining estates cannot get together and agree a common scheme for the benefit of subsequent purchasers of properties on the two estates to be mutually enforceable: why should equity not enforce such a scheme? .... Secondly, it is clear that there is no need for a prior laying out of the estate.... Thirdly, I do not accept that all the properties have to be sold on this basis. If that was so, then interpretation of provisions such as paragraph 10 will invalidate the existence of the scheme. Yet Parker J himself accepted in Elliston v. Reacher at 389 [that] such a provision is one which could be said to be indicative of the scheme rather than calling it into question."
  79. After citing a further passage from the judgment of Parker J in Elliston v. Reacher and a passages from the judgments of Sir Herbert Cozens-Hardy MR and Buckley LJ in Reid v. Bickerstaff [1909] 2 Ch 305 at 323, the judge continued (at p.28B):
  80. "There are, therefore, two requirements which are identified .... perhaps most clearly in the passage in the judgment of Buckley LJ which I have just read."
  81. The two requirements to which the judge was there referring, as identified by Buckley LJ in Reid v. Bickerstaff in the passage which he cited are (i) "that defined lands constituting the estate to which the scheme relates should be identified" and (ii) "that the nature and particulars of the scheme shall be sufficiently disclosed for the purchaser to have been informed that his restrictive covenants are imposed upon for the benefit of other purchasers of plots within that defined estate with the reciprocal advantage that he shall as against such other purchasers be entitled to the benefit of such restrictive covenants as are in turn to be imposed on him."
  82. As to the first such requirement, the judge said (at p.28C):
  83. ".... it is clear that this is a strict requirement. However, the estate need not be identified in the conveyance by reference to a plan or map ... Extrinsic evidence is admissible. Indeed, even if it is clear there was a plan but it has been lost, the court is still able to find a scheme ...."

  84. The judge went on (at p.28F):
  85. "So far as evidence of reciprocity or mutuality is concerned, ideally it should be expressed in the conveyance. However, that is not necessary. Extrinsic evidence is admissible ... If the extrinsic evidence simply shows a [lotted] plan and nothing else that is not enough on its own... Nor is the fact that all the covenants are the same... It should also be mentioned that the form of the covenant may be important."

  86. The judge then turned to the application of the relevant principles. He began by noting that the evidence established that the houses in the Northern part of the estate, including 14 and 16 Ruffetts Close, were sold off in 1928 or later; that of the one hundred or so Conveyances which he had seen, more than 90 per cent contained virtually identical covenants, subject only to immaterial differences; and that:
  87. "... the "Vendors' estate" would have been known by purchasers to be the estate shown on the plans attached to the brochures which I have mentioned, which plan (on a larger scale) I consider would have been seen by any purchaser as one or more of the plans in the estate office had he visited the site office, as he is likely to have done. In my view, on the balance of probabilities, the plan in the estate office would also have shown the plotting of the estate roughly in accordance with the first brochure, which, as I have said, was not merely schematic."

  88. The judge went on to note that the brochures referred to existence of "residential restrictions". He concluded that this suggested that the properties were being marketed not merely on the basis that they would in themselves be valuable assets on an attractive estate, but that the "residential restrictions" would make them more valuable as well as more pleasant to live in. He commented that he was unable to see what restrictions could have been referred to other than the restrictions contained in the Conveyances, and that an intention that the covenants should "fall away" once the developer had sold off all the land was "an unattractive solution" as compared with the existence of a scheme.
  89. The judge then turned to paragraph 10 in the Second Schedule to the Conveyances of 14 and 16 Ruffetts Close. In this connection the judge referred extensively to the judgment of Sir Nicolas Browne-Wilkinson V-C in Allen v. Veranne (unreported, judgment delivered on 5 February 1988), where the Vice-Chancellor considered the significance of a similar provision in determining whether a scheme existed. In Allen v. Veranne the Vice-Chancellor concluded that a right for the vendor to exempt part of the estate from the restrictions in question was not inconsistent with the existence of a scheme. Referring to Allen v. Veranne the judge said (at p.33F):
  90. "It can be said that paragraph 10 in this case is the equivalent of the earlier part of stipulation 12 in Allen, and that therefore it tends to support the existence of a scheme."

  91. The judge continued (at p.33G):
  92. "The present case is certainly not the strongest I have seen for supporting a scheme, particularly in the light of the terms of the Conveyances. However, to my mind, subject to the points to which I now turn, the factors I have mentioned are strong enough, in the light of the authorities, to lead to the conclusion that there is a scheme.
    There are points the other way that I have not so far mentioned and they have to be considered. The first is that the terms of some of the Conveyances of properties in the Northern part are not indicative of the scheme and suggest that the scheme was not imposed in respect of some of the properties, for instance, the covenant by way of indemnity or the land to be benefited is not identified.
    Secondly, and to my mind much more significantly, there is very little evidence of the basis upon which properties in the central and Southern parts of the estate were conveyed, but such evidence as there is suggests that at least some of the Conveyances may have been executed earlier than any of the brochures I have seen. That view is strongly supported by the terms of the contemporary newspaper report to which I have been referred. Furthermore, the two Conveyances of properties in the middle or Southern part of the estate do not identify the land to which the covenants are intended to relate; indeed in one of the cases the Conveyance does not appear to identify who the covenantee is.
    Thirdly, the estate layout has been changed from that indicated on the only lotting plan I have seen, namely that in the first brochure. Most notably there is no Ruffetts Close on that plan.
    Fourthly, some of the covenants in the Conveyances are different, in particular they show different values of properties in paragraph 3, and they require some houses to be detached and some not to be detached, and paragraph 9 is omitted.
    It seems to me that the main feature is that the great majority of the Conveyances I have seen in the Northern part, that is at least 90 per cent, show that the properties when they were conveyed were not only conveyed effectively subject to the same covenants but that they were conveyed in terms which indicate that they are for the benefit of [the developer's] "estate" and are not expressed in terms of indemnity. The fact that paragraph 9 is omitted in some conveyances appears to be of no weight whatever, not least because some of the roads may have been adopted... It further appears to me that the variation in the terms of values of the houses, and whether they are to be detached or semi-detached, is indicative of a carefully thought out scheme rather than covenants being mechanistically applied. On an estate of this size one would have expected a carefully thought out scheme to involve different properties having different values in different areas, rather than finding a blind consistency throughout.
    The fact that there are some oversights in a few of the properties in the northern half does not impress me. As has been observed in other cases, there might be oversights due to poor conveyancing practice, or mistakes made following amendments put forward by the purchaser's solicitors. That does not prevent there from being a scheme. One has to look at the matter more broadly, particularly in the light of paragraph 10.
    In my judgment, so far as the northern part is concerned, the picture is consistent with there being a carefully thought out scheme. The fact that there are one or two omissions due to oversights cannot alter that.
    What gives me much more concern is the defendants' second point. I assume that the sale of houses in the southern, and indeed the middle, part of the estate, was by conveyances of which the two I have seen were typical, and that there was no earlier brochure similar to the ones I have seen and no sales office plans. On that basis, I think it would follow that there was no effective scheme enforceable against the properties which were sold in the southern or central part of the estate. Does that invalidate the conclusion I would otherwise have reached to the effect that there is an effective scheme which can be enforced inter se among the owners of properties in the northern part of the estate?
    While the issue is not straightforward, I do not think that it does. As between [the developer] and the purchasers of houses in the northern part of the estate, the terms of the conveyances and the circumstances surrounding those conveyances result in the two principal requirements of the scheme being satisfied: the scheme area is identified, and it is the whole of the estate, and the purchasers of those houses appreciated from the circumstances and from their conveyance that there was a scheme intended to benefit and bind them.
    The fact that the common vendor appears to have sold off a number of houses on a large part of the estate elsewhere does not alter the fact that as between the common vendor and a very large proportion of the purchasers of houses in a substantial area of the estate there is an agreed scheme. The fact that they have expressed the scheme as extending to an even larger area where it may be ineffective does not, in my view, invalidate the analysis of what they have agreed as a matter of law, nor does it cancel the effectiveness of what they have agreed in terms of practical consequences. They have agreed [the] scheme area as the whole estate. Furthermore, paragraph 10 actually envisages parts of the estate being excluded from the scheme if the common vendor wishes.
    It would probably be different if there was no sensible block of property, like the northern area in the present case, or the triangular site including Ruffetts Close, where the scheme could be enforced to a very substantial extent between the owners of nearly all the houses. In such case, I would accept either that there is no scheme which could be enforced in law, or, if there is a scheme, that it is so patchy and valueless that, although it may exist in law, it would be inappropriate for the court to enforce it.
    On the present facts, therefore, I conclude that [the developer] and the various purchasers of properties from it in the triangular site in the north of the estate, including numbers 14 and 16 [Ruffetts Close], entered into their conveyances on the basis that there was a scheme extending to the whole estate. The fact that in relation to a substantial part of the estate, not including the site, the scheme may be unenforceable does not mean that the court should conclude that there is no scheme, or thar there is no enforceable scheme, or that there is [a] scheme which should not be enforced in relation to the site.
    Mr Clay suggested that this conclusion was inconsistent with the observation of Megarry J in Brunner v. Greeenslade [1971] Ch 93 at 1003, where he suggested that a scheme comes into existence the moment the first property on the estate is sold. By parity of reasoning he said, it may well be that if the first 250 or more properties on this estate were sold without a scheme, it is too late to seek to impose a scheme on the estate including those properties.
    I do not think that is a good point. The effect of what Megarry J was saying is that once a vendor sells a property on a given estate, on terms which indicate that there is to be a scheme applicable to the estate, then the scheme comes into existence.
    It may be that, if a purchaser has purchased a property on an estate on the basis that there is to be a scheme in relation to the whole estate, in circumstances where the vendor has put it out of his power to impose a scheme in respect of part of the estate, the vendor may be vulnerable to a claim for damages or rescission. But that does not mean to say there is no scheme so far as the vendor and purchaser are concerned. In the present case that question does not arise, because, as I have mentioned, there is the specific provision of paragraph 10.
    In these circumstances I reach the conclusion, albeit with a degree of hesitation, that there is a scheme in this case and that it is effective, at least in relation to the site comprising some 90 properties which includes numbers 14 and 16 Ruffetts Close, as well as the properties belonging to many of the claimants.
    It therefore follows that [it is] not only the owners of numbers 10 [Ruffetts Close], 12 [Ruffetts Close] and 63 [Croham Valley Road] who can rely on section 78 and enforce the covenants against the owners of numbers 14 and 16 [Ruffetts Close]. but the other claimants in this case can also do so because there is a scheme."

    THE ARGUMENTS

    The scheme issue

  93. Mr Clay reminds us of the basic requirements for a building scheme, as established by authority. He submits that in referring to these requirements as "no more than general guidance" the judge was materially understating and undervaluing them, and that this flawed approach to the authorities undermines and vitiates his conclusions.
  94. Mr Clay submits that none of the requirements for a building scheme is present in the instant case. In the first place, he submits, there is no identified area a requirement which the judge acknowledged to be a "strict requirement" (see p.28D). The judge concluded that there was a building scheme operating between plots within the triangle formed by Ballards Way, Crest Road and Croham Northern area of the estate the area which the judge defined as "the site" but (submits Mr Clay) he made no finding as to whether and to what extent the scheme extended beyond that area. Further, Mr Clay submits that it must be possible to discover from the Conveyance of a plot which is said to be included in a scheme (with, where appropriate, the use of extrinsic evidence as an aid to interpretation of the Conveyance) to what area the scheme relates. In the instant case the reference to "the Company's Estate at Croydon" or to "the Vendors' Estate at Croydon" could, he submits, mean any one of three things: first, it could mean the entirety the estate as shown in the brochures (that is to say, the whole of the "upside down Italy"); second, it could mean such part of the estate as remains in the ownership of the developer; and thirdly, given that a similar expression is used in the Conveyance of the last of the plots, when by definition no part of the estate was retained by the developer, it could mean that part of the estate which has already been sold off by the developer.
  95. As to the judge's reliance on extrinsic evidence, Mr Clay accepts that extrinsic evidence is in principle admissible as an aid to interpretation of the Conveyances, but he submits that the judge attached too much weight to such limited extrinsic evidence as is available in the instant case. In particular, he criticises the judge's conclusion, (or, as he would have it, assumption, since there was no evidence to support it) that the extent of the estate would have been known to purchasers and that a larger scale version of the plans in the brochures "would have been seen by any purchaser as one or more of the plans in the estate office had he visited that office, as he is likely to have done" (see p.30C), and his finding (at p.30D) that:
  96. ".... the plan in the estate office would also have shown the plotting of the estate roughly in accordance with the first brochure ..."

  97. Mr Clay also relies on the fact (to which the judge made reference: at p.34D) that such extrinsic evidence as is available indicates that some plots were sold off before the publication of the first of the three brochures which are in evidence. This, he submits, is entirely consistent with the fact that in a number of Conveyances the terms of which are in evidence there is no reference at all to the intended beneficiary of the covenants (for example, Conveyances of 49 and 59 Ballards Way (23 June 1928), 42 Ballards Way (2 November 1928), 19 Ballards Way (17 November 1930) and 55 Crest Road (15 June 1931)). These Conveyances tend, he submits, to show a pattern in the conveyancing to which the judge should have given due weight. He submits that the inference to be drawn from such conveyancing evidence as is available is that the early Conveyances contain no indication of an intention that a scheme was intended.
  98. In this connection, Mr Clay relies on Brunner v. Greenslade [1971] 1 Ch 993 at 1003G per Megarry J) for the proposition that a scheme "crystallises" when the first plot is sold. Hence, he says, the scheme in the instant case (if there was a scheme) must have crystallised in about 1925. It follows, he submits, that the fact that some subsequent Conveyances may identify the land to be benefited by the covenants cannot have the effect of bringing a scheme into existence where no scheme previously existed.
  99. Mr Clay relies in particular on the conveyancing of 10 Farley Road, to which the judge referred in his judgment (at p.12C-E). On 1 September 1925 10 Farley Road, together with other land, was conveyed by the developer to a Mr William Percy Costain. Then, some eight months later, 10 Farley Road was conveyed by Richard Costain and Sons Ltd, which (it is to be inferred) was an associated company of the developer and/or of Mr Costain, to a Mr Burton. The Conveyance to Mr Burton is dated 7 May 1926, and on the available evidence it is was the first sale off of a plot on the estate to a third party purchaser. According to the recital of its terms in the Charges Register relating to 10 Farley Road at the Land Registry, the Conveyance to Mr Burton makes no reference to any intended beneficiary of the covenants. Mr Clay submits that this is consistent with there being no scheme in existence when the first plots on the estate were sold off. He points out that the Conveyance of 10 Farley Road is the only early Conveyance the terms of which are in evidence.
  100. Mr Clay submits that there is no evidential justification for the judge's observation (at p.15D) that it was:
  101. ".... inherently unlikely that the sort of negative covenants imposed by paragraphs 1, 2 and 3 [of the Second Schedule] would have been other than for the benefit of the land ".

  102. Mr Clay submits that, on authority, a purchaser of a plot must be able to ascertain with sufficient certainty from his Conveyance (interpreted, so far as may be necessary, with the aid of extrinsic evidence) (a) whether his plot is included in a scheme, and (b) if so, what other plots are included in the scheme. In other words, he must be able to ascertain the area within which the "local law" applies, so that he can know who can enforce the covenants against him, and (by the same token) against whom he can enforce them. Mr Clay submits that this requirement is not satisfied in the instant case.
  103. Mr Clay also stresses the requirement for reciprocity and mutuality in any scheme. He submits that the judge's conclusion that there is a scheme enforceable as between plots within "the site", whilst at the same time leaving open the possibility that the scheme may have wider effect within the estate, conflicts with that requirement.
  104. As to paragraph 10 of the Second Schedule to the Conveyances, Mr Clay submits that, read in context, paragraph 10 provides a clear indication that no scheme was intended. He submits that Allen v. Veranne is distinguishable from the instant case, on the footing that the Vice-Chancellor's conclusion in relation to the provision in question was that it was not inconsistent with the existence of a scheme, and that it did not suffice to outweigh "what would otherwise seem to be an overwhelming case for a building scheme" (see ibid. p.22C).
  105. Mr Henderson, on the other hand, submits that the judge's factual findings were findings which he was fully entitled to make on the evidence before him. He further submits that, on a proper reading of his judgment, the judge found as a fact that a scheme existed which covered the whole estate, notwithstanding that it may have been effective and enforceable only as between plots situated in what he defined as "the site".
  106. He submits that, on the authority of Elliston v. Reacher, the fact that the benefit of the covenants in a scheme may also attach to property which is situated outside the area of the scheme is not necessarily fatal to the requirement of reciprocity and mutuality between the properties within the scheme. He points out that that was also the position in Allen v. Veranne.
  107. Nor, he submits, is the fact that a scheme may be unenforceable by or against particular plots within a scheme fatal to the existence of a scheme. In support of this submission he relies on the judgment of Kekewich J at first instance in Nalder and Collyer's Brewery Co Ltd v. Harman (1900) 82 LT 594 (affirmed by the Court of Appeal at (1900) 83 LT 257).
  108. Thus in the instant case, he submits, the fact that the scheme may be unenforceable by or against plots in the Southern and central areas of the estate does not vitiate the judge's conclusion that there is an enforceable scheme as between plots within "the site".
  109. As to paragraph 10, Mr Henderson submits that it is not only consistent with the existence of a scheme but a positive pointer towards the existence of a scheme. In support of this submission he cites Elliston v. Reacher in the Court of Appeal (at p.672 per Cozens Hardy MR) and Allen v. Veranne. He submits, in effect, that the existence of a power of exemption from a particular obligation is an indicator that, absent exemption, the obligation stands.
  110. The annexation issue

  111. Mr Clay submits, on the authority of Federated Homes, that annexation of the benefit of a covenant requires that, as in the case of a scheme, the land for the benefit of which the covenant is taken must be sufficiently identified in the Conveyance which contains the covenant. He submits that, for the reasons which he puts forward on the scheme issue, that requirement has not been satisfied in the instant case.
  112. He further submits that the law as to annexation, when applied to an estate laid out in plots, gives rise to the anomalous result described forcefully by Ungoed-Thomas J in Eagling v. Gardner as "a building scheme in Alice's Wonderland" (see ibid. p.846d). Mr Clay characterises a situation in which the first purchaser cannot enforce the covenants of any of the other purchasers, and in which the last purchaser can enforce the covenants of all the other purchasers, as ridiculous and unjust.
  113. Mr Henderson, on the other hand, submits that the clear effect of each of the Conveyances, construed in accordance with section 78, was to annex the benefit of the covenants to that part of the developer's "Estate at Croydon" which the developer retained at the date of the Conveyance, and that the extrinsic evidence leaves no doubt as to what estate was being referred to.
  114. As to Mr Clay's submission that the land to be benefited by the covenants is not sufficiently identified, Mr Henderson submits that the covenants in question are of obvious benefit to the land retained. He supports this submission by citing a passage from the judgment of Wilberforce J in Marten v. Flight Refuelling (at p.136) to the effect that where an owner of land, on selling part of it, sees fit to impose a restriction and expresses that restriction as being for the benefit of the land which he retains, the court will normally assume that it is capable of doing so.
  115. CONCLUSIONS

    The scheme issue

  116. In Brunner v. Greenslade, Megarry J, referring to the equitable principles relating to building schemes, said (at p.1006B):
  117. "It may be, indeed, that this is one of those branches of equity which work best when explained least."

  118. Any sensible principle must, I would have thought, be readily explicable. But if, in saying that, Megarry J was warning against the danger of over-analysing or reformulating well-established principles, then I respectfully agree with him. Each time the cases about building schemes are analysed or reviewed in a later case, a further opportunity is afforded to litigants to search for perceived differences in interpretation or emphasis. I will accordingly content myself with citations from only one of the earlier cases: Reid v. Bickerstaff [1909] 2 Ch 305. At p.319 of the report in that case, Cozens Hardy MR said this:
  119. "What are some of the essentials of a building scheme? In my opinion there must be a defined area within which the scheme is operative. Reciprocity is the foundation of the idea of a scheme. A purchaser of one parcel cannot be subject to an implied obligation to purchasers of an undefined and unknown area. He must know both the extent of his burden and the extent of his benefit. Not only must the area be defined, but the obligations to be imposed within that area must be defined. Those obligations need not be identical. For example, there may be houses of a certain value in one part and houses of a different value in another part. A building scheme is not created by the mere fact that the owner of an estate sells it in lots and takes varying covenants from the various purchasers. There must by notice to the various purchasers of what I may venture to call the local law imposed by vendors upon a definite area."

  120. In the course of his judgment in the same case, Buckley LJ said this (at p.323):
  121. "For the application of the principle [of a building scheme] it is, I think, essential to establish as a matter of fact the following state of things: that the vendor expressly or by implication contracted with the defendant in the action or his predecessor in title (whom I will call the purchaser) upon the footing that at the date of that contract the vendor told the purchaser that he was proposing to deal with a defined estate in a defined way, and that he offered to sell to the purchaser a plot forming a part of that defined estate on the terms that the purchaser should enter into such restrictive covenants relating to his plot as the scheme contemplated upon the footing that the purchaser should reciprocally have the benefit of such restrictive covenants relating to the other plots on the estate as were indicated by the scheme. There can be no building scheme unless two conditions are satisfied, namely, first, that defined lands constituting the estate to which the scheme relates shall be identified, and, secondly, that the nature and particulars of the scheme shall be sufficiently disclosed for the purchaser to have been informed that his restrictive covenants are imposed upon him for the benefit of other purchasers of plots within that defined estate with the reciprocal advantage that he shall as against such other purchasers be entitled to the benefit of such restrictive covenants as are in turn to be imposed upon them. Compliance with the first condition identifies the class of person as between whom reciprocity of obligation is to exist. Compliance with the second discloses the nature of the obligations which are to be mutually enforceable. There must be as between the several purchasers community of interest and reciprocity of obligation."

  122. With those statements of principle in mind, I turn to the facts of the instant case, in so far as they are ascertainable from such evidence as is available.
  123. I address first Mr Henderson's submission that the judge found as a fact that a scheme exists over the entirety of the estate, notwithstanding that it may be unenforceable in relation to plots outside the area which he defined as "the site". As I read his judgment, however, the judge made no such finding. I return to the relevant passages in his judgment. At p.29 of his judgment, the judge turns to the application of the relevant principles to the facts of the case, and lists six factors which he concludes (at p.34A-B) are strong enough, subject to four further points, to lead to the conclusion "that there is a scheme". For present purposes, I can pass over the first, third and fourth of those further points. As to the second of those points, the judge says this (at p.34D):
  124. "Secondly, and to my mind much more significantly, there is very little evidence of the basis upon which properties in the central or southern parts of the estate were conveyed, but such evidence as there is suggests that at least some of the conveyances may have been executed earlier than any of the brochures I have seen. That view is strongly supported by the terms of the contemporary newspaper report to which I have been referred. Furthermore, the two conveyances of properties in the middle and southern part of the estate do not identify the land to which the covenants are intended to relate; indeed in one of the cases the conveyance does not appear to identify who the covenantee is."
  125. The judge returns to this second point at p.36E of his judgment, saying this:
  126. "What gives me much more concern is the defendants' second point. I assume that the sale of houses in the southern, and indeed the middle, part of the estate was by conveyances, of which the two I have seen were typical, and that there was no earlier brochure similar to the ones I have seen and no sales office plans. On that basis, I think it would follow that there was no effective scheme enforceable against the properties which were sold in the southern or central part of the estate."
  127. The judge then goes on to address the question:
  128. "Does that invalidate the conclusion I would otherwise have reached to the effect that there is an effective scheme which can be enforced inter se among the owners of properties in the northern part of the estate?"
  129. The judge's answer to that question is No (see p.37B). He then goes on to express his conclusion (at pp.38E to 39A) as follows:
  130. "On the present facts, therefore, I conclude that [the developer] and the various purchasers of properties from it in the triangular site in the north of the estate, including numbers 14 and 16 [Ruffetts Close], entered into their conveyances on the basis that there was a scheme extending to the whole estate. The fact that in relation to a substantial part of the estate, not including the site, the scheme may be unenforceable does not mean that the court should conclude that there is no scheme, or that there is no enforceable scheme, or that there is [a] scheme which should not be enforced in relation to the site."
  131. In the passages I have just quoted, the judge refers not just to the existence of a scheme, but also to the existence of an "effective" scheme and/or an "enforceable" scheme. In the context in which those references are made, I do not understand the judge to be drawing any distinction between those three concepts. In any event, they seem to me to be one and the same. Given the requirement of reciprocity and mutuality, a building scheme which is not "effective" and "enforceable" as between the owners for the time being of the properties included within it is not a scheme to which the equitable principles can apply.
  132. It follows that I cannot accept Mr Henderson's submission that what the judge found to exist was a scheme which extended to the whole of the estate but which was unenforceable as between properties in the Southern and central parts of it. I can fully accept that a particular property situated within an estate may not be subject to a building scheme which affects the remainder of the estate because the original purchaser of that property did not buy it with notice of the scheme and hence with the intention that the property would be included in the scheme. Such a situation appears to have arisen in Nalder and Collyer's Brewery Co Ltd v. Harman, on which Mr Henderson relies. In that case a property on an estate alleged to be subject to a building scheme was sold prior to the rest of the estate being put up for sale by public auction. The Conveyance of the property in question made no reference to any scheme. At the subsequent auction, however, the sale plan included the whole of the estate, including the property which had been previously sold off; and the plan showed the whole of the estate, including the property in question, divided into numbered lots. Kekewich J said (at p.596 of the report, left-hand column):
  133. "I hold that there is a building scheme affecting that property not only which was offered for sale [at the auction] but that which was described in the plan annexed to the particulars and conditions of sale, and which included property which had been sold prior to the auction."
  134. However, Kekewich J's statement that "there is a building scheme affecting that property" must be read in the context of his further findings. Thus, he went on to hold (at p.596, right-hand column) that the property in question had not been purchased as part of the building scheme, and (at p.597, left-hand column) that the purchaser of it was "no party to the building scheme". His decision was upheld by the Court of Appeal (the decision of the Court of Appeal, expressed in three very short judgments, is reported at (1900) 83 LT 257).
  135. As I read that case, the effect of Kekewich J's decision is that, notwithstanding that the scheme was intended by the vendor to relate to the entirety of the estate, and notwithstanding that the purchasers at auction must have bought on that basis, in fact the scheme did not include the property sold off prior to the auction: that is to say, the property sold off prior to the auction was not included in the area within which the "local law" operated. It was not, as I read it, a decision to the effect that the property sold off prior to the auction was subject to the scheme, but that the scheme was nevertheless unenforceable in relation to it. As already indicated, I would in any event have regarded a decision to that effect as self-contradictory.
  136. Approaching the judgment on that footing, it seems to me clear that, in the passage which I have quoted at p.36E-H, the judge leaves open the question whether there was a scheme extending to the whole estate. Indeed, it may be that he intended to go further than that and find that there was no such scheme. Whereas a finding that there was such a scheme would be wholly inconsistent with the next stage in his judgment in which he poses the question whether "that" invalidates the conclusion which he would otherwise have reached, namely that "there is an effective scheme which can be enforced inter se among the owners of properties in the northern part of [the] estate".
  137. In any event, I consider that on the available evidence the judge was plainly right not to find that a scheme existed in relation to the whole estate. In the first place the available conveyancing evidence relating to properties in the Southern and central parts of the estate (to which the judge referred), far from pointing to the existence of a scheme affecting those parts of the estate, points the other way. Secondly, as the judge noted, there was no evidence as to how the plots were marketed prior to the production of the first of the three brochures referred to earlier, which (it was agreed) was produced in about 1927.
  138. So the question at issue is whether, absent a scheme which operates over the whole estate, there was nevertheless a scheme which operated as between properties situated within "the site".
  139. In my judgment, on the available evidence the answer to that question must be No. I reach that conclusion for essentially two connected reasons. In the first place, the evidence provides no answer to the question: What is the "defined area" within which the scheme is intended to operate? Is it limited to "the site", or does it extend to adjoining or adjacent properties, and if so which properties? And in the second place, how is a purchaser of a plot within "the site" to know which plots on the estate are within the scheme and which are not. To adapt the words of Cozens-Hardy MR in Reid v. Bickerstaff (in the passage quoted earlier): How will he know the extent of his burden and the extent of his benefit? The available evidence provides no answer to that question either.
  140. As to provision contained in paragraph 10 of the Second Schedule to the Conveyances of 14 and 16 Ruffetts Close, and as to the similar provision to be found in other Conveyances, it seems to me that such a provision takes its flavour from the surrounding circumstances. As the Vice-Chancellor commented in Allen v. Veranne (at p.20C): "It points both ways." Considered in isolation, such a provision is to my mind more or less equally consistent with the existence of a scheme as with its absence. Thus, where the other factors in the case point clearly towards the existence of a scheme (as they did in Allen v. Veranne), such a provision is not a contra-indication. In the instant case, however, the fact that the provision in question is included in Conveyances which contain no identification of the beneficiary of the covenants (for example, the Conveyance of 10 Farley Road to Mr Burton), seems to me to provide clear support for the conclusion that, as a matter of interpretation of those Conveyances, no scheme was intended.
  141. Accordingly I disagree with the judge on the scheme issue. In my judgment, the available evidence falls far short of establishing a scheme affecting "the site". I would accordingly allow the appeal against that part of the judge's decision.
  142. The annexation issue

  143. I can deal with this issue shortly.
  144. In my judgment, the judge reached the right conclusion on the annexation issue, for the reasons he gave. The references to "the Company's Estate at Croydon" and to "the Vendors' Estate at Croydon" are in my judgment entirely apt to refer to such parts of that estate as were retained by the developer, and by virtue of section 78(1) the covenants are deemed to have been made with the developer and its successors in title.
  145. I reject Mr Clay's submission that the land to be benefited is not sufficiently identified. In my judgment the extrinsic evidence establishes clearly what land it referred to.
  146. Nor can there be any doubt, in my judgment, that the covenants "touch and concern" the retained land. As Wilberforce J observed in Marten v. Flight Refuelling (at p.136, referred to earlier), where the parties have expressly referred to a covenant as having been imposed for the purpose of benefiting the retained land of the covenantee, "the court would normally assume that it is capable of doing so".
  147. I would accordingly uphold the judge's decision on the annexation issue, and dismiss the appeal in that respect.
  148. MR JUSTICE BODEY:

  149. I agree.
  150. LORD JUSTICE JUDGE:

  151. I agree with Jonathan Parker LJ. In deference to the contrary conclusion reached by Neuberger J on the interesting building scheme issue I shall briefly summarise my reasons.
  152. There is no doubt that the properties with which this case is concerned formed part of a massive housing development on what had previously been unspoilt countryside. In that broad sense, the original developers of the land were involved in a building scheme. However before properties built in accordance with such a scheme can benefit from and become subject to mutually enforceable covenants of the kind presently under consideration, the authorities show that the number of characteristics must be established. Among them is certainty: otherwise, in relation to each plot of land said to fall within the scheme, the question will continually arise: does it, or does it not, so fall? More precisely, is it, or is it not, subject to mutually enforceable benefits and obligations, and if enforceable, by and against the owners of which plots? This essential requirement for certainty makes obvious practical sense. It can be traced from the last century, when the focus seemed to be on building plots "laid out" for sale, (Renals v Cowlishaw (1878) 9 ChD125) through numerous judicial observations that the area or land covered by the scheme must be "defined". (see, for example, Parker J in Elliston v Reacher (1908) Ch374) and Cozens-Hardy MR and Buckley LJ in Reid v Bickerstaff (1909) 2Ch305)
  153. It is no longer necessary to establish that the area covered by the proposed scheme has been divided into plots (Baxter v Four Oaks Properties Ltd) (1965) Ch816). Nevertheless the emphasis on the need for definition of the area subject to the scheme remains unchanged. This requirement is not inconsistent with the possibility that the evidence may show that a vast development was subject to one, or indeed more than one enforceable building scheme, or that some parts of a large development were included in such a scheme while another part or parts, or even a single plot, fell outside it. Whether the necessary degree of definition is established is a question of fact.
  154. The main difficulty I have had with Neuberger J's conclusions can be expressed quite simply. He did not, and for the reasons given by Parker LJ he would on the evidence have been unable to find, that the covenants now under consideration extended throughout the entirety of the original building development. He nevertheless held that the building scheme which he identified applied to what he described in different passages in his judgment as the "northern part", or "northern half" of the overall development, or the "northern area", and ultimately to triangular site, including Ruffetts Close. These descriptions suggest considerable, and in my view, justifiable uncertainty. In the end he found that the scheme applied to properties in "Walton Heath and the triangular site in the north of the estate". My concern with this conclusion may be tested by reflecting that the findings made by the judge leave open for further litigation whether, and if so which land within what may loosely be described as the northern part of the development did or did not fall within this building scheme. This clearly indicates that the area covered by the scheme was insufficiently defined.
  155. For these reasons, as well as those given by Parker LJ, I agree that the appeal against this part of the judge's decision should be allowed, and further agree, that the appeal in relation to the annexation issue should be dismissed.
  156. Order: Appeal dismissed on annexation issue; Appeal allowed on building scheme issue; claimant to pay costs in the appeal and below to first and second defendants of the building scheme issue; first & second defendants to pay claimants costs of the annexation issue; application by claimants for permission to appeal to House of Lords refused; application by first and second defendants for permission to appeal to House of Lords refused.
    (Order does not form part of the approved judgment)


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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1732.html