Covenants Flashcards
(20 cards)
What is a covenant?
A type of contractual promise, from one freehold owner (covenantor to another (covenantee).
The covenantor undertakes to restrict the use of his/her own land, and it is enforcible in contract law.
However, if certain conditions fulfilled, also enforceable against later owners if conditions fulfilled
Which case says that equity can make the benefit and the burden of a covenant run?
Tulk v Moxhay - Subject to conditions
Conditions for the burden to run:
- Covenant must be restrictive
- Covenant must touch and concern the land
- Original covenantee must have owned/acquired legal estate when covenant made
- Original parties must have intended covenant to run
- Notice (s32 LRA) entered
Burden running 1: Covenant must be restrictive (Austerberry + Rhone)
Covenants cannot force successors in title to spend money (Austerberry) - no positive obligation.
Rhone v Stephens - a covenant to keep a roof in watertight and windtight condition was positive as it required expenditure of money.
Burden running 2: Covenant must touch and concern the land
P&A Swift: Equity will enforce it only if it is to protect value and amenity of the covenantee’s land
Consider
- If separated from land, will it cease to be of benefit?
- Is the benefit or burden of the covenant personal?
- Does the covenant affects nature, quality, mode or value of land?
Running burden 3: At the time of the covenant, covenantee must have owned the benefitting land
London CC v Allen is the case for this.
Running burden 4: Original parties must have intended the covenant to run with the land
Automatically implied by statute - s79(1) LPA
However, can be excluded through contract - Morrells
Running burden 5: Covenant must be entered as a notice
This is under s32, and is important as it will protect the covenant from s29 (purchasers of registrable dispositions for valuable consideration).
Workaround of positive covenants - reciprocal benefit and burden - Halsall v Brizell
Where there is some reciprocal benefit and burden.
Eg a buyer has the right to use a road, and covenants to pay costs for their maintenance.
Here, he is getting a benefit at a cost.
Held: The buyer’s successor cannot use the road without paying the cost.
The consequence is that the duty can run as long as the dutyholder wishes to, and does exercise the attached reciprocal right.
Conditions for the benefit to run with the land
- Can be restrictive or positive (easier than burden, won’t consider it again)
- Must touch and concern the land (P&A Swift again)
- Benefitting land must be identifiable
- Original parties must have intended annexation
Running of the benefit 3: Benefitting land must be identifiable - Dano + Greenwood
Dano v Earl Cadogan - a trust estate is not sufficient for benefitting land.
Bath v Greenwood - Neighbourhood is too wide
Running of the benefit 4: Original parties must have intended annexation
Intention implied by s78(1) LPA 1925 for covenants post-1925
You can opt out by contract (Federated Homes)
What can one do if they have the benefit of a covenant and it is being breached?
Seek damages or an injunction
Damages are the default remedy for breach of contract but are enforceable ONLY against original covenantor, who remains liable even if successor in breach (s79)
Injunction - restrains breach, available against current owner.
Damages in lieu may be awarded - Shelfer criteria but Coventry - courts retain discretion.
What is the statute for modification/discharge of a covenant and what are the stages?
S84 LPA - Upper Tribunal can discharge or modify the covenant upon application from owner of burdened land.
2 Stages:
- Jurisdiction - must meet one of the grounds in s84s
s84(1)(a) - Covenant obsolete - no longer any role to be played, doesn’t benefit anyone.
s84(1)(aa) - Impedes some reasonable user - most cases fought on this ground
s84(1)(b) - Mutual agreement
s84(1)(c) - No injury to party receiving the benefit - Discretion
Jurisdiction stage: The reasonable user ground
First: Establish some reasonable user is impeded by the covenant (s84(1)(aa))
Then: Show that this restriction EITHER does not secure practical benefit of substantial value or advantage, OR is contrary to the public interest (+ money should be adequate comp in event of discharge/modification) - s84(1A)
FINALLY: Take into account development plan, pattern of planning permissions and original period of covenant (s84)(1B)
Jurisdiction on the reasonable user ground (part 1) - Finding that a reasonable user is impeded (s84(1)(aa))
Naidu, Re Martin on planning perm.
Morris, Uni of Chester, Holden, Berkeley Sq
Planning permission is good evidence of reasonableness (Naidu), but it does not fetter discretion (Re Martin)
Examples of reasonable user:
1. Building flats (Morris v Brookmans)
2. Building a fitness facility for students (Uni of Chester
3. Setting up dog-grooming business (Holden, Re Ash Lodge)
4. Changing offices in Mayfair to a private members club (Berkeley Sq Investments.
Fairly easy to find reasonable user, next stage is more difficult.
Jurisdiction on the reasonable user ground (part 2) - Restriction doesn’t secure practical benefit OR is contrary to public benefit (+ damages adequate) s84(1A) - Morris, Shephard, Johnson, Univ Chester
- Public interest?
Underused point, however the fact that an applicant is doing something socially useful is relevant (Alexander Devine) - Restriction does not secure practical benefit of substantial value or advantage.
For value, you can show that your house would be worth substantially less value if covenant discharged.
For substantial advantage, we have following principles.
- Thin edge of the wedge - If we allow this one application, it would have a domino effect, encouraging others to apply and build, changing character of neighbourhood (Morris, Shephard v Turner)
- Availability of parking spaces? If app allowed, less parking spaces for residents. This is a matter of degree though, in Johnson setting up a preschool was fine as it would only interrupt parking at 9am and 3pm
- Restricting competition? Covenant benefittor might own competing businesses? However courts generally like to encourage competition
- If it is very important to the neighbouring property’s use and enjoyment, likely no discharge/modification (Univ of Chester) - here, sunlight restricted by building, ruining his enjoyment of riverside garden.
AFTER ALL THESE - you also check if money will be adequate compensation for the benefitting party, to compensate for any loss due to discharge/modification.
Final stage of jurisdiction ground in s84 - The planning period and original period cross-check (s84(1B))
Court will try to ensure decision in line with planning law, planning decision and spirit of covenant.
Take into account development plan, pattern of planning permission grants and original period of when the covenant was granted, and any other material circumstances.
Examples of planning permission/original period cross-check - Drummond, Muskwe and Lamble
Drummond - Their plan was consistent with development plan, would not cause loss of important landscape features.
Muskwe - Although covenant only 20 years old, changing to a care home did not infringe its spirit.
Lamble - House was in a green belt area, so new house, garage and gym was excessive intensification of use.
Discretion stage under s84
Tribunal can still reject the application if there is some overwhelming reason to do so, although usually at this point after jumping through the jurisdiction hurdles, they provide relief.
HOWEVER: If applicant behaved badly, they may refuse at discretion stage - Alexander Devine.
Developer bought housing units in breach of covenant before applying for modification, which seemed to be a tactic to force a grant under s84, since courts reluctant to order demolition of works in progress.
Lord Burrows - Cynical breach is a reason to refuse relief.
