Covenants — Covenant to maintain common roof of adjoining properties in separate ownership — Whether House should overrule Austerberry v Oldham Corporation — Whether positive covenant enforceable against successor in title to covenantor
The roof of
Walford House covers part of Walford Cottage, the two properties having been in
common ownership until 1960. By a conveyance of August 27 1960 the cottage was
sold off and the vendor covenanted to maintain the part of the roof of the
house over the cottage in wind and watertight condition. Since 1960 both
properties have been sold. Part of the roof over the cottage fell into
disrepair and the appellant owners of the cottage were granted damages by the
trial judge against the respondent owner of the house for breach of covenant.
The Court of Appeal allowed an appeal brought by the respondent. The appellants
appealed, contending that the equity will compel the owner of the house to
comply with the covenant to repair the roof or to pay damages, and that the
House should overrule Austerberry v Oldham Corporation (1885) 29
ChD 750.
the respondent. Equity supplements, but does not contradict, the common law. To
overrule the Austerberry case would destroy the distinction between law and
equity and to convert the rule of equity into a rule of notice. The ‘pure
principle’ that any party deriving any benefit from a conveyance must accept
any burden in the same conveyance, distilled by Sir Robert Megarry V-C in Tito
v Waddell (No 2) [1977] Ch 106, would not be recognised. Although
conditions could be attached to the exercise of a power which, if relevant to
the exercise of the right, might be enforceable: see Halsall v Brizell
[1957] Ch 169. That situation was distinguishable because the 1960
conveyance imposed an independent obligation.
The following
cases are referred to in this report.
Austerberry
v Oldham Corporation (1885) 29 ChD 750; 1
TLR 473, CA
Cooke v Chilcott (1876) 3 ChD 694
Cox v Bishop (1857) 8 De GM&G 815 (44 ER 604)
Federated
Homes Ltd v Mill Lodge Properties Ltd [1980]
1 WLR 594; [1980] 1 All ER 371; (1979) 39 P&CR 576; [1980] EGD 841; (1979)
254 EG 39, [1980] 1 EGLR 113, CA
Halsall v Brizell [1957] Ch 169; [1957] 2 WLR 123; [1957] 1 All ER
371
Haywood v Brunswick Permanent Benefit Building Society (1881) 8 QBD
403
Jones v Price [1965] 2 QB 618; [1965] 3 WLR 296; [1965] 2 All ER
625, CA
London
& South Western Railway Co v Gomm (1882)
20 ChD 562
Morland v Cook (1868) LR 6 Eq 252
Nisbet
and Potts’ Contract, Re [1906] 1 Ch 386
Sefton v Tophams Ltd [1967] 1 AC 50; [1966] 2 WLR 814; [1966] 1 All
ER 1039; [1966] EGD 242; (1966) 198 EG 189, HL
Smith
& Snipes Hall Farm Ltd v River Douglas
Catchment Board [1949] 2 KB 500; [1949] 2 All ER 179; (1949) 47 LGR 627;
153 EG 486, CA
Spencer’s
Case (1583) 5 Co Rep 16a; 1 Smith LC (13th ed) 51
Tito v Waddell (No 2) [1977] Ch 106; [1977] 2 WLR 496; [1977] 3
All ER 129
Tulk v Moxhay (1848) 2 Ph 774; [1843-60] All ER Rep 9
Williams
v Unit Construction Co Ltd (1955) 19 Conv
261
This was an
appeal by Mr and Mrs Rhone from the decision of the Court of Appeal, which had
allowed an appeal by the respondent, Mrs Stephens executrix of Mrs M Barnard
deceased, from a decision of Judge Malcolm Cotterill, who had awarded the
appellant damages in an action for breach of covenant.
James Munby QC
(instructed by Pardoes) appeared for the appellants; David Spens (instructed by
Alletsons) represented the respondent.
In his speech,
LORD TEMPLEMAN said: This appeal raises the question of the
enforceability of positive covenants between owners of freehold estates and
involves consideration of the rule in Austerberry v Oldham
Corporation (1885) 29 ChD 750 (‘the Austerberry case’).
The roof which
covers Walford House also covers part of Walford Cottage. Both properties were
in common ownership until by a conveyance dated August 27 1960 Walford Cottage
was sold. The conveyance contained the following provisions:
2 It is hereby agreed and declared between the
Vendor and the Purchasers that all easements quasi-easements or rights in the
nature of easements as now existing between the property hereby conveyed and
the adjoining property of the Vendor known as Walford House aforesaid shall
continue for the benefit of the respective properties.
3 The Vendor hereby covenants for himself and
his successors in title owner or occupiers for the time being of the property
known as Walford House aforesaid to maintain to the reasonable satisfaction of
the Purchasers and their successors in title such part of the roof of Walford
House aforesaid as lies above the property conveyed in wind and water tight
condition.
Clause 2 of
the 1960 conveyance had the effect, inter alia, of conferring and
confirming on Walford House the right to be supported by the contiguous Walford
Cottage. The 1960 conveyance also had the effect of conferring and confirming
on Walford Cottage the right to be supported by Walford House. Clause 3 of the
1960 conveyance did not confer any rights on Walford Cottage, but by its
express terms it appears to confer on the owners for the time being of Walford
Cottage the right to sue the owner for the time being of Walford House for
damages if the roof is not kept wind and watertight.
Since 1960
both properties have been sold. The appellant plaintiffs are now the owners of
Walford Cottage. The respondent defendant is the executrix of the last owner of
Walford House. The trial judge ordered the owner of Walford House to pay
damages to the owners of Walford Cottage for breach of the covenant contained
in clause 3 of the 1960 conveyance to keep the roof of Walford House which lies
above Walford Cottage in wind and water tight condition. The Court of Appeal
reversed the judge and dismissed the action.
Mr David
Spens, who appeared for the owner of Walford House, says that the covenant has
never been breached because the part of the roof which is out of repair belongs
to Walford Cottage. Examination of the plans attached to the conveyance,
however, shows that the covenant to repair must refer to the roof which
protects both properties. So upon the true construction of the 1960 conveyance
the owner of Walford House was in breach of the covenant to repair.
At common law
a person cannot be made liable upon a contract unless he was a party to it. In Cox
v Bishop (1857) 8 De GM&G 815 (44 ER 604) a lease was assigned
to a man of straw and it was held that the covenants in the lease could not be
enforced against an equitable assignee of the lease who had entered into
possession. The covenants were not enforceable because there was no privity of
contract or estate between the lessee and the assignee. The rigours of the
common law which do not allow covenants to be enforced by and against
successors in title were relaxed first by the doctrines laid down in Spencer’s
Case (1583) 5 Co Rep 16a and then by statutory extensions of those
doctrines introduced by the Grantees of Reversions Act 1540 (32 Hen 8 c34), the
Conveyancing Act 1881 and the Conveyancing Act 1911, now repealed and reproduced
in sections 141 and 142 of the Law of Property Act 1925. In the result, as
between landlord and tenant both the burden and the benefit of a covenant which
touches or concerns the land demised and is not merely collateral run with the
reversion and the term at law whether the covenant be positive or restrictive.
As between persons interested in land other than as landlord and tenant, the
benefit of a covenant may run with the land at law but not the burden: see the Austerberry
case.
Thus clause 3
of the 1960 conveyance, despite its express terms, did not confer on the owner
for the time being of Walford Cottage the right at common law to compel the
owner for the time being of Walford House to repair the roof or to obtain
damages for breach of the covenant to repair. In this appeal, Mr James Munby
QC, on behalf of the owners of Walford Cottage, contends that equity will
compel the owner of Walford House to comply with the covenant to repair the
roof or to pay damages in lieu.
My lords, equity
supplements but does not contradict the common law. When freehold land is
conveyed without restriction, the conveyance confers on the purchaser the right
to do with the land as he pleases provided that he does not interfere with the
rights of others or infringe statutory restrictions. The conveyance may,
however, impose restrictions which, in favour of the covenantee, deprive the
purchaser of some of the rights inherent in the ownership of unrestricted land.
In Tulk v Moxhay (1848) 2 Ph 774, a purchaser of land covenanted
that no buildings would be erected on Leicester Square. A subsequent purchaser
of Leicester Square was restrained from building. The conveyance to the
original purchaser deprived him and every subsequent purchaser taking with
notice of the covenant of the right, otherwise part and parcel of the freehold,
to develop the square by the construction of buildings. Equity does not
contradict the common law by enforcing a restrictive covenant against a
successor in title of the covenantor, but prevents the successor from
exercising a right which he never acquired. Equity did not allow the owner of
Leicester Square to build because the owner never acquired the right to build
without the consent of the persons (if any) from time to time entitled to the
benefit of the covenant against building. In Tulk v Moxhay the
speech of Lord Cottenham LC contained the following passage at p777:
It is that
said, that the covenant being one which does not run with the land, this Court
cannot enforce it; but the question is, not whether the covenant runs with the
land, but whether a party shall be permitted to use the land in a manner
inconsistent with the contract entered into by his vendor, and with notice of
which he purchased.
Equity can
thus prevent or punish the breach of a negative covenant which restricts the
user of land or the exercise of other rights in connection with land.
Restrictive covenants deprive an owner of a right which he could otherwise
exercise. Equity cannot compel an owner to comply with a positive covenant
entered into by his predecessors in title without flatly contradicting the
common law rule that a person cannot be made liable upon a contract unless he
was a party to it. Enforcement of a positive covenant lies in contract; a
positive covenant compels an owner to exercise his rights. Enforcement of a
negative covenant lies in property; a negative covenant deprives the owner of a
right over property. As Lord Cottenham said in Tulk v Moxhay at
p778:
. . . if an
equity is attached to the property by the owner, no one purchasing with notice
of that equity can stand in a different situation from the party from whom he
purchased.
Following Tulk
v Moxhay there was some suggestion that any covenant affecting land
was enforceable in equity provided that the owner of the land had notice of the
covenant prior to his purchase. In Morland v Cook (1868) LR 6 Eq
252 lands below sea level were partitioned by a deed containing a covenant that
the expense of maintaining the sea wall should be borne by the owners of the
lands and payable out of the lands by an acre-scot. Lord Romilly MR enforced
the covenant against a subsequent purchaser of part of the lands on the grounds
that he had purchased with notice of the covenant. In Cooke v Chilcott
(1876) 3 ChD 694 a covenant by the
from the well to all houses built on the vendor’s land was enforced against a
subsequent purchaser of the land burdened with the covenant on the grounds that
the covenant ran with the land, but that in any event the defendant took with
notice of the obligation. Malins V-C said, at p701:
I think that
when a contract is entered into for the benefit of contiguous landowners, and
one is bound by it and the other entitled to the benefit of it, the covenant
binds him for ever, and also runs with the land. But it is equally clear that
he is bound by taking the land with notice of the covenant.
These last two
cases did not survive the decision of the Court of Appeal in Haywood v Brunswick
Permanent Benefit Building Society (1881) 8 QBD 403. In that case land had
been conveyed in consideration of a rent charge and a covenant to build and
repair buildings; a mortgagee of the land was held not to be liable on the
covenant either at law or in equity although the mortgagee had notice of the
covenant. Brett LJ said, at p408, that Tulk v Moxhay:
. . . decided
that an assignee taking land subject to a certain class of covenants is bound
by such covenants if he has notice of them, and that the class of covenants
comprehended within the rule is that covenants restricting the mode of using
the land only will be enforced. It may be also, but it is not necessary to
decide here, that all covenants also which impose such a burden on the land as
can be enforced against the land would be enforced . . . it is said that if we
decide for the defendants we shall have to overrule Cooke v Chilcott 3
ChD 694. If that case was decided on the equitable doctrine of notice, I think
we ought to overrule it.
Cotton LJ
said, at p409:
Let us
consider the examples in which a Court of Equity has enforced covenants
affecting land. We find that they have been invariably enforced if they have
been restrictive, and that with the exception of the covenants in Cooke v
Chilcott 3 ChD 694, only restrictive covenants have been enforced.
Cotton LJ also
said that Tulk v Moxhay:
. . . lays
down the real principle that an equity attaches to the owner of the land .. .
The covenant to repair can only be enforced by making the owner put his hand
into his pocket, and there is nothing which would justify us in going that
length.
In London
& South Western Railway Co v Gomm (1882) 20 ChD 562 an option to
purchase land on the happening of an uncertain event was held to be void for
remoteness. It was argued that the covenant was enforceable in equity. Jessel
MR said, at pp582-583:
With regard
to the argument founded on Tulk v Moxhay 2 Ph 774, that case was
very much considered by the Court of Appeal, at Westminster in Haywood v
Brunswick Permanent Benefit Building Society 8 QBD 403, and the Court
there decided that they would not extend the doctrine of Tulk v Moxhay
to affirmative covenants, compelling a man to lay out money or do any other
act of what I may call an active character, but that it was to be confined to
restrictive covenants. Of course that authority would be binding upon us if we
did not agree to it, but I most cordially accede to it. I think that we ought
not to extend the doctrine of Tulk v Moxhay in the way suggested
here. The doctrine of that case . . . appears to me to be either an extension
in equity of the doctrine of Spencer’s Case 5 Co Rep 16a to another line
of cases, or else an extension in equity of the doctrine of negative easements
. . . The covenant in Tulk v Moxhay was affirmative in its terms,
but was held by the Court to imply a negative. Where there is a negative
covenant expressed or implied . . . the Court interferes on one or other of the
above grounds. This is an equitable doctrine, establishing an exception to the
rules of Common Law which did not treat such a covenant as running with the
land, and it does not matter whether it proceeds on analogy to a covenant
running with the land or on analogy to an easement. The purchaser took the
estate subject to the equitable burden, with the qualification that if he
acquired the legal estate for value without notice he was freed from the
burden.
Lindley LJ
said, at pp 587-588, that because in Haywood v Brunswick Permanent
Benefit Building Society (1881) 8 QBD 403 it was sought to extend the
doctrine of Tulk v Moxhay:
. . . to a
degree which was thought dangerous, considerable pains were taken by the court
to point out the limits of that doctrine . . . The conclusion arrived at was
that Tulk v Moxhay, when properly understood, did not apply to
any but restrictive covenants.
In the Austerberry
case the owners of a site of a road covenanted that they and their
successors in title would make the road and keep it in repair.
The road was
sold to the defendants and it was held that the repair covenant could not be
enforced against them. Cotton LJ said, (1885) 29 ChD 750, at p773:
. . .
undoubtedly, where there is a restrictive covenant, the burden and benefit of
which do not run at law, Courts of Equity restrain anyone who takes the
property with notice of that covenant from using it in a way inconsistent with
the covenant. But here the covenant which is attempted to be insisted upon on
this appeal is a covenant to lay out money in doing certain work upon this
land; and, that being so . . . that is not a covenant which a Court of Equity
will enforce: it will not enforce a covenant not running at law when it is sought
to enforce that covenant in such a way as to require the successors in title of
the covenantor, to spend money, and in that way to undertake a burden upon
themselves. The covenantor must not use the property for a purpose inconsistent
with the use for which it was originally granted; but in my opinion a Court of
Equity does not and ought not to enforce a covenant binding only in equity in
such a way as to require the successors of the covenantor himself, they having
entered into no covenant, to expend sums of money in accordance with what the
original covenantor bound himself to do.
In Re
Nisbet and Potts’ Contract [1906] 1 Ch 386 it was held that a title
acquired by adverse possession was not paramount to, and did not destroy, the
equitable right of persons entitled to the benefit of prior restrictive
covenants to enforce them against the land. Farwell J said, at pp396-397:
Covenants
restricting the enjoyment of land, except of course as between the contracting
parties and those privy to the contract, are not enforceable by anything in the
nature of action or suit founded on contract. Such actions and suits alike
depend on privity of contract, and no possession of the land coupled with
notice of the covenants can avail to create such privity: Cox v Bishop
(1857) 8 D GM&G 815. But if the covenant be negative, so as to restrict
the mode of use and enjoyment of the land, then there is called into existence
an equity attached to the property of such a nature that it is annexed to and
runs with it in equity: Tulk v Moxhay 2 Ph 774. This equity,
although created by covenant or contract, cannot be sued on as such, but stands
on the same footing with and is completely analogous to an equitable charge on
real estate created by some predecessor in title of the present owner of the
land charged . . . effect is given to the negative covenant by means of the
land itself. But the land cannot spend money on improving itself, and there is
no personal liability on the owner of the land for the time being, because
there is no contract on which he can be sued in contract.
For over a
hundred years it has been clear and accepted law that equity will enforce
negative covenants against freehold land but has no power to enforce positive
covenants against successors in title of the land. To enforce a positive
covenant would be to enforce a personal obligation against a person who has not
covenanted. To enforce negative covenants is only to treat the land as subject
to a restriction.
Mr Munby, who
argued the appeal persuasively on behalf of the owners of Walford Cottage,
referred to an article by Professor Sir William Wade and other articles in
which the present state of the law is subjected to severe criticism. In 1965 a
report by a committee appointed by the Lord Chancellor and under the
chairmanship of Lord Wilberforce (Cmnd 2719) referred to difficulties caused by
the decision in the Austerberry case and recommended legislation to
provide that positive covenants which relate to the use of land and are
intended to benefit specified other land should run with the land. The Law
Commission published on July 5 1971 working paper no 36, in which the present
law on positive rights was described as being illogical, uncertain, incomplete
and inflexible. The Law Commission Report No 127 laid before Parliament in 1965
made recommendations for the reform of the law relating to positive and
restrictive obligations and submitted a draft Bill for that purpose. Nothing
has been done.
In these
circumstances your lordships were invited to overrule the decision of the Court
of Appeal in the Austerberry case. To do so would destroy the
distinction between law and equity and to convert the rule of equity into a
rule of notice. It is plain from the articles, reports and papers to which we
were referred that judicial legislation to overrule the Austerberry case
would create a number of difficulties, anomalies and uncertainties and affect
the rights and liabilities of people who have for over 100 years bought and
sold land in the knowledge, imparted at an elementary stage to every student of
the law of real property, that positive covenants affecting freehold land are
not directly enforceable except against the original covenantor. Parliamentary
legislation to deal with the decision in the Austerberry case would require
careful consideration of the consequences. Moreover, experience with leasehold
tenure where positive covenants are enforceable by virtue of privity of estate
has demonstrated that social injustice can be caused by logic. Parliament was
obliged to intervene to prevent tenants from losing their homes and being
saddled with the costs of restoring to their original glory buildings which had
languished through wars and economic depression for exactly 99 years.
Mr Munby
submitted that the decision in the Austerberry case had been reversed
remarkably but unremarked by section 79 of the Law of Property Act 1925 which
so far as material provides as follows:
(1) A covenant relating to any land of a
covenantor or capable of being bound by him, shall, unless a contrary intention
is expressed, be deemed to be made by the covenantor 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 provision
has always been regarded as intended to remove conveyancing difficulties with
regard to the form of covenants and to make it unnecessary to refer to
successors in title. A similar provision relating to the benefit of covenants
is to be found in section 78 of the 1925 Act. In Smith & Snipes Hall
Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 followed in
Williams v Unit Construction Co Ltd (1955) 19 Conv 261 it was
held by the Court of Appeal that section 78 of the 1925 Act had the effect of
making the benefit of positive covenants run with the land. Without casting any
doubt on those longstanding decisions, I do not consider that it follows that
section 79 of the 1925 Act had the corresponding effect of making the burden of
positive covenants run with the land. In Jones v Price [1965] 2
QB 618, at p633, Willmer LJ repeated that:
. . . a
covenant to perform positive acts . . . is not one the burden of which runs
with the land so as to bind the successors in title of the covenantor: see Austerberry
v Oldham Corporation.
In Sefton v
Tophams Ltd [1967] 1 AC 50 Lord Upjohn at p73 and Lord Wilberforce at
p81 stated that section 79 of the Law of Property Act 1925 does not have the
effect of causing covenants to run with the land. Finally, in Federated
Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594*, at
pp605-606, Brightman J referred to the authorities on section 78 of the 1925
Act and said:
Section 79,
in my view, involves quite different considerations and I do not think that it
provides a helpful analogy.
*Editor’s
note: Also reported at (1979) 254 EG 39, [1980] 1 EGLR 113.
Mr Munby also
sought to persuade your lordships that the effect of the decision in the Austerberry
case had been blunted by the ‘pure principle of benefit and burden’
distilled by Sir Robert Megarry V-C from the authorities in Tito v Waddell
(No 2) [1977] Ch 106, at p301 et seq. I am not prepared to recognise
the ‘pure principle’ that any party deriving any benefit from a conveyance must
accept any burden in the same conveyance. Sir Robert Megarry relied on the
decision of Upjohn J in Halsall v Brizell [1957] Ch 169. In that
case the defendant’s predecessor in title had been granted the right to use the
estate roads and sewers and had covenanted to pay a due proportion for the
maintenance of these facilities. It was held that the defendant could not
exercise the rights without paying his costs of ensuring that they could be
exercised. Conditions can be attached to the exercise of a power in express
terms or by implication. Halsall v Brizell was just such a case
and I have no difficulty in wholeheartedly agreeing with the decision. It does
not follow that any condition can be rendered enforceable by attaching it to a
right nor does it follow that every burden imposed by a conveyance may be
enforced by depriving the covenantor’s successor in title of every benefit
which he enjoyed thereunder. The condition must be relevant to the exercise of
the right. In Halsall v Brizell there were reciprocal benefits
and burdens enjoyed by the users of the roads and sewers. In the present case
clause 2 of the 1960 conveyance imposes reciprocal benefits and burdens of
support, but clause 3 which imposed an obligation to repair the roof is an
independent provision. In Halsall v Brizell the defendant could,
at least in theory, choose between enjoying the right and paying his proportion
of the cost or alternatively giving up the right and saving his money. In the
present case the owners of Walford House could not in theory or in practice be
deprived of the benefit of the mutual rights of support if they failed to
repair the roof.
In the result
I would dismiss the appeal and make the usual order for costs against the
appellant subject to the usual appropriate legal aid reservations.
LORDS
OLIVER OF AYLMERTON, WOOLF, LLOYD and NOLAN
agreed that the appeal should be dismissed and did not add anything.
