Freehold Covenants: Common Law

Question 1

How can the benefit of a covenant pass to successors at common law?

Answer 1

The benefit of a covenant can pass to successors at common law either through express assignment or automatically.

Express assignment involves a deliberate transfer of the right to enforce the covenant, while automatic succession is governed by statutory provisions like s 78 of the Law of Property Act 1925.

Question 2

What is “express assignment” in the context of transferring the benefit of covenants?

Answer 2

Express assignment is a method allowing the benefit of a covenant to pass to a successor.

This process enables the legal and equitable transfer of covenant benefits to successors under specific conditions.

Question 3

Why is an express assignment of the benefit of a covenant termed a “chose in action”?

Answer 3

An express assignment is termed a “chose in action” because it involves the transfer of a right that is enforceable through legal action.

This term highlights that the assignment is not just about transferring physical property but also the rights associated with it.

Question 4

How is express assignment recognised under the law for the transfer of covenant benefits?

Answer 4

Express assignment is recognized under the law through equity and can also be considered a legal assignment under Section 136 of the Law of Property Act 1925.

This legal framework ensures that the transfer of covenant benefits via express assignment is valid and enforceable.

Question 5

What are the requirements for an express assignment to be valid?

Answer 5

For an express assignment to be valid, it must
1. occur simultaneously with the transfer of land,
2. be in writing signed by the original covenantee (assignor), and
3. written notice of the assignment must be given to the covenantor, the person with the burden of the covenant.

Question 6

What statutory provision allows for the automatic passage of a covenant’s benefit to successors?

Answer 6

Section 78 of the Law of Property Act 1925 allows for the automatic passage of a covenant’s benefit to successors.

This section deems a covenant made with a covenantee to also be made with their successors in title, as if they were expressly named.

Question 7

According to Denning LJ in Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board, under what principle can successors enforce covenants?

Answer 7

Denning LJ articulated that covenants made for the benefit of landowners and their successors can be enforced on the principle that a deliberate promise, intended to be binding and made for the benefit of a party with sufficient interest, must be honored. Successors have the right to sue based on their vested interest in the land.

Question 8

How does Tucker LJ’s judgment in Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board define a covenant that “touches or concerns” the land?

Answer 8

Tucker LJ outlined that for a covenant to “touch or concern” the land, it must relate to a specific parcel of land identifiable in the deed, affecting the land’s mode of occupation or its value intrinsically, not just from collateral circumstances.

He added that the covenant must be intended by the parties to benefit the land, implying that the benefit of such a covenant should run with the land to successors in title, highlighting the intent for continuity of the covenant’s benefit with land ownership.

Question 9

What are the criteria for a covenant’s benefit to automatically pass to successors at common law?

Answer 9

For a covenant’s benefit to automatically pass to successors at common law, the covenant must
1. ‘touch and concern’ the land,
2. both the original and succeeding parties must have a legal estate in the land, and
3. there must be an intention or statutory provision (like s 78 LPA 1925) that the covenant’s benefit runs with the land.

Question 10

How was the requirement for enforcing a covenant at common law challenged in the case of Smith and Snipes Hall Farm Ltd, and what was required originally?

Answer 10

At common law, the person seeking to enforce a covenant needed to have the same legal estate as the original covenantee.

This position was challenged in the case of Smith and Snipes Hall Farm Ltd, where one of the claimants was a tenant, not having the same legal estate as the original covenantee, who was a freehold owner.

Whilst this case did not change the common law regarding the requirement for the enforcement of covenants, it paved the way for s 78 LPA 1925 to update the position.

Question 11

How does section 78 of the Law of Property Act 1925 alter the position regarding who can enforce a covenant?

Answer 11

Section 78 of the Law of Property Act 1925 altered the position by deeming a covenant relating to land of the covenantee to be made with the covenantee’s successors in title and also with ‘the persons deriving title under him or them’, expanding who can enforce a covenant.

Question 12

Can a person with an equitable estate claim the benefit of a covenant at common law?

Answer 12

No, a person with an equitable estate is unable to claim the benefit of a covenant at common law.

Question 13

How can the intention for a covenant to be enforceable by successors be demonstrated?

Answer 13

The intention can be demonstrated through express annexation of the covenant’s benefit to the land in the deed, or deemed annexation under statutes such as section 78 of the Law of Property Act 1925.

Question 14

What does deemed annexation under section 78 of the Law of Property Act 1925 imply for covenants?

Answer 14

Deemed annexation under section 78 LPA 1925 implies that the benefit of a covenant is automatically considered to be annexed to the land of the covenantee, allowing successors in title to enforce the covenant.

However, this only applies to covenants created after 1925

Question 15

Can the burden of a covenant run with the land to successors in title at common law?

Answer 15

At common law, the burden of a covenant does not run with the land to successors in title, as established in Austerberry v Oldham Corporation.

Successors are not liable for covenants they were not party to due to the principle of privity of contract.

Consequently, the only way toenforce covenants against successors is generally in equity.

Question 16

What two principles rebut the general rule that the burden of a covenant does not run at common law?

Answer 16

The two principles rebut the general rule that the burden of a covenant does not run at common law are

1. Indeminty covenants: protects the original covenantor by passing financial liability (but not the burden) to successors
2. Mutual benefit and burden: a successor in title who takes the benefit of certain rights (e.g., easements) contained in a deed must also accept the burden of covenants contained in the same deed.

Question 17

What is the principle of mutual benefit and burden, and how does it apply to the enforcement of covenants?

Answer 17

The principle of mutual benefit and burden holds that a successor in title who enjoys the benefits of easements or rights associated with a property must also accept the burden of related covenants.

This principle allows for the enforcement of positive covenants against successors where they are closely related to certain rights granted, as seen in cases like Halsall v Brizell.

Question 18

What are the limitations of applying the principle of mutual benefit and burden?

Answer 18

The principle of mutual benefit and burden has limited application as it applies only to positive obligations (not restrictive covenants) and requires the presence of associated rights, such as easements, conferred as benefits in the deed on the covenantor and its successors.

It cannot make the burden of every positive covenant pass to successors, as relevant easements may not always be in place.

Question 19

How was the principle of mutual benefit and burden applied in Halsall v Brizell?

Answer 19

In Halsall v Brizell, the court held that successors in title who take the benefit of rights granted in a deed (like easements to use roads and sewers) must accept the burden of covenants (like contributing to maintenance costs) contained in the same deed.

This principle was applied to ensure that those benefiting from easements also bear the associated obligations.

Question 20

What key point did Lord Templeman make in Rhone v Stephens regarding the mutual benefit and burden principle?

Answer 20

In Rhone v Stephens, Lord Templeman clarified that the mutual benefit and burden principle is limited; not every burden imposed by a deed becomes enforceable by merely attaching it to a right.

The burden must be relevant to the exercise of the right, and the covenantor can choose between accepting both the benefit and the burden, or rejecting the benefit to be released from the burden.

Question 21

How did the case of Wilkinson & Ors v Kerdene Ltd reaffirm the principle of mutual benefit and burden?

Answer 21

Wilkinson & Ors v Kerdene Ltd reaffirmed the principle by highlighting that successors in title are not liable under the burden of a positive covenant unless the burden relates directly to the right granted.

The case emphasized considering the substance of what the covenantor was paying for, ensuring that the rights remained capable of being exercised, and thus applying the principle of mutual benefit and burden to obligate bungalow owners to pay for the maintenance works of communal facilities.

Question 22

Give the name and date of the case described below

This case involved a housing estate where the original deed granted homeowners rights to use communal facilities and obligated them to contribute towards their maintenance. When successors contested their obligation to pay maintenance fees, the ruling clarified that successors who benefit from easements must also shoulder related covenant obligations, embodying the principle of mutual benefit and burden.

Answer 22

Halsall v Brizell [1957]

Question 23

Give the name and date of the case described below

A local authority and landowners agreed that the authority would maintain a road in exchange for payments. When a landowner ceased payments due to poor road maintenance, the question arose whether new owners of the land were bound by the original agreement’s obligations. The ruling established that at common law, the burden of covenants does not run with the land, meaning successors are not automatically bound by the terms of covenants made by their predecessors.

Answer 23

Austerberry v Corporation of Oldham (1885)

Question 24

Give the name and date of the case described below

This case addressed a dispute where a defective water tank on one property caused damage to an adjoining property after changing hands. The tank had been installed under an agreement by previous owners. The Lords had to decide if the current owner could enforce a maintenance covenant against the successor of the adjoining property, without a direct contract. The decision underscored that the enforceability of a covenant’s burden on successors depends on its direct relation to a benefit they use, presenting a choice between accepting both or renouncing the benefit to avoid the burden.

Answer 24

Rhone v Stephens [1994]

Question 25

Give the name and date of the case described below

The scenario in this case involved a holiday village where bungalow owners were given rights to communal facilities in exchange for an annual maintenance fee. When successors were billed for repairs, the court confirmed that they must contribute to maintenance if they want to use the facilities, applying the principle of mutual benefit and burden to ensure that the right to use communal facilities was contingent upon contributing to their upkeep.

Answer 25

Wilkinson & Ors v Kerdene Ltd [2013]