What is the construction of a restrictive covenant imposed on a parcel of residential property and how such a covenant would have affected future development?
Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139, [2018] 1 WLR 362
Summary
Skelton v DBS Homes (Kings Hill) is a leading case in the law of property pertaining to the enforcement of restrictive covenants. The judgment by the Court of Appeal was essentially based on the construction of a restrictive covenant imposed on a parcel of residential property and how such a covenant would have affected future development. The considerations in the judgment put in place how such covenants should be construed and/or be enforced in modern law on property.
Facts
The claimant, Mr. Skelton, owned a residential property situate in Kings Hill, Kent, which was subject to a restrictive covenant contained in a transfer deed when the property was originally sold by the developers, DBS Homes (Kings Hill) Ltd, the defendant. To "a private residence only."
Mr. Skelton wanted the development of the property to be into different residential units that were to be sold individually, but insisted by DBS Homes that that would be against the terms of the restrictive document, which only allowed the carrying out to be a single private dwelling.
Whether the restrictive document could allow the carrying out be divided into the different units or whether it could be limited to one dwelling.
Issues
The principal issues for consideration in this case were:
1. Construction of a restrictive covenant: If the words "a private residence only" were held to mean one private residence or are wide enough to include more than one private residence.
2. The enforceability of the covenant: If the Court was able to uphold the Covenant and render it enforceable against the current owner, Mr. Skelton.
First Instance
Held for DBS Homes in the first instance, the High Court determined that the restrictive covenant was clear in its language and what it sought to limit: one private residence. According to the judge, therefore, the development put forward by Mr. Skelton would infringe that covenant.
Mr Skelton tried to appeal this decision on the ground that this approach was more of the modern age, and the covenant must be interpreted and could be used to hold more than one dwelling as a "private residence".
Decision on Appeal
The Court of Appeal similarly found as the High Court had and stated that the restrictive covenant was such directed towards keeping the property for one single and individual private residence. The court stressed the importance of the original context of the covenant and into which it was originally made, the purpose being to maintain the character of the residential development as envisaged by the developers.
The bottom line of the judgment was that the phrase "a private residence only" was to be given its plain and ordinary meaning. It meant in this case that the property should be used as a single dwelling unit and not to be put to several uses.
The court went further to consider the maxim of "touch and concern" in restrictive covenants as one that should have the benefit run generally to the land and not to an individual. The court found that the test in this case had been met; this, therefore, means that the covenant in question, as a result, "touched and concerned the land" and held Mr. Skelton liable for it.
Comments
The impact of the decision in Skelton v DBS Homes (Kings Hill) Ltd will be felt by property developers, homeowners, and legal practitioners alike in their interpretation of restrictive covenants. The case raises various salient issues:
1. Clarity in Covenants: The case puts a lot of emphasis on strict and clear language when drafting the terms of a restrictive covenant. An ambiguity can result in a serious dispute leading to litigation, as was the case here.
2. Original Intent and Context: The judgment features the importance of original intent and context of the covenant when interpreting the meaning. Courts will look upon the purpose behind the covenant and the circumstances at the time it was created.
3. Enforceability: Further, it merely restates the principle that restrictive covenants will be enforceable against subsequent owners where such run with the land and are clear as to intent. This serves as some protection a developer or original owner may have to uphold the character and use of a given property.
4. Modern Context: The court in this case used a traditional application of the covenant, but there is still an argument as to how restrictive covenants should be applied in a modern context, especially in view of land use and the development practices of land.
5. Future developments: Property developers and homeowners must take note of all the current restrictive covenants and how they may impact the development plans of the future. Legal advice should be further sought in regard to understanding precisely how restrictive covenants will affect a property.
Conclusion Skelton v DBS Homes (Kings Hill) Ltd provides good guidance on the proper interpretation and enforceability of a restrictive covenant generally; it underlines the need for the drafting of covenants to be clear and for an understanding of the original intention and context. On the side of owners and developers of property, the case is but one illustration of the legal subterrain which is property development, and, of course, the attention to existing covenants shadowed by legal hazard.
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