Freehold Covenants 2 - GDL Land Law

Land Law: Freehold Covenants 2 – Equity, Remedies & Discharge/Modification

Enforceability of covenants in EQUITY

BURDEN passing in equity

• General rule (see ‘Freehold Covenants 1’): burden of covenants does not pass at common law; thus covenants generally unenforceable against a successor in title (X) of the original covenantor (A)--unless narrow Halsall exception applies.

In Equity, the burden of a restrictive covenant does pass

Remember at common law the burden does not pass.

• In essence, IN EQUITY: a restrictive covenant, but not a positive covenant, is binding on a purchaser if they have notice of it.

• It is thought unfair to positive on a positive covenant, an obligation to do something; but is fair to pass on a restriction.

• Tulk v Moxhay (1848)

  • There was a covenant not to build on Leicester Square garden; and to maintain the garden in good condition.

  • HELD: the negative part of the covenant was binding on a new owner who had notice; but not the positive part.

  • Lord Cottenham: if equity did not enforce the covenantor’s promise then it would be ‘impossible for the owner of land to sell part of it without incurring the risk of rendering what he retains worthless’.

• The modern requirements form the rule in Tulk v Moxhay, 4 aspects for burden of negative covenants to pass in equity:

  • (1) the covenant must be negative in substance.

  • (2) The covenant must accommodate the dominant tenement.

  • (3) the original parties must have intended that the burden should bind successors.

  • (4) The person against whom the covenant is being enforced must have notice.

Condition 1--covenant must be negative in substance

• Must be negative in substance, not form--it is the effect of the covenant, rather than its wording, which determines whether -ve or +ve.

• In substance: can the covenant be satisfied by doing nothing.

• First q: whether the covenant can be complied with by doing nothing? If so, the covenant is negative

• ‘Hand in pocket’ test, Haywood v Brunswick: If you have to put your ‘hand in pocket’ to spend money, time, or energy - it’s a +ve covenant.

• Eg a covenant ‘not to let the property fall into disrepair’--is, in substance, a positive covenant, although linguistically negative--because you have to do something to prevent it falling into disrepair.

• So the covenant must be negative

• Mixed covenants: 2 ways to analyse

  • Split into 2 separate covenants, Shepherd Homes v Sandham (No 2) (1971): split covenants into +ve and -ve. Where the two parts of the obligation are capable of standing alone as separate obligations.

  • In this case: there was a ‘not to build’ part; and a ‘keep and use the land as an ornamental garden’ part. They were held to be separate: the latter was positive; separate from the negative covenant not to build.

  • Eg in Tulk v Moxhay itself: you can separate out into ‘not building on the garden’ (-ve, enforceable); and ‘to maintain the garden’ (+ve, not enforceable).

  • Or, more tied up, Powell v Hemsley (1909)--a condition

  • You interpret the covenant as either negative or positive as a whole, notwithstanding any conditions of performance.

  • May be that a negative undertaking with a covenant is found simply a condition of a positive covenant overall; or vice versa. Could have a negative covenant overall, with a positive condition; or vice versa.

  • Covenant: ‘to erect on the land private residences only, and that before erecting any building you must submit plans to the developer for their approval’.

  • Held: overall negative covenant, with a positive condition. It couldn’t be split--the submitting building plans only applied under the first part of the covenant not to build. In effect: it was not to build without submitting plans for approval. So overall it was enforceable, it was a restrictive covenant.

• IN EXAM, OFTEN DIFFICULT TO WORK OUT WHETHER --use these rules above-VE/+VE

• NB, positive burdens, in equity and common law, do not pass: Rhone v Stephens, Lord Templeman: ‘equity will enforce negative covenants against freehold land but has no power to enforce positive covenants against successors in title of the land’. Cannot enforce breaches of positive covenants directly against successors in title to the servient land in equity.

  • Only means of enforcing such breaches -- either pursue the original covenantor at common law (which may lead to indirect enforcement against the successor where a chain of indemnities exists); or employ the common law doctrine under Halsall v Brizell, if applicable.

(2) The covenant must accommodate the dominant tenement (i.e. must benefit the neighbouring land)

• It must be shown to benefit the neighbouring land.

• 3 aspects to this rule:

• (1) the original covenantee, and their successor(s) in title, must retain an interest in the land when the covenant was made, and at the time of enforcement, respectively

  • LCC v Allen: the covenant was made with the council, not the neighbour, so the burden didn’t run.

• (2) the covenant must ‘touch and concern’ the land: i.e. the dominant land must benefit from the covenant-must not only benefit the person.

  • This is a question of substance, not form, so wording can be misleading: see Cosmichome Limited v Southampton City Council (2013).

  • See P.A. Swift v CESG

  • Remember (from common law rules) that a covenant not to compete with business being carried out on the covenantee’s land may ‘touch and concern’ the dominant land--Newton Abbot Cooperative v Williamson & Treadgold.

• (3) Proximity between the 2 pieces of land (servient and dominant), to say that the covenant actually benefits the neighbouring land

  • Bailey v Stephens (1862)

• Essentially, whether a covenant ‘accommodates the dominant tenement’ is a question of fact

(3) the original parties to the covenant must have intended the burden to run

• A restrictive covenant may only be personal to the parties making it--for the burden to pass, the original parties must have intended an interest in land to be binding on successors.

• Express wording

  • Eg David ‘covenants for...