Экзамен зачет учебный год 2023 / Dixon, Modern Land Law

Modern Land Law

8.1.3.2 The covenantee’s land: the benefit of the covenant

Likewise, there is no doubt that the original covenantee (the person to whom the promise was made) has the ‘benefit’ of the covenant and may enforce it as a matter of contract. He has the right to sue for performance of the covenant and may be awarded damages (for past breaches of covenant), an injunction (to prevent impending breaches of covenant), or a decree of specific performance (to compel performance of a positive covenant). Once again, however, in certain circumstances, this benefit may run with the land benefited by the covenant and pass to any subsequent owner of it, giving that person the right to sue for performance of the covenant and obtain the appropriate remedy. So, adopting the above example, if Mr Jones, the owner of Blackacre (the land having the benefit of the covenant) sells that land to another, the new owner may obtain the benefit of the covenant along with the land itself, and may sue the person now subject to the burden of it. As can be seen, this means that the landowners who are parties to ‘an action on the covenant’ may, or may not, be the original covenantor and original covenantee. Assuming the requisite conditions are satisfied (on which see below), the parties can be the current owners of the burdened and benefited land.

8.1.3.3 The duality of benefit and burden

In practice, what we have just discussed is the proprietary nature of covenants; that is, their ability to impose benefits and burdens on land so that any owner or occupier of the land may be affected by the covenant, either as to burden or as to benefit. In short, the covenant has been attached to the land itself. Obviously, in practice, the person claiming the benefit of a covenant usually will be the owner for the time being of the benefited land, and the person allegedly subject to the burden usually will be the owner for the time being of the burdened land.8 Indeed, it is important to realise that in all cases where a person is seeking to enforce a freehold covenant, it must be possible to show both that the benefit of the covenant has run to the claimant and that the burden has run to the defendant. In the following sections, we shall see that the rules or conditions for the transmission of the benefit and then of the burden of a freehold covenant can be very different. However, the essential fact remains that before any covenant can be enforced, it must be shown separately that the benefit has passed to the claimant (under the appropriate rules) and that the burden has passed to the defendant (under the appropriate rules). Without this duality, there can be no action ‘on the covenant’.9

8This is simply because, practically speaking, who else would wish to enforce the covenant and who else may be made subject to the operational remedies of injunction and specific performance?

9Thamesmead Town v. Allotey (1998).

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8.2The relevance of law and equity and the enforcement of covenants

The history of land law is replete with references to the differences between ‘common law’ and ‘equity’ and this is one area where the old distinctions still have relevance today. Historically, this distinction resulted from the different types of remedies available in a court of law or in a court of equity and particularly because of the latter’s willingness to allow the covenant to ‘run’ with the land more easily. It was, in essence, the willingness of courts of equity to give a remedy against a person other than the original covenantor that precipitated the evolution of the covenant from a purely contractual animal (giving a remedy ‘at law’) to a proprietary animal (giving a remedy at first in equity and now also occasionally at law). This duality – that the covenant is both a contract and a proprietary obligation – persists to this day and the distinction between enforcement at law (whether contractual or proprietary) and enforcement in equity can still have consequences, although there is a tendency to downplay these, save where this is impossible.10

8.2.1 Suing at law

If a person sues on a covenant at law, he will be claiming that the defendant is subject to the burden of the covenant at law and should pay damages. If successful, the claimant has a right to those damages, which the court cannot refuse. As we shall see, the circumstances in which a remedy lies at law (i.e. for damages) are narrower than the situations in which a remedy lies in equity.

8.2.2 Suing in equity

The story of the courts of equity is that they would always act to mitigate the harshness of the common law and this is amply reflected in the modern rules concerning the enforcement of freehold covenants. Consequently, not only is it easier to enforce a covenant in equity, but the range of potential defendants is much greater because the burden of a covenant may run with the land in equity in a way that is impossible at law. Moreover, because enforcement of the covenant is in equity, equitable remedies are available, although unlike remedies at law they are subject to the discretion of the court and may be withheld in an appropriate case. These remedies are the injunction (for restrictive covenants) and the decree of specific performance (for positive covenants).11

10For example, in Gafford v. Graham (1998), the court observed that the defence of acquiescence (usually an equitable defence) should operate identically whether the claimant was claiming suit at law or in equity.

11In appropriate cases, damages may be awarded in lieu of an injunction (see e.g. Small v. Oliver & Saunders (2006)), but usually the claimant wants to compel the defendant to perform the covenant or to desist from some activity that breaches it.

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Finally, and perhaps most importantly of all, if the claimant sues in equity, either because they are required to (as where the defendant is not the original covenantor) or out of choice (because they do not want ‘mere’ damages) then the normal principles of registered and unregistered land come into operation. These will be considered below, but for now, the point is that a restrictive covenant12 may need to be registered (in registered and unregistered land) to be enforceable against certain kinds of defendant.

To sum up then, in any concrete case involving the enforcement of freehold covenants, there are always two issues of primary importance: first, has the benefit of the covenant run to the claimant in law or equity; and second, has the burden of the covenant also passed to the defendant in law or in equity?

Importantly, it also seems that there must be symmetry about the running of the benefit and burden. So, if the claimant is suing at law, he must establish that the defendant is subject to the burden at law and if the claimant is suing in equity, he must establish that the burden has passed to the defendant in equity.

8.3The factual context for the enforcement of freehold covenants

As the heading to this chapter makes clear, the rules about to be discussed operate when one freeholder has the right to enforce a covenant against another freeholder. Also, at the risk of repetition, there is no doubt that the benefit and the burden of certain types of covenant may in principle be transferred on a sale of either or both of the benefited and burdened freehold land. However, it is not only in actions between freeholders that these rules may be relevant. In fact, they may be applicable between any claimant and defendant who do not stand in a relationship of ‘privity of contract’ or ‘privity of estate’.13 Consequently, as well as regulating actions on the covenant between freeholders, these rules also will be relevant when a landlord seeks to enforce a covenant contained in a lease against a subtenant and where a landlord seeks to enforce a leasehold covenant against a person who has taken only an equitable lease or an equitable assignment of the lease under an assignment taking effect on or before 1 January 1996.14 Finally, the rules may also be relevant

12As we shall see, the burden of positive covenants cannot pass at all, either at law or in equity.

13For example, under an equitable tenancy granted before 1 January 1996 (on which see Chapter 6) and in actions between head landlords and subtenants.

14For equitable leases/assignments taking effect after 1 January 1996, the Landlord and Tenant (Covenants) Act 1995 generally ensures the enforcement of a restrictive covenant against the owner or occupier of land (sections 3(5) and 3(6) and Chapter 6). In respect of actions against a subtenant or other occupier of leasehold land, it is not clear whether the Landlord and Tenant (Covenants) Act 1995, section 3(5) has meant that restrictive covenants contained in a lease may always be enforceable against subtenants (assuming registration, section 3(6)), or whether the conditions about to be discussed must continue to be fulfilled.

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where the claimant is seeking to enforce a restrictive covenant (but not a positive one) against someone who has no complete estate in the land at all; for example, a squatter in the process of attempting to acquire title by adverse possession.

8.4Principle 1: enforcing the covenant in an action between the original covenantor and the original covenantee

A covenant is equivalent to a legally binding contract between the covenantor and the covenantee. As such, the covenantee may sue the covenantor for damages at law for breach of covenant or, in appropriate circumstances, obtain one of the equitable remedies of injunction or specific performance. This is straightforward, and is a reflection of the ‘privity of contract’ that exists between the original covenantee and original covenantor. However, because the benefits and burdens of certain types of covenants are transmissible to subsequent purchasers of both the original covenantor’s and original covenantee’s land, a number of different situations must be identified.

8.4.1 Both original parties to the covenant in possession

If the original covenantor and original covenantee are still in possession of their respective land, the matter is relatively straightforward. All covenants are enforceable and the covenantee may obtain damages, an injunction (to prevent breach of a restrictive covenant), or specific performance (to ensure compliance with a positive covenant) against the covenantor. This is a matter of contract. For example, in an action between original covenantor and original covenantee, the claimant can enforce a covenant to maintain a boundary fence and a covenant prohibiting the carrying on of a trade or business on the land. Both positive and negative covenants are enforceable between the original parties in possession of their lands.

8.4.2 After the original covenantor has parted with the land

If the original covenantor has parted with the land that was subject to the covenant, he remains liable on all the covenants to whomsoever has the benefit of the covenant. This is because of the contractual nature of the covenant. However, in most cases, a claimant will want to enforce the substance of the obligation (i.e. making sure the covenant is actually performed) and so will take action against the person currently in possession of the burdened land. Consequently, a remedy against the original covenantor who is no longer in possession of the land is of little practical use unless this is the only person against whom there is a realistic chance of a remedy and where damages are acceptable.

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8.4.3 After the original covenantee has parted with the land

If the original covenantee has parted with the land that had the benefit of the covenant, he may still be able to enforce a covenant against whomsoever has the burden of it. However, when suing at law (i.e. claiming damages), this right will almost certainly have been given up due to an express assignment of the right to sue to the new owners of the benefited land15 and in any event any damages are likely to be only nominal because the real loss has fallen on the person who is actually in possession of the land. In addition, when suing at equity (i.e. for an injunction or specific performance), the court is likely in its discretion to refuse to grant an equitable remedy to an original covenantee who no longer is in possession of the benefited land, because, in reality, such a person again suffers no loss.16

8.4.4 Original covenantor having no land at all

It has always been the case that a covenantor is liable on a covenant at law (but not in equity), even if he never had any land burdened by the covenant. This is because the contractual nature of the obligation is not dependant on the existence of any estate in land held by the original covenantor. Therefore, in Smith and Snipes Hall Farm Ltd v. River Douglas Catchment Board, the defendant was liable on its positive covenant to repair and maintain river banks even though it had no land burdened by the covenant.

8.4.5 Defining the original covenantee and covenantor

It goes without saying that it is vital to be able to determine exactly who is an ‘original’ covenantor or covenantee, particularly if either is still in possession of the land and so able to sue effectively and easily. Usually, of course, this is quite simple, they being the parties to the deed of covenant and identified as such on paper, having signed the deed under witness: as where the deed recites that ‘Mr Smith, freehold owner of Pinkacre, hereby covenants with Mr Jones, freehold owner of Blackacre’, and both sign the deed in the presence of a witness. However, it is possible under section 56 of the Law of Property Act 1925 to extend the range of original covenantees (but not covenantors) beyond those persons who are actually parties to the deed in the sense just described. By virtue of section 56, a person may enforce a covenant (i.e. be regarded as an original covenantee), even if they are not actually a party to it (i.e. have not signed it under witness), provided that the covenant was intended to confer this benefit on the person as a party and they

15See section 8.8.2.

16Chambers v. Randall (1923).

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are in existence and identifiable at the date of the covenant.17 What this means in practice is that far more people may have the right to the benefit of a covenant as an original covenantee (which may then be transmitted on a sale of their land) than simply the person who signs their name to the deed, providing only that the deed does not purport to confer these benefits on ‘future’ owners of land or persons who cannot be identified. A good example is where A covenants with B ‘and with the present owners of Plots 1, 2 and 3’ not to carry on any trade or business on his (A’s) land. Here, A is the original covenantor, B is an original covenantee and party to the deed, and the owners of Plots 1, 2 and 3 are also original covenantees, by virtue of section 56, provided that they are intended to be treated as parties. Thus, the ‘benefit’ of the covenant is enjoyed originally by four persons, each of whom may pass that benefit with their land if the conditions discussed below are satisfied. Note, however, that it now seems established that section 56 only has this effect when the persons identified in the covenant as being entitled to its benefit are intended to be treated as parties, not simply additional persons to whom the benefit has been given.18 This is a fine distinction, and although it can be crucial (as in Amsprop), the difficulty can be avoided by careful drafting. Simply put, the point is that section 56 is intended to ensure that specific, identifiable persons are treated as parties to the covenant, and is not intended to confer the benefit of the covenant on hoards of landowners simply because they fall within the literal ambit of a particularly boldly drafted covenant.

8.5Principle 2: enforcing the covenant against successors in title to the original covenantor – passing the burden

One of the great steps forward in English property law was the transformation of freehold covenants from purely personal obligations governed by the law of contract to proprietary obligations governed by the law of real property. This is generally regarded as having been achieved by the landmark case of Tulk v. Moxhay (1848) where a covenant not build on open land in Leicester Square, London, was enforced against the defendant when the defendant was not the original covenantor but a purchaser from him. What this means in simple terms is that if the various conditions discussed below are satisfied, a covenant can be enforced not only against the original covenantor, but against anyone who comes into possession of the land burdened by the covenant (i.e. the land over which the covenant operates). Obviously, this

17White v. Bijou Mansions (1938).

18Amsprop Trading Ltd v. Harris Distribution (1996). The point is that it is not enough that the persons are intended to take a benefit; they must be intended to be parties. Thus, the covenant should be made ‘with’ them, not merely ‘for’ them.

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might be a severe limitation on the uses to which the burdened land can be put by a successor in title to the original covenantor (e.g. if the land is subject to a covenant against business use, as in Re Bromor Properties (1995), or against building as in Tulk itself), and so it is not surprising that there are strict limitations defining the precise circumstances in which the burden of a covenant may ‘run’ with the land under the Tulk principle.

First, it is not possible for the burden of a covenant between freeholders to run at law in any circumstances.19 There can be no claim at law against a successor to the original covenantor. This is simply not possible.20 However, as noted above, equity is not as strict as the common law and it is possible for the burden of some (but not all) covenants to run with the land in equity. In short, if a burden is to run at all, it must be in equity. This has its own consequences; in particular, that a claimant relying on the equitable claim takes the risks associated with the enforcement of all equitable rights over land. These are dealt with below, but importantly encompass the rule that the award of a remedy is discretionary (even if the burden has actually run to the defendant) and that the covenant must have been registered appropriately in the systems of registered and unregistered land.

Second, even in equity, it is not the burden of every covenant that is capable of passing on transfer of the covenantor’s land. The rule is simple – some would say simplistic – and is that only the burden of restrictive covenants are capable of passing.21 This means that it is not possible for the burden of a positive covenant to be enforced against a successor to the original covenantor, and so only the original covenantor can be liable on positive covenants. For example, if the original covenantor and owner of plot X has made a covenant with the owner of plot Y (the original covenantee) not to carry on a trade or business and a covenant to maintain a fence, and then plot X is sold to a third party, the new owner could be liable on the covenant restricting use but cannot be liable on the covenant to maintain the fence. Positive burdens cannot pass. This is vitally important. What it means in practice is that, as soon as the land has passed out of the hands of the original covenantor, only restrictive covenants can be enforced against the land, and then only in equity. Indeed, although the claimant may well have the benefit of both positive and restrictive covenants, the defendant can only be liable for breaches of the restrictive ones. Despite some criticism of this rule, there is no doubt that it remains the law. It has been reiterated by House of Lords in Rhone v. Stephens (1994) and applied (albeit with considerable reluctance) by the Court of Appeal in Thamesmead Town v. Allotey. In both cases, there was distinct judicial criticism

19As we have seen, however, the burdens of positive and negative leasehold covenants can run with the lease and the reversion in law and in equity – Chapter 6.

20Rhone v. Stephens (1994).

21Hayward v. Brunswick Building Society (1881); Thamesmead Town v. Allotey (1998).

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of the rule, but the fact that conveyancing practice has developed around it (and because of it!), and the reluctance of the House of Lords to intervene, means that it can be changed only by Act of Parliament. This course of action was urged strongly by the Court of Appeal in Thamesmead Town but there is little hope of legislation in the short term, despite the fact that the burden of positive leasehold covenants is easily transmissible.22 Note, however, that the Law Commission has argued persuasively that there is no reason of principle why the burden of positive obligations should not run and have produced a comprehensive consultation document seeking views on the best way to amend the law.23 For now, it remains vital to be able to distinguish between those freehold covenants that impose on the covenantor an obligation to act (positive), and those that impose an obligation to refrain from acting (negative). The precise conditions for the passing of the burdens of restrictive covenants are discussed below.

8.5.1 The covenant must be restrictive or negative in nature

As noted immediately above, and mentioned here for the sake of completeness, it is vital that the covenant be restrictive or negative in nature. Importantly, this is a question of substance, not of form, and it is irrelevant how the covenant is actually worded – as in Tulk v Moxhay itself, where a covenant expressed in terms of the need to keep land as an open space was rightly held to be negative in substance because in reality it was a covenant not to build. The essence is that a covenant is negative if it prevents the landowner from doing something on his own land, however it may be worded. Typical examples include a covenant not to carry on any trade or business, a covenant not to build and a covenant not to sell certain types of product. In this sense, a covenant which compels the owner of land to spend money on his property will usually be regarded as positive, and hence unenforceable against successors to the original covenantor. A covenant to maintain a boundary fence is a good example, as is the covenant to repair a roof considered by the House of Lords in Rhone v. Stephens (1994).

8.5.2 The covenant must touch and concern the land

It is axiomatic that only a covenant that relates to the use or value of the land should be capable of passing with a transfer of it. The law of property is generally concerned with proprietary obligations, not personal ones. Consequently, only the burden of restrictive covenants which ‘touch and

22Especially for leases granted on or after 1 January 1996; see Chapter 6.

23See Law Commission Report No. 127, Transfer of Land: The Law of Positive and Restrictive Covenants (1984); and Law Commission Consultation Paper No. 186, Easements, Covenants and Profits a Prendre (2008).

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concern’ the land are capable of being enforced against successors in title to the original covenantor.24 There is one possible exception to this rule, being the case where a landlord attempts to enforce a leasehold restrictive covenant against a subtenant. Such parties do not stand in either privity of contract or privity of estate, so, as noted above, the ‘freehold covenant rules’ are applicable. However, according to section 3(5) of the Landlord and Tenant (Covenants) Act 1995, ‘any’ landlord or tenant’s restrictive covenant contained in a lease to which the Act applies25 ‘shall’ be capable of being enforced against any owner or occupier of the land, subject to requirements of registration.26 There is nothing in this section that requires a leasehold restrictive covenant concerning the demised land to ‘touch and concern’, and it may be that this requirement has been abolished (possibly accidentally?) in those cases where the burden of a leasehold restrictive covenant is being enforced under the ‘freehold covenants’ rules.

The above point aside then, there is no doubt that for restrictive covenants not contained in a lease, the requirement of ‘touching and concerning’ still applies.27 Given that the Tulk principle is applicable most frequently in disputes concerning freeholders, the importance of the requirement remains. Nevertheless, it is also true that consideration of this issue occurs usually in relation to whether the benefit of a covenant passes with the land, rather than the burden. This is simply because it is certain that if a covenant confers a proprietary benefit on land, it necessarily involves a proprietary burden on the land once owned by the original covenantor. Lest we think, however, that the lack of explicit mention of a ‘touching and concerning’ requirement means that it is not required when considering the passing of the burden, we should remember that the additional requirement of registration – discussed below – necessarily assumes that the burden is proprietary in nature. It is generally impossible to protect by registration a burden against land that is merely personal.

In essence, whether any particular restrictive covenant does ‘touch and concern’ will depend on the facts of each case, but a general test has been laid down by Lord Oliver in Swift Investments v. Combined English Stores (1989).28

This test, which is not rigid in its application, but is a valuable guide, requires us to ask a number of questions. First, could the covenant burden any owner of an estate in the land as opposed to the particular original owner? If it could, it may ‘touch and concern’ as this shows that the covenant has

24The original covenantor is, of course, liable on all covenants. Thus, as explained above, it is not even necessary for the original covenantor to have land in order to be liable on the covenant at law.

25Leases granted on or after 1 January 1996.

26See sections 8.5.5–8.5.6.

27See, for example, Robins v. Berkeley Homes (1996).

28Although developed in the context of leasehold covenants, it applies with equal force to freehold covenants.

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meaning even though the original covenantor is no longer in possession of the estate. Second, does the covenant affect the nature, quality, mode of user or value of the land?29 Again, if the covenant affects how the land may be utilised or its value to any purchaser, it is likely to touch and concern. Third, is the covenant expressed to be personal so that, irrespective of its substance, it is meant to operate only as a promise binding the original covenantor?30

Consideration of these issues should be enough to determine whether the restrictive covenant ‘touches and concerns’ the land and they will be applied with reference to the mass of case law on this point. Perhaps the safest route for a conveyancer when attempting to ensure that a covenant ‘touches and concerns’ is to follow the advice of Wilberforce J in Marten v. Flight Refuelling (1962) that a covenant that expressly states that it is imposed for the purpose of affecting land will normally be taken by the court as being capable of doing so. Assuming, then, that this hurdle has been cleared, the remaining conditions must be met.

8.5.3The covenant must have been imposed to benefit land of the original covenantee

This condition is one that expresses most clearly the nature of a covenant as affecting both benefited and burdened land. It means that the burden cannot pass at all unless the covenantee had land at the time the covenant was made and that that land was capable of benefiting from the covenant and that the burden was imposed in order to benefit that land.31 In other words, the covenant must have been made to benefit land and if there is no benefit or no such land, the covenant is unenforceable other than against the original covenantor. In the language of easements, there must be a ‘dominant tenement’ that could benefit from this restrictive covenant,32 although the condition is satisfied if the covenant was made to benefit the proprietary interest of the covenantee such as that held by a lessor or a mortgagee.33

29For example, the classic user covenants, such as that not to carry on a trade or business, or a certain trade; not to build; not to keep any animals.

30For example, where a covenant is expressed ‘to be enforceable only against the person hereinafter named as the original covenantor’. It seems then that, unlike issues concerning the existence of a lease (Street v. Mountford), the parties’ intentions can undo what might otherwise be a proprietary obligation. See also Sugarman v. Porter (2006) where the express words of the covenant meant that the benefit of the covenant did not run with a sale of the originally benefited land.

31Whitgift Homes Ltd v. Stocks (2001).

32London and South Western Railway v. Gomm (1882).

33There is no separate physical land in these cases, but there is a separate benefiting estate. There are also statutory exceptions in favour of local authorities under the Town and Country Planning Acts and Housing Acts, and in favour of certain other bodies such as the National Trust, none of whom require benefited land. So, contrary to the general rule, a restrictive covenant may be enforced against a landowner by a local authority, even if they (the authority) did not own land at the time of the covenant. See also the last sale by a developer under a ‘building scheme’ – the developer retains no land, but the covenant is still effective.

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