Covenants Flashcards
If you are trying to figure out if the covenants bind
The first thing you have to do is you have to look at whether the correct formalities were gone through when the covenants were created. You look to see whether the person who is trying to enforce the covenants… It is always the person who is trying to enforce the covenant… Do they have the benefit of the covenant? This is really important.
The next thing you do is you move down, and you see, once you’ve established that the person who is trying to sue has the benefit, logically the next step is to check that the person against whom the covenant is being enforced has the burden of the covenant.
Now the covenant has been breached, how do you go about enforcing the covenant? Getting the remedy for breach of covenant. Check formalities; check the person trying to sue who has the benefit, check the person who is being sued does have the burden of the covenants.
The last thing you do is the thing that we looked at last semester – you look to see whether the covenant binds under the rules for registered and unregistered titles.
Section 136 LPA 1925
The first way in which that he can show that he has acquired the benefit at common law is by showing that he took an assignment of it under Section 136 LPA 1925
(1) So it has to be in writing. It doesn’t have to be, but it is normally by deed.
(2) It has got to happen at the same time the land is transferred – the timing is critical.
(3) Written notice has to be given to the covenantor, depending on who owns the land at that time.
(4) The person taking the benefit has to buy the land who has the benefit.
If not express assignment of BENEFIT (Common Law)
1) Firstly you have to show that the covenant you are looking at touches and concerns the land. I.e., it is not a personal covenant. There is a test for that which we will look at in a moment called Lord Olivers Test (P & A Swift Investments v Combined English Stores Group)
2) The second condition is that the original covenantee, Anna, and the original covenantee’s successor in title, Boris, owned (Anna) or currently own (Boris) a legal estate in the land that you are saying has the benefit of the covenant.
3) The third condition is that the benefit of the covenant has to be annexed or attached to the land. So the benefit has to be firmly attached to the land itself. There are two ways of attaching or annexing the benefit to land: (1) You can do it expressly, (2) or you can and do it impliedly by relying on section 78 of the LPA 1925
Lord Oliver’s Test (Swift Investments v Combined English Stores Group)
First, it has to confer a benefit on the land, not just the owner personally. Be a little bit careful here. You can have duality – you can have a covenant the benefits the land and also benefit who also happens to own the land. That’s fine, but you can’t just have a covenant that benefits the owner personally and is of no benefit to the land at all. We saw that when we looked at easements.
The second condition is that it has to affect the nature, quality, mode of use, or value of the land that has the benefit.
The third condition is that it must not be expressed to be personal. It must not say this covenant is… We don’t intend that benefit of this covenant to run with the land; this covenant is personal.
Federated Homes v Mill Lodge Properties Ltd.
Section 78 was ignored until we had Federated Homes coming along and saying “oh look at what it does.” it says provided that the covenants are not personal, the benefit of the covenants is automatically attached. Basically it is implying the intention. It is saying that when the parties entered into the covenants, we are going to imply that they intended the benefit to run.
If rules for the BENEFIT pass (EQUITY)
For the benefit to pass an equity you have to show that the covenant touches and concerns the land. It must not be personal. We have heard that before, and again we are looking at Lord Olivers test.
You have to show that the benefit has been, and there are three options here, either: A) expressly assigned, or B) expressly annexed, or C) impliedly annexed as a result of section 78 LPA 1925.
Express assignment: Again, this has to happen at the same time of the transfer. The only difference is that this time because you are assigning in equity, it is slightly easier. You don’t have to give notice basically. Express assignments never happen. Elaine has never seen them happen.
Express annexation: So that’s where you make it clear when you create the covenant that you want the benefit of the covenant to become attached to the covenantee’s land. You have to go back to when the covenant was created. You go back to the transaction between Yana and Anna when the covenant was created, and you look at the document between them when they created the covenant. Did the wording of the document they created the covenant show and express intention that the parties wished to attach the benefit of the covenant to this piece of land here – Anna’s land – so that whoever owned Anna’s land, because they own the land, would get the benefit of the covenant. You are showing a clear intention that you want the benefit to be attached to and run with the covenantee’s land.
Implied annexation: if the covenant is created on or after 1 January 1926, then section 78 implies the intention, provided the covenants are not personal. Even if that wording is not set out in the document that created the covenants, the document between Yana and Anna, the created the covenants… Even if that wording is not set out, provided that the covenant was created on or after January 1, 1926, and the covenant is not personal, the wording is implied.
For the BURDEN to run (EQUITY)
Case: Tulk v Moxhay
1) The first condition for the burden to run in equity is that the covenantee – so we are looking across at the person with the benefit of the covenant – the covenantee must own land for the benefit for which the covenant is taken. Basically what you are saying here is that the covenant must touch and concern the land essentially.
2) Secondly, the original parties to the covenant – Yana and Anna – must have intended the burden to run. Remember we are dealing with the burden here. The original parties must have intended the burden to run (express wording/implied through section 79 LPA 1925). When you attend the burden to run, you intend for the burden to be attached to the coventor’s land. You will find that we are going to look at a similar point again – you are looking for express wording showing an intention for the burden to run. If there is no express wording, we are going to look at section 79 that will imply that wording.
3) Thirdly, if you are dealing with covenants that were created on or alter 1 January 1926, the covenants must be registered. We looked at this last semester. Then…
4) Fourthly, the covenant must be restrictive, or negative in nature. We will have a look at how you tell the difference between positive and restrictive covenants.
London City Council v Allan
Firstly, the covenant must benefit the dominant land which is owned by the covenantee. This is linking back to a point we made when we look at easements. The person suing, the person who has the benefit of the covenant, has to own land that is capable of benefiting from the covenant. If the covenantee doesn’t own land, the burden can’t run either.
Kelly v Barret
The covenant has to benefit the dominant land.
Hand-In-Pocket Test
Heywood v Brunswick Permanent Benefit Building Society
How do you tell the difference between a restrictive covenant and a positive covenant? Basically you are using the hand in pocket test.
If they comply with the covenant you have put your hand in your pocket, take out some money, and spend that money, the covenant is positive. If you do not have to spend money, or take action to comply with the covenant, then it is restrictive.
Lindley LJ: “ Only such a covenant as can be complied with without the expenditure of money will be enforced” between successors to the original parties.
So you do not look at the wording of the covenants. You look at the effect of the covenant.
Halsall v Brizell
The rule says if you are granted an easement, like a right of way, and linked to that easement is a covenant, to maintain or to contribute to maintenance, or something like that, what you have been given is a benefit and a burden. And you can’t take the benefit of the deed, if you are granted this linked easement and covenant, you can’t take the benefit, which is the easement, without submitting to the burden of the covenant.
The basic idea is that if Zane has been using this path, he is taking the benefit of the easement – the benefit of the document that created these rights, and it is only fair therefore that he should take on the linked burden.
So you attach the burden of the covenant to the easement.
Rhone v Stephens
The burden of any covenant will never ever run at common law.
For positive covenants, such as in Halsall v Brizell, you’ve got various cases where the courts looked at this and talked about the fact that you actually do have to use the right to be bound to the positive covenant. You have to actually take it…it is not enough to just be granted it…you actually have to use it.
Elliston v Reacher
(Building Scheme)
1) The claimants and defendant’s title derive from a common vendor. The person suing, the claimant, and the person being sued, the defendant,… their ownership, their title, must have come from a common vendor.
2) Before the sale, that common vendor who sold to all of them, laid out the land in plots and imposed similar restrictions on all the plots. Each buyer of a plot will be bound by the same covenants.
3) The restrictions must have been intended to benefit each buyer. Focus on benefit here; that was the issue; that was the problem we had…There was no issue of burden; it was a question of who got the benefit and who could sue to enforce the covenants.
4) The Plots were bought on the basis that the restrictions were to benefit everybody else on the estate. This needs to be expressly stated in the documents of the covenants when they are entered into.
Baxter v Four Oaks Properties
A buildings scheme was applied even though the vendor had not laid estate out in plots, but left it to each buyer to negotiate the size of the plots and what shape they wanted. So you had this estate, and rather than dividing it up, the seller was selling them off to buyers as they came along and asking if they wanted to tweak the boundaries here and there, and asking what size of plot they wanted, etc.
Re Dolphin’s Conveyance
This is the modern approach. The modern approach is to say well actually you don’t have to necessarily establish all of those conditions. The critical thing is to show that there is a common intention to create a building scheme. if the documents, and covenants that the parties have entered into, show a clear intention to create a building scheme, the courts will impose one. Intention is the critical thing. Not so much the property being laid out in plots anymore.
The most important thing to look for according to Re Dolphin’s Conveyence is the intention. So it is the last two – when these conveants were entered into, and was it clear that they were all going to enter into similar restrictions, and the intention that the benefit and burden would run.
