Conveyancers are often asked to advise on the enforceability of restrictive covenants. Particular problems arise in respect of “regulatory restrictions”, as opposed to “prohibitory restrictions”. The latter proscribe specific uses or actions. By contrast, regulatory restrictions are not absolute and usually require a covenantor to obtain prior approval before using land in a particular way or embarking upon a particular course of action.
In Margerison v Bates [2008] EWHC 1211 (Ch); [2008] PLSCS 204, the court was asked to consider the effect of a restrictive covenant that prevented a landowner from altering a bungalow without a neighbour’s approval. Was the benefit of the covenant vested solely in the neighbour, who had since died? If so, did her death discharge the covenant or had the restrictive covenant become absolute because no one else could give consent? Alternatively, if the benefit had passed to the subsequent owners of the land, was it reasonable for them to refuse to allow the landowner to replace a troublesome flat roof with a pitched roof that would affect the view from their property?
The judge observed that stipulations requiring consents from parties that have parted with their interest in land benefited by covenants are not an unknown phenomenon. Nor are they without commercial purpose since they prevent the fragmentation of the benefit of covenants and the need to obtain multiple consents. Indeed, a buyer may agree to pay more for land affected by such covenants for that very reason.
As a matter of construction, the conveyance in which the covenant was imposed had clearly distinguished between “the vendor” and her successors in title. The requisite approval was obtainable solely from “the vendor”. Consequently, the right to approve alterations to the bungalow was vested solely in the deceased.
What then was the effect of the covenant following her death? The judge ruled that the covenant had been discharged. The prohibition against alterations was so intimately bound up with the requirement for the neighbour’s approval that if one went, so did the other. It would be perverse if the neighbour’s death were to render the covenant absolute since the new owners of the land stood to gain more from an absolute covenant than they would have gained from a qualified covenant that passed with the land.
The judge also decided that if the benefit of the qualified covenant had passed with the land, it would have been reasonable for the new owners to refuse consent for the pitched roof. The court could prevent a covenantee from acting arbitrarily, or capriciously or from improper motives, but it could not substitute its own judgment for that of the covenantee and would intervene only if it were satisfied that no reasonable neighbour could have objected to the proposal.
Cases dealing with restrictive covenants turn on the drafting of the documents that impose them. This latest decision emphasises the need to pay close attention to detail when drafting and interpreting such covenants.
Allyson Colby is a property law consultant
