Chapter 13 Answers to end of chapter questions

Self-test questions

Does a covenantee have the benefit or burden of a covenant?

Answer: The covenantee has the benefit of a covenant. They are the person to whom the promise is made. The covenantor, who makes the promise, has the burden.

See: 13.1.

Abi has the benefit of a covenant entered into by Belinda that Belinda will maintain the fence between their gardens. Belinda has sold her land to Carl. Can Abi oblige Carl to carry out repairs to the fence?

Answer: In this scenario, Abi is the covenantee and has the benefit of the covenant. Belinda is the original covenantor, and has the burden. Carl is a successor in title to the original covenantor. The question, therefore, is whether the burden of the covenant has run with the land to Carl, so that he is obliged to carry out the terms of the covenant and repair the fence.

Whilst Belinda owned the land, Abi could have enforced the covenant as a matter of contract. However, there is no contract between her and Carl. The law on the running of the burden of a covenant must be examined.

The burden of a covenant does not run with the land at common law: Austerberry v. Corporation of Oldham (1885) 29 Ch D 750. However, the burden of certain covenants does run with the land in equity, under the rules in Tulk v Moxhay. Unfortunately, the first of the rules under Tulk v Moxhay is that the covenant must be restrictive – that is, it must forbid the doing of something. A covenant which requires the expenditure of money will not be restrictive.

This is a positive covenant, and will not run with the land, so Carl will not be bound by it. Abi could still enforce the covenant against Belinda, but her remedy would be damages, as Belinda is not in a position to repair the fence.

An easement of fencing was established in Crowe v. Wood [1971] 1 QB 77, but this is restricted to stock-proof fencing. Also, if this is in fact a covenant, it will not be treated as an easement: Churston Golf Club v Haddock [2019] EWCA Civ 544.

Therefore Abi cannot oblige Carl to carry out repairs to the fence.

Doug has the benefit of a covenant entered into by Ed that Ed will not build on his land without Doug’s consent. Will the benefit of this covenant pass to Fiona if she buys Doug’s land? Will the burden pass to Greg if he buys Ed’s land?

Answer: In this scenario, Doug is the original covenantee and has the benefit of the covenant. Ed is the original covenantor and has the burden. Fiona is the successor in title to the original covenantee, and therefore needs to know if the benefit will run with the land. Greg is a successor in title to the original covenantor and therefore needs to know if the burden of the covenant will run with the land.

The benefit of a covenant will run with the land both at common law and in equity. In addition, successors in title may have been given the benefit expressly under the Contracts (Rights of Third Parties) Act 1999, if the covenant was made after 11 May 2000. This is a restrictive covenant (it prevents building without consent), so it is more usual to consider the equitable rules for the passing of the benefit and the burden.

The benefit of a covenant will pass in equity if the covenant touches and concerns land of the covenantee and the benefit of the covenant was either annexed to the land of the covenantee; or expressly assigned to the successor in title; or the land in question is part of a building scheme: Renals v. Cowlishaw (1878) 9 Ch D 125, 129. This covenant does touch and concern the benefited land as having the right to veto building on the burdened land will increase the value of the benefited land.

The benefit may be expressly assigned to Fiona, or it may be annexed to the land. There is no evidence of a building scheme here.

Assignment must occur at the time the land is transferred to Fiona. Since the covenant was taken for the benefit of Doug’s land, and that land is identifiable, the covenant can be assigned.

Annexation means the permanent attachment of the covenant to the benefited land, and is therefore preferable to assignment. There are three types of annexation; express, implied and statutory. Implied annexation is very rare, and will not be considered further.

Express annexation occurs when the covenant indicates an intention that the benefit should become annexed to the land, so that it runs with the land; and the land for which the benefit of the covenant is made is identified or capable of identification; and either the covenant is for the benefit of the whole of the covenantee’s land and the whole of that land has been assigned to the successors in title or the covenant is intended to be for the benefit of each and every part of the covenantee’s land. The covenant is, in this case, annexed to the part it actually benefits. We do not know what the wording of the covenant is here, but some words mentioning successors in title and the land to be benefited are essential for express annexation. If the covenant is worded in that way, there may well be express annexation, as it appears that the covenant benefits the whole of Doug’s land, and that has been transferred to Fiona.

Statutory annexation occurs under LPA 1925 s.78, as interpreted by Federated Homes v. Mill Lodge Properties [1980] 1 All ER 371. As a result of that case, the benefit of any restrictive covenant is annexed to the covenantee’s benefited land, provided that the covenant is one that touches and concerns the land. However, this will not apply if the covenant is expressly stated to be personal (Roake v. Chadha [1984] 1 WLR 40) or if the benefited land cannot be identified (Crest Nicholson v. McAllister [2004] EWCA Civ 410). It is likely that statutory annexation has occurred here unless the covenant is worded so as to be personal to Doug. It is therefore likely that the benefit will pass to Fiona.

The burden of a covenant does not run with the land at common law: Austerberry v. Corporation of Oldham (1885) 29 Ch D 750. However, the burden of certain covenants does run with the land in equity, under the rules in Tulk v Moxhay. These rules are firstly, that the covenant must be restrictive, secondly that at the date of the covenant, the covenantee owned land that was benefited by the covenant; thirdly that the original parties intended the burden to run with the land to bind successors; and fourthly the covenantor must take with notice of the covenant.

This covenant is restrictive. At the date of the covenant, Doug owned land benefited by the covenant, and this covenant touches and concerns the land. An intention that it should run with the land originally had to be shown by express words, but, since 1925, LPA 1925, s. 79, has implied an intention that the burden of a restrictive covenant should run with the land. Unless the covenant was deliberately written to be personal in nature, this intention will be presumed. Notice is nowadays replaced by registration. The correct registration requirements for the land, whether unregistered or registered, must have been met if Greg is to be bound by the covenant.

In conclusion, it is not possible to say with certainty whether this covenant will run with the land. Much depends upon the intention of the parties at the time the covenant was entered into, and the wording of the covenant. However, restrictive covenants often do pass with the land.

What remedies would be open to Fiona if she were to sue Greg for breach of covenant?

Answer: Since the burden of a covenant runs in equity only, the remedies for breach of covenant must be equitable. Fiona may be able to get an injunction to stop Greg from building on the land without her consent. To get this remedy, Fiona must act quickly if there is a breach or threatened breach of covenant. If she delays too long, she may be held to have acquiesced to the breach, and get no remedy at all, or possibly damages rather than an injunction: Gafford v. Graham (1998) 77 P & CR 73. It may be safer to apply for an interim injunction, although this is not always necessary: Mortimer v. Bailey [2004] EWCA Civ 1514. In any case, she should pursue the case vigorously, and make it clear that she will not accept damages instead.

Sometimes damages may be awarded instead of an injunction. The leading case on this is Shelfer v. City of London Electric Lighting Co. Ltd (No. 1) [1895] 1 Ch 287, in which it was held that damages rather than an injunction may be awarded If the injury to the claimant's legal rights is small, can be estimated in terms of money, can be adequately compensated by a small money payment, and the case is one in which it would be oppressive to the defendant to grant an injunction. It has traditionally been said that a judge must consider all four of the principles in Shelfer v. City of London Electric Lighting Co.Ltd before granting damages rather than an injunction, and if any of the principles are not met, an injunction should be granted. For example, in Jacklin v. Chief Constable of West Yorkshire [2007] EWCA Civ 181, an injunction was granted in respect of an easement of way despite considerable delay on the part of the claimant because the court was not satisfied that it would be oppressive to grant the injunction, even though the first three principles were agreed to have been met. Similarly, in HKRUK II (CHC) Ltd v. Heaney [2010] EWHC 2245 (Ch), a two-storey extension was ordered to be demolished because it blocked the claimant’s right to light. However, in Coventry v Lawrence [2014] UKSC 13, Lord Neuberger said that the the application of the four tests must not be such as “to be a fetter on the exercise of the court’s discretion”. Other members of the Supreme Court also agreed that the four principles in Shelfer should not be ‘slavishly followed’. Therefore, it appears that a wider view should now be taken, and that an injunction might be refused even if the four criteria are not satisfied.

If damages are awarded, the sum is usually fixed by expert evidence as to the amount the claimant could have charged for relaxing the covenant.

See: 12.7.1.

Examination questions

Abe was the owner of a detached house with a large garden. In 2009, he sold part of his garden to Ben. In the transfer, Ben covenanted as follows:

To build only one bungalow on the purchased land, the plans for which were to be approved by Abe;

To build a wall between the purchased land and Abe’s retained land;

To contribute to the cost of maintaining the driveway which serves both houses, and over which both properties have a right of way.

Ben did nothing with the land for some years, mainly because he fell ill shortly after buying it. In 2015, he sold the purchased land to Cerys. A number of problems have arisen in respect of her use of the land. Firstly, she has refused to build the wall between the two plots, saying that that obligation was personal to Ben. Secondly, she has started to build a large house on the land, without consulting Abe, and despite his objections. Thirdly, she has refused to contribute to resurfacing the driveway even though it is the lorries from her building work that have damaged the surface.

Advise Abe.

Answer: In this scenario, Abe is the covenantee and has the benefit of the covenant. Ben was the original covenantor, and has the burden. Cerys is a successor in title to the original covenantor. The question, therefore, is whether the burden of the covenant has run with the land to Cerys, so that she is obliged to abide by the covenants. The covenants will be considered in turn.

The covenant to build only one bungalow on the purchased land, the plans for which were to be approved by Abe: the burden of some covenants may run in equity under the rules in Tulk v Moxhay. These rules are firstly, that the covenant must be restrictive, secondly that at the date of the covenant, the covenantee owned land that was benefited by the covenant; thirdly that the original parties intended the burden to run with the land to bind successors; and fourthly the covenantor must take with notice of the covenant.

This covenant is restrictive. At the date of the covenant, Abe owned land benefited by the covenant, and this covenant touches and concerns the land. An intention that it should run with the land originally had to be shown by express words, but, since 1925, LPA 1925, s. 79, has implied an intention that the burden of a restrictive covenant should run with the land. Unless the covenant was deliberately written to be personal in nature, this intention will be presumed. It is not clear what the exact wording was, but in the recent case of Holland Park Management v Hicks [2013] EWHC 391 (Ch), a similar covenant about building on the land and gaining permission was held to touch and concern the land and to benefit the land owner for the time being.

Notice is nowadays replaced by registration. The correct registration requirements for the land, whether unregistered or registered, must have been met if Cerys is to be bound by the covenant.

To build a wall between the purchased land and Abe’s retained land: The burden of a covenant does not run with the land at common law: Austerberry v. Corporation of Oldham (1885) 29 Ch D 750. However, as stated above, the burden of certain covenants does run with the land in equity, under the rules in Tulk v Moxhay. Unfortunately, the first of the rules under Tulk v Moxhay is that the covenant must be restrictive. A covenant which requires the expenditure of money will not be restrictive. This is a positive covenant, and will not run with the land, so Cerys will not be bound by it. Abe could still enforce the covenant against Ben, but her remedy would be damages, as Ben is not in a position to build the wall.

Refusal to contribute to resurfacing the driveway: this is also a positive covenant so will not run with the land either in law or in equity. However, this covenant may be enforceable under the doctrine of mutual benefit and burden. In Halsall v. Brizell [1957] Ch 169 the transfer of a house contained a positive covenant requiring the owners to pay a proportion¬ate share of the maintenance of a private roadway and drainage. The defendants, who were successors in title to the original covenantors, refused to pay. It was held that, on the basis ‘that a man who takes the benefit of a deed is bound by a con¬dition contained in it’, the defendants could not continue to use the roadways or the sewers unless they also paid for the maintenance of them. This meant that, in practice, the defendants were bound by the positive covenant to pay for repairs and maintenance.

In Davies v. Jones [2009] EWCA Civ 1164, [2010] 1 P & CR 22 it was held that for a positive covenant to be enforceable on the basis of mutual benefit and burden, three conditions must be satisfied:

1. The benefit and burden must be conferred in or by the same transaction.
2. The benefit and the burden must be directly related, and
3. The person on whom the burden is alleged to have been imposed must have or have had the opportunity of rejecting or disclaiming the benefit, not merely the right to receive the benefit.

These rules were applied in Ellwood v Goodman [2013] EWCA Civ 1103, a case about contruibutions to the maintenance of a roadway, and it was held that, as a matter of substance, the right to use the roadway was clearly and obviously linked to the obligation to pay for repairs. ThereforeCerys will have to pay her share of the maintenance of the roadway if she wishes to continue using it.

In Rhone v. Stephens [1994] 2 AC 310, Lord Templeman said (at 317): ‘the benefit of a covenant may run with the land at law but not the burden: see the Austerberry case’.

Explain the effect this rule has had on English land law, and indicate how the law might be reformed.

Answer: The burden of positive covenants cannot pass at common law or in equity, because no burdens pass at common law— Austerberry v. Corporation of Oldham, and only restrictive covenants pass in equity— Haywood v. Brunswick Permanent Benefit Building Society.

Therefore, it is not possible to create a straightforward positive covenant, such as a covenant to build and keep a wall in repair, or a covenant to keep a house in repair, that will run with the land so as to bind a successor in title to the covenantor.

One effect of this is there are few freehold flats in England and Wales: it is not easily possible to make the owner of the ground- floor flat keep his or her property in repair so that the flats above are supported. If the ground- floor owner neglects the property so that the flats above become unstable, there can be an action for breach of cov¬enant only if he or she is the original covenantor. An easement of support is also not helpful in the case of neglect, because easements do not usually oblige the servient owner to spend money. It is, however, possible that there might be an action in nuisance— but this is a poor substitute for a straightforward obligation on the owner to maintain his or her property.

Another effect is that conveyancers have tried to find ways round the rule in Austerberry v. Corporation of Oldham. These include leasehold enfranchisement, commonhold (which has not proved popular), indirect enforcement through estate rentcharges, the doctirine of ‘mutual benefit and burden’, and chains of indemnity covenants. All of these are artificial, complicated and liable to failure.

The Law Commission report, Making Land Work: Easements, Covenants and Profits à Prendre, Law Com No. 327 (London: The Stationery Office, 2011) recommends replacing covenants with a new interest in land, the ‘land obligation’. This would work essentially like an easement, and be regis¬tered in the same way. Land obligations could be either positive or restrictive; however, the Law Commission thought that flats would continue to work better in either leasehold or commonhold than as freeholds.

This recommendation, if implemented, would make covenants entered into in the future legal obligations that run with the land much as easements and profits do now. As can be seen from the wording, this type of ‘land obligation’ will apply to both positive and negative obligations, thus ending the rule in Austerberry v Corporation of Oldham (1885) LR 29 Ch D 750 that the burden of positive covenants cannot run with the land. Such obligations would be registrable dispositions, just as easements and profits are now, but it would be possible to create land obligations in unregistered land as well as registered. The creation of a land obligation in unregistered land would not trigger first registration; it would be registrable as a land charge instead.

After the reforms, it would no longer be possible for new covenants running under the old rules in Tulk v Moxhay to be created, although existing ones would continue to have effect. The main difference this makes is that land obligations will bind only the current owner of the land, whereas covenants bind the original covenantor in contract even after he or she has sold the land. The law commission considered that a continuing obligation was unnecessary and unfair, although previous landowners would remain liable in damages for up to 12 years for breaches they had committed whilst owners of the land.

It would still be possible for personal covenants to be created, but these would not run with the land.

A further minor reform is that in future, an agreement to mend a fence must take effect as a land obligation, not as the (anomalous) easement of fencing.

Land obligations would be able to be created expressly only; they would not be implied or arise by prescription in the way that easements and profits arise. They will not be overriding interests. Land obligations will be able to be created where two or more different pieces of land are owned by the same landowner. In other words, there will be no rule against ‘unity of seisin’ as currently applies to easements and profits. This will allow developers of housing estates, for example, to provide for land obligations enforceable by neighbours once the land is sold off in separate plots.

Land obligations will be enforceable by legal action which will be similar to an action for breach of contract. The remedy will be either an injunction or damages at the discretion of the court, and damages will be measured on a contractual basis.

The second major reform is that the jurisdiction of the Lands Chamber of the Upper Tribunal under LPA 1925 s.84 will be extended to cover land obligations, so these could be removed or modified if they become obsolete etc. The powers of the Upper Tribunal would also be modernised and extended.