Restrictive covenants predating the 1925 Act: has the benefit passed?
Wed 05 Jul 2017
When investigating title, historical restrictive covenants can be seen as a nuisance to be dealt with by title indemnity insurance. However, the recent case of Sutton and East Surrey Water Plc v Kilby & Ors, Re Woodcote Reservoirs  UKUT 248 (LC) sets out clear guidance for ascertaining the reality of successful enforcement – and ultimately whether indemnity insurance is an unnecessary expense which can be avoided.
The Applicant, Sutton & East Surrey Water PLC, owned the land by virtue of a conveyance from July 1910. In the charges register of the title, the land was subject to restrictive covenants imposed in the 1910 conveyance. One restricted the height of buildings on the land and the other restricted the erection of boundary or party fences, amongst other restrictions. The covenants contained the words ‘elevations approved by William Webb of Upper Woodcote House, Purley, Surrey’ and ‘Nothing shall be done on the land which shall become a nuisance or annoyance to the said William Webb or the adjoining owners’.
However, the 1910 deed by which these covenants were imposed was not available – the title register being the only documentation evidencing their existence. The applicant thereby applied to discharge these covenants, for the purpose of enabling a development.
Objections were made from various parties, and in setting out the merits of each application (or lack of), the judgement given by the Upper Tribunal (Lands Chamber) provided clear guidance on how to ascertain enforceability, as recapped below.
Pre 1925 restrictive covenants
The Applicant’s submission was based on the conclusion that the requirements for the benefit of a pre-1925 covenant to pass to successors in title of the original covenantee had not been satisfied by the evidence of the objectors, being that:
a) The covenant must touch and concern the land of the original covenantee; and
b) The benefit must have passed to the original covenantee’s successors in title by annexation, if there is no evidence of express assignment.
The Tribunal clarified that there are only three possible ways for successors to a covenantee to successfully enforce against successors of an original covenantor in equity:
(a) By annexation of the benefit of the covenant to the land now held by the objector;
(b) By assignment of the benefit of the covenant from the original covenantee through to the present objector; or
(c) On the basis of there existing a local law in the form of a building or development scheme.
The Tribunal was clear to point out that statutory annexation under section 78 of the Law of Property Act 1925 does not apply retrospectively. Equally, the judgement pointed out that for its predecessor, section 58 of the Conveyancing Act 1881, to apply, the benefit of a covenant is only annexed with proof of intention that the covenant should run with the land (as in Sainsbury Plc v Enfield LBC  1 WLR 590). The tribunal also provided distinct clarification as to what constitutes indication that the benefit of the covenant is to run with the land: wording such as ‘William Webb and his heirs and successors of [the benefited land]’. In this case, it was clear that the benefit of the covenant was for William Webb personally, rather than for the benefit of the owners for the time being of some particular area of ascertainable benefited land.
The tribunal referred to the judgement in Drake v Gray to highlight two clear methods of indicating annexation: ‘to describe the character in which the covenantee receives the covenant’ i.e. a covenant with [named person], owners or owner for the time being of [the land benefitted], or ‘by means of an appropriate declaration that the covenant is taken ‘for the benefit of’ whatever the lands may be’. Ultimately the wording must be such that it does not encompass simply the covenantor’s property, but rather the land actually benefiting, and accordingly the owners of it from time to time merely by virtue of their ownership.
Furthermore, by referring to Crest Nicholson, the tribunal recapped the crucial point that ultimately, for annexation to be effective, the land benefited should be easily ascertainable. In this instance, the only evidence of the covenant was the wording on the title register, as the 1910 conveyance was lost, and as such, it was not possible to identify which land belonging to William wells in fact benefitted from the covenants. It is therefore important to note in these instances, that although it might be clear that your land is burdened with the restrictive covenant, it may not be sufficiently annexed by virtue of the fact that the land benefitting from it is not clearly defined and ascertainable.
The judgement in Sutton & East Surrey provides a comforting reminder to landowners and developers that historical restrictive covenants can often be consigned to a property’s past and need not be a current worry. As mentioned in the preliminary remarks of this article, the tribunal’s workings of the merits of each objection to the application to discharge is a necessary read to all unsure as to whether to obtain title indemnity insurance.