PASSING THE BENEFIT OF COVENANTS
PASSING THE BENEFIT
⇒ Unlike the burden (which can only pass in equity, and then only in respect to restrictive
covenants), the benefit of a covenant can pass at law and equity and in respect to both positive and
negative covenants.
⇒ Also, as only burden of restrictive covenants may pass in equity, it is most common for the
claimant (i.e. the subsequent owner of the covenantee's land) to plead that the benefit has also
passed in equity (as explained in Gafford v Graham (1998)) - this is important, as there needs to be a
symmetry of the running of the benefit and burden to sue (see here).
⇒ In practice, therefore, the passing of the benefit at law and in respect to positive covenants is only
relevant when suing the original covenantor.
To reiterate, passing the benefit of positive and negative covenants at law whill be relevant only
when the claimant - the successor to the original covenantee - is claiming the benefit of such
covenants in order to sue the original covenantor.
If any other person is the defendant, the claimant may sue in equity, and only on a restrictive
covenant, as it is only the burdens of these that are capable of passing.
⇒ Passing the benefit of positive and negative covenants at law:
The benefit of the covenant must "touch and concern" the land of the original covenantee.
The claimant must have a legal estate in land.
The benefit of the covenant must have been annexed to a legal estate in land, either expressly or by
implication.
⇒ Passing the benefit of covenants in equity:
The covenant must "touch and concern" the land.
The claimant must have a legal or equitable estate in the land of the original covenantee.
The benefit of the covenant must have been transmitted to the claimant in one of three ways:
i) Express or statutory annexation;
ii) Assignment (express or implied);
iii) A scheme of development.
Passing the benefit of positive and negative covenants at law
1) THE BENEFIT OF THE COVENANT MUST "TOUCH AND CONCERN" THE LAND OF THE ORIGINAL
COVENANTEE
⇒ Only a covenant relating to the use or value of the land should be capable of passing with a
transfer of it → so we are concerned with matters affecting the land itself (i.e. in rem), not the
personal preferences or desires of the parties to the covenant.
⇒ Whether a particular covenant touches and concerns land will depend on facts of each case.
, ⇒ A useful three part test as to when a covenant touches and concerns land was laid down by Lord
Oliver in Swift Investments v Combined English Stores (1989):
Could the covenant impose a benefit on any owner of an estate in the land, as opposed to the
particular original owner?
Does the covenant affect the nature, quality manner of use or value of the land?
Is the covenant expressed to be personal so that, regardless of its substance, it is meant to operate
only on the original covenantee?
2) THE CLAIMANT MUST HAVE A LEGAL ESTATE IN LAND
⇒ In other words, the successor in title of the original covenantee must have a legal estate in land,
although not necessarily same legal estate (Law of Property Act 1925, section 78)
For example, if the original covenantee has the freehold in the land, but you then take the leasehold
of that land, you will not have the same legal estate (you will have the leasehold instead of the
freehold), but you will have a legal estate in the land.
In other words, the original covenantee may have been the freeholder, but the claimant will succeed
even if they have 'only' a legal lease.
Section 78 of the Law of Property Act 1925 deems any "owners or occupiers" (including an adverse
possession) to be successors in title for the purposes of enforcing a restrictive covenant (but not a
positive covenant).
3) THE BENEFIT OF THE COVENANT MUST HAVE BEEN ANNEXED TO A LEGAL ESTATE IN LAND,
EITHER EXPRESSLY OR BY IMPLICATION
⇒ Express Annexation:
Where 'words of annexation' are used, the benefit of the covenant is annexed with the land so that
forever afterwards it passes automatically with the land to the new owner.
In other words, a covenant may be annexed expressly by words which make it clear that the
covenant is for the benefit of certain land or words which make it clear that the covenant is intended
to endure for successive owners of the land. In either case, however, the land must be readily
identifiable, and capable of benefiting from the covenant (Re Gadds Transfer [1965]), and this must
be possible at the time the covenant is executed.
⇒ Implied Annexation:
Where words of express annexation are not used, some cases suggest that it may still be possible for
the court to identify the benefitted land by looking at the circumstances → where the facts are held
to indicate with reasonable certainty the land which is to be benefitted, the benefit thereafter will
run with the land.
⇒ Statutory Annexation:
The rather complicated rules about express annexation, and the uncertainty about implied
annexation, may be of less importance since Court of Appeal decision in Federated Homes v Mill
Lodge Properties [1980], which introduced the idea that in certain cases statutory annexation may
be effective:
PASSING THE BENEFIT
⇒ Unlike the burden (which can only pass in equity, and then only in respect to restrictive
covenants), the benefit of a covenant can pass at law and equity and in respect to both positive and
negative covenants.
⇒ Also, as only burden of restrictive covenants may pass in equity, it is most common for the
claimant (i.e. the subsequent owner of the covenantee's land) to plead that the benefit has also
passed in equity (as explained in Gafford v Graham (1998)) - this is important, as there needs to be a
symmetry of the running of the benefit and burden to sue (see here).
⇒ In practice, therefore, the passing of the benefit at law and in respect to positive covenants is only
relevant when suing the original covenantor.
To reiterate, passing the benefit of positive and negative covenants at law whill be relevant only
when the claimant - the successor to the original covenantee - is claiming the benefit of such
covenants in order to sue the original covenantor.
If any other person is the defendant, the claimant may sue in equity, and only on a restrictive
covenant, as it is only the burdens of these that are capable of passing.
⇒ Passing the benefit of positive and negative covenants at law:
The benefit of the covenant must "touch and concern" the land of the original covenantee.
The claimant must have a legal estate in land.
The benefit of the covenant must have been annexed to a legal estate in land, either expressly or by
implication.
⇒ Passing the benefit of covenants in equity:
The covenant must "touch and concern" the land.
The claimant must have a legal or equitable estate in the land of the original covenantee.
The benefit of the covenant must have been transmitted to the claimant in one of three ways:
i) Express or statutory annexation;
ii) Assignment (express or implied);
iii) A scheme of development.
Passing the benefit of positive and negative covenants at law
1) THE BENEFIT OF THE COVENANT MUST "TOUCH AND CONCERN" THE LAND OF THE ORIGINAL
COVENANTEE
⇒ Only a covenant relating to the use or value of the land should be capable of passing with a
transfer of it → so we are concerned with matters affecting the land itself (i.e. in rem), not the
personal preferences or desires of the parties to the covenant.
⇒ Whether a particular covenant touches and concerns land will depend on facts of each case.
, ⇒ A useful three part test as to when a covenant touches and concerns land was laid down by Lord
Oliver in Swift Investments v Combined English Stores (1989):
Could the covenant impose a benefit on any owner of an estate in the land, as opposed to the
particular original owner?
Does the covenant affect the nature, quality manner of use or value of the land?
Is the covenant expressed to be personal so that, regardless of its substance, it is meant to operate
only on the original covenantee?
2) THE CLAIMANT MUST HAVE A LEGAL ESTATE IN LAND
⇒ In other words, the successor in title of the original covenantee must have a legal estate in land,
although not necessarily same legal estate (Law of Property Act 1925, section 78)
For example, if the original covenantee has the freehold in the land, but you then take the leasehold
of that land, you will not have the same legal estate (you will have the leasehold instead of the
freehold), but you will have a legal estate in the land.
In other words, the original covenantee may have been the freeholder, but the claimant will succeed
even if they have 'only' a legal lease.
Section 78 of the Law of Property Act 1925 deems any "owners or occupiers" (including an adverse
possession) to be successors in title for the purposes of enforcing a restrictive covenant (but not a
positive covenant).
3) THE BENEFIT OF THE COVENANT MUST HAVE BEEN ANNEXED TO A LEGAL ESTATE IN LAND,
EITHER EXPRESSLY OR BY IMPLICATION
⇒ Express Annexation:
Where 'words of annexation' are used, the benefit of the covenant is annexed with the land so that
forever afterwards it passes automatically with the land to the new owner.
In other words, a covenant may be annexed expressly by words which make it clear that the
covenant is for the benefit of certain land or words which make it clear that the covenant is intended
to endure for successive owners of the land. In either case, however, the land must be readily
identifiable, and capable of benefiting from the covenant (Re Gadds Transfer [1965]), and this must
be possible at the time the covenant is executed.
⇒ Implied Annexation:
Where words of express annexation are not used, some cases suggest that it may still be possible for
the court to identify the benefitted land by looking at the circumstances → where the facts are held
to indicate with reasonable certainty the land which is to be benefitted, the benefit thereafter will
run with the land.
⇒ Statutory Annexation:
The rather complicated rules about express annexation, and the uncertainty about implied
annexation, may be of less importance since Court of Appeal decision in Federated Homes v Mill
Lodge Properties [1980], which introduced the idea that in certain cases statutory annexation may
be effective:
