Restrictive Covenants - Building Scheme

In the recent case of Khoury and another v Kensell heard on 9 February, the court found that there was insufficient evidence of an intention to create a building scheme on three plots of land in East Sussex.

The claimants were trying to enforce a restrictive covenant in a conveyance, claiming that the sale of three plots of land subject to the same covenants had created a scheme of mutual covenants ie a building scheme, whether expressly or by implication.

Where a building scheme exists, restrictive covenants given by purchasers of land are enforceable by the owners of the plots within the building scheme against each other, irrespective of the order of sales of the various parcels of land by the original vendor. The characteristics of a building scheme include that (1) the parcels must all have been purchased from a common vendor (2) each of the properties within the scheme must be burdened by covenants which were intended to be mutually enforceable as between all the owners within the scheme and (3) there must be a defined area to which the building scheme is to apply, which is known to all purchasers

The case does not create any new law, but confirms that for a building scheme to be established there must be a clear intention to impose mutual covenants on the purchaser of each parcel within a clearly identified area of land. It must also be shown that the purchaser of each parcel of land had accepted that the covenants they had entered into would benefit the owners of the other properties within the building scheme, and that equally the purchaser would enjoy the benefit of the covenants over those other properties. These two pre-conditions to a building scheme will depend on the intention of the parties, which is a question of fact to be determined from all the circumstances. The court will be prepared to consider extrinsic evidence to prove the existence of a scheme but there must be strong evidence as to why they should do so. This case failed as the area which benefited from the covenants had not been sufficiently defined, and the fact that a series of conveyances contained similar covenants was not sufficient to infer that a building scheme had been created.

Lorraine Rose

Solicitor

22 February 2018