Covenants & Successors
UK Cases
Tulk v Moxhay
(1848) 2 Ph 774
LORD COTTENHAM LC: That this Court has jurisdiction to enforcea 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 whatI 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 vendor 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 whethera 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 fora 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 againsat 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 ina different situation from the party from whom he purchased….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.
Smith and Snipes Hall Farm v River Douglas Catchment Board
[1949] 2 All ER 179 (CA)
TUCKER LJ: It remains to consider whether, in these circumstances, the plaintiffs, or either of them, can sue in respect of this breach. It is said for the board that the benefit in which it is contained relate to some specific parcel of land, the precise extent and situation of which can be identified by reference to the deed alone. It is first necessary to ascertain from the deed that the covenant is one which ‘touches or concerns’ the land, that is, it must either affect the land as regards mode of occupation or it must be such as per se, and not merely from collateral circumstances, affects the value of the land, and it must then be shown that it was the intention of the parties that the benefit thereof should run with the land…. With regard to the covenantor being a stranger, The Prior’s Case (1368) YB 42 Edw 3, fo 3A pl 14 is referred to in Spencer’s Case 5 Co Rep 16a in these words as set out in Smith’s Leading Cases.(13th ed., vol. 1, p. 55):
[In the case of a] grandfather, father and two sons: The grandfather being seised of the manor ofD, whereof a chapel was parcel: a prior, with the assent of his convent, by deed covenanted for him and his successors, with the grandfather and his heirs, that he and his convent would sing all the week in his chapel, parcel of the said manor, for the lords of the said manor and his servants, etc.; the grandfather did enfeoff one of the manor in fee, who gave it to the younger son and his wife in tail; and it was adjudged that the tenants in tail, as terre-tenants (for the elder brother was heir), should have an action of covenant against the prior, for the covenant is to do a thing which is annexed to the chapel, which is within the manor, and so annexed to the manor, as it is there said.
In Rogers v Hosegood [1900] 2 Ch 388 Farwell, J, in a passage where he refers, among others, to The Prior’s Case (1368) YB 42 Edn 3, fo 3A pl 14 – and I quote from his judgment because, although the case went to the Court of Appeal, the Court of Appeal had to deal with a rather different point – after stating what are the requirements in order that the covenant may run with the land, says ([1900] 2 Ch 395):
It is not contended that the covenants in question in this case have not the first characteristic, but it is said that they fail in the second. I am of opinion that they possess both. Adopting the definition of Bayley, J, in Congleton Corpn v Pattison
(1808) 10 East 130 the covenant must either affect the land as regards mode of occupation, or it must be such as per se,and not merely from collateral circumstances, affects the value of the land. It is to my mind obvious that the value of Sir J Millais’s land is directly increased by the covenants in question. If authority is needed, I
would refer to Mann v Stephens (1846) 15 Sim 377, a case very similar to the present; Vyvyan v Arthur (1823) 1 B & C 410; The Prior’s Case (1368) YB 42 Edw 3, fo 3A pl 14; Fleetwood v Hull (1889) 23 QBD 35; White v Southend Hotel Co. [1897] 1 Ch 767. I see no difficulty in holding that the benefit of a covenant runs with the land of the covenantee, while the burden of the same covenant does not run with the land of the covenantor.
In this state of the authorities it seems clear, despite some dicta tending to the contrary view, that such a covenant, if it runs with the land, is binding on the covenantor though a mere stranger, and that this point will not avail the board.
As to the requirement that the deed containing the covenant must expressly identify the particular land to be benefited, no authority was cited to us and in the absence of such authority I can see no valid reason why the maxim ‘Id certum est quod certum reddi potest’ should not apply so as to make admissible extrinsic evidence to prove the extent and situation of the lands of the respective landowners adjoining the Eller Brook situate between the Leeds and Liverpool Canal and the River Douglas.. . . I do not find anything in the judgments in Austerberry v Oldham Corpn. (1885) 29 ChD 750 which conflicts with the law asI have endeavoured to set it out above, andI have, accordingly, arrived at the conclusion that the covenenant by the board in the agreement of April 25, 1938, is one which runs with the land referred to therein, which land is capable of identification, and that it is binding on the board; and, further, that by virtue of s. 78 ( 1) of the Law of Property Act, 1925, it can be enforced at the suit of the covenantee and her successors in title and the persons deriving title under her or them so that both the plaintiff Smith and the plaintiff company can sue in respect of the damage resulting to their respective interests therein by reason of the board’s breach of covenant.
Austerberry v Corporation of Oldham
(1885) 29 ChD 750 (CA)
LINDLEY LJ: … [A]s regards the benefit running with the Plaintiff’s land, the covenant is, so far as the road goes, a covenant to repair the road; what I mean by that is, there is nothing in the deed which points particularly to that portion of the road which abuts upon or fronts the Plaintiff’s land- itis a covenant to repair the whole of the road, no distinction being made between the portion of that road which joins or abuts upon his land and the rest of the road; in other words, it is a covenant simply to make and maintain this road as a public highway; there is no covenant to do anything whatever on the Plaintiff’s land, and there is nothing pointing to the Plaintiff’s land in particular I do not overlook the fact that the Plaintiff as a frontager has certain rights of getting on to the road; and if this covenant had been so worded as to shew that there had been an intention to grant him some particular benefit in respect of that particular part of his land, possibly we might have said that the benefit of the covenant did run with this land; .But it strikes me, I confess, that there is a still more formidable objection as regards the burden. Does the burden of this covenant run with the land so as to bind the Defendants? The Defendants have acquired the road under the trustees, and they are bound by such covenant as runs with the land. Now we come to face the difficulty; does a covenant to repair all this road run with the land – that is, does the burden of it descend upon those to whom the road may be assigned in future? We are not dealing here with a case of landlord and tenant. The authorities which refer to that class of cases have little, if any, bearing upon the case which we have to consider, and I am not prepared to say that any covenant which imposes a burden upon land does run with the land, unless the covenant does, upon the true construction of the deed containing the covenant, amount to either a grant of an easement, or a rent-charge, or some estate or interest in the land. A mere covenant to repair or to do something of that kind, does not seem to me,I .confess, to run with the land in such a way as to bind those who may acquire it.
It is remarkable that the authorities upon this point, when they are examined, are very few, and it is also remarkable that in no case that I know of, except one whichI shall refer to presently, is there anything like authority to say that a burden of this kind will run with the land. That point has often been discussed, and I rather think the conclusion at which the editors of the last edition of Smith’s Leading Cases have come to is right, that no case has been decided which does establish that such a burden can run with the land in the sense in which I am now using that expression.
I am not aware of any other case which either shews, or appears to shew, that a burden such as this can be annexed to land by a mere covenant, such as we have got here; and in the absence of authority it appears to me that we shall be perfectly warranted in saying that the burden of this covenant does not run with the land. After all it ias mere personal covenant. If the parties had intended to charge this land for ever, into whosesoever hands it came, with the burden of repairing the road, there are ways and means known to conveyancers by which it could be done with comparative ease; all that would have been necessary would have been to create a rentcharge and charge it on the tolls, and the thing would have been done. They have not done anything of the sort, and, therefore, it seems to me to shew that they did not intend to have a covenant which should run with the land. That disposes of the part of the case which is perhaps the most difficult.
The last point was this that even if it did not run with the land at law, still, upon the authority of Tulk v Moxhay (1848) 2 Ph 774, the Defendants, having bought the land with notice of this covenant, take the land subject to it Tulk v Moxhay cannot be extended to covenants of this description. It appears to me, therefore, that upon all points the Plaintiff has failed, and that the appeal ought to be dismissed with costs.
Halsall v Brizell
[1957] Ch 169 (ChD)
UPJOHN J: … [I]t is conceded that it is ancient law that a man cannot take benefit under a deed without subscribing to the obligations thereunder. If authority is required for that proposition, I need but refer to one sentence during the argument in Elliston v Reacher [1908] 2 Ch 374, where Lord Cozens-Hardy MR observed: ‘It is laid down in Co. Litt. 230b, that a man who takes the benefit of a deed is bound by a condition contained in it, though he does not execute it.’ If thedefendants did not desire to take the benefit of this deed, for the reasons I have given, they could not be under any liability to pay the obligations thereunder. But, of course, they do desire to take the benefit of this deed. They have no right to use the sewers which are vested in the plaintiffs, and I cannot see that they have any right, apart from the deed, to use the roads of the park which lead to their particular house, No. 22, Salisbury Road. The defendants cannot rely on any way of necessity or on any right by prescription, for the simple reason that when the house was originally sold in 1931 to their predecessor in title he took the house on the terms of the deed of 1851 which contractually bound him to contribute a proper proportion of the expenses of maintaining the roads and sewers, and so forth, as a condition of being entitled to make use of those roads and sewers. Therefore, it seems to me that the defendants here cannot, if they desire to use this house, as they do, take advantage of the trusts concerning the user of the roads contained in the deed and the other benefits created by it without undertaking the obligations thereunder. Upon that principle it seems to me that they are bound by this deed, if they desire to take its benefits.
London County Councllv Allen
[1914] 3 KB 642 (CA)
BUCKLEY LJ: Tulk v Moxhay established that as between the grantor of a restrictive covenant affecting certain land and the owner of adjoining land the covenantee may in equity enforce the covenant against the derivative owner taking with notice. The reasoning of Lord Cottenham’s judgment in Tulk v Moxhay is that if an owner of land sells part of it reserving the rest, and takes from his purchaser a covenant that the purchaser shall use or abstain from using the land purchased in a particular way, that covenant (being one for the protection of the land reserved) is enforceable against a sub-purchaser with notice. The reason given is that, if that were not 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. If the vendor has retained no land which can be protected by the restrictive covenant, the basis of the reasoning of the judgment is swept away….
In the present case we are asked to extend the doctrine of Tulk v Moxhay so as to affirm that a restrictive covenant can be enforced against a derivative owner taking with notice by a person who never has had or who does not retain any land to be protected by the restrictive covenant in question. In my opinion the doctrine does not extend to that case. The doctrine is that a covenant not running with the land, but being a negative covenant entered into by an owner of land with an adjoining owner, binds the land in equity and is enforceable against a derivative owner taking with notice. The doctrine ceases to be applicable when the person seeking to enforce the covenant against the derivative owner has no land to be protected by the negative covenant. The fact of notice is in that case irrelevant.
Rhone (A.P.) a. Stephens
Die Jovis 17° Martii 1994
Upon Report from the Appellate Committee to whom was
referred the Cause Rhone and another against Stephens (Executrix
of Mrs M. Barnard, deceased) , That the Committee had heard
Counsel as well on Monday the 7th as on Tuesday the 8th days of
February last upon the Petition and Appeal of Ronald John Rhone
and Hazel Grace Rhone of 1 Harbour View, Combwich, Bridgwater,
Somerset, praying that the matter of the Order set forth in the
Schedule thereto, namely an Order of Her Majesty’s Court of
Appeal of the 15th day of January 1993, so far as stated therein
to be appealed against, might be reviewed before Her Majesty the
Queen in Her Court of Parliament and that the said Order so far
as aforesaid might be reversed, varied or altered or that the
Petitioners might have such other relief in the premises as to
Her Majesty the Queen in Her Court of Parliament might seem meet;
as upon the case of Jean Stephens (Executrix of Mrs M. Barnard,
deceased) lodged in answer to the said Appeal; and due
consideration had this day of what was offered on either side in
this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and
Temporal in the Court of Parliament of Her Majesty the Queen
Lord Templeman
Lord Oliver of Aylmerton
Lord Woolf
Lord Lloyd
Lord Nolan
LORD TEMPLEMAN
My Lords,
This appeal raises the question of the enforceability of positive
covenants between owners of freehold estates and involves consideration of the
rule in Austerberry v. Oldham Corporation (1885) 29 Ch. D. 750 (“the
Austerberry Case”).
The roof which covers Walford House also covers part of Walford
Cottage. Both properties were in common ownership until by a conveyance
dated 27 August 1960 Walford Cottage was sold. The conveyance contained
the following provisions:
“2 It is hereby agreed and declared between the Vendor and the
Purchasers that all easements quasi-easements or rights in the nature
of easements as now existing between the property hereby conveyed
and the adjoining property of the Vendor known as Walford House
aforesaid shall continue for the benefit of the respective properties.
“3 The Vendor herby covenants for himself and his successors in title
owner or occupiers for the time being of the property known as
Walford House aforesaid to maintain to the reasonable satisfaction of
the Purchasers and their successors in title such part of the roof of
Walford House aforesaid as lies above the property conveyed in wind
and water tight condition.”
Clause 2 of the 1960 Conveyance had the effect, inter alia, of
conferring and confirming on Walford House the right to be supported by the
contiguous Walford Cottage. The 1960 Conveyance also had the effect of
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conferring and confirming on Walford Cottage the right to be supported by
Walford House. Clause 3 of the 1960 Conveyance did not confer any rights
on Walford Cottage but by its express terms it appears to confer on the
owners for the time being of Walford Cottage the right to sue the owner for
the time being of Walford House for damages if the roof is not kept wind and
watertight.
Since 1960 both properties have been sold. The appellant plaintiffs are
now the owners of Walford Cottage. The respondent defendant is the
executrix of the last owner of Walford House. The trial judge ordered the
owner of Walford House to pay damages to the owners of Walford Cottage
for breach of the covenant contained in Clause 3 of the 1960 conveyance to
keep the roof of Walford House which lies above Walford Cottage in wind
and water tight condition. The Court of Appeal reversed the judge and
dismissed the action.
Mr. Spens who appeared for the owner of Walford House says that the
covenant has never been breached because the part of the roof which is out of
repair belongs to Walford Cottage. Examination of the plans attached to the
conveyance however show that the covenant to repair must refer to the roof
which protects both properties. So upon the true construction of the 1960
conveyance the owner of Walford House was in breach of the covenant to
ti
repair.
At common law a person cannot be made liable upon a contract unless
he was a party to it. In Cox v. Bishop (1857) 8 De. G. & J. 276 (44 E.R.
604) a lease was assigned to a man of straw and it was held that the covenants
in the lease could not be enforced against an equitable assignee of the lease
who had entered into possession. The covenants were not enforceable because
there was no privity of contract or estate between the lessee and the assignee.
The rigours of the common law which do not allow covenants to be enforced
by and against successors in title were relaxed first by the doctrines laid down
in Spencer’s case (1583) 5 Co. Rep. 16a and then by statutory extensions of
those doctrines introduced by the Grantees of Reversions Act 1540 (32 Hen.
8 c34), the Conveyancing Act 1881 and the Conveyancing Act 1911 now
repealed and reproduced in sections 141 and 142 of the Law of Property Act
1925. In the result, as between landlord and tenant both the burden and the
benefit of a covenant which touches or concerns the land demised and is not
merely collateral run with the reversion and the term at law whether the
covenant be positive or restrictive. As between persons interested in land
other than as landlord and tenant, the benefit of a covenant may run with the
land at law but not the burden; see the Austerberry case.
Thus Clause 3 of the 1960 Conveyance, despite its express terms, did
not confer on the owner for the time being of Walford Cottage the right at
common law to compel the owner for the time being of Walford House to
repair the roof or to obtain damages for breach of the covenant to repair. In
this appeal, Mr. Munby, on behalf of the owners of Walford Cottage contends
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that equity will compel the owner of Walford House to comply with the
covenant to repair the roof or to pay damages in lieu.
My Lords, equity supplements but does not contradict the common
law. When freehold land is conveyed without restriction, the conveyance
confers on the purchaser the right to do with the land as he pleases provided
that he does not interfere with the rights of others or infringe statutory
restrictions. The Conveyance may however impose restrictions which, in
favour of the covenantee, deprive the purchaser of some of the rights inherent
in the ownership of unrestricted land. In Tulk v. Moxhay (1848) 2 Ph. 774,
a purchaser of land covenanted that no buildings would be erected on
Leicester Square. A subsequent purchaser of Leicester Square was restrained
from building. The conveyance to the original purchaser deprived him and
every subsequent purchaser taking with notice of the covenant of the right,
otherwise part and parcel of the freehold, to develop the Square by the
construction of buildings. Equity does not contradict the common law by
enforcing a restrictive covenant against a successor in title of the covenantor
but prevents the successor from exercising a right which he never acquired.
Equity did not allow the owner of Leicester Square to build because the owner
never acquired the right to build without the consent of the persons (if any)
from time to time entitled to the benefit of the covenant against building. In
Tulk v. Moxhay the speech of Lord (Cottenham L.C. contained the following
passage at p. 777:
“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.”
Equity can thus prevent or punish the breach of a negative covenant
which restricts the user of land or the exercise of other rights in connection
with land. Restrictive covenants deprive an owner of a right which he could
otherwise exercise. Equity cannot compel an owner to comply with a positive
covenant entered into by his predecessors in title without flatly contradicting
the common law rule that a person cannot be made liable upon a contract
unless he was a party to it. Enforcement of a positive covenant lies in
contract; a positive covenant compels an owner to exercise his rights.
Enforcement of a negative covenant lies in property; a negative covenant
deprives the owner of a right over property. As Lord Cottenham said in Tulk
v. Moxhay at p. 778:
“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.”
Following Tulk v. Moxhay there was some suggestion that any
covenant affecting land was enforceable in equity provided that the owner of
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the land had notice of the covenant prior to his purchase. In Morland v. Cook
(1868) L.R. 6 Eq. 252 lands below sea level were partitioned by a deed
containing a covenant that the expense of maintaining the sea wall should be
borne by the owners of the lands and payable out of the lands by an acre-scot.
Lord Romilly M.R. enforced the covenant against a subsequent purchaser of
part of the lands on the grounds that he had purchased with notice of the
covenant. In Cooke v. Chilcott (1876) 3 Ch. D. 694 a covenant by the
purchaser of land with a well to erect a pump and reservoir and to supply
water from the well to all houses built on the vendor’s land was enforced
against a subsequent purchaser of the land burdened with the covenant on the
grounds that the covenant ran with the land but that in any event the defendant
took with notice of the obligation. Malins V.-C. said, at p. 701:
“I think that when a contract is entered into for the benefit of
contiguous landowners, and one is bound by it and the other entitled
to the benefit of it, the covenant binds him for ever, and also runs with
the land. But it is equally clear that he is bound by taking the land
with notice of the covenant.”
These last two cases did not survive the decision of the Court of
Appeal in Haywood v. The Brunswick Permanent Benefit Building Society
(1881) 8 Q.B.D. 403. In that case land had been conveyed in consideration
of a rent charge and a covenant to build and repair buildings; a mortgagee of
the land was held not to be liable on the covenant either at law or in equity
although the mortgagee had notice of the covenant. Brett L.J. said, at p. 408
that Tulk v. Moxhay:
“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 … It is said that if we decide for
the defendants we shall have to overrule Cooke v. Chilcott, 3 Ch. D.
694. If that case was decided on the equitable doctrine of notice, I
think we ought to overrule it.”
Cotton L.J. said, at p. 409:
“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 3 Ch. D. 694, only restrictive
covenants have been enforced.”
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Cotton LJ. also said, that Tulk v. Moxhay:
“lays down the real principle that an equity attaches to the owner of
the land . . . 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.”
In London and South Western Railway Co. v. Gomm (1882) 20 Ch.D.
562 an option to purchase land on the happening of an uncertain event was
held to be void for remoteness. It was argued that the covenant was
enforceable in equity. Jessel M.R. said, at pp. 582-583:
“With regard to the argument founded on Tulk v. Moxhay, 2 Ph. 774
that case was very much considered by the Court of Appeal in
Haywood v. The Brunswick Permanent Benefit Building Society, 8
Q.B.D. 403, and the court there decided that they would not extend
the doctrine of Tulk v. Moxhay to affirmative covenants, compelling
a man to lay out money or do any other act of what I may call an
active character, but that it was to be confined to restrictive covenants.
Of course that authority would be binding upon us if we did not agree
to it, but I most cordially accede to it. I think that we ought not to
extend the doctrine of Tulk v. Moxhay in the way suggested here. The
doctrine of that case . . . appears to me to be either an extension in
equity of the doctrine of Spencer’s case to another line of cases, or
else an extension in equity of the doctrine of negative easements . . .
The covenant in Tulk v. Moxhay was affirmative in its terms, but was
held by the court to imply a negative. Where there is a negative
covenant expressed or implied, … the court interferes on one or
other of the above grounds. This is an equitable doctrine, establishing
an exception to the rules of common law which did not treat such a
covenant as running with the land, and it does not matter whether it
proceeds on analogy to a covenant running with the land or on analogy
to an easement. The purchaser took the estate subject to the equitable
burden, with the qualification that if he acquired the legal estate for
value without notice he was freed from the burden.”
Lindley L.J. said, at pp. 587-588, that because in Haywood v.
Brunswick Permanent Benefit Building Society (1881) 8 Q.B.D. 403 it was
sought to extend the doctrine of Tulk v. Moxhay:
“to a degree which was thought dangerous, considerable pains were
taken by the court to point out the limits of that doctrine . . . The
conclusion arrived at … was that Tulk v. Moxhay, when properly
understood, did not apply to any but restrictive covenants.”
In the Austerberry case the owners of a site of a road covenanted that
they and their successors in title would make the road and keep it in repair.
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The road was sold to the defendants and it was held that the repair covenant
could not be enforced against them. Cotton L.J. said, 29 ChD 750, 773
“Undoubtedly, where there is a restrictive covenant, the burden and
benefit of which do not run at law, courts of equity restrain anyone
who takes the property with notice of that covenant from using it in a
way inconsistent with the covenant. But here the covenant which is
attempted to be insisted upon on this appeal is a covenant to lay out
money in doing certain work upon this land; and, that being so …
that is not a covenant which a court of equity will enforce: it will not
enforce a covenant not running at law when it is sought to enforce that
covenant in such a way as to require the successors in title of the
covenantor, to spend money, and in that way to undertake a burden
upon themselves. The covenantor must not use the property for a
purpose inconsistent with the use for which it was originally granted;
but in my opinion a court of equity does not and ought not to enforce
a covenant binding only in equity in such a way as to require the
successors of the covenantor himself, they having entered into no
covenant, to expend sums of money in accordance with what the
original covenantor bound himself to do.”
In re Nisbet and Potts’ Contract [1905] 1 Ch 391 it was held that a
title acquired by adverse possession was not paramount to, and did not destroy
the equitable right of persons entitled to the benefit of prior restrictive
covenants to enforce them against the land. Farwell J. said, at pp. 396-397:
“Covenants restricting the enjoyment of land, except of course as
between the contracting parties and those privy to the contract, are not
enforceable by anything in the nature of action or suit founded on
contract. Such actions and suits alike depend on privity of contract,
and no possession of the land coupled with notice of the covenants can
avail to create such privity: Cox v. Bishop (1857) 8 De G.M. & G.
815. But if the covenant be negative, so as to restrict the mode of use
and enjoyment of the land, then there is called into existence an equity
attached to the property of such a nature that it is annexed to and runs
with it in equity: Tulk v. Moxhay, 2 Ph. 774. This equity, although
created by covenant or contract, cannot be sued on as such, but stands
on the same footing with and is completely analogous to an equitable
charge on real estate created by some predecessor in title of the
present owner of the land charged. . . . effect is given to the negative
covenant by means of the land itself. But the land cannot spend
money on improving itself, and there is no personal liability on the
owner of the land for the time being, because there is no contract on
which he can be sued in contract.”
For over a hundred 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
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a positive covenant would be to enforce a 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
owners of Walford Cottage referred to an article by Professor Sir William
Wade and other articles in which the present state of the law is subjected to
severe criticism. In 1965 a Report by a committee appointed by the Lord
Chancellor and under the chairmanship of Lord Wilberforce (Cmnd. 2719)
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. The Law Commission published on 5 July 1971 Working Paper No. 36
in which the present law on positive rights was described as being illogical,
uncertain, incomplete and inflexible. The Law Commission Report No. 127
laid before Parliament in 1965 made recommendations for the reform of the
law relating to positive and restrictive obligations and submitted a 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 unremarked by section 79 of the Law of
Property Act 1925 which so far as material provides as follows:
“(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.”
– 7 –
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 in section 78 of the Act of 1925. In Smith
and Snipes Hall Farm Ltd. v. River Douglas Catchment Board [1949] 2 K.B.
500 followed in Williams v. Unit Construction Co. Ltd. (1951) 19 Conv.
(N.S.) 262 it was held by the Court of Appeal that section 78 of the Act of
1925 had the effect of making the benefit of positive covenants run with the
land. Without casting any doubt on those longstanding decisions I do not
consider that it follows that section 79 of the Act of 1925 had the
corresponding effect of making the burden of positive covenants run with the
land. In Jones v. Price [1965] 2 Q.B. 618, 633, Willmer L.J. 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 Corporation.”
In Sefton v. Tophams Ltd. [1967] A.C. 50 Lord Upjohn at p. 73 and
Lord Wilberforce at p. 81 stated that section 79 of the Law of Property Act
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
W.L.R. 594, 605-606, Brightman J. referred to the authorities on section 78
of the Act of 1925 and said that:
“Section 79, in my view, involves quite different considerations and
I do not think that it provides a helpful analogy.”
Mr. Munby also sought to persuade your Lordships that the effect of
the decision in the Austerberry case had been blunted by the “pure principle
of benefit and burden” distilled by Sir Robert Megarry V.-C. from the
authorities in Tito v. Waddell (No.2) [1977] 1 Ch. 106, at 301 et seq. I am
not prepared to recognise the “pure principle” that any party deriving any
benefit from a conveyance must accept any burden in the same conveyance.
Sir Robert Megarry relied on the decision of Upjohn J. in Halsall v. Brizell
[1957] Ch. 169. In that case the defendant’s predecessor in title had been
granted the right to use the estate roads and sewers and had covenanted to pay
a due proportion for the maintenance of these facilities. It was held that the
defendant could not exercise the rights without paying his costs of ensuring
that they could be exercised. Conditions can be attached to the exercise of a
power in express terms or by implication. Halsall v. Brizell was just such a
case and I have no difficulty in whole-heartedly agreeing with the decision.
It does not follow that any condition can be rendered enforceable by attaching
it to a right nor does it follow that every burden imposed by a conveyance
may be enforced by depriving the covenantor’s successor in title of every
benefit which he enjoyed thereunder. The condition must be relevant to the
exercise of the right. In Halsall v. Brizell there were reciprocal benefits and
burdens enjoyed by the users of the roads and sewers. In the present case
– 8 –
Clause 2 of the 1960 Conveyance imposes reciprocal benefits and burdens of
support but Clause 3 which imposed an obligation to repair the roof is an
independent provision. In Halsall v. Brizell the defendant could, at least in
theory, choose between enjoying the right and paying his proportion of the
cost or alternatively giving up the right and saving his money. In the present
case the owners of Walford House could not in theory or in practice be
deprived of the benefit of the mutual rights of support if they failed to repair
the roof.
In the result I would dismiss the appeal and make the usual order for
costs against the appellant subject to the usual appropriate legal aid
reservations.
LORD OLIVER OF AYLMERTON
My Lords,
For the reasons given by my noble and learned friend Lord Templeman
I too would dismiss the appeal.
LORD WOOLF
My Lords,
I have benefited from reading in draft the speech of my noble and
learned friend. Lord Templeman. I agree with it and for the reasons he gives
I would dismiss this appeal.
LORD LLOYD
My Lords,
I have read the speech of my noble and learned friend. Lord
Templeman, in draft. I agree that for the reasons he gives this appeal should
be dismissed.
-9-
LORD NOLAN
My Lords,
For the reasons given by my noble and learned friend Lord Templeman
I too would dismiss the appeal.
P. & A. Swift Investments v Combined English Stores Group plc
Lord Keith of Kinkel
Lord Roskill
Lord Templeman
Lord Ackner
Lord Oliver of Aylmerton
LORD KEITH OF KINKEL
My Lords,
I have had the opportunity of considering in draft the
speeches to be delivered by my noble and learned friends Lord
Templeman and Lord Oliver of Aylmerton. I agree with them and
for the reasons they give would dismiss the appeal.
LORD ROSKILL
My Lords,
I have had the advantage of reading in draft the speeches
of my noble and learned friends Lord Templeman and Lord Oliver
of Aylmerton. I agree with them and would dismiss this appeal
for the reasons they give as well as for those given by the Sir
Nicolas Brown-Wilkinson V.-C. in Kumar v. Dunning [1987] 3
W.L.R. 1167.
LORD TEMPLEMAN
My Lords,
The appellant, the surety, joined in a lease to guarantee the
performance and observance of the covenants by the tenant
contained in the lease. A covenant by a tenant which touches and
concerns the land runs with the reversion; the benefit of such a
covenant vests in the successors in title of the landlord; the
successors in title of the landlord may sue upon the covenants
although the benefit of the covenants may not have been expressly
assigned. For this purpose a successor in title of the landlord is
the person who, at the date of the breach of covenant, is entitled
to the reversion expectant on the expiration or sooner
determination of the term demised by the lease. In the present
case the original landlord assigned the reversion to the respondent
landlord; there was no express assignment of the benefit of the
tenant’s covenants or of the benefit of the surety’s covenant. The
tenant defaulted in payment of the rent reserved by the lease and
thereby committed a breach of a covenant which touched and
concerned the land. The respondent landlord, failing to recover
the rent from the tenant, brings these present proceedings against
the surety to recover the amount of the unpaid rent. The surety
denies liability, pleading that the surety’s covenant does not touch
and concern the land and does not run with the reversion so as to
be enforceable by the respondent landlord. The respondent
landlord replies that a covenant by a surety, in whatever form or
expression the surety covenant may take, is a covenant that the
tenant’s covenants shall be performed and observed. A covenant
by a surety that a tenant’s covenant which touches and concerns
the land shall be performed and observed must itself be a
covenant which touches and concerns the land; the benefit of that
surety’s covenant will run with the reversion, and the covenant is
therefore enforceable without express assignment. I agree. A
surety for a tenant is a quasi tenant who volunteers to be a
substitute or twelfth man for the tenant’s team and is subject to
the same rules and regulations as the player he replaces. A
covenant which runs with the reversion against the tenant runs
with the reversion against the surety. For these reasons and for
the reasons to be given by my noble and learned friend, Lord
Oliver of Aylmerton, I would dismiss the appeal.
LORD ACKNER
My Lords,
I have had the advantage of reading in draft the speeches
of my noble and learned friends Lord Templeman and Lord Oliver
of Aylmerton. I agree with them and for the reasons they give I
too would dismiss this appeal.
LORD OLIVER OF AYLMERTON
My Lords,
This is an appeal from an Order made on the 29 January
1988 in an action in the Queen’s Bench Division of the High Court
whereby the plaintiff, the respondent firm, recovered judgment
against the appellant in a sum of £4,250 together with interest
and costs, that sum being the amount of the arrears of rent due
to the respondent as the landlord of certain premises under a lease
to which the appellant was a party not as tenant but solely as
guarantor. The judge, His Honour Judge Oddie (sitting as a judge
– 2 –
of the High Court), granted a certificate pursuant to section 12 of
the Administration of Justice Act 1969 and on 24 March 1988
leave was granted by your Lordships to appeal direct to your
Lordships’ House. The appeal raises the much debated question
whether the benefit of a covenant by a surety for the performance
of the tenant’s obligations under a lease is one which is capable of
running with the reversion so as to be available without express
assignment to the successor in title of the original landlord. The
point had been decided in favour of the landlord by the Court of
Appeal in Kumar v. Dunning [1987] 3 WLR 1167 at the time of
the hearing before Judge Oddie and his order was accordingly
made without hearing full argument since he was, in any event,
bound by that decision.
The relevant facts can be shortly stated. Two individuals,
Paul and Annie Swift, were the lessees of premises at 58-60, Lime
Street, Liverpool, for a term of 99 years from 1 December 1950.
In 1959 they assigned their leasehold interest to a company, P. &.
A. Swift (Investments) Ltd. At that time they were carrying on
business at the premises but in July 1967 they ceased to trade
there and sold their business to a subsidiary company of the
appellant. By an underlease dated 26 July 1967 P. & A. Swift
(Investments) Ltd. demised the premises to a subsidiary of the
appellant, P. & A. Swift Ltd., which company subsequently changed
its name to Dubarry (Liverpool) Ltd. (“Dubarry”). The underlease
was for a term of 35 years at a substantial rent and the
undertenant’s obligations were guaranteed by the appellant, which
joined in the underlease as surety only. In July 1968 P. & A.
Swift (Investments) Ltd. was wound-up voluntarily and by a
conveyance dated 18 August 1969 the leasehold reversion expectant
upon the underlease was assigned by the company and its liquidator
to the respondent firm. That conveyance did not contain any
specific assignment of the benefit of the surety’s covenant entered
into by the appellant in the underlease. P. £ A. Swift
(Investments) Ltd. has since been dissolved. Dubarry failed to pay
the rent due under the underlease for the quarter commencing on
29 September 1984 and subsequent quarters and on 18 November
1986 went into creditors’ voluntary winding-up. On 31 July 1987
the liquidator of Dubarry disclaimed all interest in the underlease.
The appellant has not paid the outstanding rent although called
upon to do so.
The underlease was a full repairing and insuring underlease
containing standard covenants on the part of the tenant. The only
clause which matters for present purposes is clause 5 which, so far
as material, is in the following terms:
“5. THE SURETY in consideration of the demise
hereinbefore contained having been made at its request
HEREBY COVENANTS with the lessor that the tenant shall
pay the rent hereby reserved on the days and in manner
aforesaid and shall duly perform and observe all the
covenants hereinbefore on the tenant’s part contained and
that in case of default in such payment of rent or
performance or observance of any of the covenants as
aforesaid during the currency of the said term and also
thereafter during such period as the tenant remains in
occupation of the demise premises the surety will pay and
make good to the lessor on demand all loss damages costs
– 3 –
and expenses thereby arising or incurred by the lessor . . .
[there follows an immaterial proviso] PROVIDED FURTHER
and it is hereby further agreed that in the event of this
lease being disclaimed by the tenant or on behalf of the
tenant under any statutory or other power the surety will
take from the lessor but only if so required by the lessor by
written notice to the surety within three months after such
disclaimer a grant of another lease of the demised premises
for the residue of the said term unexpired at the date of
such disclaimer at the same several rents as those
hereinbefore reserved and subject to the like covenants and
provisoes as are herein contained and the surety on the
execution of such further lease shall pay the costs thereof
and shall execute and deliver to the lessor a counterpart
thereof.”
The only other observation which requires to be made about the
terms of the lease is that in the usual way the expression “the
lessor” is expressed to include the reversioner for the time being
immediately expectant on the term thereby created.
The relationship between the landlord and a surety in a case
such as the present is, of course, contractual only. The surety has
no interest in the land the subject-matter of the demise and there
is thus no privity of estate. In seeking, therefore, to enforce the
surety’s covenant, an assignee of the reversion cannot rely upon
the Grantees of Reversions Act 1540, the provisions of which were
substantially re-enacted in section 141 of the Law of Property Act
1925 and which apply only to covenants between landlord and
tenant. His claim to enforce rests upon the common law rule,
under which the benefit of the covenant would run with the land
if, but only if, the assignee had the legal estate in the land and
the covenant was one which “touched and concerned” the land.
There is no question but that the first of these conditions is
complied with in the instant case, but it is said, first, that a
reversion on a lease is not “land” for the purposes of the
application of the common law rule and, secondly, and in any
event, that the covenant of a surety is no more than a covenant
to pay a sum of money which is entirely collateral and does not
therefore touch and concern the land.
As to the first point, Mr. Barnes has argued with his usual
persuasiveness that although there is no specific authority on the
point the reversion of a lease clearly could not have been treated
as “land” under the old common law rule since, if it had, the
Grantees of Reversion Act 1540 would have been unnecessary.
Certainly that seems to have been so as regards covenants
between the tenant and his landlord, but, of course, the tenant’s
covenants ordinarily endure only during the term of the lease and
this may, therefore, have been peculiar to that particular
relationship. There seems to be no logical reason in the case of a
third party covenant why the mere fact that the land is let, either
at the time of the covenant or of its transfer to a successor,
should prevent the benefit from running with the land. Certainly
it appears that some incorporeal hereditaments (for instance an
easement) rank as “land” for this purpose: see Gaw v. Coras
Iompair Eireann [1953] I.R. 232. As was pointed out by Romer
L.J. in Grant v. Edmundson [1931] 1 Ch. 1 at p. 28, it is
impossible in this area of the law to argue safely either by reason
– 4 –
or by analogy for “the established rules concerning it are purely
arbitrary, and the distinctions, for the most part, quite illogical.”
We are, in any event, concerned with what is the position in 1988
and not in 1539 and there being no direct decision upon the point
I am, for my part, not prepared to assume that the common law
has not developed in the four centuries which have elapsed since
the Act of 1540 nor that “land” for the purposes of the common
law rule has not, over this period, come to bear the same meaning
as it does in the context of landlord and tenant.
In my opinion the question of whether a surety’s covenant in
a lease touches and concerns the land falls to be determined by
the same test as that applicable to the tenant’s covenant. That
test was formulated by Bayley J. in Congleton Corporation v.
Pattison (1808) 10 East 130 and adopted by Farwell J. in Rogers v.
Hosegood [1900] 2 Ch 388 at 395:
“the covenant must either affect land as regards mode of
occupation, or it must be such as per se, and not merely
from collateral circumstances, affect the value of the land.”
The meaning of those words “per se, and not merely from
collateral circumstances” has been the subject matter of a certain
amount of judicial consideration and the judgment of Sir Nicolas
Browne-Wilkinson V.-C. in Kumar v. Dunning [1987] 3 WLR 1167,
(where the problem was identical to that in the instant case save
that the covenant was giving on an assignment and not on the
grant of the lease) contains a careful and helpful review of the
authorities. No useful purpose would be served by repeating this
here and I am both grateful for and content to accept both his
analysis and his conclusion that the correct principle was that
pronounced by Best J. in Vyvyan v. Arthur (1823) 1 B. & C. 410,
417, and approved by this House in Dyson v. Foster [1909] A.C.
98:
“The general principle is, that if the performance of the
covenant be beneficial to the reversion, in respect of the
lessor’s demand, and to no other person, his assignee may
sue upon it; but if it be beneficial to the lessor, without
regard to his continuing owner of the estate, it is a mere
collateral covenant, upon which the assignee cannot sue.”
The Vice-Chancellor stated his conclusion at p. 1177:
“From these authorities I collect two things. First, that the
acid test whether or not a benefit is collateral is that laid
down by Best J., namely, is the covenant beneficial to the
owner for the time being of the covenantee’s land, and to
no one else? Secondly, a covenant simply to pay a sum of
money, whether by way of insurance premium, compensation
or damages, is a covenant capable of touching and
concerning the land provided that the existence of the
covenant, and the right to payment thereunder, affects the
value of the land in whomsoever it is vested for the time
being.”
It is objected that this states the matter too broadly because, for
example, it is said that it would involve the conclusion that a
simple covenant to pay an annuity of £x per annum to the owner
– 5 –
for the time being of Black acre would then be treated as a
covenant touching and concerning the land because it would
enhance the value of the land. This is, I think, to read the Vice-
Chancellor’s words too literally, for it is, as it seems to me,
implicit in them that he is referring to a monetary obligation
related to something which issues out of or is to be done on or to
the land. His approach to the problem, (which, again, I
respectfully adopt) emerges from the following passage from his
judgment at p. 1174:
“The surety covenant is given as a support or buttress to
covenants given by a tenant to a landlord. The covenants
by the tenant relate not only to the payment of rent, but
also to repair, insurance and user of the premises. All such
covenants by a tenant in favour of the landlord touch and
concern the land, i.e., the reversion of the landlord. The
performance of some covenants by tenants relate to things
done on the land itself (e.g. repair and user covenants).
Other tenants’ covenants (e.g. payment of rent and
insurance) require nothing to be done on the land itself.
They are mere covenants for the payment of money. The
covenant to pay rent is the major cause of the landlord’s
reversion having any value during the continuance of the
term. Where there is privity of estate the tenant’s
covenant to pay rent touches and concerns the land: Parker
v. Webb (1822) 3 Salk. 4. As it seems to me, in principle,
a covenant by a third party guaranteeing the performance
by the tenant of his obligations should touch and concern
the reversion as much as do the tenants’ covenants
themselves. This view accords with what, to my mind, is
the commercial common sense and justice of the case.
When, as in the present case, the lease has been assigned on
the terms that the sureties will guarantee performance by
the assignee of the lease, justice and common sense ought
to require the sureties, not the original tenant, to be
primarily liable in the event of default by the assignee. So
long as the reversion is not assigned, that will be the
position. Why should the position between the original
tenant and the surety be rendered completely different just
because the reversion has been assigned, a transaction
wholly outside the control of the original tenant and the
sureties?”
I entirely agree and would add only this. It has been said
that the surety’s obligation is simply that of paying money and, of
course, in a sense that is true if one looks only at the remedy
which the landlord has against him in the event of default by the
tenant. But for my part I do not think that this is a complete
analysis. The tenant covenants that he will do or refrain from
doing certain things which undoubtedly touch and concern the land.
A surety covenants that those things shall be done or not done as
the case may be. Now it is true that the remedy for breach will
sound in damages only, but the primary obligation is the same,
namely that that which is covenanted to be done will be done.
Take for instance the tenant’s covenant to repair. There is
nothing here requiring personal performance by the tenant. The
effect of the covenant is that the tenant must procure the
premises to be kept in repair. Equally, a guarantee by the surety
of the repairing covenant is no more than a covenant or warranty
– 6 –
that the guarantor will procure that the tenant, in turn, procures
the premises to be kept in repair. The content of the primary
obligation is, as it seems to me, exactly the same and if that of
the tenant touches and concerns the land that of the surety must,
as it seems to me, equally do so.
Formulations of definitive tests are always dangerous, but it
seems to me that, without claiming to expound an exhaustive
guide, the following provides a satisfactory working test for
whether, in any given case, a covenant touches and concerns the
land:
The covenant benefits only the reversioner for time
being, and if separated from the reversion ceases to
be of benefit to the covenantee.
The covenant affects the nature, quality, mode of
user or value of the land of the reversioner.
The covenant is not expressed to be personal (that is
to say neither being given only to a specific
reversioner nor in respect of the obligations only of a
specific tenant).
(4) The fact that a covenant is to pay a sum of money
will not prevent it from touching and concerning the
land so long as the three foregoing conditions are
satisfied and the covenant is connected with
something to be done on, to or in relation to the
land.
For my part, I am entirely satisfied that the decision of the
Court of Appeal in Kumar v. Dunning; [1987] 3 WLR 1167 was
correct and was reached for the correct reasons. The instant case
is indistinguishable in any material respect. Nothing I think turns
upon the precise terms of the covenant in either case. It follows
that I would dismiss this appeal.