(1) George Alexander Khoury v Tina Lorraine Kensell
| Jurisdiction | England & Wales |
| Judge | Mr Justice Zacaroli |
| Judgment Date | 09 February 2018 |
| Neutral Citation | [2018] EWHC 217 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH-2017-000098 |
| Date | 09 February 2018 |
[2018] EWHC 217 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Zacaroli
Case No: CH-2017-000098
Martin Hutchings QC (instructed by William Graham Ltd) for the Claimants
Brie Stevens-Hoare QC, Lina Mattsson (instructed by Leslie Trevor & Co) for the Respondent
Hearing dates: 16 January 2018
Introduction
For some years before 1996, Upper Tolhurst Farm in East Sussex had been in the ownership of the Mulleneux family. In 1996, three members of the family (the “Mulleneux Children”) offered for sale, as a whole or in three lots, Upper Tolhurst Farmhouse (the “Farmhouse”) and two adjoining properties, an oasthouse (the “Oasthouse”) and a barn (the “Barn”). The Oasthouse and The Barn were offered for conversion into dwellings. At the same time, two additional lots (Lots 1A and 2A), comprising land adjacent to, respectively, the Farmhouse and the Oasthouse, were offered for sale by the parents of the Mulleneux Children.
The Claimants purchased the Oasthouse and Lot 2A, completion occurring on 25 October 1996. The Defendant purchased the Barn, completing on 29 November 1996. The Farmhouse and Lot 1A were sold to a Mr and Mrs Henderson, completion also taking place on 29 November 1996.
The transfer of the Barn from the Mulleneux Children to the Defendant contained various covenants, including (by clause 4.2.4) a covenant to “…comply at all times with all planning conditions and requirements of the Local Planning Authority or any other statutory or other competent authority relating to the Property.”
The Claimants contend that the Defendant has failed to comply with that covenant. By a Claim Form issued in March 2012, and Amended Particulars of Claim dated 25 May 2015, they seek a declaration that the Defendant is in breach of covenant, and an order requiring the Defendant to demolish that part of the Barn that does not comply with planning permission.
The only basis advanced in the Amended Particulars of Claim for the contention that the Claimants were entitled to enforce the restrictive covenant in clause 4.2.4 of the transfer from the Mulleneux Children to the Defendant was that the sale of each of the Farmhouse, the Oasthouse and the Barn was effected pursuant to a building scheme.
On 28 October 2016 the Defendant issued an application under CPR Part 24 to strike out the claim for breach of covenant on the grounds that it had no real prospect of success. The application came before HHJ Simpkiss, sitting in the County Court in Brighton on 20 March 2017. In an extempore judgment he struck out the claim for breach of covenant, and gave directions in relation to the remainder of the claim (consisting of a claim in nuisance).
The Claimants appeal against that decision, pursuant to permission granted by Birss J on 11 October 2017. The skeleton argument filed by the Claimants in respect of the appeal confined the scope of the argument to the contention that the judge was wrong to find that there was no real prospect of the Claimants establishing the existence of a building scheme.
On 10 January 2018, shortly before the hearing of the appeal, the Claimants emailed to the Defendant draft amended grounds of appeal, draft re-amended particulars of claim and further documents to be included in the appeal bundle. The Claimants served a supplemental skeleton argument on 11 January 2018. By the draft amended grounds of appeal and the supplemental skeleton argument, the Claimants sought to argue (as their, now, primary ground of appeal) that the judge failed to appreciate that the Claimants were entitled to enforce the restrictive covenant in clause 4.2.4 of the transfer between the Mulleneux Children and the Defendant by virtue of s.56 of the Law of Property Act 1925. The Claimants wish to argue that on the true construction of the conveyance to the Defendant, the words included in the definition of the Seller, “successors in title the owners from time to time of the Retained Land” includes them. It is not surprising that the judge had not appreciated this, given that it was neither pleaded nor argued before him. In reality this was not an additional ground of appeal, but an attempt to amend the claim so as to add an entirely new claim. In light of the fact that (i) I am exercising an appellate jurisdiction, (ii) the new claim potentially raised questions of fact (concerning the matrix of facts against which the transfer was to be construed); (iii) the Defendant had had no proper opportunity to investigate and respond to this new claim; and (iv) the appeal was listed for two hours, which was already a substantial underestimate, I refused to entertain an application to amend the grounds of appeal. The Claimants are free (irrespective of the outcome of the appeal on the basis of the claim as originally put) to apply to the County Court for permission to amend the claim (and the Defendant remains free to advance such objections as she may have to that application).
The Claimants nevertheless wished to rely on the new documents that were added to the appeal bundle in support of their appeal as originally framed. I deal with the application to adduce fresh evidence further below.
Building Schemes
Where a building scheme exists, restrictive covenants given by the purchasers on the sale of each plot are enforceable by the owner for the time being of any plot on the estate. The characteristics of a building scheme were identified in Birdlip Limited v Hunter [2016] EWCA Civ 603, per Lewison LJ at [2]:
“(i) It applies to a defined area. (ii) Owners of properties within that area have purchased their properties from a common owner. (iii) Each of the properties is burdened by covenants which were intended to be mutually enforceable as between the several owners. (iv) The limits of that defined area are known to each of the purchasers. (v) The common owner is himself bound by the scheme, which crystallises on the occasion of the first sale of a plot within the defined area, with the consequence that he is not entitled to dispose of plots within that area otherwise than on the terms of the scheme. (vi) The effect of the scheme will bind future purchasers of land falling within the area, potentially for ever.”
At [21], Lewison LJ identified the two pre-requisites of a scheme of mutual covenants as:
“(1) the identification of the land to which the scheme relates, and (2) an acceptance by each purchaser of part of the lands from the common vendor that the benefit of the covenants into which he has entered will inure to the vendor and to others deriving title from him and that he correspondingly will enjoy the benefit of covenants entered into by other purchasers of part of the land.”
Whether these two components exist depends upon the intention of the parties, to be ascertained as a question of fact from all the circumstances: Birdlip at [24]. Lewison LJ pointed out (at [25]) that in the case of a scheme intended to last potentially for ever, the intention ought to be readily ascertainable “without having to undertake laborious research in dusty archives”, and that in almost all cases where a scheme of mutual covenants was found to exist, the area of land to which the scheme applied was ascertainable from the terms of the conveyance or other transactional documents. At [37] Lewison LJ noted that:
“Thus far, the cases in which schemes of mutual covenant have been found to exist have been cases where there is something in the conveyance or other transactional documents to alert a purchaser to the existence of the scheme. However, there are undoubtedly statements in the cases that the existence of a scheme may be inferred purely from the circumstances surrounding the initial sales. One particular circumstance is where the common vendor intends to sell the whole of his land simultaneously (e.g. by auction), because in that kind of case there is no point in his taking restrictive covenants (which he will not be able to enforce) unless they were intended to be mutually enforceable by the purchasers: Nottingham Patent Brick and Tile Co v Butler (1885) 15 QBD 261, 269 (Wills J); (1886) 16 QBD 778, 785 (Lord Esher MR).”
Where, however, a claimant sought to rely on extrinsic evidence in order to establish a scheme, it would require cogent evidence to do so: Birdlip at [42]. The mere fact that a series of conveyances contains similar covenants is not enough to lead to the inference that a scheme of mutual covenants exists: Birdlip at [39].
Elliston v Reacher [1908] 2 Ch 374 , where a building scheme was found to exist, is an example of a case where there was a clearly expressed intention to impose mutual covenants, the only issue being whether the document in which that intention was expressed was admissible given that it had been engrossed, but not executed. Parker J set out the requirements for a building scheme, at p.384, as follows:
“I pass, therefore, to the consideration of the question whether the plaintiffs can enforce these restrictive covenants. In my judgment, in order to bring the principles of Renals v. Cowlishaw and Spicer v. Martin into operation it must be proved (1) that both the plaintiffs and defendants derive title under a common vendor; (2) that previously to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development;...
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