It has long
been a feature of English law that while positive obligations can be imposed as
a matter of contract on the owner of freehold land, these will not normally
bind the purchaser should that land be sold. Therefore, where the enforcement
of positive covenants against the current owner is a practical necessity
(notably where the property concerned is part only of a building), it has been
usual to resort to leasehold ownership. Leasehold obligations pass on to an
assignee irrespective of whether they are positive or negative. In pre-1996
leases the covenant must ‘relate to’ the land; for those entered into after
that date, it is merely necessary that they are expressed to be personal.
The
long-standing refusal to countenance the enforcement of positive covenants in
relation to freehold land was reaffirmed by the House of Lords in Rhone
v Stephens (Executrix) [1994] 2 EGLR 181. Quite rightly, their lordships
were not prepared to change, by judicial decision, a rule that had governed
property transactions for over 100 years. While not defending the law, they
were satisfied that its alteration must be by way of legislation, which could
at least try to anticipate and provide for the problems that would emerge;
judicial reform would have an entirely unpredictable retrospective effect.
and burdens
In Rhone
v Stephens, the House of Lords was also invited to extend one of the
existing loopholes in this area of the law. Where a purchaser of freehold land
has sought to avoid positive obligations, the court has occasionally ruled
that, while technically free to do so, he must also forgo a related benefit.
Thus, in Halsall v Brizell [1957] 1 All ER 371 it was held that
the defendant could avoid an obligation (undertaken by his predecessor) to
contribute to the cost of maintaining the private road giving access to his
property only by giving up his right to use that road. In the Rhone case
the plaintiffs argued that the defendant had, under the conveyance separating
the ownership of their respective houses, acquired the benefit of a right of
support from their property and that she should, therefore, lose that benefit
unless she was prepared to undertake the express obligation to repair imposed
in that conveyance. However, in Lord Templeman’s view, the doctrine applies
only to related benefits and burdens; the obligation to repair was quite
distinct from the right of support and the doctrine could not apply.
A further
attempt to use this avenue as a means of dragging the law on positive covenants
into the 20th century has made its way to the Court of Appeal. The facts of Thamesmead
Town Ltd v Allotey [1998] 37 EG 161 illustrate the deficiencies in
this area of the law.
In 1986 the
plaintiff had acquired the Thamesmead housing estate from the London Residuary
Body, subject to the existing tenants’ right to buy the freehold of their
homes. This right was duly exercised in 1988 by a Mr and Mrs Boorman, who, in
1992, sold their home to the defendant. In these proceedings the plaintiff was
seeking to recover about £100 in respect of the maintenance costs of roads,
footpaths, sewers, drains and the communal areas on the estate.
The transfer
to the Boormans had given them rights to use the roads and paths owned by the
plaintiff, and to the free passage of water, soil, electricity etc through the
sewers, drains, pipes and cables in or under the adjoining parts of the estate.
They were given no rights to use the communal areas and the plaintiff was not
legally obliged to maintain those areas. The obligation to make the payments
now being claimed had been imposed in the transfer to the Boormans, and they
had also agreed to require anyone who purchased the property from them to enter
into a direct covenant with the plaintiff to make the same payments. Thus, the
intention had been to enforce this positive obligation by a series of direct
covenants with each subsequent purchaser.
In the
event, this scheme broke down since the Boormans did not impose this
requirement on the defendant when they resold. Accordingly, the only basis on
which the plaintiff could now try to compel payment was under the original,
positive, covenant.
Thamesmead
argued that the defendant was liable under the doctrine of benefit and burden,
since the burden imposed was sufficiently related to the benefits he had gained
under the transfer. The trial judge took the view that, following Rhone,
it was not sufficient merely to establish that the defendant had taken some
benefit under the transfer in order for him to become obliged to undertake its
burdens. It was necessary for the plaintiff to prove that the defendant had
positively used or otherwise taken the benefit of the rights conferred; only
then would he be obliged to make payments related to those rights. Examining
the evidence, the judge decided that the defendant had made use of the roads,
drains and sewers and must pay the contributions attributed to those items. But
he disallowed the plaintiff’s claim in respect of the communal areas.
When the
matter came before the Court of Appeal, the plaintiff sought to argue that it
was not necessary for a right to use the communal areas to be expressly
conferred. Irrespective of whether the defendant had actually used those areas,
their mere existence conferred a relevant benefit. Furthermore, it was also
argued that it was not necessary to establish that a successor has positively
made use of a benefit; the fact that he has chosen to purchase on terms that
give him the right to benefit should be sufficient. The trial judge’s ruling
made it necessary to carry out the impractical task of monitoring the actual
exercise of rights in order to be able to extract payment.
While Peter Gibson LJ clearly had some sympathy
with these difficulties, he was satisfied that the trial judge had taken a
correct view of the law. In order for a related and positive obligation to
become automatically enforceable, the benefit in question must be conferred as
of right, and the successors must have a choice of whether or not to exercise
that right. Like others before him, he ‘added his voice’ to the criticisms of
the current law and called for legislative reform. This makes even more
depressing the recent announcement that the prospect of implementing the Law
Commission’s proposals for reform of the law on positive and restrictive
covenants has now been formally abandoned.
