The benefit of a covenant

 If you thought determining whether or not the burden of a covenant was

complicated, unfortunately, whether the benefit of a covenant runs with the land is
just as complicated. As is the case with a burden of the covenant, the common law
and equity have differing rules and you will need knowledge of both.

Benefit of a covenant at common Law

Similar to the burden of covenants, there are four clear requirements:

 The covenant must ‘touch and concern’ the land

 The covenantee must hold a legal estate in the land on the date of the covenant
 The buyer of the land must derive their title from the original covenantee
 The benefit must have been intended to run with the land at the date of the
covenant

The covenant must ‘touch and concern’ the land

 Similar to the rule on the burden of a covenant, there must be some benefit to the
dominant land. The test for whether the covenant touches and concerns the land
was formed in P & A Swift Investments v Combined English Stores Group [1989]
AC 632:
 Does the covenant benefit the owner of the dominant land? The benefit to
this owner ends when ownership of the land ends
 Is there an effect on the nature, quality, mode of use or value of the
dominant land?
 Is the covenant be worded in a generic manner to apply to all owners of the
dominant land - it must not be addressed to a specific individual.

The covenantee must hold a legal estate in the land on the date of the covenant
 This requirement is fairly straightforward. Simply, the covenantee must hold a
recognised legal estate in the land. This can either be through fee simple absolute
 in possession or a term of years absolute under S1(1) of the Law of Property Act
1925.

The buyer of the land must derive their title from the original covenantee
 This test changes dependant on whether the covenant is pre-1926 or post-1926.
For pre-1926 covenants, the new owner of land must hold the same legal estate as
the original covenantee. For post-1926 covenants, as per S78(1) of the Law of
Property Act 1925, the new owner of land only needs to hold either a fee simple
absolute in possession or a term of years absolute.

The benefit must have been intended to run with the land at the date of the covenant
 Again, this requirement is different dependant on whether the covenant is pre or
post 1926. For covenants created after 1926, there is a presumption under S78(1)
of the Law of Property Act 1925 that the covenant is presumed to have been
intended to run with the land. Under pre-1926 covenants, the parties must show
they intended the benefit of the covenant to pass to new owners.

Following these four requirements being met, the benefit of the covenant has passed at
common law, meaning the current owner can sue for breach of covenant. If any one of
the requirements have not been met, the test fails and the covenantee must look to
equity for a remedy.

Benefit of a covenant at equity

 There are four different ways in which the benefit of a covenant may run in equity.
The first of those is extremely simple, and it is that the covenant must ‘touch
and concern’ the land. You can refer to the test discussed above from P & A
Swift Investments v Combined English Stores Group if you need a recap on
what that means. The other three ways are slightly more niche. These are:
 Annexation
  Assignment
 A building scheme

Annexation
 Annexation is where the benefit of a restrictive covenant is clearly applicable to a
defined area of land in such a way that the benefit of the covenant will pass on any
transfer of the land. This can be a confusing principle and case law has attempted
to clarify it. Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594
ruled that the annexation rule does not apply to covenants entered before 1926. To
further understand this rule, the different types of annexation will be considered.

Express annexation
 In express annexation, the document conferring the covenant will be drafted in
such a way that it is clear that the covenant is made the benefit the land and not the
covenantee. The covenantee may be mentioned in the document, but as long as the
drafting is clearly focussed on the actual land, it will be considered express
annexation.
 For example - ‘This covenant is entered to with Party A and his successors in title
to the land’. Despite mentioning the name of the party, it is clear there is an
express intention for the covenant to run with the land.

Renals v Cowlishaw (1879) 11 Ch D 866

In this case, the wording of the conveyance was that the covenant was for
the benefit of ‘the vendor, their heirs, administrators and assigns’.

It was held that the phrase did not identify any dominant land, therefore it
could not be considered an express annexation.

Rogers v Hosegood [1900] 2 Ch 388

In this case, the covenant stated it was made ‘with the intent that the
covenant may ensure to the benefit of the vendors their successors and
 assigns and others claiming under them to all or any of their lands
adjoining’

It was held that the phrase ‘all of any of their lands adjoining’ was
sufficient in identifying a dominant land, therefore there was a valid
annexation.

 The above cases show two covenants with very similar wording, but highlight the
importance of identifying a dominant land.

Annexation of large pieces of land

 When annexing a large piece of land, you wish to place a covenant over, you can
either choose to annex the covenant to only the whole of the dominant land, or to
annex the covenant to each and every part of the dominant land. There are a
number of differences between the two.

Disadvantages of annexing to the whole of the dominant land

 The case of Re Ballard’s Conveyance [1937] Ch 473 highlights the disadvantage
very well. In situations where the servient land is small and the dominant land is
large in comparison, there may be an issue in proving that every part of the
dominant land benefits from the covenant. Imagine a scenario where the dominant
land was 1000 acres and the servient land was a small patch in one corner of the
1000 acres. How can one argue that there is a benefit for the opposite corner of the
dominant land?
 In Re Ballard’s Conveyance, the court held that a 16-acre servient land did not
benefit the whole of the 1700 acre dominant land, meaning the annexation had
failed. However, if the covenant had been drafted for the benefit of each and every
part of the dominant land, there would be a valid annexation to any part of the
dominant land that benefits from the covenant. The benefit would then be able to
be passed on to any purchasers of smaller parts of the land.
  However, recent case law has shown a growing trend in a relaxation of this rule,
allowing an annexation of the whole of the dominant land to be effective even
where the servient land is small. For example, in the case of Wrotham Park Estate
v Parkside Homes [1974] 1 WLR 798. In this case, there was conflicting expert
evidence as to whether or not the covenant benefitted the whole of the dominant
land. The judges decided that if there was any doubt, the decision should be made
in favour of the dominant land, and the annexation will be valid, meaning the
covenant is enforceable. Therefore, when faced with a question of this kind, if
there is any doubt, cite this case as authority that the courts would likely decide in
favour of the dominant land.

Subdivision of dominant land

 Where there has been a successful annexation to a dominant land, then the
dominant land is subdivided and sold on, the owners of the subdivided land cannot
enforce any covenants attached to the original dominant land. This was confirmed
in the case of Russell v Archdale [1964] Ch 38, where the court held that an
annexation to the whole of the land would not extend to any subdivided and sold
land. However, if the covenant is an annexation to each and every part of the land,
the covenant will be enforceable.
 Therefore, consider whether the annexation is to the whole or each and every part
of the dominant land. If it is to the whole, and the land is subdivided, the owners
of the new divided land will not be able to enforce any covenants. However, the
covenantee who owns part of the original land will still be able to enforce the
covenants.

Disadvantages of annexing to each and every part of the dominant land

 After we have discussed the disadvantages of annexing as a whole, it would seem
that the obvious choice would be to annex to each and every part. However, as you
can imagine, the number of dominant owners could end up being extremely large,
which may create problems in itself.
  Imagine a situation in which the servient land is subject to a covenant to the
dominant land, and the dominant land is then subdivided into smaller plots closer
to the servient land. If the owner of the servient land wishes to negotiate with the
owner of the dominant land to remove the covenant for a fee, they may do so.
However, if they agree a fee and the covenant is lifted, the owners of the smaller
plots of land on the dominant land will still be able to enforce the covenant. The
only solution to this would be to negotiate with each and every owner of the parts
of the dominant land with the benefit of the covenant - time consuming and a lot
more expensive! This would not be an issue if the annexation was only to the
whole of the dominant land.
 The case of Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594
meant that any restrictive covenant entered into after 1925 resulted in an automatic
annexation to each and every part of land owned by the covenantee at that point.
The case of Crest Nicholson v McAllister [2004] 1 WLR 2409 rejected the
Federated Homes reading and held that the dominant land must be mentioned in
the conveyance, or identifiable from the surrounding circumstances. It was held
that any annexation would be to the whole of the dominant land unless there was
an express mention of the covenant being for each and every part.

Assignment of the benefit

 The rules of assignment are relevant and helpful where annexation has failed,
either through a failure of valid annexation, or where the dominant land has been
subdivided where the annexation was only to the whole of the dominant land.
 If some kind of assignment seems to have taken place, the requirements of Miles v
Easter [1933] Ch 611 need to be met:
 The covenant is for the benefit of some identifiable land
 The identifiable land must be benefitted
 The assignee must acquire some of the identifiable land
  The assignment of the restrictive covenant must be simultaneous with the
conveyance of the land

The covenant is for the benefit of some identifiable land

 This is satisfied if the document conveying the covenant expressly mentions the
dominant land, or as per Newton Abbot Co-operative Society discussed earlier in
the chapter, if you can identify the dominant land from the surrounding
circumstances

The identifiable land must be benefitted

 The case of Earl of Leicester v Wells-next-the-Sea [1972] 3 All Er 77 ruled that
the whole of the identifiable land must be benefitted. The judges have set a low
threshold for this, with large areas of land being benefitted.

The assignee must acquire some of the identifiable land

 The assignee need not acquire the whole of the land, but some will be sufficient.
This was confirmed in Stilwell v Blackman [1967] 3 All ER 514.

The assignment of the restrictive covenant must be simultaneous with the conveyance
of the land
 This requires that when the piece of land is transferred, there should be an express
clause in the transfer document that assigns the benefit of the covenant. However,
there are some exceptions to this requirement.
 If equity can enforce the maxim ‘equity looks on as done that which ought
to be done’ - in other words, where both parties intended to include the
assignment clause but forgot - Northbourne v Johnstone [1922] 2 Ch 309
 Where the owner of the dominant land dies and it devolves to the next
owner, the new owner can enforce the covenants benefitted the land as if it
had been expressly assigned - Leicester v Wells-next-the-sea
Building schemes
 A building scheme is where land is sold or leased in lots/plots, and these pieces of
land are subject to benefits and burdens of covenants which the purchasers are
subject to and will be mutually enforceable between the current owners. When
validly created, all properties are servient and dominant.
 Taking our examples between Party A, B and C who had the covenant of keeping
the grass cut short. If this was a building scheme, each party would be able to
enforce the covenant against each other.
 The requirements for a building scheme were set out in Elliston v Reacher [1908]
2 Ch 374, and a fifth was added in Reid v Bickerstaff [1909] 2 Ch 305
I. Both parties derive title from the same seller
II. Prior to selling, the seller set out the land for sale in lots
III. The restrictions were to be for the benefit for all of the lots
IV. Both parties purchased the lots under the impression that the restrictions
were for the benefit of all of the lots
V. The creator of the building scheme must have set up a scheme for a
defined area of land

Remedies
Contractual remedies
 If a covenant is broken, the regular remedies for breach of contract of damages for
breach and an injunction preventing breach can be sought under most
circumstances. However, a claim for damages cannot be brought against a
successor in title because there is no privity of contract as per Rhone v Stephens
[1994] 2 AC 310. This can be circumvented by a claim under the Senior Courts
Act 1981, where an injunction or damages can be sought, but damages are usually
 reduced significantly - Small v Oliver & Saunders (Developments) Ltd [2006] 3
EGLR 141

Avoidance of delay
 If an individual is seeking an equitable remedy, there must not be any delay when
making a claim. Silence to a breach can be considered acquiescence and the right
to any remedies under a breach may be lost. This was illustrated in Gafford v
Graham(1998) 77 P&CR 73. Therefore, dominant owners should not tolerate
breaches and should ensure to apply for a remedy as soon as possible.

The Law of Property Act 1925 S84(2) declaration

 Often the difficult with a covenant is not determining whether it has been breached
or not, but rather whether it is enforceable or not. A declaration under S84(2) will
establish whether or not a covenant is binding on a person, or the person seeking
to enforce it is able to enforce it.

Exam consideration: What do you think the effect of the burdened and benefitted land
coming into common ownership and occupation would be?

Reform of the law

 As early as 1965 the Law Commission noted that most positive covenants were
unenforceable and the law should be reformed ( Report of the Committee on
Positive Covenants Affecting Land 1965). In 1984, proposals were made for a new
‘land obligation’ allowing positive and negative obligations to be imposed on a
piece of land.
 The rights would be either ‘neighbour obligations’ (for two neighbours) or
‘development obligations’ (for multi- occupation).
 The rights would need registration and, once registered, would be binding
but would be enforceable only between the current owners of the respective
tenements.
 It has also been suggested that covenants should be automatically extinguished
after a statutorily fixed period has expired. The Law Commission suggested 80
years in 1991 ( Transfer of Land: Obsolete Restrictive Covenants ). There would
be a right to appeal by the owner of the right.
 The most recent proposals for reform of the law on covenants, ‘Making Land
Work: Easements, Covenants and Profits à Prendre ’, were made by the Law
Commission in 2011. The Law Commission proposed that freehold covenants
should be replaced by a new scheme of land obligations. Such obligations could be
either ‘positive’ or ‘negative’. The land obligation could be registered and both the
benefit and burden would be registrable (as in the case of easements) and, once
registered, successors in title would be bound. The original parties would cease to
be able to enforce the right and liability would also cease on sale of the property.
All existing restrictive covenants would not be affected. The main advantage of
the new system would be the right to enforce a positive covenant without having
to rely on the complexities of the rule in Halsell v Brizell or a chain of covenants.