Burden Of Covenants
This coursework is concerned with the primary issue of whether the covenants are directly enforceable against Denise and Fay. It is necessary to establish whether the benefit and the burden of the covenants run with the land as neither May, Denise or Fay are parties to the original covenant made in 2004. However if it can be established that May is entitled to the benefit and Denise and Fay are subject to the burden of the covenant then May is entitled to a remedy. There are two set of rules governing the running of covenants namely the common law rules and the equity rules.
Certain conditions must be satisfied for the benefit of a covenant to run at common law. Firstly, the covenant must touch and concern the land in some way be it use, value or occupation. In Smith and Snipes Hall Farm v River Douglas Catchment Board, covenant to improve and keep river banks was held to have ‘touched and concerned’ the covenantee’s land. The covenant not to use no. 1 as a guest house is only to benefit May’s land as this could lead to increase in pollution and traffic chaos to and from May’s land. The second covenant, a positive covenant benefits the benefited land as it requires Fay to pay a fair proportion towards the maintenance of the driveway. If Fay refuses, the driveway is likely to fall into disrepair in which case it begins to negatively affect the use, value and occupation of May’s plot of land. The third covenant a restrictive covenant requires that Fay irons 20 shirts for May every month; this does not in anyway touch and concern the land. It is unlikely that the court would ascertain if there was any benefit in this covenant.
Secondly, the original covenantee must have held a legal estate in the benefited land. Lola did have a fee simple on the two large plot of freehold land when the covenant was agreed. Thirdly, the assignee seeking to enforce the covenant must have the same legal estate in the land as the original convenantee. In 2005 Lola sold her plot to May thus transferring her fee simple. However section 78 of the Law of Property Act 1925 allows any occupier to enforce a restrictive covenant since it deems the “owners and the occupiers” for the time being to be successors in title with respect to its enforcement. The benefit of a covenant may be expressly assigned to a successor in title of the covenantee that is May’s assignment must be in writing.
Lastly, the benefit must have been intended to run with the benefited land at the time the covenant was made. Lola and Anthony, Bob and Cait must intend that the benefit is to run with the land making the covenant to be enforceable not only by the original covenantee (Lola) but also by the successor in title (May) to the original covenantee.
Hence the benefits of the entire covenant both positive and negative would pass at common law with the estate to the new owner provided the conditions discussed above are satisfied.
The burden of a covenant will never run at common law so the purchaser of the covenantor would not be bound by any covenants which they agreed with the convenantee. May would not be able to enforce the covenant because of the rule in Austerberry v Corporation of Oldham, reaffirmed by the House of Lords in case of Rhones v Stephens where it was held that the burden of a covenant either positive or negative in nature does not run with the land at common law. Thus Denise, Elizabeth, and Fay would not be liable at law for breach of any of the covenants made. However, there are two ways by which this principle can be circumvented. Firstly is by a chain of indemnity covenant, the original covenantor (Anthony, Bob and Cait) would always remain liable on the original covenant to Lola and successor in title (May) because of privity of contract. When Cait sells the burdened land to Fay, Cait would make Fay agree to put an indemnity covenant in that deed of transfer stating if Cait is sued for a breach committed by Fay or any of his successors, Fay would indemnify Cait. May can sue Fay indirectly through a chain of indemnity covenant by suing Cait the original covenantor and Cait can then sue Fay for damages paid to May. The disadvantage of this is that the chain can easily break down, and it is always difficult to locate the original owner or the original may have died or become insolvent.
Secondly is the doctrine in Halsall v Brizell which provides that a person who wishes to claim the benefit of a deed must also submit to any corresponding burden imposed by the same deed. The covenant for Fay to pay a fair proportion of the cost of maintaining the driveway is directly related to the benefit, May’s use of the road. It is therefore very probable that May could enforce covenant two using this method. Following this principle it would seem likely that the court would allow Fay use the driveway provided she paid a fair proportion for its maintenance.
The burden of a restrictive covenant may run in equity under the doctrine of Tulk v Moxhay. However, four conditions must be satisfied to permit the passing of a burden of covenants to successors in title. Firstly, the covenant must be negative or restrictive in nature. A negative covenant is one that does not require the expenditure of money as held in the case of Haywood v Brumswick Permanent Benefit Building Society while a positive covenant requires the covenantor to spend money in other to carry out a burden. Both covenant one and covenant three are restrictive. Secondly, at the date of the covenant the covenantee must have owned benefited land as held in London County Council v Allen. Thirdly, the parties must have intended the burden to run. Parties (Lola and Anthony, Bob and Cait) to the covenant must have intended the burden to pass to later owners (May and Denise, Elizabeth and Fay) of the affected land, where this is not stated in the wording of the covenant section 79 Law of Property Act 1925 can be implied unless it has been expressly or impliedly excluded from the deed of the covenant. Lastly, the restrictive covenant must have been protected by registration. Here, May must ensure that the covenant is registered. If the covenant is registered it can be enforceable against Denise and Fay even if they didn’t know about.
Since the burden may run in equity, equity must be invoked to make the benefit run. In Rogers and Hosewood, it was held that benefit of a covenant is expressly annexed to the land when words in the covenant illustrates that it is for the benefit of the covenantee’s land. Although this is not exactly clear form the facts given and we can therefore rely on statutory annexation. The case of Federated homes Ltd v Mill Lodge Properties, Court of Appeal held that section 78 Law of Property Act 1925 operates to annex the benefit of a restrictive covenant to each and every part of the covenantee of a covenantee’s land, provided the covenant touches and concerns the land. May could show that the benefit of covenant one has passed to her.
Secondly, a covenant may run in equity by express assignment. Here assignment is not available because when Lola sold to May in 2005, there was no reference to the covenants contained in the 2004 deed so May would be more likely to rely on statutory annexation to enforce covenant one.
Denise and Fay may try to discharge the covenant applying to the Land Tribunal under section 84 Law of Property Act 1925. Denise and Fay might state in their application that they think the covenant ought to be deemed obsolete. However covenant one and two would affect the benefited land whereas it is arguable that covenant three has no effect and the court may decide that covenant three is unfair and thereafter discharge it. It is nevertheless impossible to determine the likelihood of the court decision when they exercise their discretion.
In conclusion where the breach of the covenant continues, May can claim two remedies. The remedies for covenant one and covenant two would be mandatory injunction. Covenant three is enforceable between Lola and Anthony, Bob and Cait on the basis of privity of contract. However, it cannot be enforced against Fay since it does not touch and concern the land as it is a personal covenant between the original covenantors and the original covenantees.
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