Land: Covenants ✅

Question 1

Covenant is?

Answer 1

PROMISE

Question 2

How do you create a valid covenant?

Answer 2

s53(1)(a) - in writing, signed by grantor.

Question 3

Positive vs Negative/Restrictive Covenant?

Answer 3

Positive = promise to DO something
Negative = promise NOT TO DO something.

Q: is I do nothing, will I be in breach of the covenant? If yes, then probably positive.

Question 4

What are the TWO sets of rules for passing benefit and burden?

Answer 4

EQUITABLE RULES

COMMON LAW RULES

Question 5

Test for whether is a postive covenant?

Answer 5

HAND IN POCKET test - if covenantors have to put their hands into their pockets to find money to spend to comply with covenant, it is positive. Expenditure of MONEY, EFFORT or TIME

Substance, not form.

Question 6

Mixed covenant meaning?

Answer 6

Some covenants have positive and negative elements

Try split into 2 separate covenants

If cannot split, viewed as either overall positive with restrictive condition attached, or overall negative with positive condition attached.

Question 7

At common law, does BURDEN of covenant pass to successor?

Answer 7

NO - At common law, the covenant is UNENFORCEABLE against successor in title to covenantor.

Question 8

EQUITABLE RULES: What are the FOUR rules in Tulk v Moxhay that allow burden to pass to successors?

Answer 8

1. Must be RESTRICTIVE (-ve)
2. Must accommodate the dominant tenement
3. Must be INTENTION for the burden of the covenant to run
4. Must be NOTICE of covenant

Question 9

THREE parts of rule that ‘covenant must accommodate dominant tenement’?

Answer 9

1. Covenantee + successor covenantee must hold interest in land AT TIME OF CREATION AND ENFORCEMENT
2. Covenant must TOUCH AND CONCERN the land
   – only benefit dom owner whilst they own dom land
   – affect nature, quality, use or value of dom land
   – not be expressly personal
3. Must be SUFFICIENT PROXIMITY between dominant and servient land - not need to share common boundary but must be close enough to benefit.

Question 10

Meaning of ‘must be INTENTION for burden of covenant to run’?

Answer 10

Expressly - covenant wording makes it clear successors to be bound

Impliedly - s79 LPA 1925 - covenant relating to land shall be deemed to be made by covenantor on behalf of its successors in title, unless a contrary intention expressed - will always be implied intention unless a covenant drafted to exclude it.

Question 11

Must be notice?

Answer 11

Registered - s32 LRA 2002 - covenant must be protected by entry of NOTICE in charges register of servient title.

Unregistered - must be protected by CHARGE D(ii) Land Charge.

If either of these not done in relation to relevant time of land, purchaser for value of burdened land WILL NOT BE BOUND - but volunteer or donee would be bound.

Question 12

EQUITABLE RULES: What are the TWO requirements for benefit to pass in equity?

Answer 12

1. Covenant must TOUCH AND CONCERN dominant land;

and

2. Benefit must pass by ONE of the recognised methods:
   a. annexation (express/statutory)
   b. assignment
   c. building scheme.

Question 13

Requirement for equitable remedy re covenant?

Answer 13

Both burden and equity must pass - rules go hand in hand

Question 14

Express Annexation meaning?

Answer 14

Express words make clear original parties intend benefit to become PART OF DOMINANT LAND, rather than simply personal advantage to covenantee

e.g. benefit of owners and successors in title = enough for annexation as to named land vs ‘benefit of X, their heirs, executors and assignees’ shows benefit expressed to people not land, so no annexation.

Question 15

Statutory Annexation meaning?

Answer 15

s78 LPA 1925 - annexation automatic UNLESS EXCLUDED - either expressly excluded in words, or impliedly by another method of passing benefit being stipulated in transfer deed.

Question 16

Assignment meaning?

Answer 16

Where benefits not annexed at ouset - can be assigned where dominant benefit transferred - must be transferred every time transferreed, separate assignment must comply with s53(1)(c) LPA 1925 i.e. in writing, signed by person disposing of interest.

Question 17

When land sold, does original covenantee have ability to sue on it?

Answer 17

Under contractual principles, technically, yes, as it still has the benefit of the covenant. Unlikely will, and it is hard to envisage loss if they don’t hold land anymore.

Question 18

What are the available remedies?

Answer 18

Restrictive covenant is equitable interest in land so equitable remedies available, although discretionary i.e. no automatic right to remedies.

Most common remedy = INJUNCTION

– prohibitory - you must stop doing X
– mandatory - you must do Y.

Where would be oppressive to grant injunction, other equitable remedies may be awarded in lieu of injunction

e.g. Breach of covenant not to develop land without approval - court refused to grant mandatory injunction to demolish houses - would be waste of much needed houses - awarded damages as % of profit made by developer.

Question 19

Common law rules: burden and indirect enforcement?

Answer 19

Covenant UNENFORCEABLE against successor in title to covenantor because of the general rule that burden will not pass. Always consider first if equitable rules apply.

Question 20

What is mean by continuing liability of original covenantor?

Answer 20

Common law general rule means successor covenantor cannot be sued.

BUT burden of covenant therefore remains with OG covenantor permanently = ‘the continuing liability of the original covenantor’
So…OG covenantor can be sued for both its breaches and breaches of its successors.

Question 21

How is continuity found?

Answer 21

Usually express wording in covenant stating continuity.

If not expressed, then it can be implied - s79(1) LPA 1925 held to imply wording of continuing liability of original covenant into the covenant

Question 22

What remedies are available against OG covenantor?

Answer 22

DAMAGES = only remedy available against original covenantor, as original covenant is no longer in possession of land.

Question 23

What is an indemnity covenant?

Answer 23

⭐ An indemnity covenant is a primary obligation, and is agreement by one party to bear the cost of certain losses or liability suffered by another party in certain circumstances

As part of sale, OG covenantor (seller) should require successor (buyer) to enter indemnity covenant promising to:
1. Comply with covenant
2. Indemnity (reimbuse) if
any loss incurred as
result of breach

Indemnity covenant sought each time land sold → ‘Chain of Indemnities’ ⛓️⛓️

IC = only enforceable against direct successor:
if indemnity covenant included in each subsquent sale → chain complete → INDIRECT ENFORCEMENT

If not, indirect enforcement fails - chain of indemnities only as strong as weakest link.

⚠️ Indemnity covenant does not pass burden of covenant and does not enable current owner to be sued by anyone except their predecessor in title.

Question 24

COMMON LAW RULES: Doctrine of mutual benefit and burden?

Answer 24

= exception to general rule that covenants unenforceable at common law.

Transfer deed granted rights of way and drainage over private roads and drains. In deed, OG purchasers covenanted to contribute to cost of maintaining roads and drains. Successor covenantor relied on common law principle that burden does not pass, and refused to pay, while enjoying benefit of easement.

Successor covenantor could not take benefit (i.e. rights of way and drainage) without submitting to the burden i.e. obligation to contribute to the costs of maintenance). Only if the successor covenantor is happy to reliquish the benefit, the burden cannot be enforced. Liability is conditional.

Question 25

THREE conditions required for doctrine of mutual benefit and burden to apply?

Answer 25

1. CLEAR LINK between burden and benefit / no general principle that taking benefit under deed means must subject to any burden which it imposes
2. GENUINE CHOICE as to whether or not to take the benefit (can be a theoretical choice). If no real choice, common law rules apply and the successor does not take the burden.
3. SAME TRANSACTION must have conferred burden and benefit.

Question 26

What is another way around the common law rule (besides the mutual benefit and burden doctrine exception)?

Answer 26

Grant Long Lease - if disposed of land by way of a long lease, all covenants in leases except personal ones are enforceable by and against successors in title via the doctrine of PRIVITY OF ESTATE.

Question 27

COMMON LAW rules re benefit?

Answer 27

Original covenantee can enforce covenant

If dominant land sold, successor covenantee must show benefit has passed to it at common law - this enables successor covenantee to enforce covenant against either:
(1) original covenantor or
(2) in limited circumstances under doctrine of mutual benefit and burden applications) against successor covenantor.

Question 28

What are the TWO ways benefit can pass under common law?

Answer 28

EXPRESS ASSIGNMENT - s136 LPA 1925 - assignment in writing AND express notice of assignment must be given to covenantor - so covenantor realises new person in position to enforce covenant.

IMPLIED ASSIGNMENT

Question 29

What are the FOUR conditions of implied assignment of benefit of the covenant at Common Law?

Answer 29

1. Covenant must TOUCH AND CONCERN land
2. Must have INTENTION that benefit should run with dominant land
3. ORIGINAL COVENANTEE must have a LEGAL ESTATE in dominant land
4. SUCCESSOR covenantee must hold a LEGAL ESTATE in dominant land

Question 30

Meaning of ‘Covenant must touch and concern land’ re implied assignment of benefit at common law?

Answer 30

• must affect nature, quality, use or value of land.
• must not be expressed to be personal
• should only benefit the dominant owner while holding land, should cease to be advantageous to him once no longer holds the land.

Question 31

Meaning of ‘intention that benefit should run with dominant land’ re implied assignment of benefit at common law?

Answer 31

Express: in words
Implied: 📖 s78 LPA 1925 📖 (implied intention, unless expressly excluded)

Question 32

Meaning of ‘original covenantee must have owned legal estate when covenant made, and successor must own legal estate at time of enforcement’ re implied assignment of benefit at common law?

Answer 32

Self-explanatory

Although note:
Legal estate does not need to be of same nature. e.g. in case, original covenantee held freehold and successor held leasehold. Successor held to be entitled to beenfit of covenant and could enforce it.

Question 33

How long do restrictive covenants land?

Answer 33

Once granted, it lasts forever

Question 34

What does it mean to DISCHARGE covenant?

Answer 34

Covenant no longer valid

Question 35

What does it mean to MODIFY covenant?

Answer 35

Scope of covenant altered, but not completely invalidated.

Question 36

How does AUTOMATIC Discharge happen?

Answer 36

If same person becomes owner of dominant and servient land = MERGER

Question 37

EXPRESS discharge?

Answer 37

Dominant owner may expressly agree to discharge covenant -> will enter into formal release of covenant, usually in return for payment - must be made by DEED

Question 38

IMPLIED discharge?

Answer 38

Dominant owner may impliedly agree to discharge by doing nothing when covenant is openly breached.

Question 39

How can statutory discharge/modification happen?

Answer 39

Servient owner can make APPLICATION to UT(Land Chamber) for discharge or modification of any covenant. To avoid being held to ransom by dominant owner asking for a large sum of money to discharge obsolete covenant.

s84(1) LPA 1925 - gives Land Chamber power ‘wholly or partially to discharge or modify any restriction’.

BUt provision only applies to RESTRICTIVE COVENANTS!!!!

Question 40

Grounds that land chamber can discharge restrictive covenant on?

Answer 40

1️⃣ s84(1)(a): Covenant become obsolete due to changes in character
e.g. covenant to use the property only as residential, but surrounding area not business/retail/mixed.

2️⃣ s84(1)(aa): Its continued existence impedes the reasonable use of the land
Applicant must show either that covenant confers no practical value or is contrary to public interest
The Tribunal must be satisfied financial compensation would be adequate for the dominant owner

3️⃣ s84(1)(b): Dominant owners expressly or impliedly agree

4️⃣ s84(1)(c): Dominant owners will not suffer injury
allows tribunal to override spurious or frivolous objections
but tribunal must balance, will have regard to social and economic concerns and wider public interest

⭐ Note. if Lands Chamber discharges/modifies a covenant, may require compensation to be paid to owners of dominant land.