Freehold Covenants

Question 1

What is the test distinguishing between positive and negative covenants (2 points)?

Answer 1

i. Depends on whether the covenantor is required to put his hand into his pocket (Haywood)
ii. Test is one of substance, not form (Gomm).

Question 2

Keppell v Bailey

Answer 2

The law must be reluctant to allow incidents of a novel kind to be devised and attached to property at the whim of any owner, for this would lead to much confusion of rights

Question 3

What is the key difference between the covenantee suing at law or in equity?

Answer 3

Remedies. At law, damages are available, while in equity the remedy is more likely to be SP or an injunction.

Question 4

Rhone (burden of positive covenants + rationale)

Answer 4

The burden of positive covenants does not run at law or in equity. Equity cannot contradict the common law rule of privity; enforcement of a positive covenant lies in contract as it compels an owner to exercise his rights; cf negative covenants which merely deprive owners of rights

Question 5

Tulk, clarified by Rhone

Answer 5

Tulk recognised that the burden of restrictive covenants runs in equity. However, it based this on the requirement of unconscionability, dispensed with in Rhone. Rhone recognised that the basis of enforceability was, once the owner has given up the right to do something with his land, he cannot then pass that right on

Question 6

Five requirements for the burden of a restrictive covenant to run in equity.

Answer 6

i. There must be a dominant tenement. (Allen)
ii. The covenant must touch and concern the land, either affecting the land as regards its mode of occupation or the value of the land (Roger)
iii. Covenant must be intended to run with the servient land (such intention is rebuttably presumed under S.79 LPA)
iv. They must be created in writing (LPA 1925, S.53(1)(a)) unless arising by PE.
v. If S.29 applies, the covenant must be protected by a Notice or actual occupation.

Question 7

When will the benefit of a covenant run at law?

Answer 7

Where the transferee acquires the legal estate of the dominant tenement, the benefit runs at law.

Question 8

Describe annexation

Answer 8

The linking of the covenant to the benefited land such that it passes automatically on transfer of the estate in the land, which may occur expressly, impliedly or by statute

Question 9

Three requirements for statutory annexation of benefit under S.78?

Answer 9

Crest Nicholson -
o The covenant must touch and concern the land; the following working test was proposed in in P&A Swift Investments
o The benefited land must be identifiable from the conveyance itself, aided if necessary by external evidence
o There is no contrary intention.

Question 10

P&A Swift Investments

Answer 10

Proposed a working test for covenants “touching and concerning” land -
 The covenant benefits only the DTO for the time being and if separated from the reversion ceases to be of benefit to him
 The covenant affects the nature, quality, mode of user or value of land
 The covenant is not expressed to be personal (i.e. not given only to a specific DTO)
 Even a covenant to pay a sum of money may qualify as touching and concerning the land if the above requirements are satisfied and the covenant is connected w/ something to be done in relation to the land.

Question 11

Give an example of a case where the benefited land was identifiable from the conveyance, and one where it was not.

Answer 11

In Rogers a general description of the land sufficed; cf Renal where there was no reference to the dominant land at all

Question 12

Federated Homes (annexation)

Answer 12

The covenant may be annexed to each and every part of the land and indeed is presumed to be so annexed, such that a purchaser of any part of the dominant land can enforce the covenant provided the covenant touches and concerns that part

Question 13

What is the consequence of rebutting the Federated Homes presumption that a covenant is annexed to each and every part of the dominant land?

Answer 13

A purchaser of a small part of the estate will not benefit (Russell) and the annexation would not survive partition of the estate if the estate thereby ceases to exist as a whole (Stilwell).

Question 14

Describe assignment.

Answer 14

The covenantal benefit can be personally assigned as a chose in action at law or in equity to subsequent purchasers.

Question 15

What are the five requirements for an assignee of the covenantor to be liable on the covenant to an assignee of the covenantee?

Answer 15

1. The assignee takes with notice.
2. The covenant is taken for the benefit of the vendor’s land and not some personal purpose of his
3. The “other land” is capable of being benefited by the covenant.
4. The land is “ascertainable” or “certain”.
5. The covenantee has not parted with the whole of the land.

Question 16

What is the essence of a scheme of development? When will it affect subsequent purchasers?

Answer 16

A form of local law applies within a scheme of development such that all the original purchasers are mutually bound and benefited by identical restrictive covenants. To bind subsequent purchasers the covenant must be substantively registered as a Notice against registered title or qualify as a Para 2 overriding interest.

Question 17

Four Requirements for Scheme of Development?

Answer 17

a. Both C and D derive title from the same common vendor.
b. Before selling the land the vendor laid out a defined portion of his estate for sale in lots subject to restrictions intended to be imposed on all the lots, consistent only w/ some general scheme of development
c. The restrictions were intended by the vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be for the benefit of other land retained by the vendor
d. The lots were purchased from the common vendor on the footing that the restrictions were to enure for the benefit of the other lots included in the scheme

Question 18

Emile Elias (scheme of development)

Answer 18

 If there are significant differences in the details of the restrictions applied to particular lots, this tends to be fatal, especially if the plots are of similar size;
 Lotting is not required, but there must be at least some estate plan establishing the extent of the scheme

Question 19

Re Dolphins Conveyance

Answer 19

Relaxed the Elliston requirement where the vendor died during the sale and there was thus no common vendor.

Question 20

Kingsbury. Easiest way to satisfy this?

Answer 20

The common intention that all lots should be subject to the covenant (intent to create reciprocity of obligation) is indispensable for a scheme of development to be found.

It is best if the covenant specifies that reciprocity is intended, as in Re Dolphin’s Conveyance.

Question 21

Small

Answer 21

It is of itself insufficient that a common vendor has sold to purchasers w/ identical covenants, but uniform and ubiquitous covenants raise a “strong suspicion” that the purchasers were aware of the reciprocity of obligation

Question 22

What are the two remedies available for breach of restrictive covenants?

Answer 22

Injunction remains the prima facie legal remedy (Wakeham) but
• Wrotham Park – being an equitable remedy, injunctive relief may be refused if it would have a disproportionate and oppressive effect (e.g. here demolishing buildings erected in breach of covenant) and damages in lieu, calculated by reference to a reasonable buy-out fee, may be awarded instead.

Question 23

Gafford

Answer 23

Acquiescence in the breach of covenant may render it unconscionable for C to complain about the breach thereafter

Question 24

Fairfax

Answer 24

Acquiescence in a breach of covenant may even amount to abandonment of the covenant altogether if persisting for an extended period

Question 25

What are the four grounds on which the court’s discretion to discharge or modify RCs under S.84 is typically exercised?

Answer 25

a. The covenant is obsolete
b. Reasonable user of the burdened land is being impeded and the restriction does not secure substantial benefits/is contrary to the public interest AND money is adequate compensation
c. There is express or implicit agreement by those entitled to the benefit
d. Those entitled to the benefit will not be injured