Elliston v Reacher [1908] 2 Ch 374
Property law – Restrictive covenant – Building scheme
Facts
Part of an estate which had been purchased by a society was proposed to be sold in numbered lots as per a sales plan, with the terms of sale attached to the plan. A plan was annexed to the indenture that was being prepared in line with the creation of a trust and this was identical to the sales plan. However, the restrictive covenants would only be applicable to those who signed the document. One of the restrictive covenants was that no hotel, tavern, pub or manufacturing plant could be built on any of the lots and a house on the lot could not be significantly modified without the consent of the vendor. One of the purchasers of the plots of land leased their property and the lessee used the property as a hotel. The plaintiff sought to challenge the use of the property as a hotel in line with the restrictive covenant previous agreed.
Issue
The court was required to establish whether the plaintiff could restrict the building and use of a hotel on the property in question. In doing so, the court had to consider whether the covenant had passed in law with the land through the different owners of the property.
Decision/Outcome
The court held that there was a general building scheme based on the current facts. On this basis, both parties could rely on the benefit of the covenant and therefore, the plaintiff could rely on an injunction to prevent the building and use of a hotel on the property.
Updated 21 March 2026
This case summary accurately reflects the decision in Elliston v Reacher [1908] 2 Ch 374, which established the four conditions required for a valid building scheme (also known as a scheme of development) under which mutual burden and benefit of restrictive covenants can be enforced between purchasers of plots within the same estate.
Readers should be aware of two significant later developments. First, the conditions for a valid building scheme were reconsidered and somewhat relaxed by the Court of Appeal in Reid v Bickerstaff [1909] 2 Ch 305 and, more importantly, by Baxter v Four Oaks Properties Ltd [1965] Ch 816 and Re Dolphin’s Conveyance [1970] Ch 654, which held that a pre-defined layout of lots is not strictly necessary provided there is a clear common intention. The strict four-part test from Elliston v Reacher has therefore been treated with some flexibility by later courts.
Second, and most significantly for students, the Law of Property Act 1925 (particularly s.78) and the decision of the Court of Appeal in Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594 substantially affected how the benefit of restrictive covenants runs with the land. Students should read Elliston v Reacher alongside these authorities for a complete picture of the modern law on building schemes and restrictive covenants. The broader law in this area has not been fundamentally reformed by statute and the case remains a leading authority on the requirements for a building scheme, but it must be understood in its wider legal context.
