Any purchaser of a developed freehold property in Barbados will most likely be legally bound by certain covenants restricting use of the property. On the other hand, a developer who purchases an area of land which is not yet subject to covenants, with the intention of selling off lots to individual purchasers, will need to ensure that covenants are imposed on each and every lot to be sold, in order to preserve the amenities and value of the development as a whole. The legal regime governing freehold covenants has been derived from English principles and applies in Commonwealth Caribbean territories, including Barbados.
So what does a purchaser of property in Barbados, whether as a developer or as an individual home owner, need to know about the law of freehold covenants? First, there are a number of standard covenants which are found in conveyances of freehold lots in residential developments, such as:- not to use the lot for any trade or business; not to subdivide the lot; not to erect more than one dwelling house on the lot. These examples are all ‘negative’ or ‘restrictive’ covenants, in the sense that they prohibit certain activities on the property, and compliance does not involve any expenditure on the part of the lot owner. On the other hand, there may be ‘positive’ covenants, involving expenditure by the owner, such as covenants to maintain a wall or fence, or to contribute to the cost of maintenance of access roads, drains, parks and gardens. As a general rule, whereas ‘positive’ covenants are binding only on the original purchaser who entered into the covenants, and not on his successors, a ‘negative’ or ‘restrictive’ covenant will in most cases be binding not only on the original purchaser of a lot but on his successors-in-title, unless and until a successor can obtain a ‘discharge’ or ‘modification’ of the covenant by order of the Barbados High Court.
Developer creating a building scheme
From a developer’s perspective, the enforceability of freehold covenants by and against future lot owners in the development is a technicality requiring the services of an attorney specializing in conveyancing and property law. The best means of securing future enforceability of covenants is by the creation of a ‘scheme of development’ or ‘building scheme’, sometimes described as a form of ‘private planning law’ which is additional to and separate from the public planning law and restrictions imposed by the Town and Country Planning legislation. To create a building scheme, there must be evidence that the developer defined precisely the geographical area of the scheme, divided the land into lots, and then sold each lot subject to the same covenants; further, it must be clear that the original purchasers of the lots acquired their properties in the knowledge that the lots were subject to a building scheme, which means that the developer’s agent should show each purchaser a plan of the estate and give him details of the restrictions. By so doing, the developer creates a ‘local law’ binding all the lot owners and their successors, and enabling present and future owners to sue and be sued on the covenants. In legal parlance, this is known as ‘reciprocity of obligation.’
The necessity for (i) a defined geographical area and (ii) uniformity in the covenants came to the fore in Emile Elias & Co Ltd v Pine Groves Ltd (1993) , a case from Trinidad, where legal rules similar to those in Barbados apply. The land in this case, comprising approximately 90 acres, was formerly used exclusively as a golf course for the St Andrews Golf Club. Both Emile Elias’ and Pine Grove’s land were part of a small development which took place in 1938, when the then common owner, Maraval Lands Ltd, sold five lots to four different purchasers (the predecessors-in –title of the present parties), each of the purchasers entering into restrictive covenants affecting the lots bought by them. In legal proceedings brought in 1993, Emile Elias Ltd alleged that those covenants were mutually enforceable between the current owners of the lots under a building scheme. The Judicial Committee of the Privy Council held, however, that there was no building scheme and the covenants were not enforceable, because (a) it was unclear whether the alleged scheme applied to 5 of the lots or only to 4, so that the geographical area of the alleged scheme was uncertain, and (b) the covenants affecting lots 1,4 and 5 were different in several respects from those affecting lots 2 and 3. This case shows that, in order to establish a building scheme, great care must be taken by the developer and its legal adviser to ensure that the requirements regarding geographical certainty and uniformity of the covenants are satisfied.
Purchaser obtaining a discharge or modification of existing covenants
A common scenario is that of the purchaser of one or more properties in an existing housing development who wishes to alter the properties by, for example, demolishing existing houses on several lots and erecting in their place an apartment block or a row of town houses. Although the purchaser may have obtained permission for the proposed development from the Town and Country planning authority, he may nevertheless find that existing restrictive covenants forbid the erection of more than one dwelling house on each lot. In this situation, a purchaser (‘the applicant’) will need to apply to the High Court for a ‘discharge or modification’ of the covenant before he can proceed with the proposed development. The application for discharge or modification can be opposed by other lot owners on the estate (‘the objectors’).
Under the Property Act, Cap 236, there are four separate grounds on which an applicant may seek a discharge or modification of a covenant, but only two of those are commonly relied upon: (i) that the covenant has become ‘obsolete’ and therefore ought to be discharged or modified; and (ii) that a discharge or modification ‘would not cause injury to the objectors.’ Until quite recently, the Barbados courts have been extremely reluctant to exercise their discretionary power to discharge or modify on either of these grounds. For instance, in 2000 an applicant wished to erect a condominium apartment building on a residential lot in the Blue Waters area in Christ Church. The property was burdened with a restrictive covenant forbidding the erection of more than one single dwelling house. The applicant argued before the Court that the modification would do no injury to the objectors, as the proposed building was in harmony with the architectural character of the neighbourhood, but the Barbados Court of Appeal rejected the application. The Chief Justice commented that “Barbados is a small island, but that does not mean that every bit of it must be subjected to the hustle and bustle of modern day traffic and congestion, or that those who legitimately contracted to live in a low density development must have their choice overridden in favour of those who want to make money”(Re Packer, 2001).
More recently, however, both in Barbados and in Jamaica (where identical legislation applies), the courts seem to be becoming more amenable to discharge or modification of covenants. It is now recognized that, over time, steady urbanization has changed the character of many neighbourhoods. Fifty or more years ago, when these neighbourhoods were first developed and lots sold under building schemes, restrictive covenants may have been imposed in order to preserve the character of a development consisting of single-family dwelling houses. Later, in response to the pressures of population increases and the consequent demand for more residential accommodation, various lot owners may have replaced the single houses with apartment blocks or rows of town houses, no doubt in breach of covenants restricting such conversion. In the absence of any objection from other lot owners in the development (who may not have been aware of their legal right to object, or may have been reluctant to incur the expense of doing so), more and more owners may have been encouraged to erect multi-dwelling units, with the result that eventually the character of the neighbourhood would have essentially changed. Accordingly, in the light of such changes, an applicant for discharge or modification of a restrictive covenant today might find it easier to persuade the court that, for instance, a covenant restricting building to a single dwelling-house on a particular lot had become ‘obsolete’ and ought therefore to be discharged or modified.
Such was the position in Re Boyce (2005), a case featuring Rowans Park, a residential development in the central parish of St George, described in various advertisements as a ‘well-established’, ‘highly desirable’, or ‘much sought-after’ neighbourhood. A purchaser of a property in Rowans Park obtained planning permission to subdivide his lot into four separate lots and to build four town houses. He then applied to the High Court for an order discharging a covenant forbidding subdivision. The Court noted that Rowans Park had once been an estate consisting of single dwelling-houses, but that by the year 2005 there were many multi-dwelling units in the area, and the covenants prohibiting subdivision and the erection of more than one house on the lot had become ‘obsolete’. They were therefore discharged.
Recently, in deciding whether there has been a change in the character of a neighbourhood sufficient to justify discharge or modification of covenants, the courts have used what is known as ‘the estate agent’s test’, which is simply: ‘What would the purchaser of a property in that neighbourhood expect to get?’ If the hypothetical purchaser would expect to acquire a traditional, single dwelling house in the area, a covenant restricting building to one house on a lot would not be ‘obsolete’ and the Court would refuse to discharge it; on the other hand, if the purchaser would expect the area to be full of apartment blocks, condominium developments and rows of town houses, then such a restrictive covenant would be likely to be held ‘obsolete’ and would be discharged.
The importance of restrictive covenants in housing developments cannot be overestimated, from both the developer’s and the individual owner’s point of view. Applications for the discharge or modification of covenants are common today, in view of the pressures of urbanization and the need for affordable housing in suburban areas. Since a court order is required , the applicant will most likely need the services of an attorney specializing in property and conveyancing litigation.
Written by Dr Vanessa Kodilinye, Attorney-at-Law 25/01/2016
