Covenants Basics

Question 1

What are the four requirement for the running of the burden of freehold covenants in equity as set out in Tulk v Moxhay

Answer 1

Four Requirements:

1. The covenant must be negative in nature
2. The covenants must accommodate the dominant land (touches and concerns)
3. The original parties must have intended for the burden to pass with the servient land. (can be done by express wording but also note LPA 1925 s.79)
4. The purchaser of the servient land must have had notice of the covenant.
   
   • Purchaser has notice if registered (s.29 LRA 2002) OR if not provide valuable consideration e..g inherit/gift
   • Purchaser for valuable consideration does not have notice.

Question 2

LPA 1925 s 79

Answer 2

Creates a rebuttable presumption that covenants are made not just with original covenantor, but also with his successors in title. It will not, by itself, pass the burden of a covenant.

Question 3

Define a restrictive covenant

Answer 3

A restrictive covenant affecting freehold land consists of an agreement in a deed that one party will restrict the use of its land in some way for the benefit of another’s land.

Question 4

LCC v Allen [1914] 3 KB 642 CA

Answer 4

LCC v Allen [1914] 3 KB 642 CA

• Facts
  
  • D took land subject to notice of restrictive covenant not to build
  • D proceeded to build three houses on the land, in breach of covenant
• Issue: Could the covenant be enforced by way of an injunction to demolish the houses?
• Decision: No
• Reasoning:
  
  • There must exist land which can benefit from a covenant for its burden to pass to successors
  • As the Council owned no land which could benefit from the covenant, the covenant was unenforceable against D

Kennedy LJ did note however that he was ‘not at all favourably impressed with her [the defendant] conduct as a good citizen’

Question 5

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

Answer 5

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

• Facts
  
  • A undertook to keep land rented to him by P in good repair and to rebuild elements where necessary. D took possession of land under mortgage ded and failed to keep buildings in good repair
• Issue:
  
  • Did the burden of the covenant run with the land?
• Held:
  
  • Burden of covenant did not run with land – Tulk v Moxhay applied only to restrictive covenants.
    
    • Brett LJ: to extend Tulk to non restrictive covenants would be to create a new equity

Question 6

What are the two requirements for the doctrine of mutual benefit and burden?

Answer 6

1. Burden is related and necessary to a simultaneous benefit
2. Must be able to opt out of receiving the benefit and burden

Thamesmead Town Ltd v Allotey

Question 7

Thamesmead Town Ltd v Allotey (1998) 30 HLR 1052 CA

Answer 7

Thamesmead Town Ltd v Allotey (1998) 30 HLR 1052

• Facts
  
  • The purchasers of a flat in the Thamesmead estate covenanted to pay a proportion of the costs of repair of the footpaths and communal areas in the estate
  • The purchasers also covenanted to ensure that any subsequent purchaser would covenant to same effect
  • The purchasers re-sold the flat to the defendant, failing to ensure that any equivalent covenant was made
  • The original covenantee sought to enforce the covenant against the defendant, who refused to pay the demanded £200
• Issue
  
  • Could the defendant be forced to pay?
• Decision: Yes
• Reasoning
  
  • Although there was no direct covenant, the Thamesmead estate constituted a scheme of development which facilitated the applicability of the doctrine of benefit and burden
  • The doctrine requires only a burden (1) relevant to and enabling the exercise of a right and (2) the opportunity to choose whether to accept that benefit and burden
  • The defendant had already chosen to accept some benefits, making the choice element a non-issue, and could be charged ~£40 for enjoyed the benefit of the communal areas without accepting the burden to contribute to their maintenance
  • The full £200 could not be ordered as the order had to be reduced to account for only the benefits accepted by the defendant

Question 8

Wilkinson v Kerdene [2013] 2 EGLR 163 CA

Answer 8

Wilkinson v Kerdene [2013] 2 EGLR 163 CA

• Facts
  
  • The defendants (Wilkinson) purchased a bungalow in a holiday village later owned by Kerdene Ltd, which sought to restore the village after it had fallen into disrepair
  • The conveyance contained a right to use recreational facilities and roads within the village, and a (separate) obligation to pay an annual fee to Kerdene Ltd for village maintenance
• Issue: Was the covenant enforceable by Kerdene Ltd?
• Decision: Yes
• Reasoning
  
  • Under the doctrine of benefit and burden, the right and obligation were linked. The money earned via the fee was used maintain the recreational and road facilities
  • As the fee could not be apportioned, and a fair amount of the fee would be put towards maintaining the defendant’s benefit, the whole fee was enforceable
  • This case was decided amongst 8 cases which involved the holiday village, and 100 separate claims against all of the bungalows owned in the village – most were settled out of court

Question 9

When will the benefit of a covenant pass in equity

Answer 9

The benefit of a covenant will pass in equity provided

• The covenant is one which touches and concerns the land and
• The covenant passed either by ;
  
  • Annexation
  • Express assignment
  • Scheme of development

Question 10

Can the burden of a covenant pass at common law.

Answer 10

Burden of a covenant will never pass at common law Austerberry.

Although there are workarounds e.g:

• Mutual benefit/burden
• Indemnity covenant

Question 11

How does the benefit of a covenant pass at common law?

Answer 11

1. Express assignment
   
   • s.136 LPA 1925: in writing and express notice given to covenantor
   • Once the ebenfit has been assigned, the assignor loses the ability to enforce the coveant
2. Implied Assignment
   
   • ​P&A Swift Investments:
   1. ​Covenant must touch and concern dominant land
   2. Original parties must havee intened benefit to pass ( express of s.78 LPA 1925)
   3. At the time covenant was created the covenantee must have held a legal estate in the land to be benefitted
   4. Successor in title to the covenantee, who seeks to enforce the covenant, must also hold a legal estate in the dominant land.