Archive for the ‘Building scheme’ Category

Waiver, mandatory injunctions and building schemes

August 18, 2018

Introduction

A building scheme (such as the scheme embodied in a Deed of Mutual Covenant) creates a local law for the estate it governs. The scheme may require owners of property within the scheme to obtain the consent of a common landlord (in a scheme established for leasehold properties) or of some other body (such as a Management Committee) before making alterations or additions to the property. This arrangement envisages the formal submission of plans as the start of a process leading to consent or refusal to give consent. Carrying work out without the requisite consent is a breach of covenant and can lead to an action for a declaration, damages and the grant of an injunction.

What if an owner makes alterations to property without obtaining the formal consent required but either: (a) the person or body with the capacity to give the consent knew of the work and failed to object to it; or (b) the person or body with the capacity to give consent has repeatedly failed to enforce the restriction with regard to alterations made to other properties within the scheme? Would it be inequitable either to allow the enforcement of the covenant or, if it is enforceable, to grant an injunction requiring the property to be reinstated?

These questions were considered by the Privy Council in Singh v Rainbow Court Townhouses Ltd ([2018] UKPC 19), on appeal from the Court of Appeal of the Republic of Trinidad and Tobago.

 

Singh v Rainbow Court Townhouses Ltd

Mrs. Singh owned a house in the Rainbow Court estate. She held the property under a lease for 199 years. The lease contained a recital to the effect that all of the units in Rainbow Court would be sold under a building scheme under which the covenants would be mutually enforceable. Rainbow Court Townhouses Ltd (‘the company’) was a company formed for the purpose of managing the development.

The lease contained a tenant’s covenant not to make any alteration or addition to the property without the prior written approval of the landlord and of the company. Mrs. Singh carried out works at her house without either consent. The company sought mandatory injunctions requiring Mrs. Singh to remove the alterations she had made.

 

Acquiescence or waiver

Mrs. Singh argued that the landlord and the company had acquiesced in the breach of covenant since: (a) (through its officers and employees) it knew of the work that was to be carried out for several days before it began and had not objected; and (b) the owners of ten other properties within the building scheme had carried out unauthorised alterations to their properties and neither the landlord nor the company had done anything to enforce the covenant against them.

On waiver, Lord Carnwath (with whom the other members of the Privy Council agreed) approved this statement:

‘It is in all cases a question of degree. It is in many ways analogous to the doctrine of estoppel, and I think it is a fair test to treat it in that way and ask, “Have the plaintiffs by their acts and omissions represented to the defendant that the covenants are no longer enforceable and that he is therefore entitled to use his house as a guest house.’

(Chatsworth Estates Co v Fewell [1931] 1 CH 224 at 231 per Farwell J.)

Lord Carnwath commented:

‘The issue was not whether breaches had been overlooked in individual cases but whether these omissions could be said to amount in effect to a representation that the covenants were no longer enforceable.’ ([32]).

The informal exchanges with the company’s employees and officers were not a waiver:

‘The mere failure of two officers to make immediate objection in October 2014 when notified of works due to start within in about a week, without any detailed information of their nature cannot be interpreted as a representation of any kind on behalf of the company.’ ([33])

The courts below had, however, failed to adequately investigate the allegations that the landlord and the company had not objected when other owners within the scheme had carried out unauthorised alterations:

‘On the face of the pleadings there was an arguable case that these were no different in kind to works which had been accepted without objection on other properties. Whether or not this gave rise to a case of waiver in the sense defined by Farwell J, they were at least arguably relevant to the scope of any mandatory order. It is difficult to see how fairness … would be served by an order which required the Appellant to carry out such works without any investigation of their significance, or how they compared to works accepted without objection on other properties on the estate.’ ([35])

The appeal was allowed and the case was remitted to the High Court.

Michael Lower

 

 

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Building schemes

November 28, 2012

In Elliston v Reacher ([1908] 2 Ch 665, CA (Eng)) a building society bought land. A deed was prepared in which the building society and the purchasers were said to covenant with each other not to use any plot of land on the estate as a hotel (unless the building society’s consent was obtained). This was stamped but was not executed by the building society or any of the purchasers. The sales materials for the first sale of the plots identified the estate and the plots to be sold and stated that each purchaser would covenant with every other to observe the restriction on building a hotel without consent. The first conveyance of each plot expressed an intention that the purchaser and his successors in title would be bound by the restrictions in the deed of covenant. It identified the plot and the estate. It was held that this created an effective building scheme so that the restriction against building a hotel could be enforced by a successor in title against a successor in title. Every lot was purchased subject to the understanding that it had the benefit and burden of the restrictions.

Weekly review: 8 – 12 August

August 13, 2011

Land covenants: abandonment

Land covenants often impose restrictions on what can be built on land and the uses to which it can be put. Should a covenant created in the nineteenth century still govern the use of land today? This gives great weight to the intentions of the long-dead parties to the deed. The character of the area and the pressures on the use of the land may have changed greatly. Thus in Attorney-General of Hong Kong v Fairfax Ltd, the Crown sought to enforce a restriction in an 1862 Crown Lease of land near the centre of Hong Kong (Hing Hon Road and Bonham Road). Since the 1950s high-rise, high-density development had been the norm in the area. Nevertheless, in the 1990s, the Crown still sought to enforce a covenant that allowed only the building of ‘villa residences’, The Crown’s acquiescence over many years in other obvious breaches of the same covenant persuaded the Privy Council that it had abandoned the covenant and was no longer entitled to enforce it.

Gray and Gray point out that although the Upper Tribunal (Lands Chamber) (formerly the Lands Tribunal) in England has the power to discharge or modify restrictive covenants (Law of Property Act 1925, s. 84) it is often reluctant to do so. The covenants can often play a useful part in protecting ‘environmental amenity’ (Elements of Land Law, pp. 255 – 256). Property Prof Blog has a number of posts about the use of conservation easements in the US.

Land Covenants: who can benefit?

Privity of contract means that only the parties to a contract can enforce it. Section 26 of the Conveyancing and Property Ordinance provides a way of extending the range of parties to land covenants:

‘A person may take an immediate or other interest granted to him in respect of land or the benefit of any condition, right of entry, covenant or agreement granted to him over or in respect of land, although he may not be named as a party to the instrument.’

One practical use of this is as a way of passing the benefit of land covenants onto the owners of identified parcels of land (as one element of a building scheme). White v Bijou Mansions shows that the person relying on section 26 must show that he falls within ‘the scope and benefit’ of the covenant and not merely that enforcement would be useful to him. Section 26 does not abolish the law on privity and applies only to land (Beswick v Beswick).

Promissory estoppel

It is usually said that promissory estoppel is a sword and not a shield. The Australian High Court allowed it to be used as a cause of action in Walton’s Stores (Interstate) Ltd v Maher. More recently, the Hong Kong Court of Final Appeal seems to have done the same in Luo Xing Juan v Estate of Hui Shui See.

Proprietary estoppel

Sometimes the relevant promise or representation in a proprietary estoppel claim stands out a mile; there have been frequent public assurances. On other occasions, however, the evidence is not overwhelming but is sufficient. Suggitt v Suggitt is an example of the latter.

Vacant possession

A seller of land often agrees to sell with vacant possession. At the end of a lease, a tenant has to give back possession. The meaning of ‘vacant possession’ was considered again in NYK Logitics (UK) Ltd v Ibrend Estates BV.