Where land is subject to restrictive covenants and the land that benefits from them has changed hands, one of the key questions to ask is whether the benefit of those covenants passes to the new owner by assignment, annexation, or through a building scheme.
In Norwich City College of Further and Higher Education v McQuillin and another [2009] EWHC 1496 (Ch); [2009] PLSCS 198, the High Court considered whether a landowner was entitled to enforce restrictive covenants to prevent redevelopment that was expected to cost approximately £173m.
The covenants were imposed in a conveyance of 1936 for the benefit of an estate in
The High Court held that the words “or the part or parts thereof for the time being remaining unsold” made it clear that the land that benefited from the covenants excluded land that was subsequently sold out of the estate. The original landowner had imposed the covenants for the benefit of himself alone. The estate had disintegrated and the owner of the land that was burdened by the covenants against development was entitled to a declaration that the covenants were no longer enforceable.
The judge took the view that this interpretation was consistent with the fact that the original landowner had reserved the exclusive right to release, waive or alter any of the covenants. It was also consistent with the fact that, in 1936, when the covenants were imposed, the estate was being parcelled up and sold. In those circumstances it was perfectly natural for the original landowner to retain the exclusive power to give or withhold consent to a modification or relaxation of the covenants that he had imposed, without having to obtain the consent of every subsequent purchaser to whom he had sold land.
The decision highlights the importance of analysing restrictive covenants carefully when buying land that is subject to covenants that restrict or impede development, or when seeking to enforce them. Were the words that annexed the benefit of the covenants to neighbouring land modified and, if so, to what effect?
Practitioners drafting new covenants should also consider the purposes for which the restrictive covenants are being imposed. Does the seller intend to confer the benefit of the covenants on multiple purchasers, to increase the value and amenity of the land being sold? Or should the standard wording used by conveyancers be amended to reserve the benefit of the restrictive covenants exclusively to the seller?
Allyson Colby is a property law consultant
