Freehold Covenants

Question 1

Define covenant

Answer 1

a promise contained in a deed (Dano v Earl of Cadogan)

Question 2

State the formalities of the covenant and assume they have been complied with (as no evidence to the contrary)

Answer 2

A freehold covenant is an equitable interest and must comply with s 53(1)(a) LPA 1925; it must be in writing and signed by the covenantor.

Question 3

General passing structure, why

Answer 3

burden and benefit in equity, then common law

Whether the burden has passed in equity should be addressed first because at common law the burden does not pass (Austerberry v Oldham) and equitable remedies are preferable as injunctions are available

Question 4

Burden passing in equity - 4 consitions

Answer 4

Tulk v Moxhay

1) Covenant must be negative
2) C must accomodate dominant tenement
3) The original parties must have intended the burden to run to bound new owners
4) Notice

Question 5

Covenant must be negative

Answer 5

The covenant will be negative if compliance with it does not require spending money, the ‘hand in pocket’ test (Haywood v Brunswick)
Time is money (Haywood v Brunswick)

Question 6

Negative C - what does one do if both positive and negative obligations appear?

Answer 6

1. Severance of the covenant into its negative and positive obligations (Shepherd Homes v Sandham)

In order to sever the obligations must be distinct and separable

The burden of the negative obligation will pass but the burden of the positive will not

2. If the negative obligation is integrated with the positive the covenant as a whole must be deemed substantially negative or substantially positive (Powell v Hemsley)

If a negative covenant is a condition of a predominantly positive covenant it is assimilated into that positive covenant

Question 7

The covenant must accommodate the dominate tenement - 3 requirements for benefitting the neighbouring land?

Answer 7

(1) The covenantees must have an interest in land (London CC v Allen)
(2) The covenant must touch and concern the dominant land (P&A Swift v Combined English Stores)
(3) The servient and dominant land must be sufficiently proximate (Bailey v Stephens)

Question 8

Accommodate DT - (1) The covenantees must have an interest in land (London CC v Allen)

Answer 8

The original covenantee must possess an interest in land on the date when the covenant is granted

The successive covenatee must possess an interest in land at the time when the covenant is enforced

Question 9

Accommodate DT - (2) The covenant must touch and concern the dominant land (P&A Swift v Combined English Stores)

Answer 9

Touch and concern requires the covenant benefits the dominant land itself by affecting its value, nature and quality and its use does not simply benefit a particular owner purely in their personal capacity

Note: it may benefit an individual owner personally as long as it benefits the land to some extent (Newton Abbot v Williamson & Treadgold)

Question 10

Accommodate DT - (2) The covenant must touch and concern the dominant land (P&A Swift v Combined English Stores) - cases

Answer 10

Treadgold – restrictive covenant not to use property for a competing business permitted as it benefited the land by preventing competition

Cosmicohome Ltd v Southampton City Council – restrictive covenant confining use of the site to a broadcasting centre which could only be used by the BBC, did not benefit the land itself

Holland Park v Hicks – restrictive covenant not to build without plans being approved by the adjoining owner upheld

Question 11

TvM - The original parties must have intended the burden to run to bound new owners

Answer 11

Shown by either express words of the covenant, or

It is implied by s 79 LPA 1925
This will apply unless the parties have expressly excluded its application (Morrells v Oxford United FC)

Question 12

TvM - notice

Answer 12

Requirements depend on whether the land is registered or unregistered

Question 13

TvM - notice - registered land

Answer 13

Notice of the covenant is by means of notice on the charges register of the servient land (s 32 LRA 2002), which binds a purchaser for valuable consideration (s 29 LRA 2002).

If no notice the purchaser not bound if he is a purchaser for valuable consideration (s 29(1) LRA 2002)

Any person who acquires the freehold who is not a purchaser for valuable consideration will be bound by a restrictive covenant if it constitutes an overriding interest. It will be an overriding interest if the person is in actual occupation of the land (sch 3 para 2 LRA 2002)

Note: a donee or volunteer will always be bound

Question 14

TvM - notice - unregistered land

Answer 14

Restrictive covenants granted on or after 1st Jan 1926:

Registration of the restrictive covenant as a Class D(ii) land charge on the land charges register (s 2(5)(ii) LCA 1972) constitutes notice and will bind all purchasers (s 198 LPA 1925)

If not registered it will bind anyone who is not a purchaser for money or money’s worth (including nominal but excluding marriage consideration) s 4(6) LCA 1972

Question 15

For the covenant to be enforceable, what needs to pass?

Answer 15

Benefit and burdon (Re Union of London and Smith’s Bank Ltd’s Conveyance)

Question 16

Benefit passing in equity: requirements

Answer 16

Touch and concern the land (P&S Swift) – established above

It must have passed in one of three ways (Renals v Cowlishaw)

• Annexation
• Assignment
• Scheme of development

Question 17

Benefit equity - Annexation - details and 3 methods

Answer 17

The benefit of the covenant must be permanently attached to the dominant land at the point when the covenant was created

Annexation of the benefit to the whole of the dominant land constitutes annexation to every part of the land (Federated Homes v Mill Lodge Properties)

The size of the dominant land is irrelevant (Wrotham Park v Parkside Homes)

Methods:
Express
Implied
Statutory

Question 18

Annexation - express

Answer 18

The covenant’s wording must expressly state that the covenant is intended to benefit the land and is not merely for the personal benefit of any particular owner (Rogers v Hosegood cf. Renals v Cowlishaw)

Failure to register the burden of a restrictive covenant on the Charges Register of the servient land will not prevent annexation of the benefit from occurring (Rees v Peters)

Question 19

Annexation - implied

Answer 19

Implied from the transfer deed (Marten v Flight Refuelling). Very rare

Question 20

Annexation - statutory

Answer 20

The benefit will automatically pass under s 78(1) LPA 1925 (Federated Homes v Mill Lodge) unless the parties have expressly excluded its operation (Roake v Chadha)

Will not operate where it has been expressly stated in the deed that the covenant is only to benefit the land for the period of time when it is occupied by the original covenantee (Sugarman v Porter

Academic criticism: 78’s purpose to pass if the benefit parties intended it, not to pass it automatically

The extent of the dominant land must be described in sufficiently precise terms (Crest Nicholson v McAllister)

Doesn’t apply to pre-1926 covenants (Small v Oliver & Saunders)

Question 21

Benefit equity - assignment

Answer 21

When a covenantee conveys his land he may expressly assign the benefit of his covenant

To valid it must (Miles v Easter):

• Take place at the same time as the transfer of land
• Be in writing and signed by the covenantee who is disposing of his interest (s 53(1)(c) LPA 1925)
• The land must be sufficiently precisely identified
• The covenant must be re-assigned every time the land is subsequently conveyed

Where the current covenantor dies, the covenant vests in his personal representatives and is held on trust for the beneficiaries of his estate (Earl of Leicester v Wells UDC)

Question 22

Benefit equity - Scheme of development - details

Answer 22

Allows vendors of housing estates to ensure that initial and successive purchasers of individual homes in the estate are able to enforce all of the restrictive covenants for the benefit of the estate as a whole

Question 23

Benefit equity - Scheme of development - conditions

Answer 23

Conditions set out in Elliston v Reacher – more guidelines (Baxter v Four Oaks Properties)

1) Both claimant and D must derive title form a common vendor
Not essential (Re Dolphin’s Conveyance)

2) Prior to sale of plots, vendor must have laid out the estate in plots subject to similar covenants and intended them to be imposed on all of the plots
Not essential (Baxter v Four Oaks)

3) The restrictions must have been intended to benefit all the plots sold; and
Essential (Jamaica Mutual Life Assurance v Hillsborough)

4) The claimant and D must both have purchased on the basis that the restrictions were to benefit the other plots
5) The area of the scheme must be clearly defined (Reid v Bickerstaff)

Question 24

Burden passing a common law - general rule

Answer 24

General rule: the burden does not pass at common law (Austerberry v Corporation of Oldham, confirmed Rhone v Stephens)

The liability rests with the original covenantor for any breaches of the covenant by successors (s 79 LPA)

Question 25

How may the original covenantor seek to circumvent the fact that he may have to deal with the burden?

Answer 25

(1) Mutual benefit and burden rule (Halsall v Brizell) (2) Chain of indemnity covenants DONT NEED: (3) Commonhold (4) s 40 LRA 2002 Restriction (5) Grant of a long lease

Question 26

Mutual benefit and burden rule (Halsall v Brizell) - rule and conditions

Answer 26

Rule: where a covenant has a mutual benefit and burden the covenantor cannot take the benefit without the burden. Conditions: - The benefit and the burden must be conferred by the same transaction (Davies v Jones) - The benefit and burden must be linked (Thamesmead Town v Allotey) - There must be a real choice of whether or not to take the benefit (Rhone v Stephens)

Question 27

Chain of indemnity covenants

Answer 27

Original contractor may seek an indemnity from a successive covenantor to be reimbursed for any damages they are required to pay as a result of any breaches A new indemnity contract must be extracted from each new successor in title ISSIES - chain can get very long, and worthless if someone dies etc

Question 28

Has benefit passed at common law? 3 ways of passing

Answer 28

Express Assignment (s 136 LPA) Implied Assignment Statue

Question 29

Benefit common law - Express Assignment (s 136 LPA)

Answer 29

To be valid it must be in writing with notice provided to the covenantor (s 136 LPA)

Question 30

benefit common law - Implied assignment

Answer 30

Four conditions set out in P&A Swift Investments v Combined English Stores 1) Covenant must ‘touch and concern’ the land Must not be purely personal. Must benefit the land itself by affecting its value, nature, quality or use. 2) The parties should have intended that the benefit should pass to successors in title Will be either express or implied under s 78 LPA 3) Covenantee must have held the legal estate in the benefited land at the time of entering into the covenant and 4) Successor must hold the legal estate No requirement that the successor covenantee’s legal estate be the same type of legal estate as that owned by the preceding covenantee (Smith and Snipes Hall Farm v River Douglas Catchment Board)

Question 31

Enforceability / notice

Answer 31

Restrictive covenants are only capable of being equitable interests in land (s 1(3) LPA 1925) and will only bind a purchaser of the servient land if that purchaser has notice of the covenant. The requirements for notice depends on whether the land is registered or unregistered

Question 32

Enforceability - registered land

Answer 32

A person with the benefit must enter a notice on the Charges Register of the servient land required by virtue of s 32 LRA, as a restrictive covenant is not one of the excluded interests under s 33 LRA. This will bind all purchasers (s 29(2) LRA 2002) If no notice, the purchaser will be bound if he is a purchaser for valuable consideration (s 29(1) LRA 2002) Cannot be bound by it as an overriding interest under sch 3 para 2 LRA 2002 as a third party can’t be in actual occupation of the land carrying the burden A donee or volunteer will be bound by a restrictive covenant regardless of whether it is entered on the Charges Register

Question 33

Enforceability - unregistered land

Answer 33

estrictive covenants granted after 1st Jan 1926 Registration of the restrictive covenant as a Class D(ii) land charge on the land charges register (s 2(5)(ii) LCA 1972) constitutes notice and will bind all purchasers (s 198 LPA 1925) If not registered the restrictive covenant will bind all except a purchaser of a legal estate for money or money’s worth Before are subject to the doctrine of notice

Question 34

Remedies

Answer 34

Mandatory injunction for positive covenant (Wrotham Park v Parkside Homes) Prohibitory for negation Damages in lieu (Jaggard v Sawyer) Damages only granted as a right if benefit has passed at common law