Rhone (A.P.) and another (A.P.) (Appellants)
v.
Stephens (Executrix of Mrs M. Barnard, deceased) (Respondent)
JUDGMENT
Die Jovis 17° Martii 1994
Upon Report from the Appellate Committee to whom was
referred the Cause Rhone and another against Stephens (Executrix
of Mrs M. Barnard, deceased) , That the Committee had heard
Counsel as well on Monday the 7th as on Tuesday the 8th days of
February last upon the Petition and Appeal of Ronald John Rhone
and Hazel Grace Rhone of 1 Harbour View, Combwich, Bridgwater,
Somerset, praying that the matter of the Order set forth in the
Schedule thereto, namely an Order of Her Majesty’s Court of
Appeal of the 15th day of January 1993, so far as stated therein
to be appealed against, might be reviewed before Her Majesty the
Queen in Her Court of Parliament and that the said Order so far
as aforesaid might be reversed, varied or altered or that the
Petitioners might have such other relief in the premises as to
Her Majesty the Queen in Her Court of Parliament might seem meet;
as upon the case of Jean Stephens (Executrix of Mrs M. Barnard,
deceased) lodged in answer to the said Appeal; and due
consideration had this day of what was offered on either side in
this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and
Temporal in the Court of Parliament of Her Majesty the Queen
assembled, That the said Order of Her Majesty’s Court of Appeal
of the 15th day of January 1993 complained of in the said Appeal
be, and the same is hereby, Affirmed and that the said Petition
and Appeal be, and the same is hereby, dismissed this House: And
it is further Ordered. That the Costs incurred by the Respondent
in this House and in the Court of Appeal be paid out of the Legal
Aid Fund in accordance with section 18 of the Legal Aid Act 1988,
such order to be suspended for four weeks to allow the Legal Aid
Board to object if they wish: And it is also further Ordered.
That the Costs incurred by the Appellants in respect of the said
Appeal be taxed in accordance with the Legal Aid Act 1988.
Cler: Parliamentor:
Judgment: 17 March 1994
HOUSE OF LORDS
RHONE (A.P.) AND ANOTHER (A.P.)
(APPELLANTS)
v.
STEPHENS (EXECUTRIX OF MRS. M. BARNARD, DECEASED)
(RESPONDENT)
Lord Templeman
Lord Oliver of Aylmerton
Lord Woolf
Lord Lloyd
Lord Nolan
LORD TEMPLEMAN
My Lords,
This appeal raises the question of the enforceability of positive
covenants between owners of freehold estates and involves consideration of the
rule in Austerberry v. Oldham Corporation (1885) 29 Ch. D. 750 (“the
Austerberry Case”).
The roof which covers Walford House also covers part of Walford
Cottage. Both properties were in common ownership until by a conveyance
dated 27 August 1960 Walford Cottage was sold. The conveyance contained
the following provisions:
“2 It is hereby agreed and declared between the Vendor and the
Purchasers that all easements quasi-easements or rights in the nature
of easements as now existing between the property hereby conveyed
and the adjoining property of the Vendor known as Walford House
aforesaid shall continue for the benefit of the respective properties.
“3 The Vendor herby covenants for himself and his successors in title
owner or occupiers for the time being of the property known as
Walford House aforesaid to maintain to the reasonable satisfaction of
the Purchasers and their successors in title such part of the roof of
Walford House aforesaid as lies above the property conveyed in wind
and water tight condition.”
Clause 2 of the 1960 Conveyance had the effect, inter alia, of
conferring and confirming on Walford House the right to be supported by the
contiguous Walford Cottage. The 1960 Conveyance also had the effect of
– 1 –
conferring and confirming on Walford Cottage the right to be supported by
Walford House. Clause 3 of the 1960 Conveyance did not confer any rights
on Walford Cottage but by its express terms it appears to confer on the
owners for the time being of Walford Cottage the right to sue the owner for
the time being of Walford House for damages if the roof is not kept wind and
watertight.
Since 1960 both properties have been sold. The appellant plaintiffs are
now the owners of Walford Cottage. The respondent defendant is the
executrix of the last owner of Walford House. The trial judge ordered the
owner of Walford House to pay damages to the owners of Walford Cottage
for breach of the covenant contained in Clause 3 of the 1960 conveyance to
keep the roof of Walford House which lies above Walford Cottage in wind
and water tight condition. The Court of Appeal reversed the judge and
dismissed the action.
Mr. Spens who appeared for the owner of Walford House says that the
covenant has never been breached because the part of the roof which is out of
repair belongs to Walford Cottage. Examination of the plans attached to the
conveyance however show that the covenant to repair must refer to the roof
which protects both properties. So upon the true construction of the 1960
conveyance the owner of Walford House was in breach of the covenant to
ti
repair.
At common law a person cannot be made liable upon a contract unless
he was a party to it. In Cox v. Bishop (1857) 8 De. G. & J. 276 (44 E.R.
604) a lease was assigned to a man of straw and it was held that the covenants
in the lease could not be enforced against an equitable assignee of the lease
who had entered into possession. The covenants were not enforceable because
there was no privity of contract or estate between the lessee and the assignee.
The rigours of the common law which do not allow covenants to be enforced
by and against successors in title were relaxed first by the doctrines laid down
in Spencer’s case (1583) 5 Co. Rep. 16a and then by statutory extensions of
those doctrines introduced by the Grantees of Reversions Act 1540 (32 Hen.
8 c34), the Conveyancing Act 1881 and the Conveyancing Act 1911 now
repealed and reproduced in sections 141 and 142 of the Law of Property Act
1925. In the result, as between landlord and tenant both the burden and the
benefit of a covenant which touches or concerns the land demised and is not
merely collateral run with the reversion and the term at law whether the
covenant be positive or restrictive. As between persons interested in land
other than as landlord and tenant, the benefit of a covenant may run with the
land at law but not the burden; see the Austerberry case.
Thus Clause 3 of the 1960 Conveyance, despite its express terms, did
not confer on the owner for the time being of Walford Cottage the right at
common law to compel the owner for the time being of Walford House to
repair the roof or to obtain damages for breach of the covenant to repair. In
this appeal, Mr. Munby, on behalf of the owners of Walford Cottage contends
– 2 –
that equity will compel the owner of Walford House to comply with the
covenant to repair the roof or to pay damages in lieu.
My Lords, equity supplements but does not contradict the common
law. When freehold land is conveyed without restriction, the conveyance
confers on the purchaser the right to do with the land as he pleases provided
that he does not interfere with the rights of others or infringe statutory
restrictions. The Conveyance may however impose restrictions which, in
favour of the covenantee, deprive the purchaser of some of the rights inherent
in the ownership of unrestricted land. In Tulk v. Moxhay (1848) 2 Ph. 774,
a purchaser of land covenanted that no buildings would be erected on
Leicester Square. A subsequent purchaser of Leicester Square was restrained
from building. The conveyance to the original purchaser deprived him and
every subsequent purchaser taking with notice of the covenant of the right,
otherwise part and parcel of the freehold, to develop the Square by the
construction of buildings. Equity does not contradict the common law by
enforcing a restrictive covenant against a successor in title of the covenantor
but prevents the successor from exercising a right which he never acquired.
Equity did not allow the owner of Leicester Square to build because the owner
never acquired the right to build without the consent of the persons (if any)
from time to time entitled to the benefit of the covenant against building. In
Tulk v. Moxhay the speech of Lord (Cottenham L.C. contained the following
passage at p. 777:
“It is said, that the covenant being one which does not run with the
land, this Court cannot enforce it; but the question is, not whether the
covenant runs with the land, but whether a party shall be permitted to
use the land in a manner inconsistent with the contract entered into by
his vendor, and with notice of which he purchased.”
Equity can thus prevent or punish the breach of a negative covenant
which restricts the user of land or the exercise of other rights in connection
with land. Restrictive covenants deprive an owner of a right which he could
otherwise exercise. Equity cannot compel an owner to comply with a positive
covenant entered into by his predecessors in title without flatly contradicting
the common law rule that a person cannot be made liable upon a contract
unless he was a party to it. Enforcement of a positive covenant lies in
contract; a positive covenant compels an owner to exercise his rights.
Enforcement of a negative covenant lies in property; a negative covenant
deprives the owner of a right over property. As Lord Cottenham said in Tulk
v. Moxhay at p. 778:
“if an equity is attached to the property by the owner, no one
purchasing with notice of that equity can stand in a different situation
from the party from whom he purchased.”
Following Tulk v. Moxhay there was some suggestion that any
covenant affecting land was enforceable in equity provided that the owner of
– 3 –
the land had notice of the covenant prior to his purchase. In Morland v. Cook
(1868) L.R. 6 Eq. 252 lands below sea level were partitioned by a deed
containing a covenant that the expense of maintaining the sea wall should be
borne by the owners of the lands and payable out of the lands by an acre-scot.
Lord Romilly M.R. enforced the covenant against a subsequent purchaser of
part of the lands on the grounds that he had purchased with notice of the
covenant. In Cooke v. Chilcott (1876) 3 Ch. D. 694 a covenant by the
purchaser of land with a well to erect a pump and reservoir and to supply
water from the well to all houses built on the vendor’s land was enforced
against a subsequent purchaser of the land burdened with the covenant on the
grounds that the covenant ran with the land but that in any event the defendant
took with notice of the obligation. Malins V.-C. said, at p. 701:
“I think that when a contract is entered into for the benefit of
contiguous landowners, and one is bound by it and the other entitled
to the benefit of it, the covenant binds him for ever, and also runs with
the land. But it is equally clear that he is bound by taking the land
with notice of the covenant.”
These last two cases did not survive the decision of the Court of
Appeal in Haywood v. The Brunswick Permanent Benefit Building Society
(1881) 8 Q.B.D. 403. In that case land had been conveyed in consideration
of a rent charge and a covenant to build and repair buildings; a mortgagee of
the land was held not to be liable on the covenant either at law or in equity
although the mortgagee had notice of the covenant. Brett L.J. said, at p. 408
that Tulk v. Moxhay:
“decided that an assignee taking land subject to a certain class of
covenants is bound by such covenants if he has notice of them, and
that the class of covenants comprehended within the rule is that
covenants restricting the mode of using the land only will be enforced.
It may be also, but it is not necessary to decide here, that all covenants
also which impose such a burden on the land as can be enforced
against the land would be enforced … It is said that if we decide for
the defendants we shall have to overrule Cooke v. Chilcott, 3 Ch. D.
694. If that case was decided on the equitable doctrine of notice, I
think we ought to overrule it.”
Cotton L.J. said, at p. 409:
“Let us consider the examples in which a court of equity has enforced
covenants affecting land. We find that they have been invariably
enforced if they have been restrictive, and that with the exception of
the covenants in Cooke v. Chilcott 3 Ch. D. 694, only restrictive
covenants have been enforced.”
– 4 –
Cotton LJ. also said, that Tulk v. Moxhay:
“lays down the real principle that an equity attaches to the owner of
the land . . . The covenant to repair can only be enforced by making
the owner put his hand into his pocket, and there is nothing which
would justify us in going that length.”
In London and South Western Railway Co. v. Gomm (1882) 20 Ch.D.
562 an option to purchase land on the happening of an uncertain event was
held to be void for remoteness. It was argued that the covenant was
enforceable in equity. Jessel M.R. said, at pp. 582-583:
“With regard to the argument founded on Tulk v. Moxhay, 2 Ph. 774
that case was very much considered by the Court of Appeal in
Haywood v. The Brunswick Permanent Benefit Building Society, 8
Q.B.D. 403, and the court there decided that they would not extend
the doctrine of Tulk v. Moxhay to affirmative covenants, compelling
a man to lay out money or do any other act of what I may call an
active character, but that it was to be confined to restrictive covenants.
Of course that authority would be binding upon us if we did not agree
to it, but I most cordially accede to it. I think that we ought not to
extend the doctrine of Tulk v. Moxhay in the way suggested here. The
doctrine of that case . . . appears to me to be either an extension in
equity of the doctrine of Spencer’s case to another line of cases, or
else an extension in equity of the doctrine of negative easements . . .
The covenant in Tulk v. Moxhay was affirmative in its terms, but was
held by the court to imply a negative. Where there is a negative
covenant expressed or implied, … the court interferes on one or
other of the above grounds. This is an equitable doctrine, establishing
an exception to the rules of common law which did not treat such a
covenant as running with the land, and it does not matter whether it
proceeds on analogy to a covenant running with the land or on analogy
to an easement. The purchaser took the estate subject to the equitable
burden, with the qualification that if he acquired the legal estate for
value without notice he was freed from the burden.”
Lindley L.J. said, at pp. 587-588, that because in Haywood v.
Brunswick Permanent Benefit Building Society (1881) 8 Q.B.D. 403 it was
sought to extend the doctrine of Tulk v. Moxhay:
“to a degree which was thought dangerous, considerable pains were
taken by the court to point out the limits of that doctrine . . . The
conclusion arrived at … was that Tulk v. Moxhay, when properly
understood, did not apply to any but restrictive covenants.”
In the Austerberry case the owners of a site of a road covenanted that
they and their successors in title would make the road and keep it in repair.
– 5 –
The road was sold to the defendants and it was held that the repair covenant
could not be enforced against them. Cotton L.J. said, 29 Ch.D. 750, 773
“Undoubtedly, where there is a restrictive covenant, the burden and
benefit of which do not run at law, courts of equity restrain anyone
who takes the property with notice of that covenant from using it in a
way inconsistent with the covenant. But here the covenant which is
attempted to be insisted upon on this appeal is a covenant to lay out
money in doing certain work upon this land; and, that being so …
that is not a covenant which a court of equity will enforce: it will not
enforce a covenant not running at law when it is sought to enforce that
covenant in such a way as to require the successors in title of the
covenantor, to spend money, and in that way to undertake a burden
upon themselves. The covenantor must not use the property for a
purpose inconsistent with the use for which it was originally granted;
but in my opinion a court of equity does not and ought not to enforce
a covenant binding only in equity in such a way as to require the
successors of the covenantor himself, they having entered into no
covenant, to expend sums of money in accordance with what the
original covenantor bound himself to do.”
In re Nisbet and Potts’ Contract [1905] 1 Ch. 391 it was held that a
title acquired by adverse possession was not paramount to, and did not destroy
the equitable right of persons entitled to the benefit of prior restrictive
covenants to enforce them against the land. Farwell J. said, at pp. 396-397:
“Covenants restricting the enjoyment of land, except of course as
between the contracting parties and those privy to the contract, are not
enforceable by anything in the nature of action or suit founded on
contract. Such actions and suits alike depend on privity of contract,
and no possession of the land coupled with notice of the covenants can
avail to create such privity: Cox v. Bishop (1857) 8 De G.M. & G.
815. But if the covenant be negative, so as to restrict the mode of use
and enjoyment of the land, then there is called into existence an equity
attached to the property of such a nature that it is annexed to and runs
with it in equity: Tulk v. Moxhay, 2 Ph. 774. This equity, although
created by covenant or contract, cannot be sued on as such, but stands
on the same footing with and is completely analogous to an equitable
charge on real estate created by some predecessor in title of the
present owner of the land charged. . . . effect is given to the negative
covenant by means of the land itself. But the land cannot spend
money on improving itself, and there is no personal liability on the
owner of the land for the time being, because there is no contract on
which he can be sued in contract.”
For over a hundred years it has been clear and accepted law that equity
will enforce negative covenants against freehold land but has no power to
enforce positive covenants against successors in title of the land. To enforce
– 6 –
a positive covenant would be to enforce a personal obligation against a person
who has not covenanted. To enforce negative covenants is only to treat the
land as subject to a restriction.
Mr. Munby who argued the appeal persuasively on behalf of the
owners of Walford Cottage referred to an article by Professor Sir William
Wade and other articles in which the present state of the law is subjected to
severe criticism. In 1965 a Report by a committee appointed by the Lord
Chancellor and under the chairmanship of Lord Wilberforce (Cmnd. 2719)
referred to difficulties caused by the decision in the Austerberry case and
recommended legislation to provide that positive covenants which relate to the
use of land and are intended to benefit specified other land should run with the
land. The Law Commission published on 5 July 1971 Working Paper No. 36
in which the present law on positive rights was described as being illogical,
uncertain, incomplete and inflexible. The Law Commission Report No. 127
laid before Parliament in 1965 made recommendations for the reform of the
law relating to positive and restrictive obligations and submitted a draft Bill
for that purpose. Nothing has been done.
In these circumstances your Lordships were invited to overrule the
decision of the Court of Appeal in the Austerberry case. To do so would
destroy the distinction between law and equity and to convert the rule of
equity into a rule of notice. It is plain from the articles, reports and papers
to which we were referred that judicial legislation to overrule the Austerberry
case would create a number of difficulties, anomalies and uncertainties and
affect the rights and liabilities of people who have for over 100 years bought
and sold land in the knowledge, imparted at an elementary stage to every
student of the law of real property, that positive covenants affecting freehold
land are not directly enforceable except against the original covenantor.
Parliamentary legislation to deal with the decision in the Austerberry case
would require careful consideration of the consequences. Moreover,
experience with leasehold tenure where positive covenants are enforceable by
virtue of privity of estate has demonstrated that social injustice can be caused
by logic. Parliament was obliged to intervene to prevent tenants losing their
homes and being saddled with the costs of restoring to their original glory
buildings which had languished through wars and economic depression for
exactly 99 years.
Mr. Munby submitted that the decision in the Austerberry case had
been reversed remarkably but unremarked by section 79 of the Law of
Property Act 1925 which so far as material provides as follows:
“(1) A covenant relating to any land of a covenantor or capable of
being bound by him, shall, unless a contrary intention is
expressed, be deemed to be made by the covenantor on behalf
of himself, his successors in title and the persons deriving title
under him or them, and, subject as aforesaid, shall have effect
as if such successors and other persons were expressed.”
– 7 –
This provision has always been regarded as intended to remove
conveyancing difficulties with regard to the form of covenants and to make it
unnecessary to refer to successors in title. A similar provision relating to the
benefit of covenants is to be found in section 78 of the Act of 1925. In Smith
and Snipes Hall Farm Ltd. v. River Douglas Catchment Board [1949] 2 K.B.
500 followed in Williams v. Unit Construction Co. Ltd. (1951) 19 Conv.
(N.S.) 262 it was held by the Court of Appeal that section 78 of the Act of
1925 had the effect of making the benefit of positive covenants run with the
land. Without casting any doubt on those longstanding decisions I do not
consider that it follows that section 79 of the Act of 1925 had the
corresponding effect of making the burden of positive covenants run with the
land. In Jones v. Price [1965] 2 Q.B. 618, 633, Willmer L.J. repeated that:
“a covenant to perform positive acts … is not one the burden of
which runs with the land so as to bind the successors in title of the
covenantor: see Austerberry v. Oldham Corporation.”
In Sefton v. Tophams Ltd. [1967] A.C. 50 Lord Upjohn at p. 73 and
Lord Wilberforce at p. 81 stated that section 79 of the Law of Property Act
1925 does not have the effect of causing covenants to run with the land.
Finally in Federated Homes Ltd. v. Mill Lodge Properties Ltd. [1980] 1
W.L.R. 594, 605-606, Brightman J. referred to the authorities on section 78
of the Act of 1925 and said that:
“Section 79, in my view, involves quite different considerations and
I do not think that it provides a helpful analogy.”
Mr. Munby also sought to persuade your Lordships that the effect of
the decision in the Austerberry case had been blunted by the “pure principle
of benefit and burden” distilled by Sir Robert Megarry V.-C. from the
authorities in Tito v. Waddell (No.2) [1977] 1 Ch. 106, at 301 et seq. I am
not prepared to recognise the “pure principle” that any party deriving any
benefit from a conveyance must accept any burden in the same conveyance.
Sir Robert Megarry relied on the decision of Upjohn J. in Halsall v. Brizell
[1957] Ch. 169. In that case the defendant’s predecessor in title had been
granted the right to use the estate roads and sewers and had covenanted to pay
a due proportion for the maintenance of these facilities. It was held that the
defendant could not exercise the rights without paying his costs of ensuring
that they could be exercised. Conditions can be attached to the exercise of a
power in express terms or by implication. Halsall v. Brizell was just such a
case and I have no difficulty in whole-heartedly agreeing with the decision.
It does not follow that any condition can be rendered enforceable by attaching
it to a right nor does it follow that every burden imposed by a conveyance
may be enforced by depriving the covenantor’s successor in title of every
benefit which he enjoyed thereunder. The condition must be relevant to the
exercise of the right. In Halsall v. Brizell there were reciprocal benefits and
burdens enjoyed by the users of the roads and sewers. In the present case
– 8 –
Clause 2 of the 1960 Conveyance imposes reciprocal benefits and burdens of
support but Clause 3 which imposed an obligation to repair the roof is an
independent provision. In Halsall v. Brizell the defendant could, at least in
theory, choose between enjoying the right and paying his proportion of the
cost or alternatively giving up the right and saving his money. In the present
case the owners of Walford House could not in theory or in practice be
deprived of the benefit of the mutual rights of support if they failed to repair
the roof.
In the result I would dismiss the appeal and make the usual order for
costs against the appellant subject to the usual appropriate legal aid
reservations.
LORD OLIVER OF AYLMERTON
My Lords,
For the reasons given by my noble and learned friend Lord Templeman
I too would dismiss the appeal.
LORD WOOLF
My Lords,
I have benefited from reading in draft the speech of my noble and
learned friend. Lord Templeman. I agree with it and for the reasons he gives
I would dismiss this appeal.
LORD LLOYD
My Lords,
I have read the speech of my noble and learned friend. Lord
Templeman, in draft. I agree that for the reasons he gives this appeal should
be dismissed.
-9-
LORD NOLAN
My Lords,
For the reasons given by my noble and learned friend Lord Templeman
I too would dismiss the appeal.
– 10 –
Source: https://www.bailii.org/
