Freehold Covenants

Front 1

Rhone v Stephens

Back 1

Equity will enforce negative covenants against freehold land (to enforce negative covenants is only to treat the land as subject to a restriction) but has no power to enforce positive covenants, as that would be to enforce a personal obligation against a person who has not covenanted

Front 2

Halsall v Brizell

Back 2

Narrow exception to the rule that the burden of a covenant cannot pass to a successor in title at common law

only applies where the dominant owner grants to the servient owner a benefit in the nature of a service or facility (maybe a right to use a drain across the land or a right of way over a driveway). The rule states that where a deed grants a benefit, but also imposes a connected burden (for example, a corresponding obligation to contribute to the cost of maintaining the drain or road), the servient owner cannot take the benefit and ignore the burden, even if he is not an original party to the deed

If the new owner is happy to do without the benefit, they are not responsible for the burden

Front 3

Thamesmead Town v Allotey

Back 3

Confirmed narrow interpretation of Halsall v Brizell (as in Rhone v Stephens)

Two tests for the Halzall v Brizell exceptions:
1) condition of discharing the burden must be relevent to the exercise of the rights which enable the benefit to be obtained
2) the successors in title must have the opportunity to choose whether to take the benefit or, having renounced it, escape the burden

Front 4

P & A Swift Investments v Combined English Stores Group plc

Back 4

laid out a "working test" for whether a covenant touches and concerns the land:
1) the covenant benefits only the covenantee for time being, and if separated from the dominant land ceases to be of benefit to the covenantee
2) he covenant affects the nature, quality, mode of user or value of the land of the covenantee
3) the covenant is not expressed to be personal
4) the fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land as long as the three forgoing conditions are satisfied and the covenant is connected with something to be done on to or in relation to the land

Front 5

Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board

Back 5

Denning interpreted s78 LPA 1925 to mean that those not holding the legal estate (e.g. tenants) could still sue if the covenant was broken

Front 6

Tulk v Moxhay

Back 6

Burden of a covenant can pass in equity

Front 7

L.C.C. v Allen

Back 7

"doctrine ceases to be applicable when the erson seeking to enforce the covenant against the derivative owner has no land to be protected by the negative covenant"

- so I think, proximity in relation to the passing of burden in equity?

Front 8

Rogers v Hosegood

Back 8

Annexation in equity

If the benefit of the covenant is expressly annexed to the land at the time of the covenant, it is thereafter permanently attached

Front 9

Newton Abbot Co-operative v Williams & Treadgold

Back 9

Implied passing of the benefit in equity (rare)

Annexation of the benefit to the dominant land will be implied from the surrounding circumstances, but this will be a question of fact in each cas

This case also shows a covenant which affects the business of the dominant landowner may still touch and concern the dominant land

Front 10

Federated Homes Ltd v Mill Lodge Properties Ltd

Back 10

Brightman LJ could not understand how a covenant annexed to land as a whole is not annexed to individual parts of it. He declared a presumption that a covenant would be annexed to each and every part of the land without the need for any express provision to do so

(so a successor in title to part of the dominant land can claim a benefit)

the term "successors in title" is sufficient to annex the benefit of the covenant to the covenantee's land - express words are therefore apparently not necessary

"if the condition precedent of section 78 is satisfied – that is to say, there exists a covenant which touches and concerns the land of the covenantee - that covenant runs with the land for hte benefit of his successors in title, persons deriving title under him or them and other owners and occupiers

Front 11

Crest Nicholson v McAllister

Back 11

Confirmed Roake v Chadha: s78(1) LPA 1925 can be expressly excluded

For s78 the land intended to be benefit still needs to be defined so that it is "easily ascertainable"; it is not sufficient to identify the benefited land by looking at the surrounding circumstances

Front 12

Wrotham Park Estate Co Ltd v Parkside Homes Ltd

Back 12

A covenant not to build on servient land other than in accordance with specified conditions was held to be capable of benefiting a 4,000 acre plot of land

(Marten v Flight Refuelling - 7,500 acre plot of land)

Front 13

Covenant

Back 13

A covenant is a promise generally contained in a deed and may require the covenantor to do something, for example, a promise to maintain a boundary fence, or a promise to refrain from doing something, for example, a promise not to build on the land.

Front 14

Covenants in Land

Back 14

successors in title to the original parties will wish to know whether the burden and benefit of the original covenant will bind them/be enforceable by them – ie whether the covenant runs with the land.

Front 15

Covenantor

Back 15

Gives the promise: undertakes the BURDEN of the covenant, which means he can be sued if the covenant is breached

Front 16

Servient land

Back 16

Land owned by the covenantor (and his successors in title), which suffers the BURDEN of the covenant

Front 17

Covenantee

Back 17

Receives the BENEFIT of the covenant, and has the right to sue if the covenant is breached

Front 18

Dominant land

Back 18

Land owned by covenantee (and his successors in title), which enjoys the benefit of the covenant

Front 19

Positive covenant

Back 19

Requires the covenantor to do something in order to keep the promise

Front 20

Negative covenant

Back 20

Can generally be satisfied by meer inaction, typically involving a promise to refrain from doing something (e.g. build)

Front 21

Personal covenant

Back 21

Purely personal to the covenantee

Front 22

"Touches and concerns" the land

Back 22

made for the benefit of the covenantee but in their capacity as owner of that particularly property; not intended to be personal to one person only

P&A Swift investments laid out a "working test" for whether a covenant touches and concerns the land:
1) the covenant benefits only the covenantee for time being, and if separated from the dominant land ceases to be of benefit to the covenantee
2) he covenant affects the nature, quality, mode of user or value of the land of the covenantee
3) the covenant is not expressed to be personal
4) the fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land as long as the three forgoing conditions are satisfied and the covenant is connected with something to be done on to or in relation to the land

Front 23

Common law and equity SHOULD NOT BE MIXED

Back 23

For a covenant to be enforced directly at common
law by and against a successor in title, it must be shown that both the benefit and burden have passed at common law. For a covenant to be enforced directly in equity, it must be shown that both the benefit and burden have passed in equity.

Front 24

Ways to pass the benefit (common law)

Back 24

1) express assignment - s136 LPA 1925
2) implied passing of the benefit - P&A Swift Investments v Combined English Stores Group plc

Front 25

Express assignment

Back 25

Benefit of a covenant may be expressly assigned by the original covenantee to their successor under 136 LPA 1925 as a chose in action

Front 26

Implied passing of the benefit (common law)

Back 26

ALL FOUR REQUIREMENTS MUST BE FULFILLED

1) Touch and concern the land
- cannot be a purely personal benefit (for test, see P&A Swift Investments)
2) Show original parties' intention that the benefit should run with the land retained by the covenantee
- may be in the original transfer deed
- if it is not expressly stated, will be implied as a result of s78(1) LPA 1925
3) At time the covenant was made, the covenantee must have held a legal estate in the land
4) Successor in title must hold a legal estate in the land (NB: Smith and Snipes Hall Farm Limited, extended this beyond owners to tenants)

Front 27

3rd parties + covenants

Back 27

Possibly be able to take the benefit through Contracts (Rights of Third Parties) Act 1999. Not been tested though.

Front 28

Austerberry v Oldham Corporation

Back 28

At common law, the burden of a covenant, positive or negative, can never pass with freehold land; it remains personal to the covenantor

Front 29

Common law: liability for breach of covenant

Back 29

Burden of the covenant does not pass; the original covenantor must be approached. However, if the original covenantor is sued the only remedy is damages.

There can be a chain of indeminty, whereby the original covenantor can sue his successors for the cost of the damages he has had to pay

Front 30

Other methods for enforcing covenants (common law)

Back 30

1) Long lease, instead of disposing of it for a freehold estate
2) creation of a commonhold development
3) restriction - s40 LRA 2002
- The covenantee could put a restriction on the Proprietorship Register of the burdened land to the effect that no transfer of the burdened land may be registered without the consent of the covenantee. As a condition of giving his consent to the transaction, the covenantee asks for a direct covenant from the buyer, thereby creating a new privity of contract between the covenantee and the buyer.

There are also two other ones, that seem pretty irrelevant

Front 31

Requirements for burden to pass in equity

Back 31

1) Covenant must be negative
- It is the effect of the covenant, rather than its wording, which determines whether it is negative or positive.
2) Covenant must accomodate a dominant tenement
Three aspects to this:
a) original covenantee and his successor(s) in title must have retained an interest in land at the date of the covenant and at the time of enforcement respectively.
b) the covenant must ‘touch and concern’ the land
c) both the servient and dominant lands must be sufficiently proximate to each other
3) Parties must have intended the burden to run
- Since 1925 covenants relating to the covenantor’s land are deemed to be made by the covenantor on behalf of himself and his successors in title, unless a contrary intention appears (Morells v Oxford United FC)
4) Notice
- purchaser of the servient land must have notice of the covenant to be bound by it
Where title to the land is registered at the Land Registry, a restrictive covenant must be entered as a notice in the charges section of the register of the servient property (s32 LRA 2002). If it has been so entered, the covenant will be binding upon everyone. If it has not been entered, then a purchaser for valuable consideration will take free of it (s29 LRA 2002), although anyone who is a volunteer will still be bound.

Where title to the land is unregistered, a covenant imposed after 1925 must be registered as a Class D(ii) land charge under the Land Charges Act 1972.
Registration as a Land Charge gives the requisite notice (s198 LPA 1925). If not registered, it is void against a purchaser for money or money’s worth of a legal estate (s4(6) LCA 1972).

Front 32

Positive or negative covenant?

Back 32

The first question to ask is whether the covenant can be
complied with by doing nothing. If the answer is ‘yes’, then the covenant is negative.

Another test often used is to ask whether performance involves the expenditure of money: Haywood v Brunswick Permanent Benefit Building Society. (This could also include any actions required to effect performance, on the basis that ‘time is money’). If so, it is positive.

Front 33

Positive and negative?

Back 33

May be possible to sever the positive undertaking from the negative, creating two separate obligations

negative undertaking within a covenant may be found to be simply a condition of a positive covenant overall, or vice versa. This means that the covenant should be interpreted as either negative or positive as a whole

Front 34

Benefit passes in equity

Back 34

1) benefit touches and concerns the land
2) that he / she must have become entitled to its benefit by either annexation, assignment or a scheme of development, as set out by Sir Charles Hall V-C in Renals v Cowlishaw

Front 35

Annexation (benefit in equity)

Back 35

benefit is tied to the land at the time the covenant is made

1) express
- language of the covenant makes it clear that the parties intend the benefit to become part of the land of the covenantee rather than an advantage personal to the covenantee
2) implied
- this is very rare
3) statute
-Section 78(1) LPA 1925 provides that a covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title.
(NB: pre 1926 covenants the benefit must be exprssly annexed)

Front 36

Rees and another v Peters

Back 36

Court of Appeal held that the benefit of a restrictive covenant had been annexed to the dominant land, despite the fact that the Land Registry failed to note the burden of the covenant on the servient land's charges register

Front 37

Assignment (benefit in equity)

Back 37

Where the benefit of a covenant has not been annexed to the land at the time the covenant was made, it can nevertheless be expressly assigned when the land is transferred, which may be a long time afterwards. For the assignment to be effective in equity, the land with the benefit must be properly identified and the assignment made at the time of the conveyance of the land

The assignment must also comply with the provisions of s53(1)(c) LPA 1925 as it represents the disposition of an equitable interest.

If express assignment is necessary, this must be repeated every time the land is sold or given away.

Front 38

Scheme of Development

Back 38

Problems can arise where a new housing estate is built and sold on the basis that all the buyers will buy subject to various restrictive covenants, generally designed to enhance the estate. In the ordinary way, the covenants will be given to the builder/vendor but, after the last house has been sold, the vendor would no longer have any real interest in enforcing the covenants.

If owners of individual houses wished to enforce the covenants, there could be problems about whether the benefit had passed to them.

The use of a building scheme, or scheme of development, avoids these problems. Where there is a scheme, the restrictive covenants are treated as being the equivalent of a set of by-laws binding on and enforceable by all purchasers, together with their successors

Front 39

Scheme of Development requirements

Back 39

1. both claimant and defendant must derive title from a common vendor;
2. prior to the sale of both plots, the common vendor must have laid out the estate in plots subject to similar covenants and intended them to be imposed on all of the plots;
3. the restrictions must have been intended to benefit all the plots sold;
4. the claimant and defendant must both have purchased on the basis that the restrictions were to benefit the other plots.
(1-4 from Elliston v Reacher)
5. the area of the scheme must be clearly defined
(Reid v Bickerstaff)

Front 40

Wrotham Park Estate Co Ltd v Parkside Homes

Front 41

Extinction and Modification of Restrictive Covenants

Back 41

Agreement:
1) Express
2) Implied
- benefit may be lost if the covenantee has submitted to a long usage wholly inconsistent with its continuance (although if it is mere delay, without evidence of implied consent to discharge or modification, the covenantee may still be able to claim damages at common law)

Declaration by the Court
-Application may be made to the court for a declaration as to whether freehold land is affected by any restriction and, if so, the nature, extent and enforceability of it (s84(2) LPA 1925)

Front 42

Restricted Covenants in Registered Title

Back 42

The person with the benefit must enter a notice on the charges section of the register of the freehold estate which carries the burden, by virtue of s32 LRA 2002, as a restrictive covenant relating to freehold land is not one of the excluded interests under s33. The notice will be either an agreed one (s34 LRA 2002) or a unilateral one (s35 LRA 2002). The freehold restrictive covenant will then be binding on any subsequent owner of the servient land, subject to the other conditions for the passing of a burden in equity being satisfied (see para 8.4.1.1 above). If, however, the notice is not entered, then a purchaser for value of the servient land will not be bound by it (s29 LRA 2002), but a volunteer will still take the land subject to the covenant.

Front 43

Restrictive Covenants in Unregistered Title

Back 43

Such covenants should be registered as a Class D(ii) land charge at the Central Land Charges Registry in Plymouth. If registered, they bind subsequent purchasers (s198 LPA 1925). Where not registered, a purchaser of the legal estate for money or money’s worth will not be bound: s4(6) LCA 1972.