NOTES OF CASES
| Published date | 01 July 1980 |
| DOI | http://doi.org/10.1111/j.1468-2230.1980.tb01603.x |
| Date | 01 July 1980 |
NOTES
OF
CASES
REVOLUTION
IN
RESTRICTIVE
COVENANTS
LAW?
Federated Homes Ltd
v.
Mill
Lodge Properties Ltd’
at first sight
achieves
a
revolutionary but welcome simplification of an excessively
technical branch of the law. Unfortunately, the Court
of
Appeal
(Megaw, Browne and Brightman
L.
JJ.),
like real revolutionaries,
did not take time for
a
considered reserved judgment and have left
much scope for argument that the position is, as yet, by no means
finally settled.
The defendant company purchased the blue land in
1971
from the
owner of the red, green and blue land. Clause
5
of
the Conveyance
stated,
“
The Purchaser hereby covenants with the Vendor
a
that
.
. .
(iv) in carrying out the development of the blue land the
Purchaser shall not build at a greater density than
a
total
of
300
dwellings
so
as
not to reduce the number of units which
the Vendor might eventually erect on the retained land under
the existing Planning Consent.”
Clause
2
referred to
“
any adjoining or adjacent property retained
by the Vendor
”
and the court read
“
the retained land
”
in clause
5
(iv) as meaning the retained property mentioned in clause
2
and
identified by extrinsic evidence as the red and green land. The clause
5
(iv) restrictive covenant was for the benefit
of
land identifiable
from the terms
of
the conveyance and the question arose whether
the benefit of the covenant had passed to the plaintiff whether by
virtue of annexation or of as~ignment.~
The vendor sold off the retained red and green land to B,
expressly assigning the benefit of the defendant’s covenant. B then
conveyed the green land to the plaintiff, expressly assigning the
benefit of the covenant.
As
a
result of this unbroken chain of
assignments Brightman
L.J.4
(with whom Browne and Megaw
L.JJ.
concurred) stated,6
“I
am disposed to think that that
is
sufficient to entitle the
plaintiff to relief and that the plaintiff‘s right to relief would
1
[
19801
1
All
E.R.
371.
2
To
annex the covenant expressly further words should have been used,
i.e.
‘*
with the Vendor and his successors in title the owners from time to time of the
adjacent property retained by the Vendor,” adding
ex abundante
cautela
“
to the
intent that the benefit thereof may be annexed to and run with each and every
part
of
such propzrty.”
3
There was
no
scope for the third building scheme method
of
passing the benefit of
restrictive covenants. The only Chancery member
of
the court.
5 Megaw
L.J.
added a few words to his concurrence, but these words only
revealed that he did not appreciate that if a covenant
is
annexed to the whole land.
and therefore each and every part, but is taken only for the benefit
of
the land
whilst enjoyed as a whole entity
(e.g.
the Childwickbury Estate in
Re Ballard‘s
Conveyance
[1937]
Ch.
473)
then it can only be enforced by a person entitled
to
that whole entity.
6
119801 1
All
E.R.
371, 378.
445
446
THE MODERN LAW REVIEW
[Vol.
43
be no greater if it were held it
also
had the benefit of the
covenant
in
its capacity as owner of the red land. However,
the judge dealt with both areas of land and
I
propose to do
the same.”
The red land had been conveyed with an express assignment of
the covenant to U.D.T., who had later transferred it to the plaintiff,
but without expressly assigning the covenant.
Mr. Mills, Q.C., as deputy judge of the High Court, had granted
an injunction to the plaintiff on the basis that the benefit of the
covenant was vested in the plaintiff as owner of the green land, by
virtue of a chain of assignments, and as owner
of
the red land by
virtue of implied assignment under section
62
of the Law of Property
Act
1925.‘
The Court of Appeal, without expressing any view upon section
62,8
boldly seized upon section
78
of the Law of Property Act
as
operating,
so
that the defendant’s covenant from the outset had
automatically been annexed to each and every part
of
the retained
red and green land,
so
the plaintiff was entitled to an injunction.
One warmly welcomes their view* that prima facie
a
covenant
should be read as enuring for the benefit
of
every part of the
benefited land and not as enuring for the benefited land as
a
whole
while enjoyed as
a
whole only.
The court’s view that section
78,
which conventionally was regarded
as
a
word-saving provision, has an automatic annexation effect (thus
ousting the assignment doctrine
lo)
is most controversial. After all,
as the House of Lords
l1
forcefully emphasised, in interpreting section
56,
the Law of Property Act
1925
is
a
consolidating Act consolidating
Law of Property (Amendment) Act
1924,
Law of Property Act
1922
and other Acts such as the Conveyancing Act
1881.1a
Indeed, the
relevant Parliamentary committee
la
duly certified it made no
alteration in the law
so
that as a consolidating Act it passed through
on the nod. As
a
consolidating Act “if the words are capable of
more than one construction then the Court will give effect
to
that
construction which does not change the law.” There is also the
~~
7
Though he accepted the novel
6.
62 submission (see (1971) 87 L.Q.R. 570-571) he
rejected the much canvassed view (see (1971) 87 L.Q.R. 564-568) that the
flrst
express assignment
of
an assignable covenant amounts to delayed annexation: see
[1980]
1
All
E.R.
371, 378.
8
There is thus uncontroverted judicial authority
in
favour
of
s.
62, which, unlike
s.
78,
is
subject
to
a contrary intent.
9
Supported in (1962) 78 L.Q.R. 334,482 (R.
E.
Megarry); (1968) 84 L.Q.R. 25-28
(P.
V.
Baker) and (1971) 87 L.Q.R. 562-564
(D.
J.
Hayton) and requiring review
of
Russell
v.
Archdale
[19641 Ch. 38;
Re
Jefl.8
Transfer
[1966]
1
All
E.R.
937 and
Stilwell
v.
Blarkman
[
19681 Ch. 508.
10
A
point the court seem to have overlooked.
11
Beswick
v.
Beswick
[
19681 A.C. 58, 73, 87, 93, 105.
33
By
s.
58
‘‘
A covenant relating to land
of
inheritance
. .
.
shall be deemed
to
be
made with the covenantee his heirs and assigns and shall have effect as
if
heirs and
assigns were expressed.
13
Beswick
v.
Beswick
[I9681 A.C. 58,
105
per
Lord Upjohn.
14
Hansard,
Vol.
182, Ser.
5,
col. 2116.
15
Be.wick
v.
Beswrck
[
19681
A.C.
58, 87
per
Lord Guest.
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