Land - Restrictive Covenants - Notes (1)

Usual Setting of a covenant issue:
Owner has 2 or more plots of land, at least one is sold to the purchaser with positive covenant (e.g. maintain repair) and/or negative covenant (e.g. not to use for business purpose); then at different times, owner sells the rest of land to X while the purchaser sells his to Y – there is no privity of contract between X and Y, nor privity of estate because it’s freehold land…
- What needs to be proved?
(i) Covenant has passed from Owner to X
(ii) Covenant has passed from Purchaser to Y

Burden passed from Purchaser to Y
- At common law, burden does not pass
- In equity, follow Tulk v Moxhay case (keep garden place uncovered):
-> Assist new owner to bridge the covenant
-> Stress of Doctrine of notice
* Positive covenants do not run at law or in equity, unless mutual benefit burden principle (which is narrowed by Rhone & Stephens)
* 4 conditions to meet so that covenants can pass to Y:
(i) Covenants must be negative (not to do something)
(ii) Benefit covenantee’s land (London County Council v Allen)
(iii) Intention for burden to run LPA s79 (Intention is presumed until being rebutted)
(iv) Registration:
(a) Unregistered land: LCA D(ii), registered against a person
(b) Registered land: Pre 1925 LRA, doctrine of notice; Post 1925 LRA, registration as minor interest against the land
* Owner cannot enforce covenants against sublease: except by doctrine of restrictive covenant for negative covenant

Benefit from Owner to X
- Common law rules do not apply if burden is relied on equitable rules for passing of burden
-> benefit has to be passed via equity as well
- Benefit has to touch & concern the land
(i) annexation: tied to the land (Federated homes: clear identification of benefited land; s78 will automatically annex covenant to a land if it is clearly identified in the coveyance)
-> 3 possible views of s78: (a) orthodox view – word saving; (b) s78 there is annexation intended to benefit only the clearly identified land; (c) s78 annexes whether land is clearly identified within the document or outside of the document
=> there is no conclusion of (b) or (c)
(ii) assignment: If annexation is expressly excluded; less important in practice
(iii) building scheme (Elliston v Reacher): only benefits can be passed automatically; burden still need to follow the 4 conditions above
-> Cannot have building scheme of only 2 plots; usually 4 plots or more

* For annexation, why land should be identified in the conveyance? It is a policy issue. For e.g. if Owner’s land has been passed to A then B then C; while Purchaser’s land has been passed to X then Y then Z
-> as Z, he will search LCA, he will see there is a covenant not to use the land for business purpose; but he won’t know who benefits from the covenants so as to negotiate with the covenantor if no identification of benefited land is recorded; Z will not know who can enforce the covenant against him either if he doesn’t comply to it.