Sale of land — Covenant restricting use to educational purposes running with land — Public housing authority having benefit of pre-emption covenant — Claimant freeholder wishing to sell land for housing — Whether covenants preventing claimant from selling land — Whether successors in title entitled to benefit of pre-emption covenant — Whether unity of seisin principle applied — Determination given
The London County Council (LCC), as a public housing authority, acquired a 3,000 acre estate (the Becontree estate). By four conveyances, they conveyed on sale to Essex County Council (Essex), as education authority, 24 acres in four tranches (the land) for secondary educational purposes. By each of the conveyances, Essex “for themselves their successors and assigns” entered into restrictive covenants with the LCC “their successors and assigns”. The first covenant prohibited use of the land, except with the consent of the LCC, for other than public educational purposes. The second banned the erection of any building on the land except in accordance with plans and elevations that had been approved by the LCC. The third prohibited the sale or, save for educational purposes, the parting with possession of the land without offering the LCC first refusal.
The claimant, as the successor to Essex, was the freehold registered proprietor of the land and occupied it for educational purposes. The land subsequently became surplus to requirements and the claimant wished to sell it, free from the covenants, for housing purposes. The issue arose as to whether: (i) the covenants prevented it from doing so; (ii) in particular, the benefit of the covenants was vested in any, and, if so, which, of the successors in title of the LCC as owners of the remainder of the Becontree Estate; and (iii) whether the burden of the covenant bound the successors in title of Essex to the land.
Held: A determination was given.
On the proper construction of the conveyances, the covenants were valid and subsisting. The benefit was vested in the first and second defendants and the burden fell on the claimant. The claimant was free to sell the land for its full market value free of the restrictive covenants, but doing so would trigger the pre-emption clause. If the first and second defendants then exercised the right of pre-emption, they would be required to pay the full market price for the land free from the restrictive covenants.
The court, inter alia, rejected the argument that the covenants ceased to be enforceable by the first defendants by reason of unity of seisin (formal legal ownership) of the land and that part of the Becontree estate vested in it between 1971 and 1989. If a restriction existed simply for the benefit of two adjoining premises and both properties were bought by one entity, the restrictions would automatically ease. However, there had to be unity both of ownership and of possession. A restrictive covenant could not be extinguished if someone continued to be entitled to the benefit, or subject to the burden, of the covenant.
As a general principle, a merger of interests could not take place where the interests were not held in the same right. For restrictive covenants to be extinguished merely because the same public body, as in the present case, held, for different statutory purposes, the dominant and servient properties would defeat the objects of the restrictive covenants for no good or sufficient reason: Texaco Antilles Ltd v Kernochan [1972] AC 609; R v Tower Hamlets London Borough Council, ex parte Chetnik Developments Ltd [1988] 1 AC 858 and Bromley London Borough Council v Greater London Council [1983] 1 AC 768 considered.
David Ainger (instructed by Finers Stephens Innocent) appeared for the claimant; Christopher Cant (instructed by Barlow Lyde & Gilbert) appeared for the first defendants; Karen Walden-Smith (instructed by the solicitor to Redbridge London Borough Council) appeared for the second defendants; the third defendants did not appear and were not represented.
Eileen O’Grady, barrister
