Advise coriander whether she can prevent didier and dominique from buildinng another house in the rounds of hamiyn road

Introduction

The problem that this essay answers relates to enforcement of a negative covenant against the registered purchaser of a freehold property. The parties involved in the problem are: Rosemary, who is the registered freehold owner of 25, Hamlyn Road (or No.25, hereinafter).

George, who bought a plot from Rosemary (26, Hamlyn Road, or No.26, hereinafter). The transfer contained a negative covenant to not build more than 2 storey building for residential use by a single family. Didier and Dominique, who bought No.26 from George. Coriander, who has inherited No.25 after Rosemary’s death and became a registered owner of the property.

Rosemary is the original covenantee. Coriander is her successor in title. George is the original covenantor. Didier and Dominique are his successors in title. The problem issue arises from the fact that Didier and Dominique are applying for a planning permission to build another house on No.26, directly behind No.25 and overlooking its garden. Thus, there is an anticipatory breach of the covenant. The remedy of injunction is available to Coriander for preventing the actual breach. The essay details the nature of negative covenant and gives a solution to Coriander, to prevent Didier and Dominique from building another house in the grounds of No.26.

Negative Covenant : meaning, passing of benefit and burden, effect

A covenant is an undertaking contained in a deed in which one party (the covenantor), promises another (the covenantee) that he will or will not engage in some specified action or activity related to the defined area of land. 1 Covenants can be positive or negative. The former make some expense necessary on the part of the covenantor and the latter is restrictive in nature.

The covenant to not build more than two storey building for residential use by a single family is a negative covenant. Covenants are negative when they regulate the use of the property. These covenants are restrictive in nature and their objective is to prevent the covenantor from doing some act. Negative covenants prohibit specified kinds of activity or development on the covenantor’s land for the benefit of the land retained by the covenantee. 2 Such negative restrictive covenants run with the land under equity but not under common law.

It is important to understand the passing of the benefit and burden under both common law and equity. These are discussed in the following part of the essay. Under the law of equity, the burden of a negative burden passes to the successor if the following conditions are satisfied:

• The covenant has to be negative. In Haywood v Brunswick Permanent Benefit Building Society 3 , it was held that negative or restrictive covenants were enforceable as against a successor in title. In this, the principle laid down in Tulk v Moxhay 4 , was followed where it also held that restrictive covenants run with the land.
• The covenant must benefit the dominant land. Where the covenants are in adjacent land, it is easier to derive the benefit value of the covenant. Where the dominant land is nowhere close to the servient land, it is difficult to see how one can benefit the other, as was held in Kelly v Barrett. 5 Thus the two plots must be sufficiently proximate with each other in order for one to benefit from the other.
• The covenantee must on the date of the covenant, have owned the land for the benefit of which the covenant was made. In London County Council v Allen, 7 it was held that where the covenantee did not have possession of or interest in the land which was intended to benefit.
• It must be the common intention of the parties that the burden of the covenant should run with the land of the covenantor. Under Law of Property Act 1925 (LPA 1925), s.79 this intention is presumed, unless it is specifically excluded. In Re Royal Victoria Pavilion 8 where the covenant was held to be personal in nature, the benefit and burden were not allowed to pass to the respective successors in title.

The benefit of covenant passes in equity to the successor in title by: annexation, assignment and scheme of development. 9 Annexation is the permanent attachment of the benefit of the covenant to the land and once attached, the benefit will pass to the successors. 10 Annexation basically nails the covenant to the land. 11 Of special significance is that the dominant land should be clearly recognised in the annexation. 12 Especially, where the words ‘to each and every part’ are used with respect to the covenantee’s land, this is an example of an express annexation.

Under the common law, the doctrine of privity of contract is applied. Under this doctrine, the successor in title does not get the burden as he did not originally enter into the covenant.

The rules with relation to the passing of benefit in common law are different from the passing of burden. In P A Swift Investments v Combined English Stores Group plc, 14 the House of Lords laid down the following conditions for transmission of benefit of covenant:

• the covenant must touch and concern the land of the covenantee;
• the covenantee must have some legal estate in the land;
• the transferee must also take a legal estate in the land benefitted;
• it must have been intended that the benefit should run with the land owned by the covenantee at the date of the covenant.

Generally speaking, for the passing of benefit to the successor (Coriander), she must prove that the covenantee held a legal estate in the land (the freehold), she also holds a legal estate in the land 16 , the covenant must touch and concern the land 17 and there must have been an intention that the covenant should run at the date of the covenant. This is usually presumed under Law of Property Act 1925 (LPA 1925), s. 78. Unless specifically excluded, it is presumed that there was an intention that the covenant should run.

Apart from LPA 1925, s.78(1), a newer legislation, that is, the Contracts (Rights of Third Parties) Act 1999 (CRTPA 1999), also provides that a person who is not ‘in his own right’ a party to the contract, may still enforce a term in the contract that expressly allows him to take such an action or confers some benefit on such a person. 19 It is important to note that the CRTPA 1999 applies to all covenants made after May 2000. In this case, the covenant was made in 2010. Therefore, instead of applying the doctrine of privity of contract to exclude Coriander’s right ti take legal remedy, CRTPA 1999, s.1 can be used to allow her to take a remedy.

In the present situation, the transfer clause makes clear that the covenant is for the benefit of No.25. As the registered freehold owner of No.25, Rosemary had legal estate in the land. Coriander has taken the legal estate in No.25 as the inheritor of the estate after Rosemary’s death. Finally, the last condition is clearly satisfied by the last clause of the transfer, which states that “The burden of this covenant is intended to bind and binds each and every part of the property into whosoever’s hands it may come.” This is clearly an annexation. Thus, all the conditions for the passing of the benefit are satisfied in Coriander’s case.

Effect of Registered Disposition

Under the Land Registration Act 2002 (LRA 2002), s.29(1), a covenant will take effect as an interest requiring protection on the Register and must be entered by way of notice against the title of the covenantor’s land. The notice has to be entered in the Charges Register for the burdened land and on the Property Register for the benefitted land. 20 If the holder of the right fails to register the covenant, then the fact of its knowledge or notice to the purchaser of the property, is irrelevant.

Remedies available to Coriander

Restrictive covenant being an equitable right, the remedies are also available in equity. The remedy that is the most appropriate for Coriander in this situation is injunction. As the breach has not occurred at this time and Didier and Dominique have yet to apply for the planning commission, the appropriate injunction remedy in this case is a quia timet injunction. 21 In cases where the breach is in an anticipatory stage, as in this situation, a quia timet injunction prevents the breach from taking place by restraining the action. It is important to note the following points that are relevant for equitable remedy of injunction. A restrictive covenant is enforceable against the successor in title to the covenantor if the burden has passed to him in equity. The successor in title to the covenantee can enforce the covenant as against the other party under LPA 1925, s. 56 or CROTPA 1999.

In addition, being an equitable remedy, the maxims of equity are also applicable to the enforcement of the covenant. Therefore, the successor in title to the covenantee must show that he has ‘clean hands’, that is, he has not done anything that would compromise the legality of his situation. The the doctrine of laches is applicable to ensure that the applicant does not delay action beyond reasonable period of time. There must be no indication or agreement between the parties that applicant that will accept monetary compensation for the breach of covenant.

When these conditions are satisfied, the successor in title to the covenantee can petition for an injunction. In this case, the benefit had passed to Coriander under equity. Moreover, she satisfies the requirements of equity for the purpose of having the injunction granted to her. She has not delayed the action, or entered into any agreement for monetary compensation. At this stage the breach is at the anticipatory stage. Coriander can rightfully take action for an injunction to prevent the breach.

Conclusion

The covenant being a negative covenant, runs with the land under equity. The covenant is also expressly annexed in the transfer document. Therefore, it binds future successors in title to the covenantor. In the present case, both the benefits and burdens of the covenant have passed under equity. This means that the covenant is enforceable in equity. Accordingly, the equitable remedy of injunction for anticipatory breach of covenant is available to Coriander as against Didier and Dominique.

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