Pre-2010 Covenants
UK Cases
Tulk v Moxhay
[1848] EWHC Ch J34 (22 December 1848)
U
22 December 1848
In the year 1808 the Plaintiff, being then the owner in fee of the vacant piece of ground in Leicester Square, as well as of several of the houses forming the Square, sold the piece of ground by the description of “Leicester Square garden or pleasure ground, with the equestrian statue then standing in the centre thereof, and the iron railing and stone work round the same,” to one Elms in fee: and the deed of conveyance contained a covenant by Elms, for himself, his heirs, and assigns, with the Plaintiff, his heirs, executors, and administrators, “that Elms, his heirs, and assigns should, and would from time to time, and at all times thereafter at his and their own costs and charges, keep and maintain the said piece of ground and square garden, and the iron railing round the same in its then form, and in sufficient and proper repair as a square garden and pleasure ground, in an open state, uncovered with any buildings, in neat and ornamental order; and that it should be lawful for the inhabitants of Leicester Square, tenants of the Plaintiff, on payment of a reasonable rent for the same, to have keys at their own expense and the privilege of admission therewith at any time or times into the said square garden and pleasure ground.”
The piece of land so conveyed passed by divers mesne conveyances into the hands of the Defendant, whose purchase deed contained no similar covenant with his vendor: but he admitted that he had purchased with notice of the covenant in the deed of 1808.
The Defendant having manifested an intention to alter the-character of the square garden, and asserted a right, if he thought fit, to build upon it, the Plaintiff, who still remained owner of several houses in the square, filed this bill for an injunction; and an injunction was granted by the Master of the Rolls to restrain the Defendant from converting or using the piece of ground and square garden, and the iron railing round the same, to or for any other purpose than as a square garden and pleasure ground in an open state, and uncovered with buildings.
On a motion, now made, to discharge that order,
Mr. R. Palmer, for the Defendant, contended that the covenant did not run with the land, so as to be binding at law upon a purchaser from the covenantor, and he relied on the dictum of Lord Brougham C. in Keppell v. Bayley (2 M. & K. 547), to the effect that notice of such a covenant did not give a Court of Equity jurisdiction to enforce it by injunction against such purchaser, inasmuch as “the knowledge by an assignee of an estate, that his assignor had assumed to bind others than the law authorised him to affect by his contract-had attempted to create a burthen upon property which was inconsistent with the nature of that property, and unknown to the principles of the law-could not bind such assignee by affecting his conscience.” In applying that doctrine to the present case, he drew a distinction between a formal covenant as this was, and a contract existing in mere agreement, and requiring some further act to carry it into effect; contending that executory contracts of the latter description were alone such as were binding in equity upon purchasers with notice; for that where the contract between the parties was executed in the form of a covenant, their mutual rights and liabilities were determined by the legal operation of that instrument, and that if a Court of Equity were to give a more extended operation to such covenant, it would be giving the party that for which he had never contracted. He admitted, indeed, that the decisions of the Vice-Chancellor of England in Whatman v. Gibson (9 Sim. 196) and Schreiber v. Creed (10 Sim. 35) were not reconcileable with that doctrine; but he referred to the present Lord Chancellor’s order, on appeal, in Mann v. Stephens (15 Sim. 379), as apparently sanctioning it by the liberty there given to the Plaintiff to bring an action, from which it was to be inferred that his Lordship thought that the right of the Plaintiff to relief in equity depended upon, and was commensurate with, his right of action upon the covenant at law.
THE LORD CHANCELLOR [Cottenham], (without calling upon the other side). That this Court has jurisdiction to enforce a contract between the owner of land and his neighbour purchasing a part of it, that the latter shall either use or abstain from using the land purchased in a particular way, is what I never knew disputed. Here there is no question about the contract: the owner of certain houses in the square sells the land adjoining, with a covenant from the purchaser not to use it for any other purpose than as a square garden. And it is now contended, not that the vendee could violate that contract, but that he might sell the piece of land, and that the purchaser from him may violate it without this Court having any power to interfere. If that were so, it would be impossible for an owner of land to sell part of it without incurring the risk of rendering what he retains worthless. It is said that, the covenant being one which does not run with the land, this Court cannot enforce it; but the question is, not whether the covenant runs with the land, but whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased. Of course, the price would be affected by the covenant, and nothing could be more inequitable than that the original purchaser should be able to sell the property the next day for a greater price, in consideration of the assignee being allowed to escape from the liability which he had himself undertaken.
That the question does not depend upon whether the covenant runs with the land is evident from this, that if there was a mere agreement and no covenant, this Court would enforce it against a party purchasing with notice of it; for if an equity is attached to the property by the owner, no one purchasing with notice of that equity can stand in a different situation from the party from whom he purchased. There are not only cases before the Vice-Chancellor of England, in which he considered that doctrine as not in dispute; but looking at the ground on which Lord Eldon disposed of the case of The Duke of Bedford v. The Trustees of the British Museum (2 My. & K. 552), it is impossible to suppose that he entertained any doubt of it. In the case of Mann v. Stephens before me, I never intended to make the injunction depend upon the result of the action: nor does the order imply it. The motion was, to discharge an order for the commitment of the Defendant for an alleged breach of the injunction, and also to dissolve the injunction. I upheld the injunction, but discharged the order of commitment, on the ground that it was not clearly proved that any breach had been committed; but there being a doubt whether part of the premises on which the Defendant was proceeding to build was locally situated within what was called the Dell, on which alone he had under the covenant a right to build at all, and the Plaintiff insisting that it was not, I thought the pendency of the suit ought not to prejudice the Plaintiff in his right to bring an action if he thought he had such right, and, therefore, I give him liberty to do so[1].
With respect to the observations of Lord Brougham in Keppell v. Bailey, he never could have meant to lay down that this Court would not enforce an equity attached to land by the owner, unless under such circumstances as would maintain an action at law. If that be the result of his observations, I can only say that I cannot coincide with it.
I think the cases cited before the Vice-Chancellor and this decision of the Master of the Rolls perfectly right, and, therefore, that this motion must be refused, with costs.
Ballard’s Conveyance
[1937] Ch 473 (ChD)
CLAUSON J: I am bound to hold that, while the covenant may concern or touch some comparatively small portion of the land to which it has been sought to annex it, it fails to concern or touch far the largest part of the land. I asked in vain for any authority which would justify me in severing the covenant and treating it as annexed to or running with such part of the land as is touched by or concerned with it, though as regards the remainder of the land, namely, such part as is not touched by or concerned with the covenant, the covenant is not and cannot be annexed to it and accordingly does not and cannot run with it. Nor have I been able through my own researches to find anything in the books which seems to justify any such course. In Rogers v Hosegood the benefit of the covenant was annexed to all or any of certain lands adjoining or near to the covenantor’s land, and no such difficulty arose as faces me here; and there are many other reported cases in which, for similar reasons, no such difficulty arose. But the requirement that the covenant, in order that the benefit of it may run with certain lands,must concern or touch those lands, is categorically stated by Farwell J in the passage I have cited, in terms which are unquestionably in accord with a long line of earlier authority.
Marten v Flight Refuelling Ltd
[1962] Ch 115 (HL)
WILBERFORCE J: Before passing to the Newton Abbot case [1952] Ch 286,I should add that the rule as stated by the Court of Appeal in Miles v Easter [1933] Ch 611 seems to me to be clearly in line with other statements of principle made by the courts. In Rogers v Hosegood [1900) 2 Ch 388; 16 TLR 489, CA- a leading case on annexation – Collins LJ said [1900] 2 Ch 368, 407: ‘When, as in Renals v Cowlishaw (1879) 11 ChD 866, CA, there is no indication in the original conveyance, or in the circumstances attending it, that the burden of the restrictive covenant is imposed for the benefit of the land reserved, or any particular part of it, then it becomes necessary to examine the circumstances under which any part of the land reserved is sold, in order to see whether a benefit, not originally annexed to it, has become annexed to it on the sale, so that the purchaser is deemed to have bought it with the land, and this can hardly be the case when the purchaser did not know of the existence of the restrictive covenant.’
This seems to support the view that an intention to benefit may be found from surrounding or attending circumstances, as indeed is frequently done in practice in the case, mentioned by Collins LJ [1900] 2 Ch 388, 408, of building schemes.
In Formby v Barker [1903] 2 Ch 539, CA, which is one of the authorities which show that unless the covenantee retains some land intended to be benefited he cannot sue any person except the original covenantor, Vaughan Williams LJ said ibid. 550: ‘I have not been ilble to find any case in which, after the sale of the whole of an estate in land, the benefit of a restrictive covenant has been enforced by injunction against an assignee of the purchaser at the instance of a plaintiff having no land retained by the vendor, although there are cases in which restrictive-<ovenants seem to have been enforced at the instance of plaintiffs, other than the vendor, for the benefit of whose land it appears from the terms of the covenant, or can be inferred from surrounding circumstances, that the covenant was intended to operate.’ A reference to these passages was made by Upjohn Jin the Newton Abbot case [1952] Ch 286, but I have thought it worth while to set them out here so that they can be compared with other citations.
I would add to these a reference to the facts in Lord Northbourne v Johnston & Son [1922] 2 Ch 309, where the covenant was expressed to be with the trustees of a settlement, their heirs and assigns, the deed containing no reference to any land at all. Sargant J seems not to have doubted that it could be shown that the covenant was for the benefit of the unsold part of a particular building estate which in fact was vested in the trustees.
I pass now to the Newton Abbot case [1952] Ch 286. The facts were that the original covenantee was the owner of a property called Devonia, in Fore Street, Bovey Tracey, on which she carried on business as an ironmonger. The original covenantor was the purchaser from her of other properties in Fore Street opposite Devonia, and the covenant was (briefly) against carrying on the business of an ironmonger. There was no reference in the conveyance by which the covenant was imposed to any land for whose benefit it was made, the only mention of Devonia being that the vendor was described as ‘ofDevonia’. The action was between assigns of the covenantee’s son, who inherited her estate, and assigns of the covenantors.
Upjohn J held that the benefit of the covenant was not annexed to Devonia, but held that, looking at the attendant circumstances, the land to be benefited was shown with reasonable certainty and that the land in question was Devonia.
This decision was attacked by the Attorney-General in a lively argument, and I was invited not to follow it. Of course, it relates to its own special facts, and no doubt I could leave it on one side. But I see nothing in it contrary to the principles which appear to be securely laid down. Here were two shops in common ownership facing each other in the same street, one of them, Devonia, an ironmonger’s shop. The shops opposite are sold with a covenant against carrying on an ironmonger’s business. What could be more obvious than that the covenant was intended for the protection or benefit of the vendor’s property Devonia? To have rejected such a conclusion would, I venture to think, have involved not only an injustice but a departure from common sense. So far from decling the authority of this case, I welcome it as a useful guide. But it is onlya guide, andI must ultimately reach my conclusion on the facts of the present case.
Federated Homes Ltd v Mill Lodge Properties Ltd
[1980] 1 All ER 371 (CA)
BRIGHTMAN LJ: An express assignment of the benefit of a covenant is not necessary if the benefit of the covenant is annexed to the land. In that event, the benefit will pass automatically on a conveyance of the land, without express mention, because it is annexed to the land and runs with it. So the issue of annexation is logically the next to be considered.
The judge said:
The next heading with which I must deal is ‘annexation’, to whichI will now come. It isa somewhat technical thing in the law of restrictive covenants.A good deal of argument was addressed to me on annexation by both sides. Submissions are made about express annexation, implied annexation, that is to say, annexation implied from surrounding circumstances, and annexation by assignment. In my judgment, there was in this case no ‘annexation’ of the benefit of the covenant to the retained land or any part of it. Section 78, in particular, of the Law of Property Act does not have the effect of annexing the benefit of the covenant to anything. It is simplya statutory shorthand for the shortening of conveyances, which it perhaps has done to some extent in this case. Annexation depends on appropriate drafting, which is not here in this case, in spite of a recent process which can perhaps be called ‘a widening of the law’ in these matters. The attendant circumstances moreover, positively militate against annexation because, as counsel for the defendants rightly pointed out to me (though he did so in the course of his argument on construction) the restriction in this particular case is of limited duration and plainly not applicable to ultimate purchasers of plots of the land intended to be benefited. ‘Annexation’, in my judgment, is for the parties to the covenant itself to achieve if they wish to, and (though those parties may no doubt provide for annexation at a later stage)I am not satisfied or prepared to hold that there is any such thing as ‘delayed annexation by assignment’ to which the covenantor is not party or privy.
The reference to ‘delayed annexation by assignment’ is toa proposition thata covenant can, ona later assignment, thereby become annexed to the land by the act of the assignor and the assignee alone. In my judgment the benefit of this covenant was annexed to the retained land, andI think that this isa consequence of s. 78 of the Law of Property Act 1925 [he outlines
- 78] …
Counsel for the defendants submitted that there were three possible views about
- One view, which he describes as ‘the orthodox view’ hitherto held, is that it is merelya statutory shorthand for reducing the length of legal documents.A second view, which was the one that counsel for the defendants was inclined to place in the forefront of his arguments, is that the section only applies, or at any rate only achieves annexation, when the land intended to be benefited is signified in the document by express words or necessary implication as the intended beneficiary of the covenant.A third view is that the section applies if the covenant in fact touches and concerns the land of the covenantee, whether that be gleaned from the document itself or from evidence outside the document.
For myself,I reject the narrowest interpretation of s. 78, the supposed orthodox view, which seems to me to fly in the face of the wording of the section. BeforeI express my reasonsI will say that I do not find it necessary to choose between the second and third views because, in my opinion, this covenant relates to land of the covenantee on either interpretation of s. 78. Clause 5(iv) shows quite clearly that the covenant is for the protection of the retained land and that land is described in cl.2 as ‘any adjoining
or adjacent property retained by the Vendor’. This formulation is sufficient for annexation purposes: see Rogers v Hosegood.
There is in my judgment no doubt that this covenant ‘related to the land of the covenantee’, or, to use the old-fashioned expression, that it touched and concerned the land, even if counsel for the defendants is correct in his submission that the document
must show an intention to benefit identified land. The result of such application is that one must read cl. 5(iv) as if it were written: ‘The purchaser hereby covenants with the vendor and its successors in title and the persons deriving title under it or them, including the owners and occupiers for the time being of the retained land, that in carrying out the development of the blue land the purchaser shall not build at a greater density than a total of 300 dwellings so as not to reduce the number of units which the vendor might eventually erect on the retained land under the existing planning consent.’ I leave out of consideration s. 79 as unnecessary to be considered in this context, since Mill Lodge is the original covenantor.
The first point to notice about s. 78(1) is that the wording is significantly different
from the wording of its predecessor, s. 58(1) of the Conveyancing and Law of Property Act 1881. The distinction is underlined by sub-s. (2) of s. 78, which applies sub-s. (1) only to covenants made after the commencement of the Act. Section 58(1) of the earlier Act did not include the covenantee’s successors in title or persons deriving title under him or them, nor the owners or occupiers for the time being of the land of the covenantee intended to be benefited. The section was confined, in relation to realty, to the covenantee, his heirs and assigns, words which suggest a more limited scope of operation than is found in s. 78.
If, as the language of s. 78 implies, a covenant relating to land which is restrictive of the user thereof is enforceable at the suit of (1) a successor in title of the covenantee, (2) a person deriving title under the covenantee or under his successors in title, and (3) the owner or occupier of the land intended to be benefited by the covenant, it must, in my view, follow that the covenant runs with the land> because ex hypothesi every successor in title to the land, ever derivative proprietor of the land and every other owner and occupier has a right by .statute to the covenant. In other words, if the condition precedent of s. 78 is satisfied, that is to say, there exists a covenant which touches and concerns the land of the covenantee, that covenant runs with the land for the benefit of his successors in title, persons deriving title under him or them and other owners and occupiers.
This approach to s. 78 has been advocated by distinguished textbook writers: see Dr Radcliffe in the Law Quarterly Review (1941) 57 LQR 203, Professor Wade in the Cambridge Law Journal (1972] CLJ 157 under the apt cross-heading ‘What is wrong with section 78?’, and Megarry and Wade on the Law of Real Property 4th edn (1975) Counsel pointed out to us that the fourth edition of Megarry and Wade’s textbook indicates a change of mind on this topic since the third edition was published in 1966.
Although the section does not seem to have been extensively used in the course of argument in this type of case, the construction of s. 78 which appeals to me appears to be consistent with at least two cases decided in this court. The first is Smith v River Douglas Catchment Board (1949] 2 All ER 179, [1949] 2 KB 500. In that case an agreement was made in April 1938 between certain landowners and the catchment board under which the catchment board undertook to make good the banks of a certain brook and to maintain the same, and the landowners undertook to contribute towards the cost. In 1940 the first plaintiff took a conveyance from one of the landowners of a part of the land together with an express assignment of the benefit of the agreement. In 1944 the second plaintiff took a tenancy of that land without any express assignment of the benefit of the agreement. In 1946 the brook burst its banks and the land owned by the first plaintiff and tenanted by the second plaintiff was inundated. The two important points are that the agreement was not expressed to be for the benefit of the landowner’s successors in title; and there was no assignment of the benefit of the agreement in favour of the second plaintiff, the tenant. In reliance, as I understand the case, on s. 78 of the Law of Property Act 1925, it was held that the second plaintiff was entitled to sue the catchment board for damages for breach of the agreement. It seems to me that that conclusion can only have been reached on the basis that s. 78 had the effect of causing the benefit of the agreement to run with the land so as to be capable of being sued on by the tenant.
The other case, Williamsv Unit Construction Co. Ltd (1951) 19 Conv NS 262, was decided by this court in 1951. There a company had acquireda building estate and had underleased four plots to Cubbin for 999 years. The underlessors arranged for the defendant company to build houses on the four plots. The defendant company covenanted with Cubbin to keep the adjacent road in repair until adopted. Cubbin granteda weekly tenancy of one house to the plaintiff without any express assignment of the benefit of the covenant. The plaintiff was injured owing to the disrepair of the crovden. aSnhte. was held entitled to recover dama/ges from the defendants for breach of the
We were referred to observations in the speeches of Lord Upjohn and Lord Wilberforce in Tophams Ltd v Earl of Sefton to the effect that s. 79 of the Law of Property Act 1925 (relating to the burden of covenants) achieved no more than the introduction of statutory shorthand into the drafting covenants. Section 79, in my view, ainnvaololvgeys. quite different considerations and I do not think that it providesa helpful
It was suggested by counsel for the defendants that if this covenant ought to be read as enuring for the benefit of the retained land, it should be read as enuring only for the benefit of the retained land as a whole and not for the benefit of every part of it; with the apparent result that there is no annexation of the benefit toa part of the retained land when any severance takes place. He referred us to a passage in Re Union of London
and Smith’s Bank Ltd’s Conveyance, Miles v Easter [1933] Ch 611, [1’933] All ER Rep 355, whichI do not think it is necessary for me to read.
(19T7h5e) p.ro7b6l3e:m is alluded to in Megarry and Wade on the Law of Real Property 4th edn In drafting restrictive covenants it is therefore desirable to annex them to the covenantee’s land ‘or any part or parts thereof’. An additional reason for using this form of words is that, if there is no indication to the contrary, the benefit may be held to be annexed only to the whole of the covenantee’s land, so that it will not pass with portions of it disposed of separately. But even without such words the court may find that the covenant is intended to benefit any part of the retained land; and small indications may suffice, since the rule that presumes annexation to the whole only is arbitrary and inconvenient. In principle it conflicts with the rule for assignments, which allows a benefit annexed to the whole to be assigned with part, and it also conflicts with the corresponding rule for easements.
I find the idea of the annexation of a covenant to the whole of the land but not toa part of ita difficult conception fully to grasp. I can understand thata covenantee may expressly or by necessary implication retain the benefit oaf covenant wholly under his own control, so that the benefit will not pass unless the covenantee chooses to assign; butI would have thought, if the benefit of a covenant is, ona proper construction ofa document, annexed to the land, prima facie it is annexed to every part thereof, unless the contrary clearly appears. It is difficult to see how this court can have reached its decision in Williamsv Unit Construction Co Ltd (1951) 19 Conv NS 262 unless this is right. The covenant was, by inference, annexed to every part of the land and not merely to the whole, because it will be recalled that the plaintiff wasa tenant of only one of the four houses which had the benefit of the covenant….
In the instant case the judge in the course of his judgment appears to have dismissed the notion that any individual plotholder would be entitled, even by assignment, to have the benefit of the covenant that I have been considering. I express no view about that. I only say this, that I am not convinced that his conclusion on that point is correct. I say no more about it.
In the end, I come to the conclusion that s. 78 of the Law of Property Act 1925 caused the benefit of the restrictive covenant in question to run with the red land and therefore to be annexed to it, with the result that the plaintiff company is able to enforce the covenant against Mill Lodge, not only in its capacity as owner of the green land, but also in its capacity as owner of the red land.
For these reasons I think that the judge reached the correct view on the right of the plaintiff company to enforce the covenant, although in part he arrived there by a different route.
Roake v Chadba
[1984] 1 WLR 40 (ChD)
HIS HONOUR JUDGE PAUL BAKER QC: I must now tum to the alternative argument of the plaintiffs based on s. 62 of the 1925 Act. This argument is directed to the conveyances or transfers conveying the alleged benefited land to the predecessors of the plaintiffs, and ultimately to the respective plaintiffs themselves. In each of these transfers, so I am prepared to assume, there is to be implied the general words of s. 62:
(1) A conveyance of land shall be deemed to include and shall by virtue of this Act operate to convey, with the land, all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, watercourses, liberties, privileges, easements, rights, and advantages whatsoever, appertaining or reputed to appertain to the land, or any part thereof, or, at the time of conveyance, demised, occupied, or enjoyed with or reputed or known as part or parcel of or appurtenant to the land or any part thereof …
Then in sub-s. (2) it deals with the conveyance ofland having houses and buildings and various corresponding rights in relation to buildings. I do not thinkI need read that subsection.
The argument is that the benefit of the covenant contained in the original transfer to the predecessors of the defendants (that is to say William Lambert) was carried by the words ‘rights, and advantages whatsoever, appertaining or reputed to appertain to the land, or any part thereof’. It seems an argument on these lines was accepted by John Mills QC, the deputy judge who gave the decision at first instance in the Federated Homes case, butI have not seen it, and so cannot comment on it. The proposition now contended for is noat new one. In Rogers v Hosegood [1900) 2 Ch 388, [1900-3) All ER Rep 915 it was similarly put forward as an alternative argument to an argument based on annexation. In that case however it was decided that the benefit of the covenant was annexed so that the point on the Conveyancing Act 1881, s. 6, the forerunner of s. 62 of the 1925 Act, did not have to be decided. Nevertheless, Farwell J, sitting in the Chancery Division, said ([1900] 2 Ch 388 at 398):
It is not necessary for me to determine whether the benefit of the covenants would pass under the general words to which I have referred above, if such covenants did not run with the land. If they are not in fact annexed to the land, it may well be that the right to sue thereon cannot be said to belong, or be reputed to belong, thereto; but I express no final opinion on this point.
In the Court of Appeal the point was canvassed in argument but not referred to in the judgment of the court, which was given by Collins LJ.
In the present case, the covenant in terms precludes the benefit passing unless it is expressly assigned. That being so, as it seems to me, it is not a right appertaining or reputed to appertain to land within the meaning of s. 62 of the 1925 Act. On whether the benefit of a covenant not annexed can ever pass under s. 62, I share the doubts of Farwell J. Counsel for the defendants suggested, and there may well be something in this, that the rights referred to in s. 62 are confined to legal rights rather than equitable rights which the benefit of restrictive covenants is. But again I place it on construction. It cannot be described as a right appertaining or reputed to appertain to land when the terms of the covenant itself would seem to indicate the opposite.
Elliston v Reacher
[1908] 2 Ch 374 (ChD)
PARKER J: I pass, therefore, to the consideration of the question whether the plaintiffs can enforce these restrictive covenants. In my judgment, in order to bring the principles of Renals v Cowlishaw (1878) 9 Ch D 125 and Spicer v Martin (1888) 14 App Cas 12 il,lt6 operation it must be proved (1) that both the plaintiffs and defendants derive title under a common vendor; (2) that previously to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development; (3) that these restrictions were intended by the common 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 and were for the benefit of other land retained by the vendor; and (4) that both the plaintiffs and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme whether or not they were also to enure for the benefit of other lands retained by the vendors. If these fourth points be established, I think that the plaintiffs would in equity be entitled to enforce the restrictive covenants entered into by the defendants or their predecessors with the common vendor irrespective of the dates of the respective purchases. I may observe, with reference to the third point, that the vendor’s object in imposing the restrictions must in general be gathered from all the circumstances of the case, including in particular the nature of the restrictions. If a general observance of the restrictions is in fact calculated to enhance the values of the several lots offered for sale, it is an easy inference that the vendor intended the restrictions to be for the benefit of all the lots, even though he might retain other land the value of which might be similarly enhanced, for a vendor may naturally be expected to aim at obtaining the highest possible price for his land. Further, if the first three points be established, the fourth point may readily be inferred, provided the purchasers have notice of the facts involved in the three first points; but if the purchaser purchases in ignorance of any material part of those facts, it would be difficult, if not impossible, to establish the fourth point. It is also observable that the equity arising out of the establishment of the four points I have mentioned has been sometimes explained by the implication of mutual contracts between the various purchasers, and sometimes by the implication of a contract between each purchaser and the common vendor, that each purchaser is to have the benefit of all the covenants by the other purchasers, so that each purchase is in equity an assign of the benefit of these covenants. In my opinion the implication of mutual contract is not always a perfectly satisfactory explanation. It may be satisfactory where all the lots are sold by auction at the same time, but when, as in cases such as Spicer v Martin, there is no sale by auction, but all the various sales are by private treaty and at various intervals of time, the circumstances may, at the date of one or more of the sales, be such as to preclude the possibility of an actual contract. For example, a prior purchaser may be dead or incapable of contracting at the time of a subsequent purchase, and in any event it is unlikely that the prior and subsequent purchasers are ever brought into personal relationship, and yet the equity may exist between them. It is, I think, enough to say, using Lord Macnaghten’s words in Spicer v Martin, that where the four points I have mentioned are established, the community of interest imports in equity the reciprocity of obligation which is in fact contemplated by each at the time of his own purchase.
Crest Nicholson Residential (South) Ltd v McAllister
[2004] EWCA Civ 410 (01 April 2004)
Lord Justice Chadwick :
This is an appeal and cross-appeal from an order made on 17 December 2002 by Mr Justice Neuberger in proceedings brought by Crest Nicholson Residential (South) Limited to determine the extent to which land at Claygate, Surrey, in respect of which it is the purchaser under a conditional contract, is subject to restrictive covenants. The defendant to those proceedings, Mrs Fiona McAllister, is the owner of neighbouring land and (as such) claims to be entitled to the benefit of those covenants.
The underlying facts
The land in question, which borders Claygate Common, was sold for building in 1923. The purchasers, into whose names the land was conveyed, were Mr Percy Mitchell and his brother, Mr Charles Mitchell. In July 1924 they agreed to sell the land to their company, Mitchell Brothers (Builders) Limited; but there was no conveyance and the land remained in the names of the two brothers. Between 1926 and 1936 the company sold off the land, in plots, to individual purchasers. The two brothers joined in the conveyances to those purchasers as trustees to convey the legal estate. Those conveyances imposed restrictive covenants on the land conveyed.
There were, I think, a dozen conveyances by the Mitchell brothers and their company between 19 July 1926 and 27 May 1936. Seven are relevant to this appeal. They fall into four groups: (i) conveyances dated 2 February 1928 and 15 February 1933 to Mr Arthur Edward Arthur (“the Arthur conveyances”), (ii) conveyances dated 22 August 1928 and 3 November 1933 to Mr Harry Thomas Humphreys (“the Humphreys conveyances”), (iii) conveyances dated 21 November 1930 and 3 November 1933 to Mr Edwin Robert Roberts (“the Roberts conveyances”) and (iv) a conveyance dated 27 May 1936 to Mr Richard William Ffitch Wing and Mr Richard John Wing (“the Wing conveyance”). The land in respect of which Crest Nicholson is purchaser “the proposed development land” is comprised of parts of the land conveyed by each of the seven conveyances. The land of which Mrs McAllister is the owner comprises part of the land conveyed by the Wing conveyance.
The land conveyed by the Arthur, Humphreys and Roberts conveyances is now comprised in the registered titles of three properties known respectively as “Westwood”, “Mylor” and “Morwenna”. Each of those properties has a frontage onto a road known as The Causeway. On each of those properties there is, now, a substantial dwelling house. The proposed development land includes part of the gardens at the rear of each of those properties; that is to say, it includes what may be described as the bottom half of each of those gardens, extending back to Claygate Common.
Most of the land conveyed by the Wing conveyance is now comprised in the registered titles of three other properties known respectively as “Redruth”, “Tressilion” and “Newlyn”. Each of those properties has a frontage onto Cornwall Avenue, which forms an extension to Common Road. Again, there is, now, a dwelling house on each of those properties. The remainder of the proposed development land includes part of the garden of Tressilion and the whole of the property known as Redruth, through which it is intended that access to the proposed development will be obtained from Cornwall Avenue. Mrs McAllister is the registered proprietor of Newlyn.
In or about September 2000 Crest Nicholson entered into a conditional contract for the purchase of the proposed development land with a view to the development of that land by the erection of five new houses on what are now the gardens of Westwood, Mylor and Morwenna, and a sixth house in place of the existing dwelling on Redruth. Mrs McAllister opposed that development. She contended that the erection of new houses would breach the terms of the restrictive covenants of which she, as owner of Newlyn, was entitled to the benefit.
The relevant covenants
Each of the seven conveyances contains, in the first schedule, covenants restricting the use which is to be made of the land conveyed. The relevant covenants, for the purposes of this appeal, are those in paragraph 2 of the first schedule to each conveyance. Those paragraphs impose one or both of the following restrictions (or restrictions in substantially the same terms): (i) a restriction (“the user restriction”) that “the premises shall not be used for any purpose other than those of or in connection with a private dwelling house or for professional purposes”; (ii) a restriction (“the building restriction”) that “no dwelling house or other building shall be erected on the land hereby conveyed unless the plans drawings and elevations shall have been previously submitted to and approved of in writing by [the Company/the Vendor] but such approval shall not be unreasonably or vexatiously withheld”.
In that context, with two exceptions, “the Company” or “the Vendor”, as the case may be, means Mitchell Brothers (Builders) Limited. The exceptions are that in one of the Roberts conveyances (that dated 21 November 1930) and in the Wing conveyance, the persons or person by whom plans are to be approved for the purposes of the building covenant (described as “the Vendors” or “the Vendor”) are the two brothers rather than the company. We were told that Mr Charles Mitchell predeceased his brother; that Mr Percy Mitchell died in 1949; and that the company was dissolved in 1968.
Restrictions in the terms which I have just set out are found in both the Arthur conveyances, in both the Roberts conveyances, in the later of the Humphreys conveyances and in the Wing Conveyance. The earlier Humphreys conveyance (dated 22 August 1928) contains the user restriction but does not contain the building restriction.
The restrictions contained in the first schedule to the conveyance dated 2 February 1928 were the subject of a covenant given by the purchaser, Mr Arthur Edward Arthur, in these terms:
“The Purchaser to the intent and so that the covenants hereinafter contained shall be binding on the said land and hereditaments hereby conveyed into whomsoever hands the same may come but not so as to render the Purchaser personally liable for damages for any breach thereof after he shall have parted with all interest therein hereby Covenants with the Company and the Trustees that he the Purchaser and the persons deriving title under him will at all times hereafter observe and perform the [restrictions mentioned in the First Schedule hereto].”
There is no express annexation, in that conveyance, of the benefit of the covenants to land retained by the covenantees. The later of the two Arthur conveyances (dated 15 February 1933) is a conveyance to Mr Arthur made supplemental to the earlier conveyance of 2 February 1928. Its object, as appears from the recitals, is to convey to him “a further piece of land forming part of the said fee farm estate subject to the said restrictions [imposed by the principal conveyance]”. The covenants are given in the same terms. Again, there is no express annexation of the benefit of the covenants to land retained by the covenantees.
The covenants in the Humphreys conveyances did contain express words of annexation:
“For the benefit of the property at Claygate aforesaid belonging to the Vendors or the part thereof for the time being remaining unsold and so as to bind the property hereby conveyed The Purchaser hereby covenants with the Vendors and the Trustees that the Purchaser and the persons deriving title under him will henceforth at all time hereafter observe and perform all and singular the restrictions contained in the First Schedule hereto . . .”
The covenant in the first of the Roberts conveyances (dated 21 November 1930) was given by the purchaser, Mr Roberts, in these terms:
“. . . to the intent that this covenant shall be binding so far as may be on the owner for the time being of the property hereby assured but upon the Purchaser only so long as he is the owner of the said property . . .”
There are no words of annexation in that conveyance. The covenant in the later Roberts conveyance (dated 3 November 1933) was given in the same terms as those in the two Humphreys conveyances.
In those cases where the conveyance contains no words of annexation it is pertinent to note the description of the land conveyed. In the first of the Arthur conveyances (dated 2 February 1928) the land conveyed is described as:
“ALL THAT piece or parcel of freehold land situate and being Plot number 6 and part of Plot number 5 on the Fee Farm Estate at Claygate in the County of Surrey…”
The land conveyed is further described as having a frontage onto the road known as The Causeway; its dimensions are given; and it is said to be “more particularly delineated and described on the plan drawn hereon.” The plan drawn on the conveyance is not a plan of the Fee Farm estate; in particular, it is not a plan which shows that estate partitioned into plots. Nor is there any other provision or description in the conveyance which enables the land known as the Fee Farm Estate to be identified; unless it be by reference to the conveyance dated 23 October 1923 to Mr Percy Mitchell and Mr James Mitchell mentioned in the second schedule (documents of title of which the purchaser is entitled to have copies produced). In the later Arthur conveyance (dated 15 February 1933) the land conveyed is:
“ALL THAT piece or parcel of freehold land situate and being partly in the rear of Plot No 6 and partly in the rear of Plot No 5 on the Fee Farm Estate at Claygate in the County of Surrey.”
Its dimensions are given and it, too, is said to be “more particularly delineated and described on the plan drawn hereon.” That plan is not a plan of the Fee Farm estate; and, again, there is no provision or description in the conveyance which enables the land known as the Fee Farm estate to be identified.
In the first of the Roberts conveyances (dated 21 November 1930) the land conveyed is described as:
“ALL THAT piece or parcel of land situate in and fronting a road called The Causeway . . . which with its dimensions boundaries and abuttals thereof is more particularly delineated in the plan hereon and thereon coloured pink TOGETHER with the messuage or dwelling house recently erected thereon and known or intended to be known as “Morwenna” Number 11, The Causeway” . . .”
There is no reference in that conveyance to the Fee Farm estate; and nothing to identify any land retained by the covenantees for which the benefit of the covenant is taken.
It is clear from the terms of the two Humphreys conveyances that, at the date of the first conveyance (22 August 1928) there was no dwelling house on the land conveyed but that, by the date of the later conveyance (3 November 1933, the dwelling house known as Mylor had been erected on the land conveyed in 1928. The later conveyance is of “land at the rear of Mylor”. It is clear, also, that, at the date of the first of the Roberts conveyances (21 November 1930) the dwelling house known as Morwenna had already been erected on the land conveyed – the conveyance itself refers to Morwenna. The later conveyance is of “land at the rear of Morwenna”. And it is, I think, clear that there was no dwelling house on the land conveyed by either of the Arthur conveyances at the dates of those conveyances. To complete the picture, the land conveyed by the two Arthur conveyances was sold on by Mr Arthur to his neighbour, Mr Humphreys, by a conveyance dated 3 April 1939. The dwelling house known as Westwood, which now stands on the land conveyed by the first of the Arthur conveyances, was built after April 1939.
The covenants in the Wing conveyance, dated 27 May 1936, are given in a form which differs from that found in the six earlier conveyances. In the Wing conveyance the purchasers covenant:
“. . . for the benefit and protection of the remainder of the property of the Vendors and of the Company at all times hereafter . . .”
It is, of course, under that conveyance that Mrs McAllister derives her own title to the property now known as Newlyn. It was common ground that, absent a building scheme, she could not claim to be entitled to the benefit of covenants imposed by the Wing conveyance.
These proceedings
These proceedings were commenced in November 2001. The relief sought, under CPR Pt 8, included a declarations (i) that, on the true construction of the seven conveyances to which I have referred (particulars of which are set out in the schedule to the claim form) the covenants in paragraph 2 of the first schedules thereto do not restrict the respective covenantors and their successors in title from using the premises conveyed by each conveyance for the erection of more than one private dwelling house and (ii) that, on completion of its contract to purchase part of the land conveyed by those conveyances Crest Nicholson will not be prevented by those covenants from developing the land in the manner proposed (as illustrated by plans put in evidence). The claim was subsequently amended to seek determination of the additional question whether, on the death or dissolution of the person or persons to whom drawings, plans and elevations were to be submitted for approval under the building covenant, (i) the building covenant became absolute and unqualified, or (ii) the covenant became spent, or (iii) there was some other (and, if so, what) consequence in relation to that covenant.
The matter came before Mr Justice Neuberger in October 2002. It was accepted on behalf of Mrs McAllister that there was no building scheme. It was accepted, also, that she was not entitled to the benefit of the covenants imposed by the Wing conveyance. It was common ground that, as the owner of so much of the land now in her title as was conveyed by the Wing conveyance, Mrs McAllister was entitled to the benefit of the covenants imposed by the Arthur, Humphreys and Roberts conveyances. The judge held that the building restriction had become spent on the dissolution of the company or the death of the survivor of the two brothers (as the case might be). But, on its true construction, the effect of the user restriction was to preclude the covenantor and his successors in title to the premises conveyed by each of the Arthur, Humphreys and Roberts conveyances from using the premises conveyed by that conveyance for the erection of more than one private dwelling house or for professional purposes. Those findings are reflected in the order dated 17 December 2002.
The judge gave each party permission to appeal to this Court. Crest Nicholson filed an appellant’s notice on 29 January 2003, challenging the judge’s finding as to the effect of the user restriction. It was said that the judge should not have construed the words “a private dwelling house” to mean “a single private dwelling house”; and, on the true construction of those words, ought to have made the declaration sought in the claim form; that is to say, ought to have declared that, on completion of its contract to purchase part of the land conveyed by the seven conveyances, Crest Nicholson would not be precluded from developing the land acquired in accordance with its proposals. Mrs McAllister cross-appealed, by respondent’s notice filed on 4 March 2003. She challenged the judge’s finding that the building restriction was spent. It is said that, on a true construction of that restriction against building, it became absolute upon the dissolution or death or of the person or persons to whom, under its terms, drawings, plans and elevations were to be submitted for approval.
As I have said, it was common ground before the judge that (with the exception of the land conveyed by the Wing conveyance) Mrs McAllister was entitled to the benefit of the covenants. The judge recorded that concession in his judgment, [2002] EWHC 2776 (Ch), reported at [2003] 1 All ER 46. He noted, at paragraph 10, that:
“. . . although initially in dispute between the parties, it is now common ground that . . . (2) To the extent that the . . . covenants are negative in nature, they “touch and concern” land. That part of Newlyn which was included in the estate had not been sold off at the time that the company sold off the plots comprising the claimant’s land. Consequently, the benefit of the covenants is annexed to part of Newlyn, and the defendant is entitled in principle to enforce the covenants in so far as they have been imposed on the claimant’s land: see section 78 of the Law of Property Act 1925 and Federated Homes Ltd –v- Mill Lodge Properties Ltd [1980] 1 WLR 594; . . . ”
In the skeleton argument prepared on its behalf by counsel, and dated 24 January 2003, Crest Nicholson did not seek to withdraw that concession. It was accepted that Mrs McAllister “has the benefit of the restrictive covenants in the conveyances of Westwood, Mylor and Morwenna by statutory or express annexation”. But, at the hearing in this Court, counsel applied to withdraw the concession that the covenants had become, or remained, annexed to the land conveyed by the Wing conveyance in 1936. It was said that, on a true construction of the relevant conveyances and having regard to the language of section 78 of the Law of Property Act 1925, there was no annexation to land which ceased to be in the ownership of the company or the two brothers. That application was not opposed; and we thought it right to grant it. It was not suggested that the point raises any issue of fact on which (if the concession had not been made) evidence would have been called at trial. Annexation being now in issue, it is appropriate to consider that first. If, or to the extent that, the benefit of the covenants in the several conveyances is not annexed to the land now in Mrs McAllister’s title, the questions which the judge was asked to determine become academic.
Annexation
It is trite law that, in order to enforce a covenant affecting land, a person (say, A) who is not the original covenantee must show that he is entitled to the benefit of it. Further, if A seeks to enforce the covenant against a person (say, B) who is not the original covenantor, A must show that B has become subject to the burden of the covenant. Absent, on the one hand, an express assignment (or chain of assignments) of the benefit of the covenant and, on the other hand, an express covenant for indemnity (or chain of covenants) from successors of the original covenantor (neither of which is not alleged in this case), A cannot enforce the covenant against B at law. But, since the decision in Tulk v Moxhay (1848) 11 Beavan 571, the covenant may, nevertheless, be enforced in equity if certain conditions are satisfied. In the present case it is not in dispute that, in equity, the burden of the covenants imposed in the Arthur, Humphreys and Roberts conveyances has passed to the present owners of Westwood, Mylor and Morwenna; in so far as there is someone who can enforce those covenants. The question now raised is whether Mrs McAllister, as the owner of part of the land conveyed by the Wing conveyance, is such a person: is she a person entitled to the benefit of the covenants imposed in the Arthur, Humphreys and Roberts conveyances?
The benefit of a covenant may pass in equity (as in law) through a chain of assignments. That is not this case. Or the benefit of a covenant may pass where land has been sold off under a building scheme (which is not now alleged). Absent a chain of assignments or a building scheme, the benefit of a covenant may, nevertheless, pass to the owner for the time being of land to which it has been annexed. In covenants made before 1926 it was necessary to show, by construing the instrument in the light of surrounding circumstances, that annexation to the covenantee’s retained land (or some part of it) was intended. Express words of annexation were not required. “If, on the construction of the instrument creating the restrictive covenant, both the land which is intended to be benefited and an intention to benefit that land, as distinct from benefiting the covenantee personally, can clearly be established, then the benefit of the covenant will be annexed to that land and run with it, notwithstanding the absence of express words of annexation” – see Megarry and Wade, The Law of Real Property (6th Edition, 2000) at paragraph 16-062, citing His Honour Judge Rubin in Shropshire County Council v Edwards (1982) 46 P & CR 270, 277.
In relation to covenants imposed in instruments made after 1925 (as were the covenants with which we are concerned in this appeal) the position is governed by the provisions of section 78 of the Law of Property Act 1925 (Benefit of covenants relating to land). Section 78(1) is in these terms:
“A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed.
For the purposes of this subsection in connexion with covenants restrictive of the user of land “successors in title” shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited.”
The effect of section 78 of the 1925 Act was considered by this Court in Federated Homes Ltd v Mill Lodge Properties Ltd [1980]1 WLR 594. In order to understand what the Court decided it is necessary to have in mind the facts in that case. The defendant, Mill Lodge Properties Ltd, was the owner of land (“the blue land”) which it had acquired under a conveyance dated 26 February 1971 from a developer, McKenzie Hill Ltd. At the time of the conveyance McKenzie Hill owned a larger site, comprising (in addition to the blue land) three other parcels described respectively as “the red land”, “the green land” and “the pink land”. The whole was subject to conditions contained in a planning consent (granted in 1970) and a related phasing agreement. The conveyance of 26 February 1971 contained a covenant, by the defendant as purchaser, that in carrying out development of the blue land it would not build at a greater density than a total of 300 dwellings so as not to reduce the number of units “which the vendor might eventually erect on the retained land under the existing planning consent”. The covenant was made with the vendor; it was not expressed to be made with the vendor’s successors in title or persons deriving title under it or them. By a simultaneous conveyance the pink land had been sold by McKenzie Hill to another purchaser, Gough Cooper (Midland) Limited. The Gough Cooper conveyance contained a similar covenant. On 25 March 1971 McKenzie Hill sold and conveyed the red land and the green land to its mortgagee, William Brandt’s Sons & Co Ltd. Those conveyances contained express assignments of the covenants in the two conveyances of 26 February 1971. On 25 February 1972 Brandt’s sold and conveyed the green land to the plaintiff, Federated Homes Limited. At or about the same time Brandt’s sold the red land, also, to the plaintiff; but the red land was conveyed, on 1 March 1972 by Brandt’s to BTA Trading Co Ltd, as sub-purchaser, Federated Homes joining in that conveyance as purchaser. That conveyance contained an express assignment of the covenants in the conveyances of 26 February 1971. In 1975, BTA Trading – which had, by then, changed its name to UDT Properties Ltd and had become registered with title at HM Land Registry – sold the red land back to Federated Homes and, on 18 March 1975, executed a land registry transfer. The transfer contained no express assignment of the benefit of the covenants in the February 1971 conveyances. In the meantime the original 1970 planning consent had lapsed, the defendant had obtained new planning consents for the erection of dwellings on the blue land and was threatening to build, under those consents, in a way which would prejudice Federated Homes in relation to the development that it would be permitted to carry out on the red land and the green land. The proceedings, commenced in 1978, sought to enforce the 1971 density covenant against the defendant as the owner of the blue land (and the original covenantor).
It can be seen, therefore, that, in relation to the green land but not in relation to the red land, the plaintiff was able to rely on a chain of express assignments. It was contended on behalf of the defendant, Mill Lodge, that on a true construction of its February 1971 conveyance the covenants which it imposed were personal to the original covenantee, McKenzie Hill and so not assignable. That was said, inter alia, to follow from the fact that the covenant was made only with “the vendor” and not with successors in title. The Court disposed of that latter point shortly. Lord Justice Brightman (with whose judgment the other members of the Court agreed) pointed out (ibid, 602D) that section 78 of the 1925 Act provided, in terms, that “a covenant relating to any land of the covenantee shall be deemed to have been with the covenantee and his successors in title, which presupposes assignability”.
The Court rejected, also, the contention that the covenant had become spent when the original 1970 planning consent lapsed. The effect, as Lord Justice Brightman observed (ibid, 603B), was that the covenant was plainly enforceable for the benefit of the green land. He said this:
“Having reached the conclusion that the restrictive covenant was capable of assignment and is not spent, I turn to the question whether the benefit has safely reached the hands of the plaintiff. The green land has no problem, owing to the unbroken chain of assignments. I am disposed to think that that is sufficient to entitle the plaintiff to relief, and that the plaintiff’s right to relief would be no greater at the present time if it were held that it also had the benefit of the covenant in its capacity as owner of the red land.”
Nevertheless, he went on to consider annexation, which was, of course, material to the question whether the density covenant was enforceable for the benefit of the red land. He explained that:
“An express assignment of the benefit of a covenant is not necessary if the benefit of the covenant is annexed to the land. In that event, the benefit will pass automatically on a conveyance of the land, without express mention, because it is annexed to the land and runs with it.”
As I have said, the object of the covenant in the 1971 conveyance was expressed to be “so as not to reduce the number of units which the vendor might eventually erect on the retained land under the existing planning consent”. The retained land was not defined; but Lord Justice Brightman had held (ibid,599F) that, on the true construction of the 1971 conveyance to Mill Lodge, “the retained land means the red and the green land and the small additional areas comprised in the site, other, of course, than the blue and the pink land”. So there was no doubt as to the identity of the retained land. That is important to a proper understanding of the following passage in his judgment (ibid,604C-G)
“[Counsel for Mill Lodge] submitted that there were three possible views about section 78. One view, which he described as ‘the orthodox view’ hitherto held, is that it is merely a statutory shorthand for reducing the length of legal documents. A second view, which was the one that [counsel] was inclined to place at the forefront of his argument, is that the section only applies, or at any rate only achieves annexation, when the land intended to be benefited is signified in the document by express words or necessary implication as the intended beneficiary of the covenant. A third view is that the section applies if the covenant in fact touches and concerns the land of the covenantee, whether that be gleaned from the document itself or from evidence outside the document.
For myself, I reject the narrowest interpretation of section 78, the supposed orthodox view, which seems to me to fly in the face of the wording of the section. Before I express my reasons I will say that I do not find it necessary to choose between the second and third views because, in my opinion, this covenant relates to land of the covenantee on either interpretation of section 78. Clause 5(iv) shows clearly that the covenant is for the protection of the retained land and that land is described in clause 2 as “any adjoining or adjacent property retained by the vendor.” This formula is sufficient for annexation purposes; see Rogers v Hosegood [1900] 2 Ch 388.
There is in my judgment no doubt that this covenant ‘related to the land of the covenantee’, or, to use the old-fashioned expression, that it touched and concerned the land, even if [counsel] is correct in his submission that the document must show an intention to benefit identified land. The result of such application is that one must read clause 5(iv) as if it were written: ‘The purchaser hereby covenants with the vendor and its successors in title and the persons deriving title under it or them, including the owners and occupiers for the time being of the retained land, that in carrying out the development of the blue land the purchaser shall not build at a greater density than a total of 300 dwellings so as not to reduce, etc.’ I leave out of consideration section 79 as unnecessary to be considered in this context, since Mill Lodge is the original covenantor.”
It is clear that the Court approached the question of annexation in the Federated Homes case on the basis that the density covenant was taken for the benefit of retained land which could be identified in the 1971 conveyance. Lord Justice Brightman expressed his conclusion in these terms (ibid, 605A-C):
“If, as the language of section 78 implies, a covenant relating to land which is restrictive of the user thereof is enforceable at the suit of (1) a successor in title of the covenantee, (2) a person deriving title under the covenantee or under his successors in title, and (3) the owner or occupier of the land intended to be benefited by the covenant, it must, in my view, follow that the covenant runs with the land, because ex hypothesi every successor in title to the land, every derivative proprietor of the land and every other owner and occupier has a right by statute to the covenant. In other words, if the condition precedent of section 78 is satisfied – that is to say, there exists a covenant which touches and concerns the land of the covenantee – that covenant runs with the land for the benefit of his successors in title, persons deriving title under him or them and other owners and occupiers.”
There is, in effect, statutory annexation of the benefit of the covenant to “the land intended to be benefited by the covenant”. The words which I have emphasised, which are incorporated by Lord Justice Brightman in the passage which I have just cited, are derived, of course, from section 78(1): “For the purposes of this subsection . . . ‘successors in title’ shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited.”
The decision of this Court in the Federated Homes case leaves open the question whether section 78 of the 1925 Act only effects annexation when the land intended to be benefited is described in the instrument itself (by express words or necessary implication, albeit that it may be necessary to have regard to evidence outside the document fully to identify that land) or whether it is enough that it can be shown, from evidence wholly outside the document, that the covenant does in fact touch and concern land of the covenantee which can be identified.
It is clear from Lord Justice Brightman’s reference (ibid) to Rogers v Hosegood [1900] 2 Ch 388 that it is sufficient for the conveyance to describe the land intended to be benefited in terms which enable it to be identified from other evidence. In Rogers v Hosegood the covenant was given for the benefit of the vendors, their heirs and assigns “and others claiming under them to all or any of their lands adjoining or near to the [premises conveyed].” The Court of Appeal held that to be a sufficient description (ibid, 403-404):
“The real and only difficulty arises on the question – whether the benefit of the covenants has passed to the assigns of Sir John Millais as owners of the plot purchased by him on March 25, 1873, there being no evidence that he knew of these covenants when he bought. Here, again, the difficulty is narrowed, because by express declaration on the face of the conveyances of 1869 the benefit of the two covenants in question was intended for all or any of the vendor’s lands near to or adjoining the plot sold, and therefore for (amongst others) the plot of land acquired by Sir John Millais.”
The question left open in the Federated Homes case had, I think, already been answered in the judgment of this Court in Marquess of Zetland v Driver [1939] Ch 1, a decision not cited in Federated Homes. The applicable principles were restated in the following passage, (ibid,7-8):
“Covenants restricting the user of land imposed by a vendor upon a sale fall into three classes: (i) covenants imposed by a vendor for his own benefit; (ii) covenants imposed by a vendor as owner of other land, of which that sold formed a part, and intended to protect or benefit the unsold land; and (iii) covenants imposed by a vendor upon a sale of land to various purchasers who are intended mutually to enjoy the benefit of and be bound by the covenants: Osborne v Bradley [1903] 2 Ch 446, 450.
Covenants of the first class are personal to the vendor and enforceable by him alone unless expressly assigned by him. Covenants of the second class are said to run with the land and are enforceable without express assignment by the owner for the time being of the land for the benefit of which they were imposed. Covenants of the third class are most usually found in sales under building scheme, although not strictly confined to such sales. It is not suggested that the present covenant falls within this class. Nor will it assist the appellant if it falls within the first class, since he was not the original covenantee or an express assignee from him. If, therefore, the appellant is entitled to sue on this covenant it must fall within the second class above mentioned.
Such covenants can only be validly imposed if they comply with certain conditions. Firstly, they must be negative covenants. . . . Secondly, the covenant must be one that touches or concerns the land, by which is meant that it must be imposed for the benefit or to enhance the value of the land retained by the vendor or some part of it, and no such covenant can ever be imposed if the sale comprises the whole of the vendor’s land. . . . Thirdly, the land which is intended to be benefited must be so defined as to be easily ascertainable, and the fact that the covenant is imposed for the benefit of that particular land should be stated in the conveyance and the persons or the class of persons entitled to enforce it. The fact that the benefit of the covenant is not intended to pass to all persons into whose hands the unsold land may come is not objectionable so long as the class of persons intended to have the benefit of the covenant is clearly defined.” [emphasis added]
In its later decision in the Federated Homes case this Court held that the provisions of section 78 of the 1925 Act had made it unnecessary to state, in the conveyance, that the covenant was to be enforceable by persons deriving title under the covenantee or under his successors in title and the owner or occupier of the land intended to be benefited, or that the covenant was to run with the land intended to be benefited; but there is nothing in that case which suggests that it is no longer necessary that the land which is intended to be benefited should be so defined that it is easily ascertainable. In my view, that requirement, identified in Marquess of Zetland v Driver remains a necessary condition for annexation.
There are, I think, good reasons for that requirement. A restrictive covenant affecting land will not be enforceable in equity against a purchaser who acquires a legal estate in that land for value without notice of the covenant. A restrictive covenant imposed in an instrument made after 1925 is registrable as a land charge under class D(ii) – section 10(1) of the Land Charges Act 1925 and, now, section 2(5) of the Land Charges Act 1972. If the title is registered, protection is effected by entering notice of the restrictive covenant on the register – section 50 of the Land Registration Act 1925 and, now, section 11 of the Land Registration Act 2002. Where practicable the notice shall be by reference to the instrument by which the covenant is imposed and a copy or abstract of that instrument shall be filed at the registry – section 50(1) of the Land Registration Act 1925 and section 3(5) of the Land Charges Act 1972. It is obviously desirable that a purchaser of land burdened with a restrictive covenant should be able not only to ascertain, by inspection of the entries on the relevant register, that the land is so burdened, but also to ascertain the land for which the benefit of the covenant was taken – so that he can identify who can enforce the covenant. That latter object is achieved if the land which is intended to be benefited is defined in the instrument so as to be easily ascertainable. To require a purchaser of land burdened with a restrictive covenant, but where the land for the benefit of which the covenant was taken is not described in the instrument, to make enquiries as to what (if any) land the original covenantee retained at the time of the conveyance and what (if any) of that retained land the covenant did, or might have, “touched and concerned” would be oppressive. It must be kept in mind that (as in the present case) the time at which the enforceability of the covenant becomes an issue may be long after the date of the instrument by which it was imposed.
In Marquess of Zetland v Driver (supra) the vendor was tenant for life of settled land at Redcar in Yorkshire. By a conveyance dated 10 September 1926 a part of that land (subsequently known as No 200, Lord Street) was conveyed to a purchaser, Mr David Goodswen. The purchaser covenanted “to the intent and so as to bind as far as practicable the said property hereby conveyed into whosesoever hands the same may come and to benefit and protect such part or parts of the lands in the Borough Township or Parish of Redcar . . . now subject to the settlement (a) as shall for the time being remain unsold or (b) as shall be sold by the vendor or his successors in title with the express benefit of this covenant . . .” that he would observe the restrictions and stipulations set out in the second schedule to the conveyance. Those restrictions included a restriction on use which, in the opinion of the vendor, might be detrimental to him or the owners or occupiers of any adjoining property in the neighbourhood. In 1935 Mr Goodswen conveyed No 200 Lord Street to the defendant, Mr Driver, who thereafter sought to use it for the sale of fried fish. The plaintiff, as successor to the original covenantee, took the view that that use was detrimental to adjoining property in the neighbourhood and sought to enforce the covenant.
After setting out the principles in the passage to which I have already referred, the Court of Appeal said this (ibid, 8-9):
“Applying these conditions to the present case, the covenant sued upon appears to comply with them. The covenant is restrictive; it is expressly stated in the conveyance to be for the benefit of the unsold part of the land comprised in the settlement and such land is easily ascertainable, nor is it suggested that at the date of the conveyance the land retained was not capable of being benefited by the restrictions, and lastly the appellant is the successor in title of the original covenantee and as such is the estate owner of part of the land unsold which is subject to the settlement. . . .” [emphasis added]
But the Court went on, at (ibid, 10) to say:
“It is to be noticed in the present case that the benefit of the covenant is not intended to pass to a purchaser without express assignment. It is not necessary for us to express any opinion as to what would be the effect of a sale of part of the settled property with an express assignment of the covenant; but, if such a purchaser could enforce the covenant, it could only be for so long as some successor in title of the original covenantee retained some part of the settled property, since such a person alone can form the requisite opinion.
“For these reasons the appeal must be allowed. The appellant is entitled to the injunction which he seeks subject to two limitations. In the first place the injunction must be limited to fried fish . . . because the opinion of the appellant as to the nuisance was confined to fried fish, and secondly, the period of the injunction must be confined to so long as the appellant or some successor in title of the original vendor retains unsold any part of the settled property for the benefit of which the covenant was imposed. . . .” [emphasis added].”
It is important to keep in mind that the covenant was taken to benefit such part or parts of the lands subject to the settlement “as shall for the time being remain unsold”. The words which I have emphasised make clear that the land intended to be benefited may be defined so as to exclude land subsequently sold off from the vendor’s estate. That principle was recognised in the recent decision of this Court in Dano Limited v Earl Cadogan and others [2003] EWCA Civ 782 (unreported, 19 May 2003).
To my mind, the decision in Marquess of Zetland v Driver (supra) goes much of the way to answer a second question which this Court did not need to address in the Federated Homes case: whether the effect of the section 78 of the Law of Property Act 1925 is displaced by a contrary intention manifested in the instrument itself. But that question was addressed, specifically, in Roake and others v Chadha and another [1984] 1 WLR 40, to which I now turn.
In Roake v Chadha land forming part of what was formerly known as the Sudbury Court Estate in North Wembley was laid out in lots and the individual lots sold off to purchasers in the 1930’s. The individual lots were conveyed using a standard form of transfer. The schedule to the transfer contained a restriction on building on the land conveyed; in particular it required that no building should be erected other than one private dwelling house at a cost of not less than £500 and that plans drawings and elevations should first be submitted for approval by the vendor company. The covenant was imposed in the following terms, so far as material:
“And the purchaser to the intent and so as to bind (so far as practicable) the land hereby transferred into whosoever hands the same may come . . . hereby covenants with the vendors but so that this covenant shall not enure for the benefit of any owner or subsequent purchaser of any part of the vendor’s Sudbury Court estate at Wembley unless the benefit of this covenant shall be expressly assigned that he the purchaser and his successors in title will observe and perform all and every the provisions conditions and stipulations set out in the schedule hereto so far as they relate to or affect the premises hereby transferred or any part thereof.”
The defendants were successors in title to the purchaser of one of the former lots (No 4 Audrey Gardens) which had been sold and conveyed by a transfer dated 4 April 1934. They proposed to erect an additional house on that land. It was common ground that that would be in contravention of the restriction in the conveyance. The plaintiffs were the successors in title to the purchasers of two other lots on the estate (No 1 Audrey Gardens and No 104 Abbotts Drive), which had been conveyed by transfers dated, respectively, 28 May 1934 and 22 March 1935. Neither transfer contained an express assignment of the benefit of the covenant imposed by the transfer of 4 April 1934, nor had the benefit of that covenant been expressly transferred by any other instrument. Nevertheless, the plaintiffs sought a declaration that they were entitled to the benefit of that covenant and an order restraining the defendants from building in breach of it.
It was accepted on behalf the plaintiffs that the express words of the covenant appeared to exclude annexation. It was accepted, also, that their case could not be advanced on the basis of a building scheme. But it was said that, nevertheless, the covenant imposed by the transfer of 4 April 1934 had become annexed to the land then forming part of the Sudbury Court Estate and subsequently conveyed out of that estate by the transfers of 28 May 1934 and 22 March 1935 by the operation of section 78 of the 1925 Act. Reliance was placed on the contrast between the language of section 78 and section 79 (Burden of covenants relating to land) of that Act. Section 79(1) is in these terms, so far as material:
“A covenant relating to any land of a covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself his successors in title and the persons deriving title under him or them, and, subject as aforesaid, shall have effect as if such successors and other persons were expressed . . .” [emphasis added].
It was pointed out, correctly, that the words which I have emphasised are not found in section 78(1) of the Act. So, it was said, the legislature must have intended the provisions of section 78 (Benefit of covenants relating to land) to be mandatory; it must have intended that those provisions could not be excluded by a contrary intention, however clearly expressed.
His Honour Judge Paul Baker QC, sitting as a Judge of the High Court, rejected that submission. After analysing the judgment of Lord Justice Brightman in Federated Homes Ltd v Mill Lodge Ltd (supra), and pointing out that no reason of policy had been suggested to explain why section 78 of the 1925 Act should be mandatory, the judge said this, at [1984] 1WLR 40, 46B-H:
“I am thus far from satisfied that section 78 has the mandatory operation which [counsel] claimed for it. But if one accepts that it is not subject to a contrary intention, I do not consider that it has the effect of annexing the benefit of the covenant in each and every case irrespective of the other express terms of the covenant. I note that Brightman LJ in the Federated Homes case did not go so far as that, for he said, at page 606:
‘I find the idea of the annexation of a covenant to the whole of the land but not to a part of it a difficult conception fully to grasp. I can understand that a covenantee may expressly or by necessary implication retain the benefit of a covenant wholly under his own control, so that the benefit will not pass unless the covenantee chooses to assign; but I would have thought, if the benefit of a covenant is, on a proper construction of a document, annexed to the land, prima facie it is annexed to every part thereof, unless the contrary clearly appears.’
So at least in some circumstances Brightman LJ is considering that despite section 78 the benefit may be retained and not pass or be annexed to and run with land. In this connection, I was also referred by [counsel for the defendants] to Elphinstone’s Covenants Affecting Land (1946), p.17, where it is said in a footnote:
‘but it is thought that, as a covenant must be construed as a whole, the court would give due effect to words excluding or modifying the operation of this section…’
The true position as I see it is that even where a covenant is deemed to be made with successors in title as section 78 requires, one still has to construe the covenant as a whole to see whether the benefit of the covenant is annexed. Where one finds, as in the Federated Homes case, the covenant is not qualified in any way, annexation may be readily inferred; but where, as in the present case, it is expressly provided:
‘this covenant shall not enure for the benefit of any owner or subsequent purchaser of any part of the vendor’s Sudbury Court Estate at Wembley unless the benefit of this covenant shall be expressly assigned…’
one cannot just ignore these words. One may not be able to exclude the operation of the section in widening the range of the covenantees, but one has to consider the covenant as a whole to determine its true effect. When one does that, then it seems to me that the answer is plain and in my judgment the benefit was not annexed. That is giving full weight to both the statute in force and also what is already there in the covenant.”
I respectfully agree, first, that it is impossible to identify any reason of policy why a covenantor should not, by express words, be entitled to limit the scope of the obligation which he is undertaking; nor why a covenantee should not be able to accept a covenant for his own benefit on terms that the benefit does not pass automatically to all those to whom he sells on parts of his retained land. As Lord Justice Brightman pointed out, in the passage cited by His Honour Judge Paul Baker QC, a developer who is selling off land in lots might well want to retain the benefit of a building restriction under his own control. Where, as in Roake v Chadha and the present case, development land is sold off in plots without imposing a building scheme, it seems to me very likely that the developer will wish to retain exclusive power to give or withhold consent to a modification or relaxation of a restriction on building which he imposes on each purchaser; unfettered by the need to obtain the consent of every subsequent purchaser to whom (after imposing the covenant) he has sold off other plots on the development land. I can see no reason why, if original covenantor and covenantee make clear their mutual intention in that respect, the legislature should wish to prevent effect being given to that intention.
Second, it is important to keep in mind that, for the purposes of its application to restrictive covenants – which is the context in which this question arises where neither of the parties to the dispute were, themselves, party to the instrument imposing the covenant or express assignees of the benefit of the covenant – section 78 of the 1925 Act defines “successors in title” as the owners and occupiers of the time being of the land of the covenantee intended to be benefited. In a case where the parties to the instrument make clear their intention that land retained by the covenantee at the time of the conveyance effected by the transfer is to have the benefit of the covenant only for so long as it continues to be in the ownership of the original covenantee, and not after it has been sold on by the original covenantee – unless the benefit of the covenant is expressly assigned to the new owner – the land of the covenantee intended to be benefited is identified by the instrument as (i) so much of the retained land as from time to time has not been sold off by the original covenantee and (ii) so much of the retained land as has been sold off with the benefit of an express assignment, but as not including (iii) so much of the land as has been sold off without the benefit of an express assignment. I agree with the judge in Roake v Chadha (supra) that, in such a case, it is possible to give full effect to the statute and to the terms of the covenant.
This approach to section 78 of the 1925 Act provides, as it seems to me, the answer to the question why, if the legislature did not intend to distinguish between the effect of section 78 (mandatory) and the effect of section 79 (subject to contrary intention), it did not include the words “unless a contrary intention is expressed” in the first of those sections. The answer is that it did not need to. The qualification “subject to contrary intention” is implicit in the definition of “successors in title” which appears in section 78(1); that is the effect of the words “the land of the covenantee intended to be benefited”. If the terms in which the covenant is imposed show – as they did in Marquess of Zetland v Driver (supra) and in Roake v Chadha – that the land of the covenantee intended to be benefited does not include land which may subsequently be sold off by the original covenantee in circumstances where (at the time of that subsequent sale) there is no express assignment of the benefit of the covenant, then the owners and occupiers of the land sold off in those circumstances are not “owners and occupiers for the time being of the land of the covenantee intended to be benefited”; and so are not “successors in title” of the original covenantee for the purposes of section 78(1) in its application to covenants restrictive of the user of land.
By contrast, the definition of “successors in title” for the purposes of section 79(1) appears in sub-section (2) of that section: “the owners and occupiers for the time being of such land”. In that context “such land” means “any land of the covenantor or capable of being bound by him [to which the covenant relates].” The counterpart in section 79 of “land of the covenantee intended to be benefited” (in section 78(1)) is “such land”. “Such land” in that context means the land referred to in section 79(1); that is to say “any land of the covenantor or capable of being bound by him”. But section 79(1) imposes two qualifications; (i) the land must be land to which the covenant relates and (ii) there must be no expression of contrary intention. The section could, perhaps, have described the land as “land of the covenantor (or capable of being bound by him) intended to be burdened”. But the effect would have been the same. If the parties did not intend that land, burdened while in the ownership of the covenantor, should continue to be subject to the burden in hands of his successors (or some of his successors), they could say so. On a true analysis there is no difference in treatment in the two sections. There is a difference in the drafting technique used to achieve the same substantive result. That may well simply reflect the legislative history of the two sections. Section 78(1) of the 1925 Act re-enacted section 58 of the Conveyancing and Law of Property Act 1881 as applied by section 96(3) of the Law of Property Act 1922 and amended by section 3 of, and paragraph 11 in the Third Schedule to, the Law of Property (Amendment) Act 1924. Section 79 was a new provision, first introduced in the 1925 Act.
Is the benefit of the covenants annexed in the present case?
As I have said, there is no express annexation of the covenants contained in the two Arthur conveyances (dated 2 February 1928 and 15 February 1933) or in the first of the Roberts conveyances (dated 21 November 1930). The question, in relation to those three conveyances, is whether the land intended to be benefited can be identified (from a description, plan or other reference in the conveyance itself, but aided, if necessary, by external evidence to identify the land so described, depicted or otherwise referred to) so as to enable statutory annexation under section 78(1) of the 1925 Act to have effect. The land conveyed by the two Arthur conveyances is described by reference to plots numbered 5 and 6 on the Fee Farm Estate at Claygate; but there is nothing in either conveyance which points to an intention that the covenant is taken for the benefit of other land (and, if so, what other land) on the Fee Farm Estate; and nothing in either conveyance which enables the Fee Farm Estate to be identified. There is no reference to the Fee Farm Estate in the first (or the second) of the Roberts conveyances.
The covenants in the two Humphreys conveyances (dated 22 August 1928 and 3 November 1933) and in the second of the Roberts conveyances (dated 3 November 1933) did contain express words of annexation: “For the benefit of the property at Claygate aforesaid belonging to [the Company] or the part thereof for the time being remaining unsold” [emphasis added]. The question, in relation to those three conveyances, is whether the effect of the words which I have emphasised is to limit annexation to so much of the land belonging to the Mitchell Brothers company at the time of the conveyance as thereafter remained for the time being unsold.
In my view the benefit of the covenants is not annexed to the land now owned by Mrs McAllister – that being land sold off by the original covenantees in 1936 under the Wing conveyance. I reach that conclusion for the following reasons.
It seems to me that the effect of the express words of annexation contained in the two Humphreys conveyances and in the second of the Roberts conveyances was to identify the land of the covenantee intended to be benefited, for the purposes of section 78(1) of the Law of Property Act 1925, in terms which excluded land which was in the ownership of the company at the time of the relevant conveyance but which, thereafter, was sold off by the company. That, I think, is the clear meaning of the words “the property at Claygate aforesaid belonging [to the Company] or the part thereof for the time being remaining unsold”. The property conveyed is described by reference to plots “being part of the Fee Farm Estate Claygate Surrey”. In that context “the property at Claygate aforesaid belonging [to the Company]” must exclude so much of the Fee Farm Estate as had already been sold off – and so does not belong to the company at the date of the conveyance. In the circumstances that the conveyance is made pursuant to a contract (to which reference is made in the recitals to the conveyance) it seems to me reasonably clear that the words “belonging [to the Company]” have the effect of excluding, also, the land conveyed – as the parties must be taken to have intended in any event. It was submitted to us that that was the object and effect – and the only object and effect – of the words “remaining unsold”. That submission might have some force – although not, I think, much force – if it were not for the additional words “for the time being”. Taken as a whole the description of the land to be benefited does not read “so much of the Fee Farm Estate as remains unsold after this conveyance”; it reads “so much of the Fee Farm Estate as for the time remains unsold”. In that context, as it seems to me, “for the time being” means “from time to time”. And that, of course, makes good sense for the reason to which I have already referred. Where development land is sold off in plots without imposing a building scheme, it is likely that the developer will wish to retain exclusive power to give or withhold consent to a modification or relaxation of a restriction on building which he imposes on each purchaser; unfettered by the need to obtain the consent of every subsequent purchaser to whom (after imposing the covenant) he has sold off other plots on the development land. If it were otherwise he would create a situation in which the ability of a purchaser of one plot to enforce covenants against the owner of another plot depended on the order in which the plots had been sold off; a situation described by Mr Justice Ungoed-Thomas in Eagling v Gardner [1970] 2 All ER 838, 846d, as “a building scheme in Alice’s Wonderland”.
In reaching the conclusion which I have as to the effect of the words of annexation in the three conveyances in which there are such words, I have had regard to the decision of this Court in Whitgift Homes Limited and others v Stocks and others [2001] EWCA Civ 1732. The words of annexation in the relevant conveyances in that case – that is to say, in the conveyances dated respectively 11 March 1932 and 23 March 1932 to the predecessors in title of the defendants to the action – appear at paragraph 32 in the judgment of Lord Justice Jonathan Parker: “For the benefit of the Company’s Estate at Croydon the Purchaser . . . covenants with the Company that the Purchaser will observe and perform the stipulations and conditions set out in the Second Schedule hereto . . “. The principal issue on the appeal was whether the estate had been sold off under a building scheme – it was held that there was no building scheme – but the question of annexation arose in relation to the alternative claims of three of the fifty-five claimants who derived title from conveyances which were later in date than the two which I have mentioned. In addressing the annexation issue in that context, Lord Justice Jonathan Parker observed, at paragraph 104 of his judgment, that “The reference to ‘the Company’s Estate at Croydon’ and to ‘the Vendors’ Estate at Croydon’ are in my judgment entirely apt to refer to such parts of that estate as were retained by the developer, and by virtue of section 78(1) the covenants are deemed to have been made with the developer and its successors in title”. That observation – which, if I may respectfully say so, seems to me entirely consistent with earlier authorities, including those to which I have referred in this judgment – is of no assistance to Mrs McAllister in the present case. The relevant words of annexation in the present case (in those conveyances in which there are express words of annexation) are not “for the benefit of the Company’s Fee Farm Estate at Claygate”; they are “for the benefit of . . . the part thereof for the time being remaining unsold”. There was evidence in the Whitgift case that some conveyances of plots on the vendors’ Croydon estate had additional words in that form – see paragraph 45 in the judgment of Lord Justice Jonathan Parker – but those conveyances were not under consideration in relation to the annexation issue and the observation to which I have referred is not directed to them.
It seems to me that there is nothing in the first of the Roberts conveyance (dated 21 November 1930) which enables the Court to identify, even with the aid of external evidence to assist general words of description, what land (if any) was intended to be benefited by the covenants. As I have said, there is no reference in that conveyance to the Fee Farm Estate or to plots on that estate. The reason is that the dwelling house known as “Morwenna” had already been built on the land conveyed by that conveyance, and the land was described by reference to that name and by reference to a plan. The plan contained no reference to the Fee Farm Estate. It showed land adjoining the plot conveyed to be in the ownership of the Mitchell Brothers; but that land did not extend to the land of which Mrs McAllister is now owner. In those circumstances section 78 of the Law of Property Act 1925 is of no assistance to Mrs McAllister. She cannot show that she is the owner or occupier of “land of the covenantee intended to be benefited”.
The position in relation to the land conveyed by the two Arthur conveyances is less obvious. As I have said, in the first of those conveyances the land conveyed is described as “situate and being Plot No 6 and Part of Plot No 5 on the Fee Farm Estate at Claygate”; and, in the second, the land conveyed is described as “situate and partly in the rear of Plot No 6 and partly in the rear of Plot No 5 on the fee farm estate at Claygate”. In each case the land conveyed is defined, by measurement, on a plan drawn on the conveyance. In neither case does the plan show any other numbered plots, or even refer to the Fee Farm Estate. In the case of the first conveyance the plan shows no other land said to be in the ownership of the Mitchell brothers or their company. There is nothing in that conveyance to show what land (if any) the brothers or their company own in the neighbourhood; in particular, there is nothing to show whether, at the date of that conveyance, they own any part of the Fee Farm Estate. In the case of the second conveyance the plan does show land in the ownership of the company on each side of, and adjoining, the land conveyed. But the adjoining land shown by the plan to be in the ownership of the company does not extend to the land now owned by Mrs McAllister.
In those circumstances I have reached the following conclusions in relation to the land conveyed by the two Arthur conveyances: (i) there is no sufficient indication, in either conveyance, that the covenants are taken for the benefit of land comprising the whole (or such parts as remained unsold) of the Fee Farm Estate – although, if there had been, evidence as to the extent of the Fee Farm Estate then unsold would, I think, have been admissible; (ii), there is no sufficient indication in the first conveyance (standing alone) that the covenant is taken for the benefit of any land then owned (and to be retained) by the Mitchell brothers or their company; (iii) there is some indication in the second conveyance that the covenant is taken for the benefit of the adjoining land shown on the plan as being in the ownership of the company; (iv) it could be said that the effect of the second conveyance was to reaffirm, by reference to the plan drawn on that conveyance, the covenants in the first conveyance; but (v) the land shown on the plan drawn on the second conveyance as being in the ownership of the company does not extend to the land now in the ownership of Mrs McAllister. It follows that, in relation to the Arthur conveyances also, section 78 of the Law of Property Act 1925 is of no assistance to Mrs McAllister. She cannot show that she is the owner or occupier of “land of the covenantee intended to be benefited”.
The meaning and effect of the restrictions
It follows from the conclusion which I have reached in relation to annexation that I find it unnecessary to decide either (i) whether the effect of the user restriction is to preclude the use of each of the plots conveyed to that of a single private dwelling house (or for professional purposes) or (ii) whether the effect of the building restriction is now spent. For completeness, however, I would add that I see no reason to differ from the conclusions reached by the judge on those issues. On those issues I think that he was right for the reasons which he gave. But, of course, he was not asked to consider the question of annexation which, to my mind, makes his conclusions on those issues academic.
Conclusion
I would allow this appeal and make no order on the cross appeal. I would vary the judge’s order so as to declare that the covenants in the first six conveyances listed in the schedule to the claim form are not enforceable by Mrs McAllister as the owner of Newlyn.
Lady Justice Arden:
I agree.
Lord Justice Auld:
I also agree.
Haywood v Brunswick Permanent Benefit Building Society
(1881) 8 QBD 403, CA
Brett LJ: This appeal must be allowed. I am clearly of opinion, both on principle and on the authority of Milnes v Branch,146 that this action could not be maintained at common law.
Milnes v Branch must be understood, as it always has been understood, and as Lord St
Leonard ‘s147understood it, and it will be seen, on a reference to his book, that he considers the effect of it to be that a covenant to build does not run with the rent in the hands of an assignee.
This being so, the question is reduced to an equitable one. Now the equitable doctrine was brought to a focus in Tulk v Moxhay, which is the leading case on this subject. It seems to me that that case decided that an assignee taking land subject to a certain class of covenants is bound by such covenants if he has notice of them, and that the class of covenants comprehended within the rule is that covenants restricting the mode of using the land only will be enforced. It may be also, but it is not necessary to decide here, that all covenants also which impose such a burden on the land as can be enforced against the land would be enforced. Be that as it may, a covenant to repair is not restrictive and could not be enforced against the land; therefore such a covenant is within neither rule. It is admitted that there has been no case in which any court has gone farther than this, and yet if the court would have been prepared to go farther, such a case would have arisen. The strongest argument to the contrary is, that the reason for no court having gone farther is that a mandatory injunction was not in former times grantable, whereas it is now; but I cannot help thinking, in spite of this, that if we enlarged the rule as it is contended, we should be making a new equity, which we cannot do.
I think also that Cox v Bishop shews that a Court of equity has refused to extend the rule of Tulk v Moxhay in the direction contended for, and that if we decided for the plaintiff we should have to overrule that case. But it is sai;d 11).at if we decide for the defendants we shall have to overrule Cooke v Chilcott. I..
Cotton LJ: I am of the same opinion on both points. I think that a mere covenant that land shall be improved does not run with the land within the rule in Spencer’s case so as to give the plaintiff a right to sue at law. I also think that the plaintiff has no remedy in equity. Let us consider the examples in which a Court of Equity has enforced covenants affecting land. We find that they have been invariably enforced if they have been restrictive, and that with the exception of the covenants in Cooke v Chilcott; only restrictive covenants have been enforced. In Tulk v Moxhay, the earliest of the cases, Lord Cottenham says, ‘That this court has jurisdiction to enforce a contract between the owner of land and his neighbour purchasing a part of it, that the latter shall either use or abstain from using it in a particular way, is what I never knew disputed.’ In that case, the covenant was to use in a particular manner, from which was implied a covenant not to use in any other manner, and the plaintiff obti).ined an injunction restraining the defendant from using in any other manner, although the covenant was in terms affirmative. At p 778, Lord Cottenham says, ‘If an equity is attached to property by the owner no one purchasing with notice of that equity can stand in a different situation from the party from whom he purchased.’ This lays down the real principle that an equity attaches to the owner of the land. It is possible that the doctrine might be extended to cases where there is an equitable charge which might be enforced against the land, but it is not necessary to decide that now; it is enough to say that with that sole exception the doctrine could not be farther extended. The covenant to repair can only be enforced by making the owner put his hand into his pocket, and there is nothing which would justify us in going that length. We are not bound here by Cooke v Chilcott1,4 8 and I do not think that the rule of Tulk v Moxhay149 can be extended as Malins
apply very closely. In Milnes v Branch, the plaintiff was not assignee in fee of the rent, having onlya leasehold interest in that rent. In Randall v Rigby, the question was; whether debt or covenant was the proper form of action. There are dicta in the judgments, however, which favour the contention of the defendants in this case, and it is impossible not to see that the burden of the covenant does not run with the land. This is nota case of landlord and tenant: we must never lose sight of that distinction.
With regard to the question of notice, Tulk v Moxhay shews that a restrictive covenant will be enforced, and so do Cox v Bishop 158 and Wilson v Hart.159 But I think that the result of these
cases is that only such a covenant as can be complied with without expenditure of money will be enforced against the assignee on the ground of notice. Especially does this appear from Wilsonv Hart, where a covenant not to use a house as a beershop was enforced against a purchaser’s tenant from year to year. It is absurd to suppose that sucha tenant could have
been compelled to perform a covenant to repair.
The principle of Cooke v Chilcott may or may not be applicable to this case, but the circumstances were wholly different. I should be sorry to overrule that case, and prefer to leave it to be reconsidered on some future occasion. It is enough to say that in the present case we have been asked to extend Tulk v Moxhay as it has never been extended before, and
we decline to do so.
Re Royal Victoria Pavilion [1961] Ch 581
Pennycuick J: In order to answer the question raised by the summons it is necessary in the first place to determine the construction of clause 5 of the conveyance. By that clause Thanet Theatrical covenanted to procure that, during a term corresponding to the residue of its leasehold interest, the use of the Pavilion should be restricted as therein mentioned. The word ‘procure’ is defined in the Oxford English Dictionary (1909 edn), Vol VII,p 1419, as meaning ‘obtain by care or effort’, and can be more simply paraphrased as ‘see to it’. The obligation undertaken by Thanet Theatrical is to see to it thata certain state of affairs prevails during the specified term. It seems to me that a covenant so expressed is naturally to be regarded as ofa purely personal character. The tenant of property is ina position to ensure that during his tenancy the property is not to be used ina specified manner either by himself or by persons claiming under him, whether as licensees, underlessees or assignees, and the word ‘procure’ is appropriate to denote a personal obligation so to ensure. So here the covenant regarded purely as a personal covenant would have been perfectly sensible and workable had Thanet Theatrical remained in existence. On the other hand, it seems to me thata covenant so expressed is not naturally to be regarded asa covenant on behalf of the covenantor and his successors in title so as to run with the land. The causative verb ‘procure’ is not appropriate where &uccessors in title are themselves to be bound. The covenantor undera covenant inteii.ded to run with the land would not sensibly be bexepdroenssee.d as procuring his successors to abstain from doing whatever is covenanted not to
The view that the covenant in clause 5 is intended to be of a purely personal character derives much support from the clauses which immediately precede and follow it. Clause 4, which as regards sub-paras (a) and (c) at any rate is plainly intended to run with the land, is introduced by the apt words ‘The purchasers for themselves and their successors and assigns hereby covenant with the vendors.’ Clause 6, which is plainly intended asa purely personal covenant, is introduced only by the words ‘the vendors hereby covenant with the purchasers.’ It would be strange draftsmanship to interpose between these two covenantsa
covenant intended to run with the land, and yet only introduced by the words ‘the vendors hereby covenant with the purchasers’.
It is important in construing the covenant in clause 5 to bear in mind that the period covered by it is only 17 years. A restriction for so short a period can readily be achieved bya purely personal obligation, unlike a restriction in perpetuity which can only be fully effective if it runs with the land.
Mr Oliver for the defendant company points out that the covenant, though positive in form, may yet be negative in substance. This is so, and I imagine that here the covenant in clause5 would be regarded as negative to this extent, that it imports an obligation on Thanet Theatrical itself not to do any of the prohibited acts, butI do not think that Thanet Theatrical’s positive obligation to procure can, as regards persons claiming under it, be translated intoa negative obligation on those parties if upon the natural construction of the covenant they are not bound by it at all.
Mr Oliver further relies on s 79 of the Law of Property Act 1925.
So here it is contended that no contrary intention is expressed in the conveyance dated7 July 1952, and that, therefore, the covenant in clause 5 must be deemed to be made by Thanet Theatrical on behalf of itself and its successors in title. If the words ‘unless the contrary intention is expressed’ in s 79 mean: unless the instrument contains express provision to the contrary, this contention would, I think, be unanswerable.
Newton Abbot Co-operative Society Ltd v Williamson and Tradegold Ltd
[1952]1 Ch 286
Upjohn J: The sole issue before me is whether the plaintiffs are entitled to the benefit of the restrictive covenant, and, if so, whether they are entitled to enforce it against the
defendants.
I will deal with the first point first. Mr Binney on behalf of the plaintiffs submitted first that the benefit of the restrictive covenant was annexed to Devonia so as to pass with the assignment of Devonia in equity without any express mention in that subsequent assignment; in other words, that the covenant runs with the land. Alternatively, he said that the plaintiffs are the express assigns of the benefit of the covenant, and as such are entitled to enforce it. In this difficult branch of the law one thing in my judgment is clear, namely that in order to annex the benefit of a restrictive covenant to land, so that it runs with the land without express assignment on a subsequent assignment of the land, the land for the benefit of which it is taken must be clearly identified in the conveyance creating the
covenant …
Now, looking at the conveyance of 1923, I can find nothing whatever which identifies the land for the benefit of which the covenant is alleged to be taken. Mr Binney relies on the fact that Mrs Mardon is described as of Devonia, Fore Street, but that in my judgment is quite insufficient to annex the benefit of the covenant to those premises. There is no other
mention whatever of Devonia in the conveyance.
In my judgment, therefore, the plaintiff fails on this point.
I tum then to his second submission, namely, that the plaintiffs are express assigns of the benefit of the restrictive covenant. Mr Bowles, on behalf of the defendants, contends that, even if it be assumed that his submission (with which I shall deal later) that the covenant was not taken for the benefit of Devonia, but of the business carried on thereat, is wrong, and the covenant was taken by Mrs Mardon for the benefit of Devonia to enable her to dispose of it to better advantage, yet there is here no complete chain of assignments vesting the benefit in the plaintiffs. He says that there was never any assignment of the benefit of
the covenant by the executors of Mrs Mardon to Leonard Soper Mardon and therefore he was not ina position to assign the benefit of the covenant to the plaint7iffs’ predecessors in title. He relied on Ives v Brown96 and Lord Northbournev Johnston& Son.
In my judgment, those authorities do not support his contention. The position asI see it was this: On the footing that the restrictive covenant was not annexed to the land so as to run with it, the benefit of the covenant is capable of passing by operation of law as well as by vexBprroewssn.assignment and formed part of Mrs Mardon’s personal estate on her death: see Ives
It was not suggested that there was any implied assent to the assignment of the benefit of the covenant to the residuary legatee, but in my judgment, when her estate was duly wound up and administered, and this case has been argued before me on the footing that that happened many years ago, the benefit of the covenant was held by the executors as bare trustees for the residuary legatee, Leonard Soper Mardon, who was himself one of the executors. He therefore became entitled to the benefit of this restrictive covenant in equity and, in my judgment, he was entitled to assign the benefit in equity on an assignment of Devonia. No doubt had the covenant been assigned to him by the executors, he could also
have assigned it at law. That this is the position is, in my judgment, made clear by … the judgment of Sargant Jin Lord Northbourne v Johnston& Son 9 …
The second main question was whether the defendants are liable to have the covenant enforced against them. This was Mr Bowles’ main defence in this action and he says that the restrictive covenant was not taken for tfle benefit of Devonia, and he puts his case in this way: first, he says that in any event this was not taken for the benefit of any land, but wasa covenant with Mrs Mardon personally, solely for the benefit of her business. Secondly, he says that in order that an express assign.of the benefit may sue an assignee of the burden of the covenant there must be some reference in the conveyance creating that covenant to the land for the benefit of which it was taken. It will be convenient to deal with the first point first.
Mr Bowles strongly urged that the covenant was taken solely to protect, the goodwill of the business carried on at Devonia, that it had no reference to the land itself, and that it was not taken for the benefit of that land; in brief, that it was a covenant in gross incapable of assignment. He urged that taking such a covenant would benefit the business in that an enhanced price could be obtained for the business, but no such enhanced price would be obtained for the land. He relied on the fact that the covenant did not mention the vendors’ assigns and that it wasa covenant against competition. Further, he pointed out that when Leonard Soper Mardon assigned to the Bovey Tracey Co-operative Society, the benefit of the
covenant was assigned in the deed which assigned the business and not in the lease of Devonia …
I do not accept this view of the transaction of 1923. In 1923, Mrs Mardon was carrying on the business of an ironmonger at Devonia. No doubt the covenant was taken for the benefit of that business and to prevent competition therewith, but I see no reason to think, and there is nothing in the conveyance of 1923 which leads me to believe, that that was the sole object of taking the covenant. Mrs Mardon may well have had it in mind that she might want ultimately to sell her land and the business and the benefit of the covenant in such manner as to annex the benefit of the covenant to Devonia for, by so doing, she would get an enhanced price for the totality of the assets which she was selling;a purchaser would surely pay more fora property which would enable him to sue in equity assigns of the defendants’ premises taking with notice and to pass on that right, if he so desired, to his
successors, than fora property which would only enable him to sue the original covenantor, for that is the result of the view urged on me by Mr Bowles.
Further, Mrs Mardon may well have thought that her own business might ultimately be dosed down, or the goodwill thereof sold to someone who was going to carry it on some other premises. She would then be left with Devonia, and Devonia could be sold at an l’nhanced price to someone intending to carry on the business of an ironmonger, because, if, as part of the sale transaction, he obtained the benefit of the covenant, he could prevent competition from the defendants’ premises opposite in that trade.
In my judgment, it was always open to Mrs Mardon, when she desired to dispose either of the land or the business, to assign the benefit of the covenant with the one or the other or both as she chose. By taking this covenant, she was thereby enabled to sell her premises, or her business, to better advantage as she thought fit …
Accordingly, in my judgment, the defendants fail on this point.
Mr Bowles’ second point was that, in order that the benefit of the covenant may be assignable, the land for which the benefit of the covenant is taken must in some way be
referred to in the conveyance creating the covenant, and I was naturally pressed with the headnote in Re Union of London and Smith’s Bank Ltd’s Conveyance99 which reads as follows:
Where on a sale otherwise than under a building scheme a restrictive covenant is taken, the benefit of which is not on the sale annexed to the land retained by the covenantee so as to run with it, an assign of the covenantee’s retained land cannot enforce the covenant against an assign (taking with notice) of the covenantor unless he can show (i) that the covenant was taken for the benefit of ascertainable land of the covenantee capable of being benefited by the covenant, and (ii) that he (the covenantee’s assign) is an express assign of the benefit of the covenant.
and with the following passage in the judgment of Bennett J:In my judgment, in order that an express assignee of a covenant restricting the user of land may be able to enforce that covenant against the owner of the land burdened with the covenant, he must be able to satisfy the court of two things. The first is that it was a covenant entered into for the benefit or protection of land owned by the covenantee at
the date of the covenant. Otherwise, it is a covenant in gross, and unenforceable except as between the parties to the covenant: see Formby v Barker.101 Secondly, the assignee must be able to satisfy the court that the deed containing the covenant defines or contains something to define the property for the benefit of which the covenant was entered into: see James LJ in Renals v Cowl ishaw.102
With all respect to the statement of the judge, I am unable to agree that where a person is suing as an assign of the benefit of the covenant there must necessarily be something in the deed containing the covenant to define the land for the benefit of which the covenant was entered into. In the first place, the passage in the judgment of James LJ in Renals v Cowlishaw, which I have already read, on which the judge relied, does not in my judgment support the statement of the law for which it was cited. In Renals v Cowlishaw, there was no express assignment of the benefit of the restrictive covenant (see the statement of fact in the report in the court below);103 and when James LJ says that to enable an assign to take the
benefit of restrictive covenants there must be something in the deed to define the property for the.benefit of which they were entered into, he is, I think, dealing with the case where it is contended that the benefit of the covenant has been annexed to the land so as to run with the land. When he uses the word ‘assign’ he is using the word as meaning an assign of the land and not an assign of the benefit of the covenant. Secondly, the views expressed by Bennett J appear to me to be inconsistent with the views expressed in some of the earlier decisions. I do not propose to cite them, but I refer to the following observations on the law on this point, namely the observations of Collins LJ, delivering the judgment of the Court of Appeal in Rogers v Hosegood;104 those of Vaughan Williams LJ in Formby v Barker; and to the
observations of Cozens-Hardy MR in Reid v Bickerstaff;105 and to the words of Buckley LJ in the same case. Finally, in Re Union of London and Smith’s Bank Ltd’s Conveyance,l06 Romer LJ,
reading the judgment of the Court of Appeal, having considered the cases where the benefit of the covenant is annexed to land so as to run without express mention, says:
In all other cases, the purchaser will not acquire the benefit of the covenant unless that benefit be expressly assigned to him or, to use the words of the Vice-Chancellor, ‘it must appear that the benefit of the covenant was part of the subject matter of the purchase’.
In my judgment, therefore, the problem which I have to consider is this: First, when Mrs Mardon took the covenant in 1923, did she retain other lands capable of being benefited by
the covenant? The answer is plainly yes. Secondly, was such land ‘ascertainable’ or ‘certain’ in this sense that the existence and situation of the land must be indicated in the conveyance
Rhone v Stephens
[1994] 2 All ER 65, HL
Lord Templeman: For over 100 years it has been clear and accepted law that equity will enforce negative covenants against freehold land but has no power to enforce positive covenants against successors in title of the land. To enforce a positive covenant would be to l’nforcea personal obligation against a person who has not covenanted. To enforce negative
covenants is only to treat the land as subject to a restriction.
Mr Munby, who argued the appeal persuasively on behalf of the plaintiffs, referred to an article by Professor Sir William Wade, ‘Covenants – “a broad and reasonable view'” (1972) ‘.l1 CLJ 157, and other articles in which the present state of the law is subjected to severe criticism. In 1965, the Report of the Committee on Positive Covenants Affecting Land (Cmnd 2719), which wasa report by a committee appointed by the Lord Chancellor and under the chairmanship of Lord Wilberforce, referred to difficulties caused by the decision in the Austerberry case and recommended legislation to provide that positive covenants which relate to the use of land and are intended to benefit specified other land should run with the land. In Transfer of Land: Appurtenant Rights (Law Commission Working Paper No 36, published on5 July 1971) the present law on positive rights was described as being illogical, uncertain, incomplete and inflexible. The Law Commission Report Transfer of Land: The Law of Positive and Restrictive Covenants (Law Com No 127) laid before Parliament in 1984 made recommendations for the reform of the law relating to positive and restrictive obligations
and submitteda draft Bill for that purpose. Nothing has been done.
In these circumstances your Lordships were invited to overrule the decision of the Court of Appeal in the Austerberry case. To do so would destroy the distinction between law and equity and to convert the rule of equity into a rule of notice. It is plain from the articles, reports and papers to which we were referred that judicial legislation to overrule the Austerberry case would create a number of difficulties, anomalies and uncertainties and affect the rights and liabilities of people who have for over 100 years bought and sold land in the knowledge, imparted at an elementary stage to every student of the law of real property, that positive covenants affecting freehold land are not directly enforceable except against the original covenantor. Parliamentary legislation to deal with the decision in the Austerberry case would require careful consideration of the consequences. Moreover, experience with leasehold tenure where positive covenants are enforceable by virtue of privity of estate has demonstrated that social injustice can be caused by logic. Parliament was obliged to intervene to prevent tenants losing their homes and being saddled with the costs of restoring to their original glory buildings which had languished through wars and
economic depression for exactly 99 years.
Mr Munby submitted that the decision in the Austerberry case had been reversed remarkably but unmarked bys 79 of the Law of Property Act 1925, which, so far as
material, provides:
(1) A covenant relating to any land of a covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself his successors in title and the persons deriving title under him or them, and subject as aforesaid, shall have effect as if such successors and other persons were expressed …
This provision has always been regarded as intended to remove conveyancing difficulties with regard to the form of covenants and to make it unnecessary to refer to successors in title. A similar provision relating to the benefit of covenants is to be found ins 78 of the 1925 Act. In Smith v River Douglas Catchment Board [1949] 2 All ER 179; (1949] 2 KB 500, followed in Williams v Unit Construction Co Ltd (1951) 19 Conv NS 262, it was held by the Court of Appeal thats 78 of the 1925 Act had the effect of making the benefit of positive covenants run with the land. Without casting any doubt on those long-standing decisions I do not consider that it follows thats 79 of the 1925 Act had the corresponding effect of making the burden of positive covenants run with the land. In Jones v Price [1965] 2 All ER 625 at 630; [1965] 2 QB 618 at 633′ Willmer LJ repeated that:’… a covenant to perform positive acts … is not one the burden of which runs with the land so as to bind the successors in title of the covenantor; see Austerberry v Oldham Corpn.’
In Sefton v Tophams Ltd [1966] 1 All ER 1039 at 1048, 1053; [1967] 1 AC 50 at 73, 81 Lord Upjohn and Lord Wilberforce stated thats 79 of the 1925 does not have the effect of causing covenants to run with the land. Finally, ·in Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 371, at 380; (1980] 1 WLR 594 at 60506, Brightman J referred to the authorities on s 78 of the 1925 Act and said:
Section 79, in my view, involves quite different considerations and I do not think that it provides a helpful analogy.
… In the result I would dismiss the appeal …
Rogers v Hosegood
[1900] 2 Ch 388, CA
Collins LJ: (read the judgment of the Court (Lord Alverstone MR, and Rigby and Collins
LJJ)): This case raises questions of some difficulty, but we are of opinion that the decision of Farwell J is right and ought to be affirmed …
The real and only difficulty arises on the question – whether the benefit of the covenants has passed to the assigns of Sir John Millais as owners of the plot purchased by him on 25 March 1873, there being no evidence that he knew of these covenants when he bought. Here, again, the difficulty is narrowed, because by express declaration on the face of the conveyances of 1869 the benefit of the two covenants in question was intended for all or any of the vendor’s lands near to or adjoining the plot sold, and therefore for (among others) the plot of land acquired by Sir John Mi!lais, and that they ‘touched and concerned’ that land within the meaning of those words so as to run with the land at law we do not doubt. Therefore, but fora technical difficulty which was not raised before Farwell J, we should agree with him that the benefit of the covenants in question was annexed to and passed to Sir John Millais by the conveyance of the land which he bought in 1873.A difficulty, however, in giving effect to this view arises from the fact that the covenants in question in the deeds of May and July 1869, were made with the mortgagors only, and therefore in contemplation of law were made with:strangers to the land: Webbv Russell, to which, therefore, the benefit did not become annexed. That a court of equity, however, would not regard such an objection as defeating the intention of the parties to the covenant is clear; and, therefore, when the covenant was clearly made for the benefit of certain land witha person who in the contemplation of such a court was the true owner of it, it would be
regarded as annexed to and running with .that land, just as it would have been at law but for the technical difficulty.
…..
These observations, which are just as applicable to the benefit reserved as to the burden imposed, shew that in equity, just as at law, the first point to be determined is whether the covenant or contract in its inception binds the land. If it does, it is then capable of passing with the land to subsequent assignees; if it does not, it is incapable of passing by mere assignment of the land. The benefit may be annexed to one plot and the burden to another, and when this has been once clearly done the benefit and the burden pass to the respective
assignees, subject, in the case of the burden, to proof that the legal estate, if acquired, has been acquired with notice of the covenant.
…..
These authorities establish the proposition that, when the benefit has been once clearly annexed to one piece of land, it passes by assignment of that land, and may be said to run with it, in contemplation as well of equity as of law, without proof of special bargain or representation on the assignment. In such a case, it runs, not because the conscience of either party is affected, but because the purchaser has bought something which inhered in or was annexed to the land bought. This is the reason why, in dealing with the burden, the purchaser’s conscience is not affected by notice of covenants which were part of the original bargain on the first sale, but were merely personal and collateral, while it is affected by notice of those which touch and concern the land. The covenant must be one that is capable of running with the land before the question of the purchaser’s conscience and the equity affecting it can come into discussion. When, as in Renals v Cowlishaw, there is no indication in the original conveyance, or in the circumstances attending it, that the burden of the restrictive covenant is imposed for the benefit of the land reserved, or any particular part of it, then it becomes necessary to examine the circumstances under which any part of the land reserved is sold, in order to see whether a benefit, not originally annexed to it, has become annexed to it on the sale, so that the purchaser is deemed to have bought it with the land, and this can hardly be the case when the purchaser did not know of the existence of the restrictive covenant. But when, as here, it has been once annexed to the land reserved, then it is not necessary to spell an intention out of surrounding facts, such as the existence of a building scheme, statements at auctions, and such like circumstances, and the presumption must be that it passes on a sale of that land, unless there is something to rebut it, and the purchaser’s ignorance of the existence of the covenant does not defeat the presumption. We can find nothing in the conveyance to Sir John Millais in any degree inconsistent with the intention to pass to him the benefit already annexed to the land sold to him. We are of opinion, therefore, that Sir John Millais’s assigns are entitled to enforce the restrictive covenant against the defendant, and that his appeal must be dismissed.
Renals v Cowlishaw
[1878] 9 Ch D 125
Hall VC: The law as to the burden of and the persons entitled to the benefit of covenants in conveyances in fee, was certainly not in a satisfactory state; but it is now well settled that the burden of a covenant entered into by a grantee in fee for himself, his heirs, and assigns, although not running with the land at law so as to give a legal remedy against the owner thereof for the time being, is binding upon the owner of it for the time being, in equity, having notice thereof. Who, then (other than the original covenantee), is entitled to the
benefit of the covenant? From the cases of Mann v Stephens,50 Western v Macdermott,51 and
Coles v Sims,52 it may, I think, be considered as determined that any one who has acquired land, being one of several lots laid out for sale as building plots, where the court is satisfied that it was the intention that each one of the several purchasers should be bound by and should, as against the others, have the benefit of the covenants entered into by each of the purchasers, is entitled to the benefit of the covenant; and that this right, that is, the benefit of the covenant, enures to the assign of the first purchaser, in other words, runs with the land of such purchaser. This right exists not only where the several parties execute a mutual deed of covenant, but wherever a mutual contract can be sufficiently established. A purchaser may also be entitled to the benefit of a restrictive covenant entered into with his veri.dor by another or others where his vendor has contracted with him that he shall be the assign of it, that is, have the benefit of the covenant. And such covenant need not be express, but may be collected from the transaction of sale and purchase. In considering this, the expressed or otherwise apparent purpose or object of the covenant, in reference to its being intended to be annexed to other property, or to its being only obtained to enable the covenantee more advantageously to deal with his property, is important to be attended to. Whether the purchaser is the purchaser of all the land retained by his vendor when the covenant was entered into, is also important. If he is not, it may be important to take into consideration whether his vendor has sold off part of the land so retained, and if he has done so, whether or not he has so sold subject to a similar covenant: whether the purchaser claiming the benefit of the covenant has entered into a similar covenant may not be so important.
The plaintiffs in this case, in their statement of claim, rest their case upon their being ‘assigns’ of the Mill Hill estate, and they say that as the vendors to Shaw were the owners of that estate when they sold to Shaw a parcel of land adjoining it, the restrictive covenants entered into by the purchaser of that parcel of land must be taken to have been entered into with them for the purpose of protecting the Mill Hill estate, which they retained; and, therefore, that the benefit of that restrictive covenant goes to the assign of that estate, irrespective of whether or not any representation that such a covenant had been entered into by a purchaser from the vendors was made to such assigns, and without any contract by the vendors that that purchaser should have the benefit of that covenant. The argument must, it would seem, go to this length, viz, that in such a case a purchaser becomes entitled to the covenant even although he did not know of the existence of the covenant, and that although the purchaser is not (as the purchasers in the present case were not) purchaser of all the property retained by the vendor upon the occasion of the conveyance containing the covenants. It appears to me that the three cases to which I have referred shew that this is not the law of this court; and that in order to enable a purchaser as an assign (such purchaser not being an assign of all that the vendor retained when he executed the conveyance containing the covenants, and that conveyance not shewing that the benefit of the covenant was intended to enure for the time being of each portion of the estate so retained or of the portion of the estate of which the plaintiff is assign) to claim the benefit of a restrictive covenant, this, at least, must appear, that the assign acquired his property with the benefit
of the covenant, that is, it must appear that the benefit of the covenant was part of the subject matter of the purchase. Lord Justice Bramwell, in Master v Hansard,53 said: ‘I am
satisfied that the restrictive covenant was not put in for the benefit of this particular property, but for the benefit of the lessors to enable them to make the most of the property which they retained.’ In the present case, I think that the covenants were put in with a like object. If it had appeared in the conveyance to Bainbrigge that there were such restrictive covenahts in conveyances already executed, and expressly or otherwise that Bainbrigge was to have the benefit of them, he and the plaintiffs, as claiming through him, would have been entitled to the benefit of them. But there being in the conveyance to Bainbrigge no reference to the existence of such covenants by recital of the conveyances containing them or otherwise, the plaintiffs cannot be treated as entitled to the benefit of them. This action must be dismissed with costs.
Re Ballard’s Conveyance
[1937] Ch 473
Clauson J: Is the covenant one which, in the circumstances of the case, comes within the category ofa covenant the benefit of which is capable of running with the land for the benefit of which it was taken? A necessary qualification in order that the covenant may come within that category is that it concerns or touches the land with which it is to run: see per Farwell Jin Rogersv Hosego od.56 That land is an area of some 1,700 acres. It appears to me quite obvious that whilea breach of the stipulations might possibly affecta portion of that area in the vicinity of the applicant’s land, far the largest part of this area of 1,700 acres could not possibly be affected by any breach of any of the stipulations.
Counsel for the respondents asked for an adjournment in order to consider whether they would call evidence (asI was prepared to allow them to do) to prove thata breach of the stipulations or of some of them might affect the whole of this large area. However,
ultimately no such evidence was called.
The result seems to me to be that I am bound to hold that, while the covenant may concern or touch some comparatively small portion of the land to which it has been sought to annex it, it fails to concern or touch far the largest part of the land.I asked in vain for any authority which would justify me in severing the covenant and treating it as annexed to or running with such part of the land as is touched by or concerned with it, though as regards the remainder of the land, namely, such part as is not touched by or concerned with the covenant, the covenant is not and cannot be annexed to it and accordingly does not and cannot run with it. Nor have I been able through my own researches to find anything in the books which seems to justify any such course. In Rogersv Hosegood, the benefit of the covenant was annexed to all or any of certain lands adjoining or near to the covenantor’s land, and no such difficulty arose as faces me here; and there are many other reported cases in which, for similar reasons, no such difficulty arose. But the requirement that the covenant, in order that the benefit of it may run with certain lands, must concern or touch those lands, is categorically stated by Farwell J … in terms which are unquestionably in accord with a long line of earlier authority.
Marquess of Zetland v Driver
[1939) Ch 1
Farwell J:
… there does not appear to be any ground on which the appellant can properly be refused the relief which he seeks; but Bennett J took the opposite view and held that the benefit of the covenant had not passed to the appellant. In coming to that conclusion he founded himself upon a decision of Clauson Jin In Re Ballard’s Conveyance,58 which he considered to be exactly in point and binding upon him. In our judgment the learned judge was wrong in thinking that Re Ballard’s Conveyance was an authority in this case. It is not necessary for us, and we do not propose, to express any opinion as to that decision beyond saying that it is clearly distinguishable from the present case, if only on the ground that in that case the covenant was expressed to run with the whole estate, whereas in the present case no such difficulty arises because the covenant is expressed to be for the benefit of the whole or any part or parts of the unsold settled property.
J Sainsbury pie v Enfield LBC
[1989] 2 All ER 817
Morritt J: In Federated Homes Ltd v Mill Lodge Properties Ltd66 the Court of Appeal decided that in the case ofa covenant relating to land of the covenantee in the sense that it touched
and concerned that land the effect of s 78 of the Law of Property Act 1925 was to cause the benefit of the covenant to run with that land and be annexed to it.
The defendant seeks to argue from this decision, and notwithstanding the reasoning expressed in it, thats 58 of the 1881 Act had the same effect. The same point was taken in Shropshire CC v Edwards 67 but was not dedded.
In Renalsv Cow lis haw 68 and Reid v Bickersatjf,69 the covenants to whichI have referred were entered into befores 58 of the 1881 Act ca.me into force on 31 December 1881. Thus, this point was not of relevance in those caseey. But in view of the date of the decision in Renalsv Cow/ishaw it would be very surprising if by enacting in s 58(1) of the 1881 Act that:
A covenant … shall be deemed to be made with the covenantee, his heirs and assigns, and shall have effect as if heirs and assigns were expressed.
Parliament intended to effect annexation when the Court of Appeal had already decided that such words if expressed did not suffice.
Between the 1881 Act and the 1925 Act the covenants in Ives v Brown70 and Milesv Easter71
were entered into. Buts 58 of the 1881 Act was not referred to in either case.
In Forsterv Elvet Colliery Co Ltd72 the Court of Appeal did refer tos 58 of the 1881 Act. The
case was not concerned with annexation of the benefit of covenants relating to freehold land. Cozens-Hardy MR said (at 635):
The word ‘lessee’ is by the definition at the beginning of the lease to include also ‘his executors, administrators and assigns, unless such construction be excluded by the sense or the context.’ And by s 58 of the Conveyancing Act 1881, words of limitation are to be read into the covenant, assuming it to be a covenant ‘relating to land.’ Now, under the old law, it is settled that the owner of the surface, not being mentioned as a party to the deed, could not have sued on the covenant.
Fletcher Moulton LJ said (at 637-38):
It is true that none of the plaintiffs in these actions were either owners or occupiers of any portion of these superjacent lands at the date of the lease. But the plaintiffs are successors in title of the then owners of portions of such lands by reason of being their assignees, and they urge that s 58, sub-s 1, of the Conveyancing and Law of Property Act 1881, applies to such a covenant as we have in this case, and that it must accordingly be deemed to have been made with the covenantee, his heirs and assigns. In other words, they say that, although the intention of the parties may have been to make a separate and direct covenant with each future owner, the fact that such a covenant would not be effectual does not prevent the present plaintiffs from claiming under the covenant made with their predecessors in title, ‘who were owners of the lands at the date of the lease, and with whom, therefore, the lessee could and did effectually covenant’.
And Farwell LJ said (at 641):
In the present case the lessors of the minerals and the owners of the surface are different persons. In my opinion, therefore, the owners for the time being mean, primarily at any rate, the owners at the date of the deed; and by s 58, sub-s 1, of the Conveyancing and Law of Property Act 1881, the covenant is made with them, their heirs and assigns. If any other owner not claiming as owner at that date, or as heir or assign of such owner, were to sue, the dictum of Sir George Jessel would apply to him. Some difficulty is created by the addition of the words ‘occupier or occupiers’; this is used in contradistinction to owner, and the Conveyancing and Law of Property Act 1881, would therefore read into the covenant ‘his or their executors, administrators or assigns’ instead of heirs and assigns. Such a covenant could not run with the land, but I do not think that this can affect the right of the owners, as it has not been suggested that the covenants are with owners and occupiers jointly.
On the subsequent appeal to the House of Lords no reference was made to s 58 of the 1881 Act (sub nom Dyson v Forster [1909] AC 98, [1908-10] All ER Rep 212).
The Law of Property Act 1922 was an amendment Act. Section 96 provides so far as material:
(2) Every covenant running with the land entered into before the commencement of this Act shall take effect subject to the provisions of this Act, and accordingly the benefit or burden of every such covenant shall, subject as aforesaid, vest in or bind the persons who by virtue of this Act succeed to the title of the covenantee or the covenantor, as the case maybe.
(3) The benefit of a covenant relating to land entered into after the commencement of this Act may be made to run with the land without the use of the words ‘heirs’ if the covenant is of such a nature that the benefit could have been made to run with the land before the commencement of this Act, and if an intention that the benefit shall pass to the successors in title of the covenantee appears from the deed containing the covenant.
(4) For the purposes of this section, a covenant runs with the land when the benefit or burden of it, whether at law or in equity, passes to the successors in title of the covenantee or the covenantor, as the case may be.
The section was, no doubt, passed to cater for the fact that succession rights had been altered. But it did not otherwise affect the operation of s 58 of the 1881 Act in relation to covenants entered into prior to the commencement of the 1922 Act.
The Law of Property (Amendment) Act 1924 was also, as its title indicates, an amending Act. Section 3 provided:
The amendments and provisions, for facilitating the consolidation of the stature law
relating to conveyancing and property, contained in the Third Schedule to this Act, shall have effect.
And in Schedule 3, Pt I, para II, it is stated:
The following provision shall be inserted at the end of s 58 of the Conveyancing Act, 1881: For the purposes of this section in connexion with covenants restrictive of the user of land ‘successors in title’ shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited.
That Act was to come into force on 1 January 1926 (see s 12(3)) but was in fact superseded
by the Law of Property Act 1925, which came into force on the same day, and repealeds 3 of and Schedule 3 to the 1924 Act.
It may be that, as submitted, one purpose of para II of Pt I of Schedule3 to the 1924 Act was to cater for the difficulty expressed by Farwell LJ in Forster v £/vet Colliery Co Ltd to whichI have referred. But the overall effect of the amendments made by the 1922 and 1924 Acts was much wider than that. Thus, s 78 of the Law of Property Act 1925, which only applies to covenants entered into after 1 January 1926, was in radically different terms froms 58 of the 1881 Act, as Brightman LJ pointed out in Federated Homes Ltd v Mill Lodge Properties Ltd.73 The principle of that case cannot be’applied to s 58 of the 1881 Act. There are no words ins
58 capable by themselves of effecting annexation of the benefit ofa covenant. All that section did was to deem the inclusion of words which both before and after the enactment ofs 58 had, with the exception of Mann v S te phe ns,74 been consistently held to be insufficient without more to effect annexation of the benefit ofa covenant.
Federated Homes v Mill Lodge Properties Ltd [1980] 1 All ER 371, CA
Brightman LJ: Counsel for the defendants submitted that there were three possible views abouts 78. One view, which he described as ‘the orthodox view’ hitherto held, is that it is merely a statutory shorthand for reducing the length of legal documents. A second view, which was the one that counsel for the defendants was inclined to place in the forefront of his argument, is that the section only applies, or at any rate only achieves annexation, when the land intended to be benefited is signified in the document by express words or necessary implication as the intended beneficiary of the covenant. A third view is that the section applies if the covenant in fact touches and concerns the land of the covenantee, whether that be gleaned from the document itself or from evidence outside the document.
For myself, I reject the narrowest interpretation of s 78, the supposed orthodox view, which seems to me to fly in the face of the wording of the section. Before I express my reasons I will say that I do not find it necessary to choose between the second and third views because, in my opinion, this covenant relates to land of the covenantee on either interpretation of s 78 …
The first point to notice about s 78(1) is that the wording is significantly different from the wording of its predecessor, s 58(1) of the Conveyancing and Law of Property Act 1881. The distinction is underlined by sub-s (2) of s 78, which applies sub-s (1) only to covenants made after the commencement of the Act. Section 58(1) of the earlier Act did not include the covenantee’s successors in title or persons deriving title under him or them, nor the owners or occupiers for the time being of the land of the covenantee intended to be benefited. The section was confined, in relation to realty, to the covenantee, his heirs and assigns, words which suggesta more limited scope of operation than is found ins 78.
If, as the language ofs 78 implies, a covenant relating to land which is restrictive of the user thereof is enforceable at the suit of (1) a successor in title of the covenantee, (2)a person deriving title under the covenantee or under his successors in title, and (3) the owner or occupier of the land intended to be benefited by the covenant, it must, in my view, follow that the covenant runs with the land, because ex hypothesi every successor in title to the land, every derivative proprietor of the land and every other owner and occupier hasa right by statute to the covenant. In other words, if the condition precedent ofs 78 is satisfied, that is to say, there existsa covenant which touches and concerns the land of the covenantee, that covenant runs with the land for the benefit of his successors in title, persons deriving title under him or them and other owners and occupiers.
This approach tos 78 has been advocated by distinguished textbook writers: see Dr Radcliffe in the Law Quarterly Review,77 Professor Wade in the Cambridge Law JoumaJs78
under the apt cro9ss-heading ‘What is wrong withs 78?’, and Megarry and Wade on the Law
of RealProperty .7 Counsel pointed out to us that the fourth edition of Megarry and Wade’s
1te9x6t6b.ook indicatesa change of mind:on this topic since the third edition was published in
Although the section does not seem to have been extensively used in the course of argument in this type of case, the construction of s 78 which appeals to me appears to be consistent with at least two cases decided in this court. The first is Smithv River Douglas Catchment Board.BO In that case, an agreement was made in April 1938 between certain landowners and the catchment board under which the catchment board undertook to make good the banks ofa certain brook and to maintain the same, and the landowners undertook to contribute towards the cost. In 1940, the first plaintiff tooka conveyance from one of the landowners ofa part of the land together with an express assignment of the benefit of the agreement. In 1944, the second plaintiff took a tenancy of that land without any express assignment of the benefit of the agreement. In 1946, the brook burst its banks and the land owned by the first plaintiff and tenanted by the second plaintiff was inundated. The two important points are that the agreement was not expressed to be for the benefit of the landowner’s successors in title; and there was no assignment of the benefit of the agreement in favour of the second plaintiff, the tenant. In reliance, as I understand the case, ons 78 of the Law of Property Act 1925, it was held that the second plaintiff was entitled to sue the catchment board for damages for breach of the agreement. It seems to me that that conclusion can only have been reached on the basis that s 78 had the effect of causing the tbeennaenfti.t of the agreement to run with the land so as to be capable of being sued on by the
The other case, Williamsv Unit Construction Co Ltd,8 1 was decided by this court in 1951. Therea company had acquired a building estate and had underieased four plots to Cubbin for 999 years. The underiessors arranged for the defendant company to build houses on the four plots. The defendant company covenanted with Cubbin to keep the adjacent road in
repair until adopted. Cubbin granted a weekly tenancy of one house to the plaintiff without ,my express assignment of the benefit of the covenant. The plaintiff was injured owing to the disrepair of the road. She was held entitled to recover damages from the defendant for breach of the covenant.
We were referred to observations in the speeches of Lord Upjohn and Lord Wilberforce in ‘/i,phams Ltd v Earl of Se fton82 to the effect thats 79 of the Law of Property Act 1925 (relating to the burden of covenants) achieved no more than the introduction of statutory shorthand
into the drafting covenants. Section 79, in my view, involves quite different considerations and I do not think that it provides a helpful analogy.
It was suggested by counsel for the defendants that if this covenant ought to be read as enuring for the benefit of the retained land, it should be read as enuring only for the benefit of the retained land as a whole and not for the benefit of every part of it; with the apparent result that there is no annexation of the benefit to a part of the retained land when any
severance takes place. He referred us to a passage in Re Union of London and Smith’s Bank Ltd’s Conveyance, Miles v Ea ster,83 which I do not think it is necessary for me to read.
The problem is alluded to in Megarry and Wade on the Law of Real Property:84
… in drafting restrictive covenants it is therefore desirable to annex them to the covenantee’s land ‘or any part or parts thereof’. An additional reason for using this form of words is that, if there is no indication to the contrary, the benefit may be held to be annexed only to the whole of the covenantee’s land, so that it will not pass with portions of it disposed of separately. But even without such words the court may find that the covenant is intended to benefit any part of the retained land; and small indications may suffice, since the rule that presumes annexation to the whole only is arbitrary and inconvenient. in principle it conflicts with the rule for assignments, which allows a benefit annexed to the whole to be assigned with part, and it also conflicts with the corresponding rule for easements.
I find the idea of the annexation of a covenant to the whole of the land but not to a part of it a difficult conception fully to grasp. I can understand that a covenantee may expressly or by necessary implication retain the benefit of a covenant wholly under his own control, so that the benefit will not pass unless the covenantee chooses to assign; but I would have thought, if the benefit of a covenant is, on a proper construction of a document, annexed to the land, prima facie it is annexed to every part thereof, unless the contrary clearly appears. It is difficult to see how this court can have reached its decision in Williams v Unit Construction Co Ltd unless this is right. The covenant was, by inference, annexed to every part of the land and not merely to the whole, because it will be recalled that the plaintiff was a tenant of only one of the four houses which had the benefit of the covenant. There is also this observation by Romer LJ in Drake v Gray [1936] Ch 451. He was dealing with the enuring of the benefit of a restrictive covenant and he said:
… where … you find, not ‘the land coloured yellow’, or ‘the estate’, or ‘the field named so and so’, or anything of that kind, but ‘the lands retained by the vendor’, it appears to me that there is a sufficient indication that the benefit of the covenant enures to every one of the lands retained by the vendor, and if a plaintiff in a subsequent action to enforce a covenant can say, ‘I am the owner of a piece of land or a hereditament that belonged to the vendor at the time of the conveyance’, he is entitled to enforce the covenant.
In the instant case, the judge in the course of his judgment appears to have dismissed the notion that any individual plotholder would be entitled, even by assignment, to have the benefit of the covenant that I have been considering. I express no view about that.I only asabyoutht iist., thatI am not convinced that his conclusion on that point is correct.I say no more
In the end,I come to the conclusion thats 78 of the Law of Property Act 1925 caused the benefit of the restrictive covenant in question to run with the red land and therefore to be annexed to it, with the result that the plaintiff company is able to enforce the covenant against Mill Lodge, not only in its capacity as owner of the green land, but also in its capacity as owner of the red land.