Covenants

Question 1

What is a covenant?

Answer 1

A type of contract in which the covenantor makes a promise to a convenantee to do, an affirmative covenant, or not to do some action, negative covenant.

Question 2

Freehold Covenant

Answer 2

A promise made in a deed.

Question 3

Leasehold Covenant

Answer 3

An agreement between a landlord and a tenant.

Question 4

Implied Covenant

Answer 4

Implied covenant of good faith and fair dealing - general presumption.

Question 5

What is voluntary waste?

Answer 5

Wilful destruction or carrying away of something attached to the property.

Must show that the waste was caused by an affirmative act of the tenant.

Such waste might occur if a life tenant chops down all the trees on the occupied land and sells them for timber.

Question 6

Permissive Waste

Answer 6

An injury caused by an omission, rather than an affirmative act, on the part of the tenant.

Such waste might occur if a tenant permits a house to fall into disrepair by not making reasonable maintenance repairs.

Question 7

Do normal contract rules apply?

Answer 7

Yes - must be legal.

Question 8

Does the benefit of the covenant run with the land?

Answer 8

Yes it can at common law.

Test:
Established in Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949]

1. It must touch and concern the land.
   Test established in P&A Swift Investments v
   Combined English Stores Group [1989]
   -Must benefit covenantee whist they owned the
   land.
   -Covenant must affect the land itself.
   -Cannot be expressed as personal.
   -Can include payment as long as it is concerned
   to the land.
2. Parties must have intended to benefit to run.
3. Covenant must be attached to a legal estate.
   Webb v Russell

Question 9

Do burdens run at common law?

Answer 9

No.
Austerberry v Corporation of Oldham (1885):
Obligation to make up a road and keep it in good repair could not pass to a successor.

Re-affirmed by the House of Lords in Rhone v Stephens [1994].

Question 10

Do burdens run at equity?

Answer 10

Yes they can.

Tulk v Moxhay Test:

1. It must be substantially negative.
   
   • Is there an expense incurred?
   • Can they comply by doing absolutely nothing?
2. Annexed to the land.
   
   • Touch & concern test of common law.
   • Plots proximate
3. At the time of creation, the covenantee must have owned the land which was to benefit.
4. Intended the benefit to run.
5. Must be on the registered, otherwise unenforceable.

Question 11

Is wording important?

Answer 11

Yes.
It is possible for someone to take benefit of a covenant who was not party to the deed. S.56 of LPA 1925.

Re Ecclesiastical Commissioners for Englands Conveyance [1936] Ch 430:
The effect of S.56 was that a person expressed in the conveyance to be one for whose benefit the covenant was made, was to be regarded as an original convenantee, even though he was not a party to the deed.

Amsprop Trading Ltd v Harris Distribution Ltd [1997]
Neuberger J disagreed. Only on specific wording can this be accomplished.

Question 12

Express Annexation

Answer 12

Words of the covenant should show that the original parties intended the benefit to run;

1. Expressly state that the covenant has been made for the ‘benefit of the named land’ - Rogers v Hosegood [1900]
2. Estate owner.

Question 13

Implied Annexation

Answer 13

The court can identify the benefited land by looking at the circumstances and facts which indicate with reasonable certainty the land which is to be benefited, the benefit will thereafter run with the land.

Question 14

Building Schemes

Answer 14

Originally 4 rules established in Elliston v Reacher [1908] - Guidance.

1. Common Vendor
2. Before selling vendor must have laid out all the plots.
3. Same restrictions must be imposed and must be clear that those plots will be benefited.
4. Purchaser must be aware.

Intention of the parties to create a building scheme is the most important factor.

Question 15

Benefits of Building Schemes

Answer 15

1. The burden of positive covenants can run.
2. Purchasers of plots within a scheme are enabled to enforce covenants, regardless of when they entered into a scheme.
3. Equity will ensure the benefit will run without the need for compliance with formalities.

Question 16

Exception to the Common Law Rules that the burden does not run with the land:

Answer 16

Halsall v Brizellt:
- Easement to use a road and required maintenance of that road.

Rule:
A successor in title could not take the benefit of an agreement unless he was also prepared to accept related burdens.
-Only ‘related’ burdens.
-No relationship then no enforceability.

Question 17

Remedies of Breach

Answer 17

Damages
- Not successful in relation to a successor in title because of lack of privity - Rhone v Stephens.

Specific Performance

Mandatory Injunction

Must avoid delay.

Question 18

Discharge of Covenants

Answer 18

Common Ownership
- Automatically extinguished should the burdened and benefited land come into common ownership. Except in situations of building schemes.

Applications to Lands Chamber

• Must show;
  
  • Covenant has become obsolete due to changes in the character of the property.
  • Covenant impedes a reasonable use and either does not provide any practical benefit of substantial value to any person or is contrary to public interest, money would be adequate compensation for the loss or disadvantage if any, that would be suffered.
  • Those party to covenant agree.
  • The proposed discharge or modification will not injure the persons entitled to the benefit of the restriction.