Restrictive covenant — Benefit — Whether passing to successors in title of covenantee — Whether wording of conveyance confining benefit to covenantee’s unsold land or that sold with express assignment of benefit — Claim allowed
The claimant was the freeholder of a property that she wished to demolish in order to construct eight apartments. The defendants were the owners, or in one case the tenant, of neighbouring properties. The parties’ properties had all previously been in the same ownership. The claimant’s land had been sold first by a 1953 conveyance that contained various covenants by the purchaser “for the benefit and protection of the Vendor’s said adjoining property or any part of such property hereafter remaining unsold and any part of such property hereafter sold with the benefit of this present covenant”. The covenants included a restriction against the erection of anything more than a single dwelling-house with garage. However, no such covenant was included in a subsequent conveyance of the land that eventually came to belong to the defendants.
The defendants maintained that they were entitled to the benefit of the covenant in the 1953 conveyance, so as to prevent the claimant’s intended development. The claimant sought a declaration that they were not so entitled. She contended that: (i) on the correct construction of the 1953 conveyance, the vendor had reserved the benefit of the covenant for the retained land only for so long as it remained unsold; (ii) in the event of a sale, the benefit of the covenant was not to pass unless it were expressly assigned; and (iii) since there had been no express assignment in the sale of the defendants’ land, the benefit of the covenant had not passed to them.
Held: The claim was allowed.
In a conveyance in which a covenant was said to benefit land that remained unsold, the effect of such “express words of annexation” was to displace section 78 of the Law of Property Act 1925 and to annex the covenant to that land only for the period during which it remained unsold. Upon sale, the covenant was not annexed and would pass only if it were expressly assigned. Despite the absence of any reference in section 78 to a “contrary intention”, there was no reason why a covenantor could not, by express words, limit the scope of the obligation that it was undertaking, nor why a covenantee could not accept a covenant for its own benefit on terms that the benefit did not automatically pass: Crest Nicholson Residential (South) Ltd v McAllister [2004] EWCA Civ 410; [2004] 2 EGLR 79; [2004] 24 EG 150, Marquess of Zetland v Driver [1939] Ch 1 and Roake v Chadha [1984] 1 WLR 40 applied. That was the intention behind the covenants in the instant case; when the vendor sold a piece of her remaining land, the covenant ceased to be annexed to it unless the benefit of it was expressly assigned. Other covenants in the 1953 conveyance did not displace that conclusion.
Moreover, in such circumstances, the covenant in question could not pass as a right or interest in the property under section 63 of the 1925 Act: Kumar v Dunning [1987] 2 EGLR 39; (1987) 283 EG 59, dealing with section 62, applied. The time for considering whether the relevant interest constituted a proprietary interest, so as to pass under section 63, was at the time of the conveyance to which section 63 was intended to apply. By the time of the sale, the covenant had ceased to be an interest in the land because it was attached to the land “unsold”, and it ceased to be annexed to it when it was sold. Even if it were otherwise, wording that referred to an express assignment expressed a “contrary intention” to the covenant passing.
Mark Halliwell (instructed by Land Law, of Altrincham) appeared for the claimant; Matthew Hutchings (instructed by Richard Buxton, of Cambridge) appeared for the fourth defendant; the other defendants did not appear and were not represented.
Sally Dobson, barrister
