Texaco Antilles Ltd v Kernochan [1973] AC 609

Facts

• The dispute involved the enforceability of a restrictive covenant prohibiting the use of land for commercial purposes against a subsequent purchaser.
• The case addressed whether the restrictive covenant was part of a valid building scheme and thus bound future owners.
• The House of Lords considered whether the original parties intended the covenants to benefit all properties within the relevant area.
• Questions arose due to the absence of a clearly defined area subject to the alleged scheme, weakening the argument for its existence.

Issues

1. Whether a valid building scheme existed such that the restrictive covenant would be enforceable against subsequent purchasers.
2. Whether there was sufficient evidence of a common intention among the original parties to create mutual obligations benefiting all properties within a defined area.
3. Whether the area subject to the alleged building scheme was adequately defined to satisfy the legal requirements for such schemes.

Decision

• The House of Lords held that for a restrictive covenant to be enforceable under a building scheme, there must be clear evidence of a common intention to create mutual obligations benefiting all properties in a defined area.
• The court determined that the absence of a clearly defined area undermined the claim that a building scheme existed.
• The burden of proving the existence of a building scheme lay with the party seeking to enforce the covenant.
• The restrictive covenant was not enforceable against subsequent purchasers as it was not established as part of a valid building scheme.

Legal Principles

• A building scheme requires (i) a common intention among original parties for mutual obligations, (ii) a clearly defined area, and (iii) covenants benefiting all properties therein, intended to bind future owners.
• The party seeking to enforce a restrictive covenant via a building scheme bears the burden of proof.
• Covenants must form part of a common plan or design, not isolated agreements between parties.
• The precise identification of the area affected is essential for establishing a valid building scheme.
• Comparative approaches in common law and civil law jurisdictions frequently consider these core requirements, though implementation may vary.

Conclusion

Texaco Antilles Ltd v Kernochan [1973] AC 609 clarified the strict criteria for enforceability of restrictive covenants under building schemes, emphasizing the necessity for common intention, a defined area, and mutual benefit, thereby influencing property law in multiple jurisdictions and highlighting the importance of clear documentation and thorough due diligence for developers and property owners.