Covenants Flashcards

1
Q

Austerberry v Earl of Oldham (1885) 29 ChD 750

covenants - running of the burden

A

At CL, law, the burden of a covenant will never pass to a successor of the servient land:

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2
Q

Tulk v Moxhay

covenants - running of the burden

A

Lord Cottenham LC refused to lift the injunction.

Lord Cottenham: The question is, not whether the covenant runs with the land, but whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased.

Lord Cottenham said that it would be ‘inequitable’ for a purchaser to escape from liability under the covenant in these circumstances. In many cases, he suggested, the vendor would have agreed to receive a lower price for the land in exchange for the purchaser’s promise. ‘Nothing could be more inequitable’ than for the purchaser to then profit at the vendor’s expense, and frustrate the vendor’s intentions, by selling the land on at a higher price to a purchaser unaffected by the promise. Equity would avoid this result by enforcing the promise against a purchaser with notice. The promise, said Lord Cottenham, created ‘an equity attached to the property by the owner’—and, in accordance with equitable principles, ‘no one purchasing with notice of that equity can stand in a different situation from the party from whom he purchased’.

Charles Tulk had a fee simple title to a section of Leicester Square in London, as well as to several houses bordering on the Square. In 1808, he sold his title to the Square to one Elms. In the deed conveying the land, Elms promised Tulk that he would maintain the land ‘in its present form … as a square garden and pleasure-ground … uncovered with any buildings’.

Title to the Square subsequently passed from Elms, via a few successors in title, to Edward Moxhay. Moxhay was aware of the promise that had been made by Elms, but he did not himself enter into any agreement to abide by the terms of that promise. Once he acquired the land, Moxhay began to cut down the trees in the Square in preparation for building.

Tulk, who still owned the neighbouring houses, sued for an injunction to stop Moxhay from building on the land or using it as anything other than ‘a square garden and pleasure ground’. The Master of the Rolls granted the injunction.

Moxhay appealed against this decision to the Lord Chancellor.

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3
Q

Haywood v Brunswick Permanent Benefit Building Society (1881) 8 QBD 403

covenants - running of the burden - **restrictive **

A

Held: the burden did not pass
Prinicple: Compliance with the covenant should not require action/expenditure of money.

This case concerns a covenant to build and maintain houses on a plot of land and whether a mortgagee, in this case, the Brunswick Building Society, is bound by that covenant.

Initially, Charles Jackson granted land to Edward Jackson with an obligation for Edward and his assigns to pay an annual chief rent and to erect and maintain buildings of at least twice that value. Edward later transferred his interest to MacAndrew, who then mortgaged the land to the trustees of the Brunswick Building Society. The society subsequently took possession of the land and buildings.

The dispute arose because, although the required buildings had been constructed, they were not maintained as stipulated. The key legal issue was whether the building society, as a mortgagee in possession, was liable for the covenant to keep the buildings in repair.

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4
Q

Rhone v Stephens [1994] 2 AC 310 (HL)

covenants - running of the burden - restrictive

Reasoning:
Lord Templeman refused to overrule these authorities for two reasons. First, he defended the principled difference between positive and restrictive covenants. A positive covenant—a promise to do something—was a contract. Equity could not enforce such a promise against a person who was not party to it without ‘flatly contradicting’ the doctrine of privity of contract. By contrast, a restrictive covenant deprived a landowner, who made the promise, of ‘some of the rights inherent in the ownership’ of the land. When the landowner passed the title on to another person, the successor acquired the ownership subject to the restriction and was bound to comply with it. On the basis of this analysis, Lord Templeman suggested, ‘enforcement of a negative covenant lies in property’, while ‘enforcement of a positive covenant lies in contract’.

Second, Lord Templeman was concerned about the practical consequences of overturning the rule that the burden of positive covenants does not run in equity. Such a decision ‘would create a number of difficulties, anomalies and uncertainties and affect the rights and liabilities of people who have for over 100 years bought and sold land’ in the knowledge that positive covenants bound only the original covenantor. He noted that if Parliament were to choose to legislate in this field, it would need to be careful about the consequences. Enforceability of positive covenants could lead to ‘social injustice’ if landowners were saddled with the costs of compliance with promises made at a time when social and economic conditions were very different.

A

The appeal was dismissed. Lord Templeman rejected counsel’s argument that the doctrine in Tulk v Moxhay (1848) 41 ER 1143 should be extended to allow the burden of positive, as well as restrictive, covenants to bind successors in title to the covenantor. He rejected the argument that s. 79 of the Law of Property Act 1925 had changed the law to allow the burden of a positive covenant to affect a successor in title at law. Finally, he held that the doctrine of mutual benefit and burden, which could render the burden of some positive covenants binding on successors in title, did not apply on the facts of the case.

Two properties, known as Walford House and Walford Cottage, had been in common ownership and had a shared roof. In 1960, title to Walford Cottage was sold. The conveyance included a promise by the vendor ‘for himself and his successors in title … to maintain … such part of the roof of Walford House … as lies above [the Cottage] in wind- and water-tight condition’. The conveyance also created reciprocal easements of support in favour of both properties.

In 1981, Mr and Mrs Rhone acquired the title to Walford Cottage. By this time, title to Walford House had been sold to Mrs Barnard. In 1984, the roof over the cottage began to leak and the Rhones asked Mrs Barnard to repair it, which she refused to do.

The Rhones brought an action in the county court, seeking damages for a breach of the covenant to keep the roof in repair. Mrs Barnard died before the county court hearings began and Ms Stephens, her executrix, was substituted as the defendant.

In the county court, HHJ Cotterill held that Mrs Barnard had breached the covenant, and ordered that Ms Stephens pay damages out of the estate and perform the repairs.

Ms Stephens appealed to the Court of Appeal, who allowed the appeal and held that the covenant was not binding on Mrs Barnard.

The Rhones appealed to the House of Lords.

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5
Q

P & A Swift Investments v Combined English Stores Group plc [1989] AC 632 (HL):

running of the burden - touch and concern the land

A

Holding: The House of Lords unanimously decided that the assignee could enforce the guarantee. Lord Templeman described a surety or guarantor as a ‘quasi-tenant’ (at 638).

Lord Oliver of Aylmerton proposed the following criteria to be applied when trying to decide on whether a covenant touches and concerns land:

> ‘(1) the covenant benefits only the reversioner for time being, and if separated from the reversion ceases to be of benefit to the covenantee;

> (2) the covenant affects the nature, quality, mode of user or value of the land of the reversioner;

> (3) the covenant is not expressed to be personal (that is to say neither being given only to a specific reversioner nor in respect of the obligations only of a specific tenant);

> (4) the fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land so long as the three foregoing conditions are satisfied and the covenant is connected with something to be done on to or in relation to the land.’ (at 642)

Facts: A lease contained a surety covenant (or guarantee) that if the tenant failed to perform the lease covenants then the surety would do so. The landlord assigned the reversion but not the benefit of the covenant. The tenant failed to pay the rent and the new landlord wanted to enforce the guarantee. Had the benefit of the guarantee passed to the assignee of the reversion automatically? It would do so if the guarantee covenant could be said to ‘touch and concern’ the land.

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6
Q

London CC v Allen [1914] 3 KB 642

running of the burden - touch and concern the land

A

HELD the covenant was unenforceable against successors because the Council did not own any land benefitted by the covenant at the time of the covenant

Also: There must be identifiable land that can enjoy the benefit of the covenant, both at the time of creation and the date of enforcement of the covenant.

Facts: As a condition of obtaining permission to build a road, the landowner covenanted with the Council not to build on his other plot (so that the road could be continued one day).

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7
Q

Morrells of Oxford Ltd v Oxford United Football Club [2001]

running of the burden - s 79 LPA

In Morrells of Oxford Ltd v Oxford United Football Club [2001], Robert Walker LJ confirmed that the role of s 79 LPA is merely to simplify the conveyancing process by creating the rebuttable presumption that covenants are made not just with the original covenantor, but also with his successors in title. It will not, by itself, pass the burden of a covenant.

A

Held, dismissing the appeal, that to impose s.79 of the Act would be to read words into the covenant which were clearly not intended and were inconsistent with the purpose of the instrument,

M sought an injunction to enforce a restrictive covenant contained in a conveyance of land against O, who proposed to use the land as a football stadium with leisure facilities. The covenant contained in a 1962 conveyance prohibited the building of licensed premises within half a mile of the public house which had been the object of the original conveyance. It was contended that, by virtue of the Law of Property Act 1925 s.79, the covenant could be presumed to bind successors in title to the land unless a contrary intention was expressed. O was granted summary judgment under the Civil Procedure Rules 1998 Part 24 and M appealed

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8
Q

Halsall v Brizell [1957] Ch 169

positive covenants ( a workaround) -

Comments and considearations
* Halsall v Brizell been treated as authority for a broad principle that allows landowners to be bound by positive obligations entered into by their predecessors in title, provided that they are still receiving benefits under the agreement that created that obligation. (For a controversial application of the principle, see Tito v Waddell (No. 2) [1977] Ch 106.) As such, it represents an established exception to the general principle that a freeholder cannot be bound by a positive covenant entered into by a predecessor (see Rhone v Stephens [1994] 2 AC 310, and Lord Templeman’s account of the basis of the principle and its limits; for a recent application of the principle, see Wilkinson v Kerdene Ltd [2013] EWCA Civ 44 and compare the narrow approach taken in Elwood v Goodman [2013] EWCA Civ 1103

  • What is the basis of the principle in Halsall v Brizell and what are its limits? Does it apply whenever an agreement confers both benefits and burdens on a pair of freeholders? If not, what kind of connection must there be between the benefit and the burden? Must the parties consciously accept that the benefits are conditional on acceptance of the burdens? Does it matter—as Lord Templeman suggested in Rhone v Stephens—if the land receiving the benefits would be rendered unusable if the benefits were withdrawn? On this test, is the outcome in Halsall v Brizell itself wrong? For an overview of the case law, and an account of the basis of the principle and its limits, see Davies (1998) 57 CLJ 522 and compare the critical view of Bevan (2018) 77 CLJ 72.
A

HELD that the buyer’s successor could not use the right without complying with the duty to pay costs to ensure the right could be exercised and exercisable (reciprocal duty – the duty to pay cost was attached to the use of the right).

Upjohn J held that the defendants were bound to comply with the covenants in the 1851 deed if they wished to continue to use the private roads and sewers held by the trustees. However, he held that the deed, on its true construction, did not allow the trustees to calculate owners’ contributions based on the number of dwelling houses on their land, and that the resolution passed in 1950 was therefore ultra vires the powers conferred by the deed and void.

The case concerned a 40-acre plot of land in Liverpool, known as Cressington Park. In 1851, the land had been divided into 174 plots and sold off to separate purchasers, while the vendors retained title to certain roads, as well as a promenade along a sea wall. By a deed dated 19 August 1851, the owners declared that they held the roads and promenade on trust for the purchasers, and the purchasers covenanted to contribute to the costs of maintaining the roads, promenade, sewer system, and gas lights on the basis of ‘a due and just proportion’. The deed provided that the owners of the plots, who were described as ‘shareholders’, had the power to make rules and regulations for the purpose of agreeing the expenses to be incurred and the administration of the land.

In 1950, the claimant trustees under the deed held a meeting with the owners of the plots. A resolution was passed that any owner who had divided a dwelling house into two or more separate flats would have to pay extra in proportion to the number of additional flats. The defendants were the executors of one of the owners who had divided his property into flats, Mr Finney. They refused to pay the extra amount demanded by the trustees.

The trustees brought an action in the Chancery Division of the High Court, asking the court to determine whether, on the true construction of the 1851 deed, they were entitled to require the defendants ‘as owners in fee simple of a house and land situate within the park’ to pay the amounts demanded.

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9
Q

Federated Homes v Mill Lodge Properties [1980] 1 WLR 594

running of the benefit - s 78 LPA

A

Held: The court held that because it was clear which land was intended to benefit, the covenant could be annexed to that land by LPA 1925, s.78. S78 has the effect of statutorily annexing the benefit of every covenant (both positive and negative) to all of the benefitted land. In order for s78 to operate, the land must be capable of benefiting from the covenant and identifiable from the deed of covenant
Priniciple: intention is implied by s 78(1) LPA 1925 for covenants entered into since 1926, unless parties opt out (important to say it)

This case concenred a covenant by the defendant not to build more than a certain number of dwellings on burdened land. It was clear from the covenant’s wording that the land to be benefitted was the neighbouring land retained by the covenantee, but there was no express words of annexation to that land. Later, the covenantee sold the land to Mill lodge

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10
Q

Dano Ltd v Earl Cadogan [2004] 1 P & CR 13

running of the benefit - identifiable land

A

HELD that, as ‘the Cadogan Settled Estate’ no longer existed, it was now not possible to identify land benefitting from the covenant, so it was unenforceable against Dano Ltd

the land must be identifiable - no technical issues

Earl Cadogan conveyed land to Chelsea Council, which covenanted with him to use the land only to house the working classes. Made for the benefit of land owned by the family’s trust, ‘the Cadogan Settled Estate’, since wound up

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11
Q

Bath Rugby Ltd v Greenwood [2021] EWCA Civ 1927

running of the benefit - identifiable land

reasoning: ‘neighbourhood’ too wide for property to be identifiable (did not define the exact purpose) , AND simply defined the scope of the nuisance (did not purport to be benefitting identifiable parcels of land)

A

Held: For the benefit of a covenant to be annexed to land, it must be taken for the protection of defined land (so that it passes with ownership of the land). In this case, the covenant was deemed to be for the benefit of the ‘neighbourhood’ and this was insufficient. While it is common for covenants preventing nuisance to refer to a ‘neighbourhood’, that term did not sufficiently identify the land to which the benefit of the covenant was intended to be annexed (it refers not to particular properties, but to a local area).

The appellant (BR) held a long lease of part of an area of land known as “the Rec”, from which it operated a famous rugby club. The Rec was subject to a covenant contained in a conveyance dated 6 April 1922 (the Covenant) under which the original purchasers covenanted for themselves and their successors and assigns with the original vendor and his successors in title and assigns that:

“…no workshops warehouses factories or other buildings for the purpose of any trade or business which may be or grow to be a nuisance annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood shall at any time hereafter be erected upon the said hereditaments and premises…”.

BR wanted to replace its existing stadium with a new, larger stadium incorporating various retail and commercial outlets, with associated car parking. It accepted that if the Covenant was still enforceable, its proposed new development might breach the Covenant. However, it argued that there was no-one who could show that they had the benefit of the Covenant. It brought a claim under section 84(2) of the Law of Property Act 1925 for declarations that, in effect, the Rec was free from the Covenant.

Two of the defendants claimed to own land that benefited from the Covenant (a flat overlooking the Rec and a house of which the flat formed part).

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12
Q

Morris v. Brookmans Park Roads Limited [2021] UKUT 125(LC)

discharge or modification of covenants - reasonable user -

The analysis of “substantial advantage” in Morris is helpful and demonstrates that it is a separate consideration from “substantial value”. Whilst it is likely the case that wherever practical benefits are of substantial value they will also be of substantial advantage, the converse is not true. Substantial advantage encompasses substantial value but also includes something more.

As Morris exemplified a successful “thin end of the wedge” argument will engage a consideration of substantial advantage. But, to use a finding of substantial advantage as a substitute for a finding of substantial value (as was done in Palmer) is questionable

A

The Tribunal accepted that the covenants did not secure a benefit of substantial value to the objectors because the nearest properties would, at most, be devalued by something less than 5%. However, the Tribunal found that the effect of the relaxation of the covenants would be to give a a perceived green light for other developments of flats and hence the likely proliferation of future applications, and the manifest likelihood that more applications would succeed. Ultimately the Tribunal accepted that whether it took two years or twenty, the current character of the estate would be lost. That character was a practical benefit of substantial advantage that was secured by the covenants on the individual houses.

‘thin end of the wedge’

Here the Applicant wanted to modify covenants which prevented the conversion of a house into five flats.

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13
Q

In the matter of an application by the University of Chester [2016] UKUT 457 (LC

discharge or modification of covenant

A

The Upper Tribunal agreed the development would have an extremely harmful impact on the amenity and enjoyment of Dr Witter’s riverside garden and refused to modify the covenants.

Case brought by the University of Chester, who had secured planning permission for a new boathouse on the River Dee, on land that benefitted from an 1896 restrictive covenant and were seeking a modification of its restrictions.
Evidence given on behalf of the objector to the modification.
Consideration of (i) whether, for the purposes of ground (a) of section 84(1) of the Law of Property Act 1925, the covenant restrictions ought to be deemed to be obsolete and (ii) whether the development would have a harmful impact on the amenity of the land with the benefit of the restrictions.

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14
Q

Holden v Upper Tribunal

discharge or modify a covenant

A

The Upper Tribunal evaluated Mr. Holden’s unopposed application to discharge restrictive covenants that prevented the use of his detached garage as a dog grooming parlour. The Tribunal considered whether the covenants were obsolete and whether discharging them would cause injury to the beneficiaries. While the Tribunal found that the grounds for obsolescence were not sufficiently demonstrated, it recognized that the discharge of restrictions might not harm the beneficiaries. Consequently, instead of fully discharging the covenants, the Tribunal opted for a limited modification. This modification allowed Mr. Holden to continue operating his dog grooming business under specific conditions, ensuring that the overall residential character of the estate remained protected.

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15
Q

Naidu v Morton

discharge or modify a covenant

A

planning permission is good evidence of reasonableness but unconclusive (re martin)

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16
Q

Re Berkley Sq investments

discharge or modify a covenant

A

The Tribunal did not accept that there would be any effect on the landlord’s wider estate and found in the tenant’s favour on grounds (a) and (c), allowing the lease modification subject to the inclusion of certain additional restrictions in the lease. It was relevant that the lease term did not expire until 2070 and the tenant only sought to modify the user clause. The Tribunal also found that the Landlord suffered no injury.

The applicant is the tenant of 45 Berkeley Square & 45 Hays Mews under a lease acquired in 2004, which expires in 2070. The permitted use of the premises was offices with ancillary residential use. The respondent is the landlord and freehold owner of the premises and the wider Berkeley Square estate.

No. 45 has not been substantially used as offices since around 2008 and, in 2013, the tenant decided that the premises would be suitable for use as a private members’ club. In February 2014 the tenant made a planning application to convert the premises.

The planning permission was granted on 7 March 2016. In the meantime, in 2015, the landlord granted a lease of neighbouring no. 46 to Caprice Holdings, to be used as the new Annabels club.

The landlord opposed any change of use under the lease to permit the operation of a club at no.45.

Grounds
The tenant sought permission from the Tribunal to modify the user clause under three grounds:
* the “reasonable user” ground- planning consent and a premises licence for 45 and 46 Berkeley Square demonstrated that private members’ club use was reasonable;
* “obsolescence” - there was no demand for office space in Grade 1 listed buildings; and
* “no injury” to the landlord - the rent for a private members club would be higher than the current rent.

17
Q

Shephard v Turner

modify or discharge a covenant - discretion stage

18
Q

Johnson

modify or discharge a covenant - discretion stage

19
Q

Spencer

modify or discharge a covenant - discretion stage

20
Q

In Lamble v Buttaci [2018] UKUT 175

discharge or modify a covenant

A

Andrew Francis successfully relied upon s. 84(1) LPA 1925 to modify restrictive covenants over land in Surrey Green Belt to allow a new house and garage. Where a covenant is qualified by consent requirement there is no need to seek declaration of the Court on whether consent refused unreasonably. The decision contains warnings about the effect of the conduct of the objectors’ solicitor on costs recovery by his clie

21
Q

drummond v bastow

discharge or modify a covenant

22
Q

muskwe v cochrane

modify or discharge a covenant - jurisdiction stage

23
Q

-Alexander Devine CCT v Housing Solutions Ltd* [2020] UKSC 45

modify or discharge a covenant - discretion satge

A
  • Developer built housing units in breach of covenant before applying for modification
  • Seemed to be a tactic to force grant under s 84 - courts generally reluctant to order demolition as too oppressive
  • Lord Burrows in UKSC: a ‘cynical breach’ like this can be a reason to REFUSE relief