#16149 - Restrictive Covenants - Land Law

Textbook 3

Positive covenants 3

Running of the burden 3

Running of the benefit 4

Restrictive covenants 4

Limitation to restrictive covenants 5

Dominant tenement 5

Running of the benefit 6

Annexation 6

Assignment 7

Schemes of development 8

Contract 9

Conclusion 9

Modification 9

Enforcement of covenants 9

Reform 10

Freehold covenants 10

Burden 10

Positive Covenants 10

Principles 10

Will the burden run? 10

Cases 11

Thameside v Allotey 11

Wilkinson v Kerdene[2013] EWCA Civ 44 (NOL) 11

Bright, Estate Rentcharges and the Enforcement of Positive Covenants [1988] Conv 99 12

Doctrine in Tulk v Moxhay 13

Principles 13

Why are restrictive covenants different? 13

Will/has/should the difference be changed/overruled/undermined? 13

Other limits to Tulk v Moxhay 14

Cases 14

Tulk v Moxhay 14

Haywood v Brunswick 15

Rhone v Stephens 15

LCC v Allen 16

Commentary 16

Gardner, Two Maxims of Equity [1995] CLJ 60 [on Rhone v Stephens] 16

Turano, Intention, Interpretation and the “Mystery” of S79 LPA 1925 [2000] Conv 377 [on Rhone v Stephens] 17

London & South Western Railway Co v Gomm (1882) 20 Ch D 562 at 582-3} (NOL) 17

Re Nisbet & Potts' Contract [1906] 1 Ch 386 at 402-4, 405-6 (NOL) 18

Benefit 18

Positive covenants 18

Principles 18

When will the benefit run with the land? 18

How must the benefited land be identified? 19

Who can sue, if the benefit runs with the land? 19

Cases 20

Smith and Snipe v River Douglas Catchment Board 20

Beswick v Beswick 21

Amsprop Trading v Harris Distribution 21

Annexation 21

Principles 21

What is the effect of annexation? 21

What are the requirements of annexation? 22

What is required for ‘concerning or touching’ the land? 22

What is the benefit annexed to – the land as a whole or some part? 23

Does an express contrary intention negate s78? 23

Cases 23

Rogers v Hosegood 23

Re Ballard’s Conveyance 24

Federated Homes v Mill Lodge 25

Crest Nicholson Residential v McAllister 25

Assignment 26

Re Union of London & Smith’s Conveyance, Miles v Easter [1933] Ch 611 at 629-634 26

Newton Abbott v Williamson (1952) 26

Re Pinewood Estate, Farnborough [1958] Ch 280 27

schemes of development 27

Elliston v Reacher [1908] 2 Ch 374 at 384 27

Re Dolphin’s Conveyance [1970] Ch 654 27

Texaco Antilles v Kernochan [1973] AC 609 28

Emile Elias v Pine Groves [1993] 1 WLR 305 28

Whitgift v Stocks [2001] EWCA Civ 1732 (NOL) 29

Birdlip Ltd v Hunter [2017] 1 P&CR 1 (recent but not important) 29

Reform 30

Law Com No 327, Part 5 30

• Covenants are obligations entered into by deed so can be regarded as part of law of contract

• Two aspects of covenants land law is concerned with:

  • Does the benefit of a covenant pass to the purchaser of land benefited by the covenant?

    • Until 1870s one couldn’t assign the benefits of contractual rights, but the common law had centuries earlier recognized the passing of the benefit of covenants relating to land

  • Does the burden of covenants run on a transfer of the land?

    • Since mid-19C Equity recognized that restrictive covenants (those not involving expenditure) bind purchasers of the burdened land – thus, restrictive covenants are a new form of equitable proprietary interest

Positive covenant: a covenant that requires expenditure by the covenantor.

• Burdens of positive covenants do NOT run with the land to which the covenant is attached: Rhone v Stephens

• Positive covenants can be entered into on a personal basis (eg. obligation by statutory body to maintain riverbanks), where no question of running of burden arises, or in a way purporting to bind purchases (eg. an obligation to keep a road on one’s land in good repair and to allow the public to use it), where the question arises. Keppell v Bailey held that it didn’t bind purchasers – this was reaffirmed since.

• Now commonhold allows the burden of covenants to run, but it is not suitable for all situations so has driven proposals for reform

• Before commonhold was created, much discussion was about how to circumvent the law in this area:

  • Use of leases: leasehold covenants allow positive and restrictive covenants to run, which means that leases are almost always used when positive covenants are vital (eg. block of flats).

    • BUT only landlords can enforce these covenants, not lessees of other flats. Thus it is less flexible than covenants, which can be made enforceable by anyone benefited from them

    • AND landlords cannot enforce positive covenants against sub-tenants because there is no privity of estate between them

    • Is the difference between freehold and leasehold justified?

      • YES – in leases the landlord retains interest in the land so it is essential for the protection of this interest that he be able to enforce positive covenants of repair. In freehold covenants, the covenantee owns adjoining land so it is less essential that positive obligations are enforced in this context as he can do the work himself

      • BUT – the leasehold covenant is not entered into to protect the freehold reversion, but rather to protect adjoining land of the other lessees, so this distinction (though effective) is artificial

  • Chain of covenants: covenants relating to land usually provide that the covenantor will be liable if he sells the land and the purchaser fails to comply, so sellers usually require the purchaser to comply with the covenant.

    • BUT this chain could always be broken (eg. if an intermediate purchaser disappears or dies

    • HOWEVER the Contracts (Rights of Third Parties) Act 1999 may enable the original covenantee to sue on the promise by the present owner (but this depends on whether the parties did intend the terms to be enforceable by the third party [original covenantee])

  • Requiring the covenantee’s consent before sale by covenantor: In registered land sale in breach of requirement of consent can be entered as a restriction

    • BUT this is cumbersome and there are no equivalents in unregistered land

  • Benefit and burden: if the covenant is the counterpart of rights being enjoyed by the purchaser, the doctrine can be used

    • BUT Rhone v Stephens: will not apply unless performance of the covenant is a condition on the exercise of the right

• Too few positive covenant cases to extract any principles

• Most cases seem to treat principle as the same between positive and restrictive covenants

• Probably correct to say that a covenant will run provided that it ‘touches and concerns’ the benefited land (both positive and restrictive)

• There used to be a rule that a C must have the same estate as the covenantee (eg. lessee couldn’t enforce a covenant with the landlord), but Smith v River Douglas said that this rule was abrogated by LPA s78

The role of s56 LPA

• Provides: a person may take an interest in a covenant, although not named as a party

• Application to benefit of covenants (both positive and restrictive):

  • May enable purchasers from covenantees to take benefit, should it not otherwise run. Denning used this interpretation in Smith, but this ignores a long line of cases holding that s56 only applies to existing and not future/uncertain persons.

  • Covenant may be intended to benefit a neighbouring owner not part of the conveyance (eg. vendor sells land to A and neighbouring plot to B, taking a covenant from B that is intended also to benefit A), and in these circumstances s56 may allow A and his successors to sue. But in Beswick v Beswick, HL said:

    • Upjohn (Pearce agreeing, Reid leaving the question open but appearing to agree, Guest appearing not to agree) – s56 applies only where the covenant purported to be with C (so no longer necessary to name C as party to the deed

    • This was applied subsequently by Neuberger

  • Therefore it is not enough to promise the vendor that adjoining landowners will benefit – there must be a promise to those persons

C (RoTP) Act 1999

• Enables someone other than covenantee to sue where the term purports to confer a benefit on him

• This overlaps with s56 but without its limitations, but it might be preferable to use s56 because the new right might be affected by rescission or variation of the contract

• Covenantee’s successors could probably use it too, but the rules on running of benefit are sufficiently relaxed that successors will rarely need to rely on the Act

• Purchasers from covenantors are bound: Tulk v Moxhay

• Rationale: fear of inappropriate use of land close to covenantee’s – without a restrictive covenant it’s impossible for covenantee to sell part of his land without risking what he retains becoming worthless.

  • Thus a planning function (limits use of land, encourages sale of land)

• More specific analysis: purchaser with notice of an obligation cannot ignore it (inequitable)

Tulk inapplicable to positive covenants

• Tulk involved covenant of both positive and negative content. The remedy was limited to a negative obligation but the reasoning regarding the effect of notice on purchasers was equally applicable to both and so it caused confusion as to whether the doctrine applied to positive covenants

• Haywood v Brunswick: only one example of application of Tulk to positive covenants, and it was assumed that Tulk limited the principle to restrictive covenants

• London and South Western Railway v Gomm: Confirms that Tulk is only applicable to restrictive covenants (exhibiting some confusion as to Haywood: Jessell, Lindley declined to ‘extend’ Tulk while Hannen treated Haywood as restricting it)

Why

• Jessell MR said in Gomm that Tulk was an extension in equity of ...