England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		15th February 2006

Mr Justice Etherton :

Introduction

1. . These are proceedings under the Law of Property Act 1925 s. 84(2) for a declaration that certain covenants ("the Covenants") restrictive of the use of land conveyed by Veronica Helen Fisher and Mary Fisher (together "the Fishers") by a conveyance dated 26 February 1963 ("the Conveyance") are not enforceable by anyone other than the Fishers.
2. . The practical purpose of the proceedings is to establish that the Defendants, who are successors in title to land retained by the Fishers following the Conveyance, are not entitled to enforce the Covenants.

The facts

3. . The relevant facts may be briefly summarised as follows.
4. . By the Conveyance the Fishers conveyed to Stanley Douglas Rodwell and Daisy Violet Rodwell ("the Rodwells") part of the Fishers' land at 68 Barnet Gate Lane, Arkley, Barnet, Hertfordshire ("No. 68"). In the Conveyance the Fishers were described as "the Vendors" and the Rodwells were described as "the Purchasers". The Fishers' address given in the Conveyance was No. 68.
5. . The land conveyed was described in the Conveyance as "ALL THAT piece or parcel of land situate in the Parish of Arkley in the County of Hertford having a frontage to Barnet Gate Lane of sixty feet or thereabouts a depth there from of One hundred and fifty six feet or thereabouts and a width at the rear of sixty five feet or thereabouts shown for the purpose of identification only on the plan annexed hereto and thereon coloured pink."
6. . There was annexed to the Conveyance a plan on which was shown Barnet Gate Lane, and plots of land abutting it, including No. 68, which was there described as "Oakfield". The conveyed land was shown on the plan as part of Oakfield and was coloured pink. Dimensions of the plots, including the conveyed land, were shown on the plan.
7. . Clause 2 of the Conveyance was as follows:

"2) The Purchasers for themselves and their successors in title hereby jointly and severally covenant with the Vendors at all times hereafter to observe the restrictions and stipulations set out in the first schedule hereto."

8. . Clause 3 of the Conveyance was as follows:

3) It is hereby declared that anything herein contained shall not be deemed to grant to the Purchasers any right of light or air over the adjoining land belonging to the Vendors.

9. . The First Schedule of the Conveyance was as follows:

a) Within six months of the date hereof to erect to the satisfaction of the Vendors or their surveyor on the western boundary of the land hereby conveyed a fence consisting of a 6" concrete gravel board and on the top thereof a close boarded fence not less than six feet in height with concrete posts and at all times thereafter to repair and maintain the same.

b) Not to erect upon the said land anything other than one detached bungalow with garage in accordance with plans previously submitted to the Vendors or their Surveyor for approval.

c) Not to use any such bungalow erected as aforesaid other than as a private dwellinghouse and not to do or commit any act or thing which may cause a nuisance or annoyance to the Vendors or other the owner or owners of any neighbouring or adjacent property.

d) Not to place upon the land or any part thereof any shed caravan or like structure or vehicle except any shed or building for use during building operations."

10. . The Second Schedule to the Conveyance set out the documents forming the Fishers' title to No. 68, including a conveyance of 26 October 1945 ("the 1945 Conveyance") by which No. 68 was conveyed to them.
11. . The land conveyed by the Conveyance is now known as 66 Barnet Gate Lane ("No. 66"), and is owned by the Claimant, Bijan Mohammadzadeh, and is registered at HM Land Registry under title No. AGL 102589. The Covenants are set out in the Charges Register relating to No. 66
12. . After the Conveyance, the Fishers sold part of the land they had retained at No. 68 following the Conveyance ("the Retained Land) to Leonard Frank Banks and Ada Margery Banks ("the Banks"). That part of the Retained Land, which is now known as 70 Barnet Gate Lane, is presently owned by the Third Defendant Melanie Ross, and is registered at HM Land Registry under title No. NGL232472.
13. . No. 68, that is to say what remained of Oakfield after the disposals to the Rodwells and the Banks, is now owned by the First and Second Defendants, Howard Joseph and Sandra Florence Maxine Joseph, and is registered at HM Land Registry under title No. NGL 702702.

The dispute

14. . The dispute between the parties can be stated very shortly. The Defendants claim that the benefit of the Covenants was annexed to the Retained Land, and the Covenants are now enforceable by them as successors in title to the Fishers. The Claimant claims that the Covenants were not annexed to the Retained Land, but were personal to the Fishers and can, as purely contractual provisions, only be enforced by them, and not by the Defendants.

The rival arguments

15. . It is common ground that covenants are to be read subject to, and as elaborated by, the Law of Property Act 1925 s.78(1) ("s.78(1)"), which is as follows:

"(1) A covenant relating to any land of the covenantee shall be deemed to be made with the convenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed.

For the purposes of this subsection in connection with convenants restrictive or the user of land "successors in title" shall be deemed to include the owners and occupiers for the time being of the land of the convenantee intended to be benefited.

16. . Mr. Mark Sefton, counsel for the Claimant, submitted that s.78(1) only effects annexation where the land intended to be benefited is described in the instrument itself, by express words or necessary implication; it is not sufficient that the covenants relate to (or, to use the traditional expression, "touch and concern") retained land of the covenantee. In the present case, the Conveyance did not, he submitted, describe land intended to be benefited by the Covenants. Expressed differently, the Claimant's case is that there is no express statement or necessary implication in the Conveyance that the Fishers intended the Covenants to be enforceable by anyone other than themselves, that is to say by their successors in title to all or any part of the Retained Land.
17. . In support of the Claimants's case Mr Setfon relied upon Marquess of Zetland v Driver [1939] 1 Ch. 1, Newton Abbot Co-operative Society Ltd v Williamson & Treadgold Ltd [1952] 1 Ch. 286, and Crest Nicholson Residential (South Ltd) v McAllister [2004] EWCA Civ 410, [2004] 1 WLR 2409.
18. . In Marquess of Zetland Farwell J, giving the judgment of the Court of Appeal, said the following (at p.8) in relation to restrictive covenants imposed by the vendor intended to protect or benefit land retained by the vendor:

"Such covenants can only be validly imposed if they comply with certain conditions. Firstly, they must be negative covenants. No affirmative covenant requiring the expenditure of money or the doing of some act can ever be made to run with the land. Secondly, the covenant must be one that touches or concerns the land, by which is meant that it must be imposed for the benefit or to enhance the value of the land retained by the vendor or some part of it, and no such covenant can never be imposed if the sale comprises the whole of the vendor's land. Further, the land retained by the vendor must be such as to be capable of being benefited by the covenant at the time when it is imposed. Thirdly, the land which is intended to be benefited must be so defined as to be easily ascertainable, and the fact that the covenant is imposed for the benefit of that particular land should be stated in the conveyance and the persons or the class of persons entitled to enforce it."

19. . In that case, the restrictive covenant in question was expressly stated in the conveyance to be for the benefit of the part of the land comprised in a specified settlement which remained unsold. That land was easily ascertainable. Accordingly, the Court of Appeal held that it was enforceable by a successor in title of the original covenantee against a successor in title of the original covenantor.
20. . The facts in Newton Abbott Co-operative Society were that in 1923 a vendor, who carried on the business of an ironmonger on premises known as Devonia, of which she was the owner, conveyed property opposite those premises to a purchaser. The conveyance contained a covenant by the purchaser not to carry on the business of an ironmonger on the property conveyed. The successor in title of the original covenantee sought to enforce the covenant against a successor in title of the original covenantor. Upjohn J held that the 1923 conveyance did not annex the benefit of the covenant to Devonia. He said, at p.289:

"In this difficult branch of the law one thing in my judgment is clear, namely, that in order to annex the benefit of a restrictive covenant to land, so that it runs with the land without express assignment on a subsequent assignment of the land, the land for the benefit of which it is taken must be clearly identified in the conveyance creating the covenant."

21. . Upjohn J then referred to Renals v Cowlishaw 11 Ch D 866, 868 and to Re Union of London and Smith's Bank Ltd's Conveyance [1933] Ch. 611. He quoted the following passage from the judgment of Romer LJ in that case at p. 627:

"… apart from what are usually referred to as building scheme cases (and this is not a case of that sort), a purchaser from the original covenantee of land retained by him when he executed the conveyance containing the covenant will be entitled to the benefit of the covenant if the conveyance shows that the covenant was intended to enure for the benefit of that particular land"

22. . Upjohn J then said, at p. 290:

"Now, looking at the conveyance of 1923, I can find nothing whatever which identifies the land for the benefit of which the covenant is alleged to be taken. Mr Binney relies on the fact that Mrs Mardon is described as of Devonia, Fore Street, but that in my judgment is quite insufficient to annex the benefit of the covenant to those premises. There is no other mention whatever of Devonia in the conveyance. In my judgment, therefore, the plaintiff fails on this point"

23. . In Crest Nicholson Residential the claimant, a property development company, which was a successor to the original covenantors, claimed declarations that restrictive covenants in several conveyances did not restrict the covenantors and their successors from using the premises conveyed by each conveyance for the erection of more than one private dwelling house. The defendant, Mrs McAllister, was a successor in title of the original covenantees in the case of each of the conveyances. In some of the conveyances there was no express annexation of the benefit of the covenants to land retained by the original covenantees.
24. . In paragraphs [23] and [24] of the judgment of Chadwick LJ, with whom the other members of the Court of Appeal agreed, the following distinction was made between restrictive covenants before 1926 and those imposed in instruments made after 1925:

"23. The benefit of a covenant may pass in equity (as in law) through a chain of assignments. That is not this case. Or the benefit of a covenant may pass where land has been sold off under a building scheme (which is not now alleged). Absent a chain of assignments or a building scheme, the benefit of a covenant may, nevertheless, pass to the owner for the time being of land to which it has been annexed. In covenants made before 1926 it was necessary to show, by construing the instrument in light of surrounding circumstances, that annexation to the covenantee's retained land (or some part of it) was intended. Express words of annexation were not required.

"If, on the construction of the instrument creating the restrictive covenant, both the land which is intended to be benefited and an intention to benefit that land, as distinct from benefiting the covenantee personally, can be clearly established, then the benefit of the covenant will be annexed to that land and run with it, notwithstanding the absence of express words of annexation": see Megarry & Wade, The Law of Real Property 6^th ed (2000), para 16-062, citing Judge Rubin in Shropshire County Council v Edwards (1982) 46 P&CR 270, 277.

24. In relation to covenants imposed in instruments made after 1925 (as were the covenants with which we are concerned in this appeal) the position is governed by the provisions of section 78 of the Law of Property Act 1925 (benefit of covenants relating to land)…"

25. . Chadwick LJ then went on to consider the effect of s.78(1) as determined by the Court of Appeal in Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594. At paragraph [25] of his judgment, Chadwick LJ quoted the following passage from the judgment of Brightman LJ (with which the other members of the Court of Appeal agreed) at p.604 of Federated Homes:

"[Counsel for Mill Lodge] submitted that there were three possible views about section 78. One view, which he described as "the orthodox view" hitherto held, is that it is merely a statutory shorthand for reducing the length of legal documents. A second view, which was the one that [counsel] was inclined to place in the forefront of his argument, is that the section only applies, or at any rate only achieves annexation, when the land intended to be benefited is signified in the document by express words or necessary implication as the intended beneficiary of the covenant. A third view is that the section applies if the covenant in fact touches and concerns the land of the covenantee, whether that be gleaned from the document itself or from evidence outside the document. For myself, I reject the narrowest interpretation of section 78, the supposed orthodox view, which seems to me to fly in the face of the wording of the section. Before I express my reasons I will say that I do not find it necessary to choose between the second and third views because, in my opinion, this covenant relates to land of the covenantee on either interpretation of section 78. Clause 5(iv) shows clearly that the covenant is for the protection of the retained land and that land is described in clause 2 as "any adjoining or adjacent property retained by the vendor". This formula is sufficient for annexation purposes: see Rogers v Hosegood [1900] 2 Ch 388. There is in my judgment no doubt that this covenant "related to the land of the covenantee", or, to use the old-fashioned expression, that it touched and concerned the land, even if [counsel] is correct in his submission that the document must show an intention to benefit identified land. The result of such application is that one must read clause 5(iv) as if it were written: "The purchaser hereby covenants with the vendor and its successors in title and the persons deriving title under it or them, including the owners and occupiers for the time being of the retained land, that 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, etc." I leave out of consideration section 79 as unnecessary to be considered in this context, since Mill Lodge is the original covenantor."

26. . Chadwick LJ continued as follows at paragraph [29] of his judgment:

"29. It is clear that the court approached the question of annexation in the Federated Homes case … on the basis that the density covenant was taken for the benefit of retained land which could be identified in the 1971 conveyance. Brightman LJ expressed his conclusion in these terms, at p.605:

"If, as the language of section 78 implies, a covenant relating to land which is restrictive of the user thereof is enforceable at the suit of (1) a successor in title of the covenantee, (2) a person deriving title under the covenantee or under his successors in title, and (3) the owner or occupier of the land intended to be benefited by the covenant, it must, in my view, follow that the covenant runs with the land, because ex hypothesi every successor in title to the land, every derivative proprietor of the land and every other owner and occupier has a right by statute to the covenant. In other words, if the condition precedent of section 78 is satisfied – that is to say, there exists a covenant which touches and concerns the land of the covenantee – that covenant runs with the land for the benefit of his successors in title, persons deriving title under him or them and other owners and occupiers."

There is, in effect, statutory annexation of the benefit of the covenant to "the land intended to be benefited by the covenant". The words which I have emphasised which are incorporated by Brightman LJ in the passage which I have just cited, are derived, of course, from section 78(1):

"For the purposes of this subsection… "successors in title" shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited."

27. . In paragraph [30] of his judgment, Chadwick LJ said that the decision of the Court in the Federated Homes left open the question

"whether section 78 of the 1925 Act only effects annexation when the land intended to be benefited is described in the instrument itself (by express words or necessary implication, albeit that it may be necessary to have regard to evidence outside the document fully to identify that land) or whether it is enough that it can be shown, from evidence wholly outside the document, that the covenant does in fact touch and concern land of the covenantee which can be identified."

28. . Having observed, from Brightman LJ's reference at p.604 in Federated Homes (quoted above) to Rogers v Hosegood, that it is sufficient for the conveyance to describe the land intended to be benefited in terms which enable it to be identified from other evidence, Chadwick LJ went on to refer to Marquess of Zetland, and stated that the question left open in the Federated Homes case had already been answered by the Court of Appeal judgment in that case (observing that it had not been cited in Federated Homes).
29. . Chadwick LJ concluded, in paragraph [33] of his judgment, that there is nothing in Federated Homes which suggests that it is no longer necessary that the land which is intended to be benefited should be so defined that it is easily ascertainable. He said:

"In my view, that requirement, identified in Marquess of Zetland v Driver [1939] Ch.1 remains a necessary condition for annexation."

30. . In paragraph [34] of his judgment Chadwick LJ said that there were good reasons for that requirement, namely that a purchaser of land burdened by a restrictive covenant should be able not only to ascertain, by inspection of the entries on the relevant register under the Land Charges Act 1925 and the Land Registration Act 1925, that the land is so burdened, but also to ascertain the land for which the benefit of the covenant was taken, so that he can identify who can enforce the covenant. He said:

"That latter object is achieved if the land which is intended to be benefited is defined in the instrument so as to be easily ascertainable. To require a purchaser of land burdened with a restrictive covenant, but where the land for the benefit of which the covenant was taken is not described in the instrument, to make inquiries as to what (if any) land the original covenantee retained at the time of the conveyance and what (if any) of that retained land the covenant did, or might have, "touched and concerned" would be oppressive. It must be kept in mind that (as in the present case) the time at which the enforceability of the covenant becomes an issue may be long after the date of the instrument by which it was imposed."

31. . On the facts of Crest Nicholson Residential, the Court of Appeal held, in respect of the various conveyances which did not contain express provisions for annexation of the benefit of the restrictive covenant in that case, that the covenant was not enforceable by Mrs McAllister.
32. . Mr. Paul Letman, counsel for the Defendants, submitted that the requirements of annexation are readily met in the present case; and that, as a matter of interpretation of the express and implied terms of the Conveyance in the light of all the admissible evidence, the land of the covenantees intended to be benefited can be easily identified as the Retained Land. In that connection, the Defendants rely, in particular, on the following. First, the address of the Fishers, as vendors, is stated in the Conveyance to be No. 68. Second, the description in the Conveyance of the land conveyed demonstrates that it was a parcel of land carved out of No. 68, being a part of the Fishers' garden. Third, clause 3 of the Conveyance confirms, the Defendants say, that the adjoining land was owned and retained by the Fishers and that was land which the Fishers intended to benefit under the terms of the Conveyance. Fourth, the Second Schedule of the Conveyance, containing the epitome of the Fishers' title, which referred to the 1945 Conveyance, shows the purchase by the Fishers of the whole of Oakfield (that is to say No. 68). Fifth, the plan annexed to the Conveyance shows that the conveyed land was carved out of Oakfield, and so shows, the Defendants say, that it can readily be inferred that the Retained Land was adjoining land intended to be benefited. Sixth, the 1945 Conveyance recorded, and would have confirmed in 1963, by the absence of any endorsed Memorandum of any earlier conveyances or dispositions, the land in the ownership of Fishers comprising the Retained Land intended to be benefited, and so such land was easily ascertainable.

Analysis

33. . Notwithstanding the eloquence and attractive presentation of Mr Sefton's submissions, I have no hesitation in rejecting them.
34. . The starting point is that counsel are agreed on all relevant points, but two. They agree that the Covenants relate to or, in more traditional language, "touch and concern", the Retained Land. They further agree that it is possible, from the terms of the Conveyance itself (the various matters relied upon by Mr. Letman) and admissible extrinsic evidence, to identify the Retained Land and that it was adjacent to No. 66, and that the latter was carved out of (what was then) No. 68. The only matter of law on which they are not agreed is whether, in order for Conveyance to have annexed the Covenants to the Retained Land, in addition to those matters on which they do agree, it is necessary that the Conveyance expressly or impliedly shows an intention that the Covenants should benefit the Retained Land, as distinct from the Covenants being enforceable only by the Fishers personally, and not their successors in title. The only matter of fact on which they are not agreed is whether, if that is an additional requirement, such an intention can be found in the Conveyance.
35. . In my judgment, it is not necessary as a matter of law that, in addition to showing that the Covenants relate to and "touch and concern" the Retained Land, and that the Retained Land can be easily be ascertained from the Conveyance and admissible extrinsic evidence, the Defendants must also show an intention that the Retained Land should benefit from the covenants as distinct from being enforceable by the Fishers personally as a matter of contract.
36. . I agree with Mr Letman that this was precisely the point decided, by reference to s.78, in Federated Homes: that is to say, that express annexation of a restrictive covenant, which touches and concerns the vendor's land, in a post - 1925 conveyance, does not depend upon an express statement or a necessary implication in the conveyance (otherwise than by reference to the words implied by section 78(1)) that successors in title to the land, as distinct from the vendor alone, should be able to enforce the restrictive covenant.
37. . The cases relied upon by Mr. Sefton do not assist the Claimant's case.
38. . Mr. Sefton accepted that the effect of Federated Homes was to render inapplicable and inaccurate the following words in the passage at p. 8 of the judgment (quoted above) in Marquess of Zetland concerning the third condition described there:

"and the fact that the covenant is imposed for the benefit of that particular land should be stated in the conveyance and the persons or the class of person s entitled to enforce it."

39. . Further, it is apparent that the following words in the passage describing the third condition on p.8 of Marquess of Zetland - "the land which is intended to be benefited" (cp "the land of the covenantee intended to be benefited" in section 78(1)) – are merely referring back to the land mentioned in the passage concerning the second condition, namely land which the covenant "touches and concerns… by which is meant that it must be imposed for the benefit of or to enhance the value of the land retained by the vendor or some part of it…".
40. . Newton Abbot Co-Operative was a case concerning a pre-1925 conveyance. Further, and in any event, it takes the matter no further than Marquess of Zetland, and must be viewed in the light of the decision of the Court of Appeal in Crest Nicholson Residential and the analysis of Chadwick LJ in that case.
41. . The entire analysis of Chadwick LJ in Crest Nicholson Residential concentrates on the requirement that property which has the benefit of a restrictive covenant (that is to say, to which the covenant is annexed) must be ascertainable from the terms of the conveyance and admissible extrinsic evidence. It does not address at all, let alone confirm, that, in addition to that requirement and the need for the covenant to relate to, that is to say, "touch and concern" the land, the conveyance must also, expressly or by necessary implication, display an intention that such land benefit from the covenant, in the sense of the benefit being enforceable by successors in title of the covenantee and not just by the covenantee personally or express assignees of the benefit of the covenants.
42. . The starting point of the entire analysis of Chadwick LJ is at paragraphs [23] and [24] of his judgment (quoted above) where he contrasts the position after 1925, by virtue of section 78(1), with the position before 1926 when it was necessary clearly to establish "an intention to benefit [the land intended to be benefited], as distinct from benefiting the covenantee personally."
43. . The conclusion of Brightman LJ at p. 605 of Federated Homes, quoted by Chadwick LJ at paragraph [29] of his judgment, was that:

"if the condition precedent of section 78 is satisfied – that is to say, there exists a covenant which touches and concerns the land of the covenantee – that covenant runs with the land for the benefit of his successors in title, persons deriving title under him or them and other owners and occupiers."

44. . Further, it is apparent that the reference in paragraph [33] of the judgment of Chadwick LJ to the "requirement, identified in Marquess of Zetland v Driver….", and which he concluded "remains a necessary condition of annexation", was a reference to the third condition and not the second described on p.8 of Marquess of Zetland.
45. . That Chadwick LJ was concentrating on the requirement that the land alleged to benefit from the restrictive covenant be ascertainable from the conveyance and admissible extrinsic evidence, rather than on an additional requirement for the conveyance to demonstrate "the intention" to benefit the land in the sense I have mentioned, is also apparent from the policy reasons which he gave at paragraph [34] of his judgment.
46. . In short, in the case of a post 1925 conveyance, once it is established that a restrictive covenant relates to, that is to say, "touches and concerns", the vendor's retained land, section 78(1) obviates the need to show separately and additionally by reference to the express terms of, or a necessary implication in, the conveyance an intention that the covenant shall benefit the land so as to be enforceable by successors in title of the covenantee rather than be enforceable only as a matter of contract by the covenantee and those to whom the covenantee expressly assigns the benefit of the covenant.
47. . In the present case, the Covenants plainly relate to, that is to say, "touch and concern", the Retained Land. They were taken to protect and enhance the enjoyment, user and value of the Retained Land. That is obvious from the nature and terms of the Covenants themselves, and the fact that No. 68 was the address of the Fishers and No.66 was carved out of No.68 leaving the Fishers with the Retained Land. The Retained Land is readily ascertainable from the Conveyance and admissible extrinsic evidence. Section 78(1) makes it clear in those circumstances that the benefit of the Covenants is enforceable not only by the Fishers but also by their successors in title, including the Defendants. The policy considerations set out in Federated Homes and Crest are fully satisfied.
48. . In the terms of the question said by Chadwick LJ at paragraph [30] of his judgment to have been left open by Federated Homes, the land intended to be benefited in the present case, namely the Retained Land, is described in the Conveyance itself (by express words or necessary implication, albeit it may be necessary to have regard to evidence outside that document fully to identify that land); and the fact that the Covenants do in fact "touch and concern" the Retained Land does not depend on evidence wholly outside the Conveyance.

Decision

49. . For those reasons, I dismiss the Claim.