Freehold Covenants

Front 1

Example:

Holland v Hicks (2013)

Back 1

A covenant to seek the neighbour’s approval of details of planning permision touched and concerned the land.

The neighbour could control the development of the land (its mode of use).

Front 2

b) Claimant must have legal estate in the land

Back 2

s.78 LPA 1925 - it need not be the same legal estate as the original covanantee (benefitted party).

Original convenantee (freehold) while the subsequent cov’tee (leasehold)

Front 3

d) Benefit must have been intended to run with the land

Back 3

Intention is now presumed under s.78(1) LPA 1925.

“...deemed to be made with covenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed.”

Front 4

Halsall v Brizell Rule: Narrowed

Back 4

Thamesmead Town v Allotey reiterated in Davies v Jones (2009)

Benefit and burden passed with same transation

Benefit and burden must be intrinsically linked - two sides of the same coin

Covenantee had the opportunity to ‘reject or disclaim the benefit.’

Front 5

Runnings of Burdens (CL): Avoiding the general rule

(Only for Positive Covanents)

Back 5

Chain of Idemnity

Rule of Halsall v Brizell (1957)

Separate covenant of the same conditions agreed to upon the transaction.

Front 6

Example:

Holland v Hicks (2013)

Back 6

A covenant to seek the neighbour’s approval of details of planning permision touched and concerned the land.

The neighbour could control the development of the land (its mode of use).

Front 7

Defined: no precise provision

Back 7

Personal obligations governed by the rules of contract law. They typically have the effect of improving the land.

Front 8

Enforceability:

Back 8

Whoever has the benefit - can sue

Whoever has the burden - can be sued

If the burden does not run, 3rdparty can’t be sued. If the benefit does not run, 3rdparty can’t sue.

Front 9

Two types of Covenants:

Back 9

Positive - confers an active obligation on the burdened land.

Negative - restricts the burdened land from certain activities.

Front 10

Haywood v Brunswick

Back 10

Deciding whether positive or negative, look at the substances and not the form

Front 11

The parties:

Identify - current covanentees and covanentors and subsequent ones.

Back 11

Covenantor - makes the promise

Covenantee - the person whom the promise was made

s.56 LPA ‘25 - promises can extend to other parties (but only if they are identified as parties to the contract).

also s.1 Contracts (Rights of Third Parties) Act 1999

Front 12

The Running of Benefits:

Common Law

Back 12

a) Must touch & concern the land

b) Claimant must have legal estate in the land

c) original convanentee must have held legal estate at the time the convenant was created

d) benefit intended to run with the benefitted land

Front 13

A) Touch and Concern the Land (Common Law)

The Test: Swift Investments v Combined English Stores (1989) per Lord Oliver

Back 13

1) benefits only the current estate owner - benefit ceases once the ownership of benefitted land ends and,

2) affects the nature, quality, mode of use or value

3) must not be expressed to be personal

Front 14

Example:

Holland v Hicks (2013)

Back 14

A covenant to seek the neighbour’s approval of details of planning permision touched and concerned the land.

The neighbour could control the development of the land (its mode of use).

Front 15

b) Claimant must have legal estate in the land

Back 15

s.78 LPA 1925 - it need not be the same legal estate as the original covanantee (benefitted party).

Original convenantee (freehold) while the subsequent cov’tee (leasehold)

Front 16

c) must have held legal estate at the time covenant was created:

Smith and Snipes Hall Farm v River Douglas Catchment Board (1949)

Back 16

The effect of s.78 is that convenant is enforceable on behalf of not only the original convenantee but all successors in title and all persons deriving title from such successors.

Front 17

d) Benefit must have been intended to run with the land

Back 17

Intention is now presumed under s.78(1) LPA 1925.

“...deemed to be made with covenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed.”

Presumption is rebutted by intention for benefit to accrue only to one person.

Front 18

Running of Burdens:

Common Law

GENERAL RULE:

Back 18

Rhodes v Stephens - The burden does not run under CL. Lord Templemen: “To enforce a positive convenant would be to enforce a personal obligation against a person who has not covenanted.”

Land may be overburdened with endless covenants - difficult to sell freely

Front 19

Runnings of Burdens (CL): Avoiding the general rule

(Only for Positive Covanents)

Back 19

Chain of Idemnity

Rule of Halsall v Brizell (1957)

Separate covenant of the same conditions agreed to upon the transaction.

Front 20

General rule exceptions:

Chain of Indemnity

Back 20

Upon transfer, buyer agrees to compensate seller for any breaches.

If covenantee sues the seller (original covenantor), seller can sue buyer for indemnities.

Chain will break if something happens to original covenantor or if such agreements are stopped.

Front 21

General rule exceptions:

Halsall v Brizell (1957) Rule

Back 21

“Mutual Benefit Doctrine”

If buyer enjoys the benefit of the covenant, they must contribute to it’s upkeep.

In Halsell, it was communal services (driveway and sewers). Burden of covenant (paying for maintenance) can pass - Covenantee benefitted.

Front 22

Halsall v Brizell Rule: Narrowed

Back 22

Thamesmead Town v Allotey reiterated in Davies v Jones (2009)

Benefit and burden passed with same transaction

Benefit and burden must be intrinsically linked

Covenantee had the opportunity to ‘reject or disclaim the benefit.’

Front 23

Thamesmead Town v Allotey (1998)

Back 23

Plaintiff’s claim for reimbursement failed - bound by Rhones v Stephens - to relate the contributions to the benefits that a defendant chose to exercise.

Expenses relating to communal areas disallowed - Defendant has no real choice to benefit or not.

Front 24

Remedy:

Back 24

As it is ruled by CL, the only available remedy for a breach of covenant was damages.

Front 25

Reminder:

Negative covenants can never pass under Common Law

Back 25

The burden could never be passed. The exception in Halsall v. Brizell only applies to Positive Covenants.

Front 26

Passing of Burdens: Equity

Only applies for Negative / Restrictive Covenants

Back 26

HoL in Rhones v Stephens (1994) - courts reluctant to intervene means that it is up to Parliament to amend the law.

Key case: Tulk v Moxhay

Front 27

Passing of Burdens: Equity

Only applies for Negative / Restrictive Covenants

Back 27

HoL in Rhones v Stephens (1994) - courts reluctant to intervene means that it is up to Parliament to amend the law.

Key case: Tulk v Moxhay

Front 28

Passing Burdens in Equity:

Tulk v Moxhay (1848)

Back 28

a) must touch & concern the land

b) imposed to benefit the original convenantee (the dominant tenament)

c) Burden intended to run with the burdened land (needs evidence)

Front 29

Must touch and concern land

Back 29

Swift Investments v Combined English Stores

The test is as above.

only benefits if owns land, nature, mode of use or value affected,

Front 30

Imposed to benefit the original convenantee:

Back 30

Bryant Homes v Stein Management (2017) - conventionally worded covenants will be presumed to confer such a benefit unless clear words make it possible to say otherwise.

(Presumed annexation unless clearly expressed otherwise)

Front 31

Burden of negative covenant intended to run with the land

Back 31

s.79 LPA 1925 - has the effect of automatic annexation on the land unless contrary intention is expressed in the transfer document (deed).

Roakes v Chadha - e.g. of contrary intention

“this covenant shall not enure for the benefit (or burden) of any owner or subsequent purchaser... unless the benefit shall be expressly assigned.”

Front 32

Passing of Benefit in Equity

Back 32

3 Methods:

Annexation

Assignment

Building Schemes

Front 33

Annexation:

Back 33

Attached to clearly identified land.

May be done Expressly - focuses on intention and the land itself must be identified (Renals v Coliwshaw)

Most significant: Statutory Annexation

Front 34

Statutory Annexation - s.78(1) LPA 1925

Back 34

Covenant relating to any land of the convenantee shall be deemed to be made with covenantee, his successors in title, persons deriving title and, shall have the effect as if those people or successors were expressed.

(Implied the convenant was made for those people)

Front 35

Key case:

Federated Homes v Mill Lodge Properties (1980)

Back 35

1 plot - divided into 4 plots.

1 of the 4 plots was sold with the covenant: “shall not build more than 300 houses.” - was not expressed to be annexed

One plot was assigned the covenant but made no mention of the other plots - could it be enforced? Covenant was clearly meant to benefit the other plots.

Front 36

Bridgeman LJ in Federated Homes v Mill Lodge Properties (1980)

3 Ways to Intepret

Back 36

1. (Rejected) Word saving provision

2. operated to annex a covenant if the document could be interpreted to show that the land was intended to benefit from it.

3. Annexation as long as the benefit touched and concerned the land - regardless if apparent from the document or surrounding circumstances.

Front 37

Bridgeman LJ in Federated Homes v Mill Lodge Properties (1980)

3 Ways to Intepret

Back 37

1. (Rejected) Word saving provision

2. operated to annex a covenant if the document could be interpreted to show that the land was intended to benefit from it.

3. Annexation as long as the benefit touched and concerned the land - regardless if apparent from the document or surrounding circumstances.

Front 38

“Preston and Newsom’s Restrictive Covenants affecting Freehold Land” 9th edn

Back 38

For a long time since Renals v Coliwshaw no court had decided that the presence of words referring to successors would not be sufficient to effect annexation.

(3rd way seems to be the case)

Front 39

Federated Homes: Restricted

Back 39

Roake v Chadha - “contrary intention defeats annexation”

Crest Nicholson v McAllister (2004) - annexation only takes place under s.78 in respect to land identified through the document. Succeeded - covenants made on land once split no longer affected it when the land was combined.

Front 40

s.78 - extended the scope

Back 40

Licensees of the DT (covanentee’s land) may now sue under this section.

Front 41

s.78 - extended the scope

Back 41

Licensees of the DT (covanentee’s land) may now sue under this section.

Front 42

Running Benefit in Equity:

Assignment

Back 42

Not attached to the land - only binds by agreement by the parties (only if assigned by a person who enjoys the benefit of the land)

Defeats annexation if covenant only allows passing through assignment (Roakes v Chadha)

Front 43

Assignment: 3 Conditions

Back 43

Covenant capable of benefitting the land (DT)

DT is ascertainable or certain

Assignment contemporaneously with the transfer of DT (must be part of the transaction)

Front 44

Assignment: 3 Conditions

Back 44

Covenant capable of benefitting the land (DT)

DT is ascertainable or certain

Assignment contemporary with the transfer of DT (must be part of the transaction)

Front 45

Assignment: Perpetuity

Back 45

Re Pinewood Estates: for assignments to continue, there must be an unbroken chain - if the purchaser is not assigned the benefit, the subsequent purchaser cannot be assigned the benefit

Front 46

Passing Benefits in Equity:

Building Schemes

Back 46

Defined in Elliston v Reacher (1908)

Law covering an area - each purchaser and his successors in title are subject to the restrictions and all the benefits conferred as between themselves and all subsequent successors in title.

Front 47

Building Schemes: 4 Requirements

Back 47

C and D derive title from a common vendor/seller

Before sale of plots, common vendor must have laid down a definite scheme of development.

Intention to impose upon not only purchasers but their successors in title, a scheme of mutually enforceable restrictions

Purchaser bought land with full knowledge of the scheme - intending to be bound

Front 48

Narrow approach to Building Schemes - Privy Council

Back 48

Jamaica Mutual Life Assurance v Hillsborough (1989)

only two requirements: Identifiable Scheme and mutually perceived common intention.

Front 49

Registering Covenants:

Back 49

If land is registered, If a person against whom the restrictive covenant is being enforced is a purchaser of registered title for valuable consideration.

must be protected by Notice

Failure to do so means it cannot be enforced - s.29 LRA 2002

Front 50

Registration of Covenants:

s.28 LRA 2002

Back 50

Regardless of registration - covenant is binding against new proprietor is two scenarios:

1) NP not a purchaser for valuable consideration (e.g. gift or inheritance)

2. Purchased an equitable interest in the land (e.g. equitable tenant or purchaser failing to register disposition)

Front 51

Registering Covenants on Unregistered Land:

Back 51

Restrictive covenant - purchaser of legal estate in burdened land for money or money’s worth, must be registered under Class D(ii) under s.2(5) and s.4(6) LCA 1972

Front 52

Registering Covenants on Unregistered Land:

Back 52

Restrictive covenant against a purchaser of legal estate in burdened land for money or money’s worth, must be registered under Class D(ii) under s.2(5) and s.4(6) LCA 1972