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The transmission of restrictive covenants

Published online by Cambridge University Press:  02 January 2018

D. J. Hurst*
Affiliation:
University of Reading

Extract

There has grown up over the years in the textbooks a considerable body of rules to determine when the benefit of a covenant undertaken by one landowner in favour of another can be passed on to the latter's successor in title. However, no one is now quite sure how these rules are to be reconciled with the widely-drafted but little-litigated section 78 of the Law of Property Act 1925. Although intended, no doubt, to resolve the difficulties over this section, judgments in the Court of Appeal in Federated Homes Ltd v Mill Lodge Properties Ltd have been severely criticised by at least three writers. What I hope to show in this article is firstly that the decision in the case was correct although the authority given for it, partly in the writings of academics and partly in two earlier Court of Appeal cases, is unsatisfactory, since the academics have adopted a false premise and the judgments support the opposite conclusion; and secondly that the body of rules now in the books is not part of the law and ought to be removed from them.

Type
Research Article
Copyright
Copyright © Society of Legal Scholars 1982

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References

1. Section 78 provides, in part: ‘(1) A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the person deriving title under him or them, and shall have effect as if such successors and other persons were expressed.’

2. [1980] 1 WLR 594.

3. G.H. Newsom, Universal Annexation? (1981) 97 LQR 32; Hayton, David, Revolution in Restrictive Covenants Law? (1980) 43 MLR 445 Google Scholar; Angela Sydenham [1980] Conv 216.

4. It has been suggested by Mr Newsom that it is arguable that for this reason the important part of the judgment, relating to the red land, is obiter, but that the better view is that the ratio is in two parts. I agree with him.

5. Section 62 was not mentioned in any of the judgments in the Court of Appeal. Presumably the judge had in mind the phrase ‘privileges, easements, rights and advantages whatsoever’ in subsection 1. But neither this phrase, nor its precursor in section 6(1) of the Conveyancing Act 1881, has ever been applied except to easements, profits and rights closely analogous to them. On the ejusdem generts principle of construction, it is inappropriate to construe ‘rights’ or ‘privileges’ as including those obtained under restrictive covenants. More conclusively, there was in the 1881 Act, and is now in the 1925 Act, another section explicitly covering the transmission of the benefits of covenants, and in such a case the particular provision is to be given precedence over the general. See Craies on Statute Law, (7th edn) (1971), p. 222. For a contrary opinion, see Hayton (1971) 87 LQR 539 at pp. 570–71.

6. (1941) 57 LQR 203.

7. [1972B] CLJ 157.

8. (4th edn) (1975). p. 764.

9. [1949] 2 KB 500.

10. (1951) 19 Conv (NS) 262.

11. Pages 605, 607. The other judgments, of Browne and Megaw LJJ, supported that of Brightman LJ.

12. (6th edition), p. 14. The passage is quoted with approval by P. V. Baker in The Benefit of Restrictive Covenants (1968) 84 LQR 22.

13. (4th edn), at pp. 746-8. It is also stated in Williams on Title (4thedn), pp.790-1, Emmet on Title, (17th edn), p. 607 and Walton on The Law of Sales of land (3rd edn), pp. 268-9 (although in Emmet a judgment apparently cited in support of the orthodox view seems not to do so), and implied in Prof. Wade's article (loc cit) and in Smith's Leading Cases (13th edn), pp. 72–7.

14. In the current edition, it is said (p. 746) that there are three conditions, although the text goes on to specify only two. By referring to earlier editions, however, it is clear that the third condition was that the claimant had to have the same legal estate as the covenantee; it is still discussed in the current edition (p. 748) but rejected as a condition because of Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board (supra), but the text at p. 746 was not amended from ‘three’ to ‘two’.

15. (1673) 2 Lev 92.

16. (1368) YB 42 Edw 3, Hil, pl 14; Co Litt 385a; Smith's LC i, 55.

17. [1919] 1 Ch 159.

18. At p. 170. The case was decided on the principle that a tenant is not an ‘assign’ for the purpose of restrictive covenants but for covenants made after 1925 this principle has been reversed by section 78: Smith and Snipes Hall Farm u River Douglas Catchment Board, supra. Section 5 of 8 & 9 Vict c. 106, the Law of property Act 1845, is further considered infra, at p. 66.

19. [1900] 2 Ch 388.

40. At pp. 394–6. Farwell himself based the dicta quoted on Reds v Cowlishaw (1878) 9 Ch D 125, which was approved in Spicer v Martin (1888) 14 App Cas 12 (HL) and Nottingham Patent Brick and Tile Co v Butler (1885) 15 QBD 261.

21. At p. 397–8.

22. At p. 404.

23. See note 20 supra.

24. [1949] 2 KB 500.

25. (1951) 19 Conv (NS) 262.

26. For example by Megarry & Wade, op. cit., at pp. 747-8, Williams on Title, (4th edn). at pp. 791-2 and Emmet on Title, (17th edn), at pp. 603–4.

27. At pp. 506, 509.

28. At p. 265.

29. [1937] Ch 473, at pp. 478–82.

30. The third writer, Prof. Radcliffe, did not indicate in his writings the conditions necessary for a covenant to run at law, although he recognised there is some distinction between law and equity: see his Real Property Law (2nd edn), p. 206. Prof. Wade's view on this matter is not obvious from the articles cited, but is clearly stated in the textbook.

31. For example, Cheshire, Modem Law of Real Property (12th edn), pp. 593-4, Maudsley and Burn, Land Law: Cases and Materials (4th edn), pp. 712–3.

34. J.G. Riddall, Introduction to Land Law (2nd edn), pp. 268–271.

33. Supra, pp. 55, 58.

34. For instance Rogers v Hosegood [1900]2 Ch 388 at p.404 (CA); O sbrone v Bradley [1903]2 Ch 446, at p. 451; Formby v Barker [1903]2 Ch 539, at p. 550; London County Council v Allen [1914]3 KB 642, at p. 672; Westhoughton UDC v Wigan Coal and Iron Co Ltd [1919] 1 Ch 159, at p. 170; Grant v Edmondson [1931]1 Ch 1, at p. 11; Rc Union of London and Smith's Bank Ltd's Conveyance, Miles v Easter [1933]1 Ch 611, at pp. 629-30; Newton Abbot Co-operative Society Ltd v Williamson & Treadgold Ltd [1952] Ch 286, at p. 291 Marten u Flight Rcfuelling Ltd [1962] Ch 115, at p. 134; Stilwell v Blackman [1968] Ch 508, at pp. 521–2.

35. For example, Drake v Gray [1936] Ch451, Shayler v Woolf [1946] Ch 320; Williams v Unit Construction Co Ltd (1951) 19Conv (NS) 262; Russell v Archdale [1964] Ch 38 Re Jeff's Transfer (No. 2) [1996] 1 WLR 861. See also Megarry and Wade, op. cit., p. 764, note 56.

36. [1949] 2 KB 500.

37. At p. 516.

38. Fairclough v Marshall (1878) 4 Ex D 37; Rogers v Hosegood [1900] 2 Ch 388, at p. 394.

39. Taite v Gosling (1879) 11 Ch D 273.

40. (1848) 2 Ph 774.

41. Miles v Easier [1933] Ch 611, at pp. 629–630.

42. Renals v Cowlishaw (1878) 9 Ch D 125, at p. 129; Miles v Easter [1933] Ch 611, at pp. 630-2; Stilwell v Blackman [1968] Ch 508, at pp. 521–2.

43. Smith and snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500; Williams v Unit Construction Co Ltd (1951) 19 Conv (NS) 262.

44. Although none of the judges mentioned it they may well have been influenced by Mr Baker's persuasive arguments: see e.g. (1968) 84 LQR 22.

45. Rogers v Hosegood [1900] 2 Ch 388, at pp. 397-8 (quoted supra at p. 58); Torbay Hotel Ltd v Jenkins [1927]2 Ch 225, at pp. 239-40 (a significant observation); Stilwell v Blackman [1968] Ch 508, at p, 521. Several of the passages in the modem judgments in which the distinction is mentioned, for instance those of Romer LJ in Miles v Easter (see note 41) and of Denning LJ (as he then was) in Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500, at pp. 516–8 have a strong historical flavour.

46. [1978] AC 904, at pp. 924–7, 940–5. See also Boyer v Warbey [1953] 1 QB 234, at pp. 245–6, a case concerning covenants in a lease.

47. See however Baker, The Future of Equity (1977) 93 LQR 529. For restrictive covenants, the doctrine of notice is substantially superceded by registration so the possession of the legal estate does not strengthen the position of the assignee of the covenantor. Cf. Osborne v Bradley [1903] 2 Ch 466, at p. 451. The Supreme Court Act 1981 is only a consolidating Act.

48. See note 32.

49. See note 43.

50. See note 3.

51. Megarry and Wade, op. cit., p. 748; Wade [1972B] CLJ 157, at p. 174, n. 69.

52. [1949] 2 KB 500, at pp. 509, 510, 516.

53. (1951) 19 Conv (NS) 262.

54. The quotation is taken from the introduction to the report of the case in the All England Reports ([1949] 2 All ER 179, at p. 181): the corresponding passage in the Law Reports does not cite the covenant at all. Mr Newsom in his article (see note 3, supra), states that he has seen the original deed, and that it contains no other relevant passage.

55. At p. 509.

56. Grey v Inland Revenue Commissioners [1960] AC 1; Beswick v Beswick [1968] AC 58, at pp. 73, 79, 84-5, 93, 104-5. The Bill was entitled ‘Law of Property Consolidation Bill’, and the long title of the Act is ‘An Act to consolidate the enactments relating to Conveyancing and the Law of Property in England and Wales.’

57. [1980] 1 WLR 594, at p. 604.

58. Section 58 of the Conveyancing Act 1881, which came into force on 1 January 1882, provided (in its amended form):

(1) A covenant relating to land of inheritance, or devolving on the heir as special occupant, shall be deemed to be made with the covenantee, his heirs and assigns, and shall have effect as if heirs and assigns were expressed.

(2) A covenant relating to land not of inheritance, or not devolving on the heir as special occupant, shall be deemed to be made with the covenantee his executors, administrators, and assigns, and shall have effect as if executors, administrators and assigns were expressed.

(3) This section applies only to covenants made after the commencement of this Act. For the purposes of this section in connexion with covenants restrictive of the user of land ‘successors in title’ shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefitted.’

Section 58 had no precursors in earlier legislation, and was not affected by the amending Acts of 1882, 1892 and 1911.

59. The Conveyancing and Law of Property Act 1881 was given this alternative short title by section 16(4) of the Conveyancing Act 1911.

60. Section 96 of the Law of Property Act 1922, so far as material, provided:

(2) Every covenant running with the land entered into before the commencement of this Act shall take effect subject to the provisions of this Act, and accordingly the benefit or burden of every such covenant shall, subject as aforesaid, vest in or bind the persons who by virtue of this Act succeed to the title of the covenantee or the covenantor as the case may be.

(3) The benefit of a covenant relating to land entered into after the commencement of this Act may be made to run with the land without the use of the word ‘heirs’ if the covenant is of such a nature that the benefit could have been made to run with the land before the commencement of this Act, and if an intention that the benefit shall pass to the successors in title of the covenantee appears from the deed containing the covenant.

(4) For the purposes of this section, a covenant runs with the land when the benefit or burden of it, whether in law or in equity, passes to the successors in title of the covenantee or the covenantor, as the case may be.

Section 92(2) (3) and (4) became section 80(2) (3) and (4) of the 1925 Act: Mr Newsom does not make this clear. Section 80(1) replaced section 59 of the 1881 Act. In each case there were important changes, as to which see infra at pp. 25–29. Section 79 of the 1925 Act had no 1881 precursor.

61. Neither of the two latter Acts ever came into force - the commencement date of the 1922 Act was originally declared to be 1 January 1925, but by the Law of Property (Postponement) Act 1924 this was altered to 1 January 1926, and before then the 1881 Act and the relevant parts of the 1922 and 1924 Acts (along with much other legislation) were all repealed by, and replaced by new provisions in, the Law of Property Act 1925 with date of commencement 1 January 1926.

62. Section 78 of The Law of Property Act 1925 provides:

(1) A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed.

For the purposes of this subsection in connexion with covenants restrictive of the user of land “successors in title” shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefitted.

(2) This section applies to covenants made after the commencement of this Act, but the repeal of section fifty-eight of the Conveyancing Act, 1881, does not affect the operation of covenants to which that section applied.’

63. In order to show that the 1922 and 1924 Acts were among those consolidated, Mr Newsom explains that, although repealed by the 1925 Act, they must be deemed to have come into force for a scintilla of time at midnight on 31 December 1925/1 January 1926. While scintillas of time do occasionally come in useful to explain the interaction of several dispositions, as for example in Church of England Building Society v Piskor [1954] Ch 553, nothing so artificial is needed here. The 1925 Act consolidated the relevant existing enactments (see note 56); the 1922 and 1924 Acts were among those, since at the date of the enactment of the 1925 Act, 9 April 1925, they had already been enacted. The dates of commencement are irrelevant.

64. Beswick v Beswick [1968] AC 58, at pp. 104–5, per Lord Upjohn.

65. Gilbert v Gilbert [1928] P 1, at p. 8 per Scrutton LJ; Grey v Inland Revenue Commissioners, supra at pp. 13 (per Lord Simmonds), 17 (per Lord Radcliffe). See also Beswick v Beswick, supra at pp. 73, 84, 87.

66. House of Commons Papers 1924-25 (68) vii, III.

67. By the Administration of Estates Act 1925, sections 45(l)(a) and 1 respectively.

68. The context makes it clear that ‘assigns’ refers to assigns - we would now say assignees - of the land and not of the benefit of the covenant: Re Ecclesiastical Commissioners of England's Conveyance [1936] Ch 430, at p. 441, per Luxmoore J. See also Wade, op cit., p. 174 whose view is better than those of Bailey (1938) 6 CLJ 339, at p. 354 and Radcliffe, op. cit., p. 204.

69. Section 5 of the Act, 8 & 9 Vict, c. 106, provides, so far as material: ‘That under an Indenture …an immediate Estate or Interest, in any Tenements or Hereditaments and the Benefit of a Condition or Covenant, respecting any Tenements or Hereditaments, may be taken, although the taker thereof be not named a Party to the same Indenture.’

70. Section 5 replaced section 11 of the Transfer of Property Act 1844, which provided ‘That it shall not be necessary in any case to have a Deed indented; and that any Person, not being a Party to any Deed, may take an immediate Benefit under it in the same Manner as he might under a Deed Poll’. The Act, like the 1922 Act, never came into force. Section 5 was not affected by the 1881 Act, but was replaced, in an extended form, by section 56 of the 1925 Act.

71. Co Litt 229a, 231a; Windrmore v Hobart (1585) Hob, 313; Storer v Gordon (1814) 3 M & S 308, at pp. 322–3; Berkeley v Hardy (1826) 5 B & C 355; Gardner v Lachlan (1836) 8 Sim 123, at p. 126.

72. Kelsey v Dodd (1883) 52 LJ Ch 34, at p. 39; Forster v Elvet Colliery Co Ltd [1908] 1 KB 629. at pp. 635, 637, 639-40; affd. sub nom. Dyson v Forster [1909] AC 98. See infra pp. 69–71.

73. White v Bijou Mansions Ltd [1937] Ch 610, at p. 624–5. [1938] Ch 351; Re Foster [1938]3 All ER 357, at p. 365; Re Miller's Agreement [1947] Ch 615; Beswick v Beswick [1968] AC 58, at pp. 93-94, 102–6. See generally [1954] CLJ 66.

74. Kelsey v Dodd, loc. cit; Forster v Elvet Colliery Co Ltd, loc. cit.

75. E.P. Wolstenholme and E.S. Turner, The Conveyancing Acts (1882).

76. At pp. 79–81.

77. E.g. Meryon White, The Conveyancing Acts (1883). pp. 113–4.

78. The Prior's Case, loc cit., Co. Litt. 385a, Lougher v Williams loc. cit; for a discussion of these cases see supra p. 56.

79. Sharp v Waterhouse (1857) E & B 816; Renals v Cowlishaw (1878) 9 Ch D 125; see also Jourdain v Wilson (1821) 4 B & Ald 266.

80. H.J. Hood and H.W. Challis, The Conveyancing Acts, (2nd edn) (1884).

81. (1889) 5 LQR 210.

82. Although Wolstenholme's commentary was, from the start, accorded great respect, it was not without blemish. Thus much of the note to section 58 discussed the passing of the burden of covenants, which is the concern of section 59. Moreover, in the Queen's Printers Copy the marginal notes for the two sections were interchanged, for which Wolstenholme, as co-draftsman, presumably had some responsibility.

83. E.g. ‘It is a good general rule in jurisprudence that one who reads a legal document, whether public or private, should not be prompt to ascribe …to its language tautology or superfluity, and should be rather at the outset inclined to suppose each word intended to have some effect or be of some use’. Ditcher v Denison (1857) 11 Moore PC 325, at p. 337 per Knight Bruce LJ.

84. The natural interpretation of section 58 would not make section 10 of the 1881 Act (now section 141 of the 1925 Act) redundant since the effect of that section is not merely to give to the assignee of a reversion on a lease the right to sue on the covenants in it, but also to deprive the assignor of the right: Re King [1963] Ch 459; London and County (A & D) Ltd v Wilfred Sporlsman Ltd [1971] Ch 764.

85. Mr Newsom only mentions the first. There is, in addition, (probably) an allusion to section 58 in South of England Dairies Ltd v Baker [1906] 2 Ch 631, at p. 637.

86. See note 72 supra.

87. This was doubted by Lord MacNaghten when the case reached the House of Lords; another judge in the Court of Appeal, Farwell J, on the other hand thought that ‘relating to land’ (the phrase used in section 58) meant ‘running with the land’. See [1908] 1 KB 639–40, [1909] AC 102; also note 89 infra.

88. At p. 635.

89. The distinction ceased to have any importance after 1925 on account of sections 131 and 132 (abolition of the rule in Shelley's Case; heirs taking by purchase) of the Law of Property Act.

90. The phrases are variously used. In Austerberry v Corporation of Oldham (1885) 25 Ch D 750, we read, at p. 776: ‘In order that the benefit may run with the land, the covenant must be one which relates to or touches and concerns the land of the covenantee’. Seem, also Rogers v Hosegood [1900] 2 Ch 388, at pp. 394–6 (quoted supra at p. 57) and the Snipes Hall case [1949] 2 KB 500, at p. 506. The confusion arises from the fact that it was only in the mid-19th century that intention came to be seen as necessary to make the benefit run: see note 79 supra. In the classic statement of the law in Spencer's Case (1583)5 Co Rep 16a there was no need to distinguish these phrases.

91. See supra p. 67 and note 74.

94. [1909] AC 98.

93. [1936] Ch 430. The case was heard on sections 5 and 58 rather than the corresponding sections of the 1925 Act because the relevant covenant had been made in 1887; by an error, the catchwords cite section 58 of the 1925 Act.

94. Kelsey v Dodd, Austerberry v Corporation of Oldham, loc. cit; Everett v Remington [1892]3 Ch 148; Rogers v Hosegood, Formby v Barker, loc. cit; Elliston v Reacher [1908] 2 Ch 374; Reid v Bickerstaff [1909]2 Ch 305; Westhoughton Urban District Council v Wigan Coal & Iron Co Ltd, loc. cit; Ives v Brown [1919]2 Ch 314; Lord Northbourne v Johnston and Son [1922]2 Ch 309; Kelly v Barrelt [1924]2 Ch 379; Grant v Edmondson [1931] 1 Ch1; Miles v Easter [1933] Ch 611; Drakc v Gray [1936] Ch 451; Re Ballard's Conveyance [1937] Ch 473; Newton Abbot Co-operative Society Ltd v Williamson & Tread gold Ltd [1952] Ch 286.

95. Ives v Brown, Miles v Easter, Drake v Gray, Re Ballard's Conveyance and the Newton Abbot case. The first, second and fourth of these were, on that interpretation, wrongly decided.

96. Section 96(3) of the 1922 Act is reproduced supra at note 60.

97. At p. 67 supra.

98. Section 79 of the 1925 Act provides: ‘(1) A covenant relating to any land of the covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the convenator 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.

This subsection extends to a covenant to do some act relating to the land, notwithstanding that the subject-matter may not be in existence when the covenant is made.

(2) For the purposes of this section in connection with covenants restrictive of the user of land “successors in title” shall be deemed to include the owners and occupiers for the time being of such land.

(3) This section applies only to covenants made after the commencement of this Act.’

99. Section 78 of the 1925 Act is reproduced supra in note 62.

100. Section 59 of the 1881 Act provides:

‘(1) A covenant, and a contract under seal, and a bond or obligation under seal, though not expressed to bind the heirs, shall operate in law to bind the heirs and real estate, as well as the executors and administrators and personal estate, of the person making the same, as if heirs were expressed.

(2) This section extends to a convenant implied by virtue of this Act.

(3) This section applies only if and so far as a contrary intention is not expressed in the convenant, contract, bond or obligation, and to the provisions therein contained.

(4) This section applies only to a covenant, contract, bond or obligation made or implied after the commencement of this Act.’

101. Section 58 of the 1881 Act is reproduced supra in note 58.

102. 3 & 4 Gul IV, c. 104. The anomaly was indicated in Richardson v Jenkins (1853) 1 Drew 477, at p. 483.

103. 32 & 33 Vict, c. 46. See also (1881) 16 LJ 494. For a detailed discussion. see any pre-1924 edition of Hood and Challis, op. cit.

104. Reproduced supra in note 98.

105. The only other way to reconcile section 108A with section 58 would be to treat section 108A as in some way altering the construction of section 58. This is clearly wrong. See Craies, op. cit., pp. 133 ff.

106. In the Federated Homes case, Brightman LJ avoided being drawn on this matter: ‘Section 79, in my view, involves quite different considerations and I do not think that it provides a helpful analogy’ (p. 606).

107. (1885) 29 Ch D 750.

108. [1914] 3 KB 642.

109. Re Royal Victoria Pavilion, Ramsgate [1961] Ch 581, at pp. 588–9.

110. Prideaux, Precedents in Conveyancing, (End edn) (1926) by Sir Benjamin Cherry and J.R.P. Maxwell, pp. 120–1. The quotation in the text is hard to reconcile with Sir Benjamin's answers to questions 21 and 23 of Section G (p. 131) of his book The New Property Act (1926). Sir Benjamin had a similar part in the 1925 Act as Wolstenholme had had in the 1881 Act.

111. I ought perhaps to offer an explanation of the phrase ‘capable of being bound by him’ in ‘A covenant relating to any land of a covenantor or capable of being bound by him’. For if the effect of section 108A was merely to continue the covenantor's liability after assignment there is no sense in which the land could be said to be bound. But the ‘or’ in the expression is important - the section, I suggest, is to apply not only to land owned by the covenantor; it extends to any land about which he can undertake obligations, for instance as lessee; it is this circumstance which, in rather loose phrasing, is being referred to.

112. [1965] Ch 1140; revd. [1967] AC 50. Lord Wilberforce took a firm stand:… section 79 of the [1925 Act] itself does not have the effect of causing Topham's covenants to run with the land: it merely extends the scope of Topham's covenants’ (p. 81). But Lord Upjohn seems to have taken a similar view (at p. 73); so also did Russell LJ in the Court of Appeal (at pp. 1199–1200).

113. Curiously, Megarry and Wade in The Law of Real Property seem to give both interpretations of section 79: at p. 723, in connection with leases, the (in my view) correct one, but at pp. 757–8, in connection with Freehold law, the wrong one, at least by implication.