England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Rolls Building, Fetter Lane, London, EC4A 1NL
		27 September 2017

HHJ Paul Matthews :

Introductory

1. This is my judgment on a claim brought under CPR Part 8 for declarations relating to restrictive covenants created by two conveyances dated 27 May 1910 and 2 July 1910, affecting or purportedly affecting properties registered with title absolute in St Albans, Hertfordshire. The claim is brought under section 84(2) of the Law of Property Act 1925 and/or the inherent jurisdiction of the court. It is supported by the witness statement of Kevin Lee dated 14 December 2016 (which I will refer to as "Lee 1") and one exhibit. It is opposed by the witness statement of James Beat dated 18 January 2017 (which I will refer to as "Beat") and one exhibit, and further supported by the second witness statement of Kevin Lee dated 31 January 2017 (which I will refer to as "Lee 2") with two further exhibits. At the trial of this claim Mr Jonathan Gaunt QC appeared for the claimant, and Mr Patrick Rolfe appeared for the defendants.
2. Section 84(2) of the Law of Property Act 1925 provides as follows:

"The court shall have power on the application of any person interested –

(a) To declare whether or not in any particular case any freehold land is [or would in any given event be] affected by a restriction imposed by any instrument; or

(b) To declare what, upon the true construction of any instrument purporting to impose a restriction, is the nature and extent of the restriction thereby imposed and whether the same is [or would in any given event be] enforceable and if so by whom.

[…] "

Background facts

3. The background facts are not seriously disputed. The claimant is the current registered proprietor of the properties known as 270, 272 and 274 London Rd, St Albans, Herts. Each property contains one detached house and one or more outbuildings. In the late 19^th century these three properties formed part of a larger estate belonging to Mr Henry Jenkin Gotto, who died on 20 January 1892. (It is not in evidence, but I understand him to have been a partner in the high class stationers Parkins and Gotto, of Oxford Street.) That larger estate consisted of (at least) a more or less rectangular piece of land fronting London Road to the north-east side, Mile House Lane to the north-west, and New House Park to the south-west. On the south east side it abutted other land, with which I am not concerned. But there is some evidence that this land too belonged to Mr Gotto. He may also have owned land on the other side of New House Park. But I am not concerned with that either.
4. When the trustees of his will came to sell his land, they sold it in rectangular parcels one after another, each intended for the building of high-class residences. The first parcel to be sold was the most easterly. It was conveyed by a conveyance dated 27^th of May 1910, made between Mr Gotto's will trustees and a Mr Henry Cecil Allen Randall. This land was coloured blue on the attached plan, and I shall refer to it as the blue land. It now consists of the properties known as 274 London Road and the block of flats known as Pine Ridge, which occupies the space formerly taken up by 274a and 276 London Road. It is contiguous with what I shall describe below as the pink land to the north-west and the violet land to the south-west, but not with any other parcel with which I am concerned. I should make clear that the plan to the May 1910 conveyance did not show any land coloured pink or violet, but instead showed it (and other land) as green; these descriptions derive from the July 1910 conveyance, whose plan was coloured in the way indicated.
5. The second parcel to be sold was conveyed by a conveyance dated 2 July 1910 made between the trustees and a Frederick John Preece. The land to be conveyed was coloured pink on the plan, and I shall refer to it as the pink land. It consists of the properties now known as 270 and 272 London Road, although those properties also include at the very rear a small part of what is known as the violet land. The pink land is contiguous with the green land to the north-west, the blue land to the south-east, and the violet land to the south-west. At its westernmost point, it meets the easternmost point of the yellow land, but is not contiguous with it.
6. The third and fourth parcels were sold pursuant to a single conveyance dated 16 November 1910 between the trustees and a Francis Alfred Giffen. These parcels were coloured yellow and green on the plan, and are therefore known as the yellow land and the green land. The green land stands at the northern apex of Mr Gotto's former land, and consists today of numbers 266 and 268 London Road, and numbers 3, 5, 7 and part of 9 Mile House Lane. It is contiguous with the pink land on the south-east side, and the yellow land on the south-west side. Its southernmost point touches the northernmost point of the violet land, but is not contiguous with it.
7. The yellow land consists of the remainder of number 9 and numbers 11 and 13 Mile House Lane, together with the rear garden of number 1 New House Park (which was formerly part of the rear gardens of numbers 11 and 13 Mile House Lane). It is contiguous with the green land on the north-east side and the violet land on the south-east side. Its easternmost point touches the westernmost point of the pink land, as mentioned above. It is a smaller parcel than any of the others, because a rectangle at the south-western side of it was separated out in 1908 and was conveyed by Mr Gotto's will trustees to Mrs Caroline Gotto. I assume that she was his widow. That part is now sub-divided, and is known as number 15 Mile House Lane and number 1 New House Park (house only, as the rear garden to number 1 is clearly part of the yellow land). Mrs Gotto entered into type and user restrictions similar to those to be described in relation to the remaining land, but not density restrictions. Her land plays no further part in this story. The owners of number 1 New House Park are involved to the extent of their rear garden.
8. Lastly, the remaining part of the land was sold, by one or more conveyances, also dated 16 November 1910, by the trustees to the same Mr Giffen. This land was coloured violet on the plan and is therefore known as the violet land. It was divided into two equal parcels, each the size of the other coloured parcels. It is contiguous with the yellow land on the north-west side and the pink and blue land on the north-east side. Its northernmost point touches the southernmost point of the green land, as already mentioned. In modern terms it consists of the addresses from number 1A through to number 15 in New House Park. However, a small part of the northern parcel of violet land, that is at the rear of the gardens of numbers 1A through to 9, was sold in 1911 to Mr Preece, the purchaser of the pink land, to become part of the rear of the properties now at 270 and 272 London Road. All the parcels are shown diagrammatically on the plan below.



9. The titles to all of these properties are now registered, with title absolute. The conveyances of May 1910 (conveying the blue land) and July 1910 (conveying the pink land) contained restrictive covenants by both purchaser and vendor. The purchaser covenants were the same in both conveyances. The vendor covenants were in more or less the same form as the purchaser covenants, but with some differences.

The covenants

10. The May 1910 conveyance is not available to the parties or to the court. However the July 1910 conveyance is available, and it recites the relevant restrictive covenants from the May 1910 conveyance. According to that recital, the purchaser covenant in the May 1910 conveyance was as follows:

"covenant by the said Henry Cecil Allen Randall for himself his heirs and assigns with the Vendors their heirs and assigns owners from time to time of the adjoining land situated on the south east the south-west and north-west sides respectively of the piece of land thereby conveyed (including amongst other lands the hereditaments thereinafter described and intended to be thereby conveyed) and to the intent that such covenant so far as the same was of a negative character should run with the land thereby conveyed and be binding upon the said Henry Cecil Allan Randall his heirs and assigns during the period of their respective ownership or occupation of the land and so far as the said covenant was of a positive character should be binding upon the said Henry Cecil Allan Randall his heirs executors and administrators to observe and perform and comply with then stipulations and restrictions contained in the First Schedule to the indenture now [then] in recital which stipulations and restrictions are mutatis mutandis similar to the stipulations and restrictions contained in the First Schedule to these presents and the indenture now in recital".

(The word in square brackets has been written above the word "now", which has been crossed out.)

11. It is accepted on both sides that the reference in that covenant to "the adjoining land situated on the south east the south-west and north-west sides respectively of the piece of land thereby conveyed" is a reference to what is now known as the pink and the violet land, but not to the green or the yellow land: see Beat, [18(4)]; Lee 2, [2].
12. The First Schedule contains five covenants, of which only the last two are relevant:

"4. No building shall be erected upon any part of the said piece of land except as and for a private dwelling house and the stabling offices and outbuildings thereof and no building erected thereon shall at any time be used except for the purpose last aforesaid and no part of the said land not built on shall be used for any purpose except as a garden or as pleasure grounds appurtenant to a residence erected upon some part of the said land.

5. Not more than two detached dwelling houses shall at any time be erected upon the said piece of land and each house erected thereon shall be of the value of five hundred pounds at the least exclusive of stabling offices and outbuildings such value to be taken to be its net first cost in material and labour only at average current prices."

13. The vendor covenant in the May 1910 conveyance is recited in the July 1910 conveyance as follows:

"covenant by the Vendors for themselves their heirs and assigns owners for the time being of amongst other lands the hereditaments hereinafter described and intended to be hereby conveyed with the said Henry Cecil Allen Randall his heirs and assigns owner or owners for the time being of the piece of land so colored blue as aforesaid that the Vendors their heirs and assigns owners for the time being of (amongst other lands) the hereditaments so intended to be hereby conveyed as aforesaid will henceforth observe perform and comply with the stipulations and restrictions contained in the Second Schedule to the indenture now in recital which stipulations and restrictions were mutatis mutandis similar to the stipulations and restrictions numbered 1 2 3 and 5 in the Second Schedule to these presents".

It is agreed between the parties that the vendor covenant (in this conveyance) was given only in relation to what is now known as the pink and violet land, and not in relation to the green or yellow land: Beat, [18(5)(a)]; Lee 2, [2].

14. The Second Schedule also contains five covenants, of which four are relevant:

"2. No buildings shall be erected upon any of the plots of land colored green yellow and violet on the said plan except as and for private dwelling houses and the stabling offices and outbuildings thereof and no building erected on any such plots shall at any time be used except for the purpose last aforesaid and no part of any such plots not built upon shall be used for any purpose except a garden or as pleasure grounds appurtenant to a residence or residences erected upon some part of such plots.

3. Not more than two detached dwelling houses shall at any time be erected upon any one of the said plots coloured violet on the said plan.

4. Not more than three detached dwelling houses shall at any time be erected upon any one of the said plots of land colored green and yellow on the said plan.

5. Every house to be erected upon the said plots of land shall be of the value of five hundred pounds at the least exclusive of stabling offices and outbuildings such value to be taken to be its net first cost in materials and labour only at average current prices."

15. In the July 1910 conveyance the purchaser covenant is stated as follows:

"the Purchaser for himself his heirs and assigns and to the intent that the covenant hereinafter contained so far as the same is of a negative character shall run with the land hereby conveyed and be binding upon the Purchaser his heirs and assigns during the period of his or their respective ownership or occupation of the land and so far as the said covenant is of a positive character shall be binding upon the Purchaser his heirs executors and administrators with the Vendors at their heirs and assigns owners from time to time of the adjoining land situated on the south east south-west and north-west sides respectively of the piece of land hereby conveyed that the Purchaser his heirs and assigns will henceforth observe and perform and comply the stipulations and restrictions contained in the First Schedule hereto."

16. The vendor covenant in the July 1910 conveyance is as follows:

"the Vendors for themselves their heirs and assigns owners for the time being of the lands colored green yellow and violet in the said plan and to the intent that the covenant hereinafter contained shall bind (so far as the Vendors have power to bind them) all persons in whom the lands colored green yellow and violet on the said plan and affected by such covenant shall for the time being be vested but so that the Vendors or any of them shall not be under any personal liability in respect of the said covenant after they shall have parted with the possession of any of the plots of land affected by such covenant [do hereby covenant] with the purchaser his heirs and assigns owner or owners for the time being of the piece of land hereby conveyed that they the Vendors their heirs and assigns owners for the time being of the lands so colored green yellow and violet as aforesaid will henceforth observe perform and comply with the stipulations and restrictions contained in the Second Schedule hereto".

(The words in square brackets appear in the original, but crossed out.)

The dispute

17. The claimant's land consists of the whole of the pink land, about one third of the blue land where it is closest to the pink land, and a small strip forming part of the violet land at the boundary with the pink land. In the claim form, this land is described collectively as "the Property". The claimant has obtained planning permission, after an appeal, to develop the Property as a class C2 registered residential care home for older people, following the demolition of the three existing class C3 dwellings. The planning appeal decision was in evidence before me, and I was referred to some parts of it. The claimant admits that the permitted development would be in breach of the 1910 restrictive covenants if they continued to affect the Property or continued to be enforceable (see Lee 1, [9]). But the claimant maintains that the 1910 restrictive covenants do not continue to affect the Property and are not enforceable against it as owner of the Property.
18. The defendants are the owners and occupiers of numbers 266 and 268 London Road, numbers 5, 7, 9 and 11 Mile House Lane, and numbers 3, 3A, 5 and 7 New House Park. They maintain that the 1910 restrictive covenants continue to affect the Property and are enforceable against it. The owners of numbers 3 and 13 Mile House Lane, and numbers 1A and 9-15 New House Park are not parties to this litigation. Nor are the owners or occupiers of Pine Ridge. None of the defendants is a party in any representative capacity; each is a party in his or her personal capacity (of course, I do not know if any of them is a trustee for others, beyond the usual trust arising on co-ownership of land).
19. As set out in the claim form,

"5. The claimant applies to the court for the following relief under section 84(2) of the Law of Property Act 1925 and/or the inherent jurisdiction of the court namely:

(1) A declaration as to whether the 1910 Restrictive Covenants continue to affect the Property.

(2) A declaration as to whether the 1910 Restrictive Covenants are enforceable against the claimant as the owner of the Property.

(3) If the 1910 Restrictive Covenants are enforceable against the claimant, a declaration as to by whom they are enforceable.

(4) An order that the defendants pay the claimant's costs of this claim.

(5) Such further or other relief as the court may think fit."

20. These are Part 8 proceedings, not Part 7. They are designed to try the issues of principle, and especially of law, between the parties, rather than the detailed issues, particularly of fact, which may arise between particular defendants and the claimant in any application by the former against the latter for an injunction. This must be borne in mind in considering what follows.

Agreed matters

21. Certain matters are agreed between the parties. They are set out in paragraphs 26 and 27 of the claimant's skeleton argument. In paragraph 26 the following four points are set out:

"(1) Both the schedule 1 and schedule 2 covenants manifest sufficient intention to annex the benefit of these covenants to land retained by the covenantee;

(2) These covenants are not expressed to be purely personal;

(3) The covenants touch and concern the lands to be benefited by them; and

(4) The land intended to be benefited by these covenants is capable of being identified with reasonable certainty."

22. Paragraph 27 sets out certain agreed consequences:

"(1) The benefit of the schedule 1 covenants has run (both at law and in equity) to Ds, as successors in title to the vendors in these conveyances, and as proprietors of land forming part of the yellow, green or violet land.

(2) The burden of the schedule 1 covenants has run in equity to C, as successor in title to the purchaser in the May 1910 and July 1910 conveyances, and as proprietor of the pink land and part of the blue land (the part on which 274 London Road is situated). As the burdens are protected by notice on the Land Register, subject to the arguments concerning enforceability set out below, the schedule 1 covenants would be enforceable against C by Ds.

(3) The benefits of the schedule 2 covenants have run (both at law and in equity) to C, as successor in title to the purchaser in the May 1910 and July 1910 conveyances, and as proprietor of the pink land and part of the blue land (i.e. 274 London Road).

(4) However, as the burdens of the schedule 2 covenants were not protected by notice on first registration of any of the registered titles within the yellow, green or violet land, or thereafter (with one exception: see paragraph 15 above), the burdens of the schedule 2 covenants are not enforceable by C against any of the Ds."

23. The exception referred to in paragraph 15 of the skeleton argument relates to 3 Mile House Lane (part of the green land) where the burden of the schedule 2 covenants is protected by notice on the registered title. However, it is not contended that the density covenant in relation to that part of the land has been breached.
24. Finally, paragraph 28 of the skeleton argument provides that, as already mentioned ([17] above):

"It is agreed that, if the schedule 1 covenants are enforceable by Ds against C, the development will breach both these [purchaser] covenants."

I should add that the defendants qualify this by asserting that the construction of the care home will breach each part of paragraph 4 of Schedule 1. The claimants say that the development will not be a breach of paragraph 5 of that Schedule, and the defendants accept this on the basis of the material presently available.

The arguments for the claimant

25. The claimant argues on two separate grounds that the defendants are unable to enforce the purchaser covenants against the claimant. The first is that there have been breaches of the vendor covenants which deprive the defendants of the right to enforce the purchaser covenants. For this purpose the claimant relies on the decisions in Measures Brothers Ltd v Measures [1910] 2 Ch 248, Australian Hardwoods v Railways Commissioner [1961] WLR 425 , Chappell v Times Newspapers [1975] 1 WLR 482, and National and Provincial Building Society v British Waterways Board, CA unreported, 26 November 1992. Secondly, the claimant says that those entitled to the benefit of the purchaser covenants have made or permitted such changes in the character of the neighbourhood that those covenants have ceased to have some practical effect. The claimant says that it is not necessary to show that the change in character means that there is no longer any value left in the covenant at all (as in Chatsworth Estates v Fewell [1931] Ch 244). I deal with these arguments in turn.

The first argument

The principle

26. As to the first argument, the claimant says that the covenantee becomes disentitled to sue where he or she has not fully performed, or cannot or will not undertake to perform, his or her obligations forming part of the consideration for the covenantor's compliance with the burden of the covenant, particularly where the covenantee's covenant is a mutual and interdependent one in relation to the covenantor's covenant. For this proposition, the claimant relies on Measures Brothers Ltd v Measures [1910] 2 Ch 248.
27. That was the case of a contract of service, in which the company agreed to appoint the defendant to the office of director for seven years at a fixed salary, and a share of the profits, and the defendant covenanted that during a certain period he would not compete with the business carried on by the company. Subsequently, but during that period, the company went into compulsory winding up, and notice was given to the defendant that his services would no longer be required. His salary was no longer paid. When the defendant started business on his own account, the company sought an injunction to restrain him from carrying on business in competition with the company in breach of his covenant. The majority of the Court of Appeal held that, since the company was no longer performing its side of the bargain, the defendant was no longer bound by his restrictive covenant, and the company was not entitled to an injunction.
28. Cozens-Hardy MR, with whom Kennedy LJ (at 262) agreed, held (at 254) that:

"the plaintiffs, who are seeking equitable relief by way of injunction, cannot obtain such relief unless they allege and prove that they have performed their side of the bargain hitherto and are ready and able also to perform their part in the future.… The plaintiffs have not given, and cannot in future give, the defendant [the consideration for which he bargained]. The contract on their part has been broken. It is not necessary that the breach should be wilful in the sense of being intentional."

29. Kennedy LJ also said this (at 262):

"A great deal of argument before us was expended on behalf of the appellants [the company] to show that covenants or stipulations in the present case were not interdependent, and, therefore, that even if the plaintiff company broke the agreement made with the defendant, it could nevertheless sue him for the alleged breach of his part of the agreement. Covenants are to be construed as dependent or independent according to the intention of the parties and the good sense of the case. Judged by this test, the supposition that the true intent and meaning of this agreement was that the defendant should be bound to the observance of clause 5, although the company failed to a substantial extent to give him the sole consideration for his obligation, appears to me to be an impossible supposition".

30. Buckley LJ, however, took a different view of the facts (at 254 – 255):

"The first question to determine is whether the considerations passing between the plaintiffs and defendant under the agreement … consist in the mutual promises made by the one to the other or in the performance by each of his obligation as the price of the benefit secured to him by the agreement. Stating it in the concrete form relevant to the particular matter in dispute before us, was the performance of clause 1 by the plaintiff company a condition precedent to any right in the plaintiff company to enforce clause 5? Am I to read the agreement as if it said, 'if the defendant shall for the time mentioned in clause 1 enjoy the place and remuneration promised by that clause he shall, but not otherwise, be compellable to perform clause 5'? In my judgment this question is to be answered in the negative."

31. It is clear that, whilst the minority view was that the test for the enforceability of the covenant was nothing short of conditionality, the majority view in this case was that the test was one of consideration. Had the applicant for an injunction performed his side of the bargain, and would he do so in the future?
32. Australian Hardwoods Pty Ltd v Commissioner for Railways [1961] WLR 425 was a Privy Council appeal from Australia. In that case the appellant company had made an agreement with the respondent Commissioner under which the company occupied and operated a sawmill, timber to be supplied by the respondent. It also included an option for the company to purchase the sawmill. In the event of purchase, the respondent was to request the transfer to the company of the sawmill licence and to continue to supply timber for the sawmill. After the respondent had given notice to determine the agreement, but before it had expired, the appellant company exercised the option, and sought specific performance of the provision requiring the respondent to request the transfer of the sawmill licence and to continue to supply timber. The courts below dismissed the claim, and the Privy Council dismissed the appeal.
33. Lord Radcliffe said (at 432-33):

"The appellant's position is, to say the least, none the stronger if it is judged as an applicant for specific performance and its claim for this special relief is tested by the equitable principles that apply to such a claim. It might be a difficult task to enumerate all the separate aspects in which the claim is liable to be defeated on grounds of equity. It is sufficient for the decision of this case to identify two of them. A plaintiff who asks the court to enforce by mandatory order in his favour some stipulation of an agreement which itself consists of interdependent undertakings between the plaintiff and the defendant cannot succeed in obtaining such relief if he is at the time in breach of his own obligations. The case of Measures Brothers Ltd v Measures is a familiar instance of this principle. The appellant in this case has not been able to deny or, at any rate, has not denied that it was in default in several respects at the time when the respondent served upon it the notice of termination. Secondly, where the agreement is one which involves continuing or future acts to be performed by the plaintiff, he must fail unless he can show that he is ready and willing on his part to carry out those obligations, which are, in fact, part of the consideration for the undertaking of the defendant that the plaintiff seeks to have enforced. Here the appellant could never show that it was ready and willing to perform its share of the agreement of 1956; for its breaches had brought upon it the notice of determination which precluded it for good from doing anything more in furtherance of that agreement."

34. The reference to the case of Measures Brothers Ltd v Measures as an example of an agreement which "consists of interdependent undertakings" is rather curious. It was the judge in the minority, Buckley LJ, who rested his decision on the ground that the undertakings were not interdependent. Although Kennedy LJ evidently considered that they were, he rested his decision on the same ground as Cozens-Hardy MR, ie that the applicant for an injunction must show that he has performed his side of the bargain and is ready and able to do so in future. What is even more curious is that part of that proposition (relating to future acts) is then put forward (without any reference to Measures) as an entirely separate, second reason.
35. In Chappell v Times Newspapers Ltd [1975] 1 WLR 482, another case in the employment context, unionised employees engaging in industrial action were required by their employers to resume normal working, or they would be treated as if their contract of employment had come to an end. Six union members who had not been involved in industrial action sought an interim injunction to restrain their employers from treating their contracts as at an end. During the hearing at first instance, they refused to give an undertaking "not to engage in disruptive activities". The injunction was refused. An appeal to the Court of Appeal was dismissed. Lord Denning MR (at 502B-E) cited the extract from the judgment of Cozens-Hardy MR and the so-called "second reason" from the advice of the Privy Council above with approval, and Stephenson LJ said much the same thing more shortly and in different words (at 504E-G). Geoffrey Lane LJ was perhaps less clear on this point (at 506E-G), but certainly did not dissent. What Lord Denning MR said (at 502B-E), including the citations from both Measures and Australian Hardwoods, was cited with approval by the Court of Appeal (Balcombe, Hirst LJJ) in National and Provicial Building Society v British Waterways Board, CA unreported, 26 November 1992, a case involving a claim for specific performance of a contract to purchase land contained in a lease.
36. For present purposes, I do not consider that it makes any difference that the relief sought in the Australian Hardwoods case and in the National Provincial case was specific performance, whereas in the others it was an injunction. On this citation of authority, in my judgment the law in relation to the grant of an injunction is as stated in the second reason from the advice of the Privy Council above. For convenience, I will repeat it here:

"Secondly, where the agreement is one which involves continuing or future acts to be performed by the plaintiff, he must fail unless he can show that he is ready and willing on his part to carry out those obligations, which are, in fact, part of the consideration for the undertaking of the defendant that the plaintiff seeks to have enforced."

37. The real question is, how far does this principle apply to the facts of the present case, where the successors in title of the covenantee of a restrictive covenant relating to land seek to enforce it against the successors in title of the covenantor? Mr Gaunt QC said that there was no real reason in principle, and certainly no logical reason, why this principle should not apply as between those parties. He did however accept that the breach by such successors in title of a trivial term in the deed in which the relevant covenant was contained would not bring the principle into play. But, as soon as there occurred any non-trivial breach, such as building one house more than the density limit provided for by the vendor's covenant, anywhere on the green, yellow or violet land, that meant that, forever after, or at least until the offending extra house was removed, the purchaser covenants could not be enforced against the successor in title of the purchaser.

The defendants' position under the vendor covenants

38. I must therefore turn to consider the position of the defendants in relation to the vendor covenants. I do so against the backdrop of the rules of priority in relation to restrictive covenants. Before 1926, a restrictive covenant in relation to land could not be enforced against a successor in title to the servient land who was a bona fide purchaser for value of a legal estate in the land without notice of the covenant: see eg Osborne v Bradley [1903] 2 Ch 446, 451-52, referring to London & South Western Railway Co v Gomm (1882) 20 Ch D 562, 583. In relation to unregistered land after 1925, pre-1926 restrictive covenants were not registrable under the Land Charges Act 1925 (Law of Property Act 1925, s 2(5)(a); Land Charges Act 1925, s 10(1), D(ii); see now the Land Charges Act 1972, s 2(5)(ii)), so that for them the same notice rule continued to apply. In relation to registered land, such a restrictive covenant could only be enforced against the proprietor of the servient land taking for value under a registered disposition if the covenant was noted on the register at the time of registration: Land Registration Act 1925, s 20; Land Registration Act 2002, ss 29(2)(a)(i), 32(1), 35.
39. In the present case, although all the properties belonging to the defendants have now been registered, none has the restrictive covenants registered against its title. Indeed, the only property that does is number 3 Mile House Lane, but its owners are not parties to this claim. Mr Rolfe may be right to say that the problem has been exacerbated by the gradual reduction over the years in the length of time needed for a good root of title, as this itself reduces the need for purchasers to call for or look at earlier conveyancing documents.
40. It is notable that the claimant's predecessors in title appear not to have made any use of the possibility of lodging a caution against first registration, under s 53 of the Land Registration Act 1925 (see Ruoff and Roper, Land Registration, 4th ed 1979, p 247; and see now s 15 of the Land Registration Act 2002). This would have prevented the loss of the right when the servient land was registered. The claimant in the evidence seeks to blame the defendants or their predecessors in title for not having applied for the registration of the burden of the covenants against their own titles on first registration: see Lee 1, [28]; Lee 2, [6]; cf Beat, [41(2)].
41. I did not have the benefit of full argument on this point, but in my judgment there is nothing in it. I was taken to no statutory or other authority (and I know of none) for saying that, absent agreement between the parties to that effect, an applicant for first registration owes a duty to the person entitled to the benefit of a restrictive covenant to ensure that the property is registered only subject to the burden of that covenant. I can see that there may well be other duties (owed to the Land Registry, at least) such as not to lie in making applications, and perhaps not knowingly to suppress relevant conveyancing documents when making such an application, but of course nothing of that kind is alleged here.
42. So far as concerns possible breaches of the vendor covenant in relation to density of building, the position appears to be as follows. In relation to the green land, the properties at numbers 3 to 7 Mile House Lane as built did not exceed the density limit of three. (Number 9 straddles both the green and the yellow land, but the house itself appears to be built on the yellow land.) The two further properties at 266 and 268 London Road (which prima facie breach the limit) were built only after registration of the land, and since upon registration there was no entry in the register to protect the covenant it was no longer enforceable against the then owners of the land.
43. In relation to the yellow land, subject to one point, the original houses at 9 to 13 Mile House Lane do not exceed the density limit of three. The one point is the question whether there has been any breach by the predecessors in title of the owner of number 1 New House Park, by encroachment onto the yellow land. I will come back to that.
44. In relation to the violet land, it is necessary to distinguish between three different groups of houses in New House Park. These are (i) numbers 1A and 3, (ii) numbers 3A, 5 and 7, and (iii) numbers 9, 11, 13 and 15. As to numbers 1A and 3, these were built only after registration of the land, and upon registration there was no entry in the register to protect the covenant. So the position is the same as 266 and 268 London Road.
45. Secondly, as to numbers 3A, 5 and 7, these were built at some time which is not known precisely, but the agreed limits lie between 1970 and 1982 inclusive. This part of the land was however first registered in 1981, and the covenant was not noted on the register at that time. The burden of proof must lie on the claimant to show that the covenant binds the land. In order to do that, the claimant must show that the houses were built before the land was registered in 1981. In my judgment, the mere fact that there are more years in which they could have been built falling before the date of registration than afterwards does not demonstrate that on the balance of probabilities the erection of these houses took place at a time when the covenant was enforceable against the landowners and so amounted to a breach. The position is that there is no admissible evidence either way before me.
46. Thirdly, as to numbers 9, 11, 13 and 15, they were built by 1970, and the land was registered not before 1999. So the relevant rule was the bona fide purchase rule, and it appears that the covenant was binding on the land at the time that the houses were built. Accordingly, on the face of it there was a breach of the covenant which could have been restrained at the time. In fact no injunction proceedings were ever brought, and it is far too late to do so now, nearly fifty years later. Moreover, the right to do so as against the owner or owners has in any event been lost, because at the time of registration the covenant was not noted on the register. Nevertheless, this is the only case of building on any of the green, yellow and violet land so as to exceed the density limit amounting to a clear breach of a covenant enforceable against the land at that time, although not now.
47. Fourthly, and for completeness, the block of flats known as Pine Ridge was built on the blue land by 1990, representing a breach of the density covenant in the May 1910 conveyance, as is admitted by the defendants (see Beat [38]). Again, however, no injunction proceedings were brought at the time, and it is almost certainly too late now. It is not accepted by the defendants that Pine Ridge breaches the type or user covenants (see Beat [37]).

The defendants' liability to remove supernumerary houses

48. The question arises whether any of the defendants, not being the original vendor or the person who constructed a supernumerary house, could be required to remove one. This is first and foremost a question of the construction of the covenant itself. The question is whether it is a breach for a person who did not construct a supernumerary house but has subsequently become the owner of the land to suffer the house to remain. In other words, is the breach a "once and for all" breach, committed only by the person constructing it, or is it a continuing breach, committed by every successive owner who does not remove it? The question is also affected by delay and acquiescence, as well as by non-registration of the covenant.
49. The relevant clauses are in paragraphs 3 and 4 of the second schedule to the May 1910 and July 1910 conveyances. Paragraph 3 deals with the violet land and paragraph 4 deals with the green and yellow land. The only practical difference between them is that under paragraph 3 the density limit for the violet land is two detached dwelling houses, whereas under paragraph 4, for the green and yellow land, it is three. The operative wording is:

"Not more than [two][three] detached dwelling houses shall at any time be erected upon any one of the said plots…".

50. An owner for the time being who erects a supernumerary house clearly commits a breach of such a covenant. But the position of a successor in title, who does not erect the house, but suffers it to remain and does not remove it is more difficult. The phrase "shall be erected" could refer simply to the act of construction. But it could perhaps also refer to the fact of existence, thus meaning "shall stand erected" or even "shall be suffered to remain". The defendants said that the phrase in the covenants in the present case had the narrower meaning, and simply referred to the act of construction. Thus, no successor in title committed a breach by allowing the supernumerary house to remain, and therefore could not be required to remove it. The claimant said that the phrase had the wider meaning, and included the fact of continued existence, so that the breach was continuing and the current owner could be required to remove it.
51. On the question of construction, the claimant referred me to the decision of the Court of Appeal in Webb v Fagotti Brothers (1899) 79 LT 683. In that case, in 1886 certain development land was sold and conveyed by the first plaintiff subject to a restrictive covenant providing that:

"10. Hotels, taverns, and manufactories. – Except on lots marked 'tavern lot', no hotel, tavern, public house, beerhouse, shop, or other building, for the sale of wines, spirits, ale, or stout, or any spirituous, malt, or exciseable liquor of any kind, shall be built upon any lot now offered for sale; and on no lot shall any manufacture be carried on unless with the consent of the vendors, who shall be at liberty to grant a licence for the same.

Shops. – No trade, business, or manufacture of any kind is to be carried on upon any of the lots now offered except those marked 'shop lots'."

52. The land so sold was marked 'shop lots' but not 'tavern lots'. It remained unbuilt on until 1897. The defendants were lessees from the purchaser, and had full notice of the covenants. They erected a restaurant, which opened in March 1897, but was conducted without the sale of alcohol until August 1897. The defendants then applied for a justices' on-licence, which was granted (on certain terms) despite the first plaintiff's opposition. The first plaintiff subsequently conveyed another lot nearby to a Mr Batten for the purpose of erecting a public house and covenanted with him not to allow any property within a specified distance (including the site of the restaurant) to be used for the sale of exciseable liquors.
53. The first plaintiff and Mr Batten together sought and obtained an injunction to restrain the defendants from using their restaurant for any of the purposes in the covenant. They were successful at first instance. The defendants appealed, but the appeal failed. The Court of Appeal did not restrict the word "built" to the act of building itself. They said that the true meaning of the covenant was that no hotel, tavern, public house and so on for the sale of alcohol should "be" on any lot not marked "tavern lots".
54. It was an unusual case, because during the course of construction of a building on the land, it could not be known whether it was one "for the sale of" alcohol. That would only be known when it was complete and began commercial operations. As with the restaurant that was actually opened there, a building on land marked 'shop lots' on the plan (as this was) might lawfully be operated for commercial purposes such as a hotel or restaurant, as long as it did not sell alcoholic drinks. The fact that a building in the course of construction was destined for a hotel or a restaurant in itself would not reveal whether alcoholic drinks were to be sold. It would look the same either way and, indeed, the proprietor could leave it until the last moment to decide which course to pursue.
55. Chitty LJ dealt with this expressly in saying (at 684 col 2):

"I think that North J was right in saying that you cannot tell, as to many of the things mentioned, whether or not a house, when it is in course of building, is intended for a hotel, tavern, public-house, &c. You must look to the user of the house before you can say that it is or is not a beerhouse, and before declaring that the covenant has been infringed."

56. So if the term 'erected' were not extended to cover 'being' as well, by the time the covenantee realised what was being done, it would be too late. In substance, therefore, this clause was treated by the court as a user covenant. But there are no such considerations here. The concept of a detached house is clear enough. In the present case, if there were (two or three) detached dwelling-houses already on the land concerned, it would be known that a breach was occurring as soon as any further such building began to be erected, and long before it was finished and started to be used. So 'erected' here does not need to be extended to cover 'being'. In my judgment this decision does not assist me, one way or the other, to decide whether the density covenant in the present case extends to suffering a supernumerary house to remain.
57. I must therefore construe the covenant on its own terms and in its own context. I bear in mind that, in addition to the density covenant, there is also a user covenant, in paragraph 2 of Schedule 2. The user covenant extends in time beyond the construction of the buildings, whatever they are. So the density covenant does not have to perform a continuing user function as well. It can safely be limited to the construction phase, if that is all that is needed. A user covenant is, of course, a paradigm of a covenant involving a continuing breach: see eg Doe d Ambler v Woodbridge (1829) 9 B & C 376, 377-78. The claimant however points here to the use of the phrase "at any time". It says that this shows that there is a breach, not only at the point of erection of a supernumerary house, but at every moment ("at any time") thereafter that it continues to exist. The defendants deny this. They say that the words are included only to deal with the possible argument that, once the limit of houses has been reached, the covenant is spent.
58. That argument was made in Turner v Pryce, unreported, 9 January 2008, BAILII: [2008] EWHC B1 (Ch), Ch D. In that case an estate had been laid out under the terms contained in a deed poll of 1890. The original deed was not available, and its terms could only be taken from an abstract made subsequently. According to the abstract, the relevant clause (in reported speech) was as follows:

"That in the event of the said covenanting party his heirs appointees or assigns building on the land so purchased by him as aforesaid he or they should and would erect on such land a good and substantial messuage or dwelling-house or one pair of semi-detached messuages or dwelling-houses and no more with all necessary outbuildings and all proper and effectual sewers or drains and culverts thereto and should not erect or permit on the said land any back house public house or pleasure garden."

59. The deputy judge, Stephen Smith QC, said:

"54. The thrust of Mrs Piggott's submission was that the covenants required the construction of one dwelling house (or a pair of semi-detached dwelling houses) by the original developer, to the specifications contained within the deed poll, but once the original house or houses had been built in accordance with the covenant, the covenant was spent. The only obligation which remained was to maintain the front of any alteration or addition to any such house in conformity with the restrictions in the deed poll (though such an obligation, shorn of the spent restrictions, would seemingly be unenforceable because of its positive nature).

[ … ]

56. Mrs Piggott had to accept that her submission would have had the effect that in 1891 a developer could have developed a plot in conformity with the covenant, declared his development complete, then sold the plot to another developer who would – according to the submission – have been free to erect several further houses in the rear garden, all within months of the ink drying on the deed poll. That seems to me to make no sense at all.

57. I have no hesitation in rejecting Mrs Piggott's construction of the particular obligations imposed by the deed poll. The deed poll did not require the development of any plot. It did require that any development which the then owner decided to implement should be in conformity with the specifications laid down, which included the construction of one dwelling house or a pair of semi-detached dwelling houses 'and no more'. The latter phrase was not just a reference to the original construction but is a continuing description of what may be contained on the plot."

60. It will be noted first of all that the situation in that case was quite different from the one in the present case. In Turner v Pryce the supernumerary houses had not yet been erected, so that there was at that stage no breach of the covenant. Instead, the question was whether it would be a breach by the present owner (or his successor in title) to build further houses on the plot. In the present case, however, the question is whether the present owner is liable to an injunction to remove supernumerary houses built by a predecessor in title, on the basis that such owner is in continuing breach of the covenant.
61. So the judge in Turner v Pryce was concerned with the question whether the words 'and no more' extended the scope of the prohibition on further construction beyond construction by the original covenantor (in 1890), rather than the question whether they imposed a continuing obligation on successors in title in relation to already constructed houses. He considered that they did. As he said, it would have made no sense to prohibit the original covenantor from building more than X houses, but then to allow him to sell and his successor in title immediately afterwards to build more.
62. My problem is different. The houses are built. The present owners are not threatening to build any more. The question is why the acts of the original covenantor or other predecessors in title should be visited on the present owners. The words 'at any time' are not at all the same as the words 'and no more'. They indicate a temporal conjunction and not a number limit. I cannot see why anyone drafting a conveyance in 1910 should have thought that there was an obvious problem as to when the covenant became spent, or (if the draftsman did) that the words 'at any time' would resolve it. I do not find any assistance for my problem in Turner v Pryce.
63. I stand back and look at the question as a matter of impression, in the context of the facts surrounding the conveyance. On that basis, I consider that the words 'at any time' do not demonstrate that the 'erection' prohibition is really (or incorporates) a 'being' prohibition, or that the present owners are intended to be liable for the presence of a supernumerary house erected by a predecessor. In my view a prohibition such as "X shall not happen", without any time restriction, means the same thing in substance as "X shall not happen at any time". I consider that the words "at any time" in the text of the clause are being used, as nineteenth century draftsmen were apt to do, simply to emphasise the prohibition itself.
64. Another possibility, perhaps less likely than simple emphasis, but still more likely than the meaning suggested by the claimant, would be to support and shore up the meaning that probably would have been given anyway to the words of the covenant, even without them. This is that the prohibition was directed at the construction of a third (or fourth) house at a time when two (or three) already existed, rather than against the construction of such a house when in the past two (or three) had previously been constructed (but one or more of which may since have been demolished). In other words, on this view the phrase would make absolutely clear that the temporal connection between the houses had to be simultaneous rather than serial. As I say, I think that that is probably implied anyway, but the law reports are littered with cases of judges saying, "Well, if the draftsman meant that, he could easily have said so, but he did not," and fear of joining their number has led many a draftsman to make express that which perhaps he or she need not have done.
65. I was referred to the case of Gaskin v Balls (1879) 13 Ch D 324, where an estate was laid out for building and sold in lots, and the purchasers covenanted with the vendor "that no building or erection of any kind whatever … should be erected beyond the line shewn by dotted lines on a plan in the margin of the deed". The Court of Appeal, reversing Bacon V-C, held that the defendant successor in title committed no breach of that covenant by not removing a bakehouse that had been erected in breach of it on his land by his predecessor. I cannot think that the addition of the words 'at any time' after the word 'should' in the covenant would have made any difference.
66. Similarly, in Powell v Hemsley [1909] 1 Ch 680, land laid out as a building estate was purchased by the defendant, who entered into a covenant that (according to the text of the report) he "would erect on the piece of land thereby conveyed no buildings other than private residences (with suitable outbuildings to be erected at the rear thereof) … and also that he would before the commencement of the erection of any building submit the plans thereof to [the covenantee] for his or their approval … " The defendant then demised the land to lessees for 250 years. The lessees entered into similar covenants. They started work on erecting a house, which breached the covenant, and also failed to submit the plans to the covenantee, but they became bankrupt before completing the house. Their trustee in bankruptcy disclaimed the lease, and the defendant re-entered on the land. The plaintiff was an assignee of the benefit of the covenant. He claimed an injunction for the incomplete house to be pulled down.
67. Eve J held that there had been breaches of the covenants as to building and as to submitting the plans, but refused to order the defendant to pull down the house. He held that the covenant did not make the defendant liable for the failure of his lessees. It was argued that as to the construction of the house there was a continuing breach by the defendant once he resumed possession and did not remove the house. The judge said:

"I cannot adopt this view. In my opinion the covenant was broken once and for all when the house was erected contrary to it; it was a breach complete at once and not continuous … "

And then the judge referred to Doe d Ambler v Woodbridge, to which reference has already been made, to show the difference between a user covenant (involving continuing breach) and a covenant which is broken once and for all (such as one not to convert a house into a shop).

68. In my judgment this case stands on a similar footing. The covenant in the present case not to build more than a certain number of houses is broken when the supernumerary house is built. It is not broken at every moment thereafter that the owner for the time being fails to remove it. By way of footnote, I add only that, contrary to what Mr Rolfe submitted, the fact that the remedy for breach of the density covenant (ie an order to remove the supernumerary house) would require a positive act does not make it a positive covenant in substance. Nor would the covenant be spent when the maximum number of houses is reached.

The effect of a breach elsewhere on the estate

69. In order to demonstrate that a party not him- or herself in breach could be disentitled from obtaining an injunction because of the conduct of a party through whom he or she claimed, Mr Gaunt QC cited to me the dictum of Farwell J in Osborne v Bradley [1903] 2 Ch 446 that:

"where there are negative covenants which are binding on the defendant the court has, speaking generally, no discretion to consider the balance of convenience or matters of that nature, but is bound to give effect to the contract between the parties, unless the plaintiff seeking to enforce the covenant has by his own conduct, or by that of the persons through whom he claims, become disentitled to sue."

So far as it goes, this is accepted on behalf of the defendants (see their skeleton argument, [28]).

70. But Mr Gaunt QC goes further. He says the same principle applies if there is a breach by a collateral successor in title to the original covenantee. In other words, if there is a breach of the density covenant of a successor in title to the violet land or some part of it, that prevents all the successors in title to the green and yellow lands (as well as a successor in title to a different part of the violet land) from enforcing the vendor covenant by injunction, even though none of them claims through the successor in title to the violet land who has committed the breach. Mr Gaunt QC did not cite any case of a restrictive covenant concerning land where such a conclusion has been arrived at.
71. I reject the submission of Mr Gaunt QC as to the effect on collateral successors in title. The cases that he cited and relied upon show that a party can because of his own conduct become personally disentitled to injunctive relief in respect of a negative covenant, and that that may prevent a successor from claiming such relief through that party. That is the extent to which those cases go. They do not say that the right itself disappears, or ceases to be enforceable by anyone.
72. In my judgment Mr Gaunt QC is confusing personal and property rights. The cases that he cited and relied upon to show that an applicant for an equitable remedy such as injunction or specific performance had to demonstrate that he was willing and able to provide the consideration which had been stipulated for were all cases where the applicant was or claimed to be entitled to a personal right by virtue of some contractual relationship with the respondent. But the rights which the defendants claim to enjoy in the present case, and in any case of a restrictive covenant concerning land, are not personal rights. There is no privity of contract between the claimant and the defendants.
73. In English law, the burden of a positive covenant is not transmissible to (is not binding on) a successor in title, either at common law or in equity. On the other hand, in equity, the burden of a negative covenant which regulates the user or enjoyment of land is so transmissible (or binding). The hallmark of a property right, as opposed to a personal right, is that it is a right relating to a thing which is binding not only as between the parties but also against third parties. That is exactly what covenants restrictive of the user of land are.
74. If therefore the defendants in the present case have rights against the claimant, they are (equitable) property rights. They were created by the original contract between the original vendor and purchaser. They were then fragmented (as they were always intended to be fragmented) in the hands of the various successors in title to the vendor. It cannot possibly have been the intention of those parties, much less of the property lawyers who were advising them, that the enforceability of the rights of each of the individual successors in title of the vendor should depend upon the title to sue and obtain injunctive relief of every other such successor in title remaining unblemished and intact. Even if it could be said (whether by virtue of Australian Hardwoods or otherwise) that a particular individual successor in title, because of his own breaches of the same or some other relevant covenant, was personally disabled from obtaining an injunction to enforce the purchaser covenant, that should not, in my judgment, prevent other collateral successors in title, not so disabled, from doing so.
75. In the present case, on the material before me, there has been no breach of any of the vendor covenants at any time by the owners of numbers 5, 7, 9 or 11 Mile House Lane, or their predecessors in title. The claimant says that the predecessors in title of the owners of number 1 New House Park have built part of their house on the yellow land, and that this is a breach of the vendor covenant for density (Lee 2, [5]). Those owners say that the house itself lies wholly outside the yellow land (Beat, [7(4)]). As I have said, these are Part 8 proceedings. On the material before me, without the benefit of something more, such as further investigation, expert evidence or a site visit, I am unable to resolve this question of fact against them (cf Long v Farrer & Co [2004] EWHC 1774 (Ch)).
76. But, in any event, to judge by the plans in evidence, even if there has been any breach by encroachment onto the yellow land, it appears to be both very slight and without impact on the claimant's property. There are many cases in the books where a trivial breach having no impact on the other party has been held not to disentitle the covenantee from enforcing the covenant: see for example Western v MacDermott [1931] Ch 244, Jackson v Winnifrith (1882) 47 LT 243, Chitty v Bray (1883) 48 LT 860, and Hooper v Bromet (1904) 90 LT 234, CA. In argument, Mr Gaunt QC accepted as much. So all of these owners are in my judgment not disentitled by reason of the conduct of their own predecessors in title (what I may call for present purposes the Osborne v Bradley point) from enforcing the purchaser covenants against the claimant, even if the predecessors of one or more of the collateral owners committed breaches.
77. In principle, the same applies to the other defendants, owners of numbers 266 and 268 London Road, and 3 New House Park, whose predecessors in title built houses in excess of the density limit at a time when it could no longer be a breach of covenant (because the covenant had not been noted on the register when the property was registered), and to the owners of numbers 3A, 5 and 7 New House Park, whose predecessors similarly built but are not proved to have done so at a time when the covenant could be enforced. They are also able to enforce the covenants against the claimant.
78. Even if I were wrong, and the Australian Hardwoods principle (above at [36]) applied in principle not only to the covenantee wrongfully refusing himself or herself to comply with the relevant covenant, but also to the enforcement of property rights in the hands of other (innocent) collateral owners, the claimant would not be able to show that it had been deprived of the consideration for which its predecessors in title bargained. In the simple case of a conveyance which contains restrictive covenants by the purchaser alone, the consideration for those covenants is the sale of the land. There would be no question, once the land was sold, of the purchaser ever complaining that he had not received what he had bargained for. In the case where the conveyance contains restrictive covenants by the purchaser in favour of the vendor (and successors in title), and also by the vendor in favour of the purchaser (and successors in title), it does not follow that the one set of covenants is "the consideration" for the other. The consideration is the totality of the stipulations and benefits on the one side (including the covenant and the conveyance of land) against the totality of the stipulations and benefits on the other (including the covenant and the purchase price).
79. Even if it could be said that the covenants on each side were interdependent, that would not mean that the consideration for which each side had bargained had not been performed. In the context of property law, the consideration is the property rights which are transferred. Since a restrictive covenant creates an interest in land, then, once that restrictive covenant right is set up, the property interest has passed, and the consideration has been given, once and for all. Mr Gaunt QC relies on the fact that in nearly all cases the vendor covenant had ceased to bind the defendants' land because of non-registration.
80. But almost all property rights known to the law have a natural boundary and come to an end. For example, I have already mentioned that, under the pre-1926 system, when the legal estate in the land burdened by a restrictive covenant passed into the hands of a good faith purchaser for value without notice, the restrictive covenant in effect came to an end. Similarly, and as already noted, under the land registration system when the legal estate is first registered without the covenant being noted against the title, then the restrictive covenant ceases to bind. But that is simply the legal boundary of the rights granted. The covenantee in such a case has still had everything that he bargained for. That he does not enjoy the benefit any more is simply because in the events that have happened it has come to an end.
81. Thus, in Western v MacDermott (1866) LR 2 Ch App 72, covenants had been entered into between the developer and the purchasers of two adjacent dwelling houses. The purpose of the covenants was to preserve the commanding views from the rear of the houses, which were built on a hillside just north of the centre of the city of Bath, towards the south of the city. A covenant not to build in the garden of one of the two dwelling houses was enforced by the owner of the other against the owner of the servient land, even though the latter complained that others round about him had infringed other covenants by which they were bound, and the benefit of which his predecessor in title had received as part of the transaction in which that predecessor had given the covenant in question.
82. Lord Chelmsford LC, affirming Lord Romilly MR at first instance, said:

"But, assuming that the plaintiff and his predecessors have suffered these things to pass without notice when they sustained no particular injury, how can that deprive the plaintiff of his equity to use the covenant for his protection where the breach of it immediately affects the enjoyment of his house?"

It is true that the judges did not expressly refer to the argument that some of the consideration for which the defendant's predecessor had bargained had failed or was being withheld. Probably no-one thought there was anything in it. Nevertheless, it is striking to consider that if Mr Gaunt QC is right, this case must have been decided the other way.

83. As already pointed out, the owners of numbers 9-15 New House Park and the owners and occupiers of Pine Ridge are not parties to this litigation. Their predecessors in title are accepted to have committed breaches of the density covenants. But as they are not parties I do not need to consider whether they are able to enforce the covenants against the claimant, and I do not do so. In any event, as I have said, these are Part 8 proceedings, dealing with matters of principle.

Benefit and burden – an alternative argument

84. As an alternative route on this first argument, Mr Gaunt QC says that the same conclusion can be supported by the doctrine of benefit and burden, identified in Halsall v Brizell [1957] 1 Ch 169, and refined in Rhone v Stephens [1994] 2 AC 310, HL. Rather than go through the earlier cases, I can take the current state of the law from the recent decision of the Court of Appeal in Wilkinson v Kerdene Ltd [2013] EWCA Civ 44.
85. In that case Patten LJ (with whom Rix and Arden LJJ agreed) said:

"27. [ … ] What Lord Templeman emphasised in Rhone v Stephens was that a successor in title to the original covenantor did not incur a liability to perform a positive covenant such as the covenant to repair in that case unless it had some real relation to a right granted in his favour under the conveyance which he did wish to exercise. The reference in his speech to the exercise of those rights being conditional upon the performance of the positive obligation is not, as he made clear, limited to cases in which it is expressly so conditional. In Halsall v Brizell the owners of houses on an estate covenanted to pay a due proportion of the cost of maintaining and keeping in good repair the roads, sewers, promenade and sea wall serving the estate. There was nothing in the conveyance itself which in terms made the enjoyment of these facilities conditional upon the payment of the maintenance charge and the charge was payable under the terms of the conveyance for their maintenance and not for the exercise of the right to enjoy and make use of them. But Upjohn J said of the owners of the houses who were successors in title to the original covenantors:

"If the defendants did not desire to take the benefit of this deed, for the reasons I have given, they could not be under any liability to pay the obligations thereunder. But, of course, they do desire to take the benefit of this deed. They have no right to use the sewers which are vested in the plaintiffs, and I cannot see that they have any right, apart from the deed, to use the roads of the park which lead to their particular house, No. 22, Salisbury Road. The defendants cannot rely on any way of necessity or on any right by prescription, for the simple reason that when the house was originally sold in 1931 to their predecessor in title he took the house on the terms of the deed of 1851 which contractually bound him to contribute a proper proportion of the expenses of maintaining the roads and sewers, and so forth, as a condition of being entitled to make use of those roads and sewers. Therefore, it seems to me that the defendants here cannot, if they desire to use this house, as they do, take advantage of the trusts concerning the user of the roads contained in the deed and the other benefits created by it without undertaking the obligations thereunder. Upon that principle it seems to me that they are bound by this deed, if they desire to take its benefits."

28. What this recognises (as Judge Vincent himself held) was that, in substance, the payment of an annual charge for the maintenance of facilities which the defendants are only entitled to use by virtue of rights granted under the deed is relevant to the continued exercise of those rights even though it is in fact (and in terms) a contribution to the cost of their maintenance. The two are not inconsistent. Quite the contrary.

29. In some cases (like Rhone v Stephens) the positive obligation may be completely unrelated to the rights which the owner seeks to exercise. A more obvious example is the decision of this court in Thamesmead Town Ltd v Allotey [1998] 37 EG 166 where the property owners on an estate were asked to contribute to the cost of repairing landscaped and community areas over which they had been granted no rights at all. At page 99 Peter Gibson LJ said that:

"The reasoning of Lord Templeman suggests that there are two requirements for the enforceability of a positive covenant against a successor in title to the covenantor. The first is that the condition of discharging the burden must be relevant to the exercise of the rights that enable the benefit to be obtained. In Rhone v Stephens the mutual obligation of support was unrelated to and independent of the covenant to maintain the roof. The second is that the successors in title must have the opportunity to choose whether to take the benefit or, having taken it, to renounce it, even if only in theory, and thereby to escape the burden and that the successors in title can be deprived of the benefit if they fail to assume the burden. On both those grounds Halsall v Brizell was distinguished. Although Lord Templeman expressed his wholehearted agreement with Upjohn J's decision, Lord Templeman's description of that decision was limited to the defendant being unable to exercise the rights to use the estate roads and to use the sewers without paying his costs of ensuring that they could be exercised. Nothing was expressly said about the cost of maintaining the sea wall or promenade and it is a little difficult to see how, consistently with Lord Templeman's reasoning and, in particular, the second requirement for the enforceability of a positive covenant, the cost of maintaining the sea wall would fall within the relevant principle.

…..

Mr Routley submits that the judge was wrong in law in holding that a positive covenant can be enforced against the assignee of the covenantor only where the burden of that covenant is a condition attached expressly or by implication to the exercise of a reciprocal right granted by the covenantee. He says that the judge should have held that such a covenant was enforceable against such a person where the burden of the covenant was a condition attached expressly or by implication to the enjoyment of a reciprocal benefit granted or provided by the covenantee, either contained in the same deed or as part of the same agreement or arrangement. In developing this argument, Mr Routley submitted that where the burden of a positive covenant is conditional upon a reciprocal or a relevant benefit, it will be enforced. He pointed out that this is not restricted to the benefit of rights granted by a deed. That is true. An oral agreement or arrangement will suffice, as was held in ER Ives Investment Ltd v High [1967] 2 QB 379. But that is irrelevant, as here the plaintiff has only the transfer on which it can rely. Mr Routley also pointed out that the benefits need not be expressly related to a corresponding burden, but can be related by implication. That is not in dispute. He drew attention to the fact that Lord Templeman did not use the language of benefit throughout, but also referred to rights and power. He submitted that this meant that Lord Templeman was deliberately distinguishing a right or power, upon which a positive covenant might be made conditional, from the benefit of a covenant. This led him to submit that the communal areas could be used or enjoyed without the defendant walking on them and that their mere existence was sufficient to confer a relevant benefit. Mr Routley pointed to the judge's comment on the importance of the provision of services by the plaintiff to the character and atmosphere of Thamesmead and the advantage to the owners of properties therein that the value of their properties would be maintained by the continued provision of such services.

I have no hesitation in rejecting this argument. Mr Routley seems to me to read far more into Lord Templeman's words than could possibly have been intended. Lord Templeman was plainly seeking to restrict, not enlarge, the scope of the exception from the rule that positive covenants affecting freehold land are not directly enforceable except against the original covenantor. Lord Templeman treated Halsall v Brizell as a case where the right to use the estate roads and sewers was conditional on a payment of a due proportion of the maintenance expenses for those facilities. While agreeing with the decision, Lord Templeman made clear that for a burden to be enforceable it must be relevant to the benefit. He said that simply to attach a right to a condition for payment would not render that condition enforceable. Similarly, it is not possible to enforce every burden in a conveyance by depriving the covenantor's successors in title of every benefit that he enjoyed under the conveyance. There must be a correlation between the burden and the benefit that the successor has chosen to take. Lord Templeman plainly rejected the notion that taking a benefit under a conveyance was sufficient to make every burden of the conveyance enforceable. Further, there is no authority to suggest that any benefit obtained by a successor in title, once the property has been transferred to him, to enable the enforcement of a burden under the conveyance is sufficient, even if that benefit was not conferred as of right by the conveyance. In my judgment, it cannot be sufficient that the taking of an incidental benefit should enable the enforcement of a burden against a person who has not himself covenanted to undertake the particular burden. Lord Templeman's reference to rights and power suggests that the successor in title must be able as of right to obtain the relevant benefit. I have already pointed out that, not only is there no right conferred on the defendant by the 1988 transfer to use the communal areas, but also the plaintiff has no obligation to maintain those areas."

86. But that doctrine applies to positive covenants. It has no application to a case like the present, which concerns negative covenants. Negative covenants are dealt with by the doctrine of restrictive covenants. In any event, in the present case, there is no obvious conditionality between the right to the benefit of the purchaser covenants and the burden of the vendor covenants. They are self-standing interests in land which each party gives to the other as part of the package that goes to make up the transaction. But that does not show that the parties intended that, merely because one restrictive covenant on one side ceased (for any reason) to be enforceable, therefore all the restrictive covenants on the other side also became unenforceable.

The second argument: change in character

The principle

87. The second argument for the claimant begins with and relies on a passage in Preston and Newsom, Restrictive Covenants affecting Freehold Land, 10^th ed 2013, [9-37]:

"The claimant can lose his right of action, or his right to an injunction, by failure to enforce, or acquiescence in, breaches of covenant or by a change in the character of the neighbourhood which he or his predecessors or others have made or allowed. If so, the covenant has ceased to have some or all practical effect."

In its skeleton argument, [41], the claimant puts this in these terms:

"the long-standing principle that a negative covenant may not be enforced by an injunction where the actions of the benefited party or his predecessors in title have made or permitted a change in the character of the neighbourhood such that the covenant has ceased to have some or all practical effect".

88. The claimant then breaks this "long-standing principle" down into two distinct standards of behaviour. Where the change in character of the neighbourhood has occurred "apart from the plaintiff's acts or omissions" it must be such as to take away all value from the covenants. But, where the acts or omissions inducing the changing character are those of the plaintiff or its predecessors, it is enough that the change in the character of the neighbourhood is such that the covenant has ceased to have some practical effect.
89. The defendants challenge these statements (skeleton, [36]), saying that the legal test is not as stated in the claimant's skeleton. I agree with the defendants. The statement from Preston and Newsom is a general introductory statement, which is then expanded in what follows. So it is not itself an encapsulation of the relevant legal principle. But in any event, the division made by the claimant into two standards of behaviour, depending whose conduct has led to the changes, is not as stated in the authorities.

Chatsworth Estates Co v Fewell

90. The claimant essentially relies on the decision of Farwell J in Chatsworth Estates Co v Fewell [1931] Ch 244. The plaintiffs' predecessors in title in 1897 sold a house ("Bella Vista") to the defendant's predecessor in title. The purchaser covenanted for himself and his successors with the vendor and his successors that the house would not be used for any purpose "otherwise than as a private dwelling house," and that he would not do any act or thing which might tend to deteriorate the value of the estate of which the house formed part. In 1927 the defendant bought the house with notice of the covenants. In April 1928 the defendant began to take paying guests in the house. The plaintiffs objected, and there was correspondence between the parties, but eventually the plaintiffs commenced an action for an injunction or damages.
91. Farwell J held that, despite the fact that there were now flats, boarding houses and schools on the estate, the area in question still remained, broadly speaking, a residential area. The plaintiffs had in fact permitted some boarding houses or guesthouses, though not that of the defendant. Since the plaintiffs had not licensed the defendant's conduct of his establishment in Bella Vista as a boarding house, it was strictly a breach of covenant. But the question, according to the judge (at 229), was whether

"it would be equitable for me to give the plaintiffs any relief by injunction or damages, or whether I must refuse all relief".

92. He went on (at 229-30):

"The defendant's first ground of defence is that there has been such a complete change in the character of the neighbourhood, apart from the plaintiff's acts or omissions, that the covenants are now unenforceable. But to succeed on that ground the defendant must show that there has been so complete a change in the character of the neighbourhood that there is no longer any value left in the covenants at all. A man who has covenants for the protection of his property cannot be deprived of his rights thereunder merely by the acts or omissions of other persons unless those acts or omissions bring about such a state of affairs as to render the covenants valueless, so that an action to enforce them would be unmeritorious, not bona fide at all, and merely brought for some ulterior purpose. It is quite impossible here to say that there has been so complete change in the character of this neighbourhood is to render the covenants valueless to the plaintiffs. Whether right or wrong the plaintiffs are bringing this action bona fide to protect their property, and it is hopeless to say that the change in the character of the neighbourhood is so complete that it would be useless for me to give them any relief."

93. That is the foundation for the general statement as to the legal test. There must be a complete change in the character of the neighbourhood, such that the covenants have lost all value. It will be noted that Farwell J, in expressing that proposition of law, has used the phrase "apart from the plaintiff's acts or omissions". Mr Gaunt QC bases himself on this phrase to submit that the proposition of law therefore only applies where the conduct concerned leading to the change in character of the neighbourhood is that of someone other than the applicant or his predecessors. I do not so read it. To my mind, the judge is making a general statement of the law, but then makes an exception because of a particular submission which was then made on behalf of the defendant in that case. This was that the plaintiffs and their predecessors had so acted in that case as to make it inequitable for equitable relief to be granted.
94. The judge put the argument for the defendant in this way (at 230-31):

"The defendant really relied on the acts and omissions of the plaintiffs and their predecessors as a bar to equitable relief. Now the plaintiffs are not unduly insistent on the observance of these covenants in this sense, that they do not conduct inquisitorial examinations into their neighbours lives, and do not make it their business to find out very carefully exactly what is being done, unless the matter is brought to their notice, either by complaints of other inhabitants, or by seeing some board or advertisement. I cannot think that plaintiffs lose their rights merely because they treat their neighbours with consideration. They are doing what they think sufficient to preserve the character of the neighbourhood. Whether they do enough is another matter, but I am quite satisfied that they are not intending, by their acts or omissions, to permit this area to be turned into anything other than a mainly residential area. There is no doubt however that they have permitted breaches of covenant in several cases where houses have been turned into flats, they have permitted at least four houses to be carried on as boarding houses or hotels, and they have not prevented – in some cases because they did not know of them – some half a dozen other houses being used as boarding houses or guesthouses."

95. The judge did not, however, hold that a lower standard of change in the character of the neighbourhood was to be applied in the case where the change was in some way attributable to the actions or omissions of the plaintiffs or their predecessors in title. Instead, the judge said this (at 231):

"In some of the cases it is said that the plaintiffs by their acts and omissions have impliedly waived performance of the covenants. In other cases it is said that the plaintiffs, having acquiesced in past breaches, cannot now enforce the covenants. It is in all cases a question of degree. It is in many ways analogous to the doctrine of estoppel, and I think it is a fair test to treat it in that way and ask, 'Have the plaintiffs by their acts and omissions represented to the defendant that the covenants are no longer enforceable and that he is therefore entitled to use his house as a guesthouse?'

[ … ] The answer in my judgment is in the negative. The plaintiff's acts and omissions did not justify the defendant in thinking that he was entitled to break the covenants by using Bella Vista as a boarding house. [ … ] On the whole I have come to the conclusion that it would be a denial of justice to the plaintiffs if I were to hold that they have so acted in the past is to disentitle them to relief for an undoubted breach of the covenants."

One standard or two?

96. So in my judgment the answer is not that there are two standards, one for judging changes in the character of the neighbourhood when caused by the applicant for an injunction or his predecessors in title, and the other for judging such changes when caused by other people. Instead, there is one standard only, which applies to everyone, except to an applicant who has (or whose predecessors have) in effect represented that the covenants are no longer enforceable, and others have relied on that representation to their detriment. In other words, the only exception is where an estoppel argument can be raised against the applicant for an injunction. That is quite different from saying that in the case of acts or omissions of the applicant or his predecessors it is enough if the covenants have lost some practical effect. In my judgment, that would be an entirely unprincipled distinction to draw, whereas a general rule for everyone subject to an estoppel defence against a particular applicant is consistent with principle.
97. The same principle was applied more recently in Turner v Pryce, unreported, 9 January 2008, BAILII: [2008] EWHC B1 (Ch), Ch D, though there it was called acquiescence rather than estoppel. Stephen Smith QC, deputy judge, said this:

"72. The Turners moved into number 21 in 1994. There is no evidence before me that they have acquiesced in any development carried out on any other plot in breach of any of the covenants in the deed poll since that date. So if a case of acquiescence is to succeed against the Turners, it is a case which must be based on the acquiescence of their predecessors in title.

[ … ]

88. The question posed by Farwell J in the Chatsworth Estates case was (transposed to the facts of this case), 'have the Turners or their predecessors in title, by their acts or omissions, represented to the Scotts and the Pryces that the covenants in the deed poll are no longer enforceable and that they are therefore entitled to construct properties in their rear gardens regardless of the restrictions contained in those covenants?' The answer is, in my view, plainly not. Whatever was done or not done by the Turners' predecessors cannot have had any effect on either the Scotts or the Pryces: as I have already explained, when giving evidence both Mr Scott and Mr Pryce denied all knowledge of the covenants in the deed poll until Mr Turner alerted them to these covenants in 2002 or 2003. From the time of their first becoming aware of the terms of the covenants, the Scotts and the Pryces can have been in no doubt that the Turners considered those covenants to be enforceable, and were determined to enforce them."

The present case

98. The claimant does not rely on any estoppel as against the defendants or their predecessors. The case for the claimant is put entirely on the basis that the defendants owe (or at least they or their predecessors owed at the time of breach) obligations as estate-owners which they have not performed. The purpose of the covenants was to preserve so far as possible the residential character of the neighbourhood at a high level of quality. Turning the area into back-to-back slums might have kept it residential, but still destroyed its quality. Pine Ridge, consisting of 18 flats, has no doubt changed the character of the blue land to some extent (though it is still residential), but that is at the south-eastern end of the Gotto estate, and cannot be said to have changed the character of the whole estate.
99. If we leave the blue land on one side, and look at the rest, there are 19 houses where there should have been only 12. The supernumerary houses that have been added elsewhere on the estate have not been so numerous, nor proved to be so low in quality, as in my judgment to have deprived the covenants of substantial value. As Farwell J put it in Chatsworth Estates Co v Fewell [1931] 2 Ch 224, 230, "It is quite impossible here to say that there has been so complete a change in the character of this neighbourhood as to render the covenants valueless to the plaintiffs." In my judgment the purpose of the covenants has not failed, and the second argument therefore does not avail the claimant.

Conclusion

100. Accordingly, my conclusion is that the 1910 restrictive covenants continue to affect the Property and are in principle enforceable by injunction by any or all the defendants against the claimant. I will consider with counsel what form of order should be made to reflect this judgment.