Topic10–CovenantsWhatisacovenant?• Promisesinadeedwhenyousellland

• Contractualrightsandobligationsthatrelatetolandandbindthepartiestoactinacertainwaytowardstheland

• Positivecovenant–selllandandotherpersonpromisestheywillpositivelybuildandmaintainfences

• Negativecovenant–covenantthatthebuyerwillnotbuildaskyscraperontheland• Contractualinnaturebutcantakeonproprietaryelementandbecomeattachedtoland

• Ifthisoccurs,covenantswillbindsuccessiveownersofthelandandpartiesthathaveprivityofestateinrelationtoland

• Despitenothavingprivityofcontractwiththeoriginalcontractualinstrumentthatexpressthecovenants

• Purposetopreventtheeconomicvalueofthelandwhichcanbeaffectedbyincompatibleuseofneighbouringproperty

• Positivecovenantburdenmaynotbeenforcedagainstsuccessivetitleholders• NegativecovenantburdenmaybeenforcedagainstsuccessivetitleholdersPositivecovenants• ThecovenantormustdoX,Y,Z• Generalruleofthumbisthatifitinvolvesspendingofmoney,itisapositivecovenant• EG.Thecoventormustbuildandmaintainthefence

• Thecoventormustcontributetothemaintenanceofashareddriveway• Thecoventormustrepairasharedroof

• RemedyforbreachofpositivecovenantisspecificperformanceNegativecovenant• ThecoventormustnotdoX,Y,Z• Generalruleofthumbisthatitisanythingthatdoesn’trequirethespendingofmoney

• Cancomplywiththecovenantbydoingnothing• EG.Thecovenantorisnottobuildoveracertainheight

• Thecovenantorisnottobuildmorethanonehouseontheland• Thecovenantorisnottodecorateoutsidetheheritagecolourscheme

• Canberegisteredontitle• IfXisbeneficiaryorburdened,youcanregisteritonthetitle

• RemedyforbreachofnegativecovenantisaninjunctionCovenantvs.Easement• Bothareincorporealinterests

Covenantee–thevendor,personwhobenefitsfromthecovenantCovenantor–thepurchaser,personwhoownstheburdenedlandPositivecovenant–acovenantthatapersonMUSTDOsomething,usuallyentailsspendingofmoneyNegativecovenant–acovenantthatapersonMUSTNOTDOsomething

• Anegativeeasement–EG.Preventingapersonfrombuildinginfrontofaview• Basedonproprietaryrights• Benefitisthatitisaproprietaryinterestandpassesontosuccessorsintitle

• Enforceableinrem• Fundamentally,aninterestintheland

• Weaknessisthatnegativecovenantsarelimitedtotypicallyairandlight• Restrictivecovenants

• Similartonegativeeasement• Contractualrights,andnoproprietaryinterests

• Contractualobligationenforceableagainstcurrentpartiestoestate• Benefitisthatthecategoriesarenotclosedandcancovenantforanything

• Consequencesisthatsomeonemaynotbeinterestedinbuyingland,butyouareallowedtohavethecovenantsnonetheless

• WeaknessisthatitdoesnotautomaticallybindsuccessorsintitleRequirementsforrestrictivecovenant1. Dominanttenementbenefitedbyrestrictivecovenantandservienttenementburdenedbyrestrictive

covenant2. Thecovenantisnegative3. Instrumentmustexpressaclearintentiontobindthelandandsuccessorsintitle• Restrictivecovenanttoberecordedonregister–TransferofLandActs88

• EG.XsellslandtoY• Covenantstatesthat“unlessYobtainsconsentofX,Yshallnotconstructmorethanone

dwellingontheburdenedlot;usetheburdenedlotforanypurposeotherthanasaprivatedwelling;subdividetheburdenedlot;oroperateupontheburdenedlotabusiness”

• DTisX’sland,STisY’slandbecauseheisburdened• CovenantisnegativebecauseitpreventsYfromdoingthings

Contractualnatureofcovenants• Covenantisapromiseinadeed

• Canbecontractualrightthatregulatesthewayinwhichlandistobeused• Ifrelevanttestsofinterconnectednessbetweencovenantandlandaresatisfied,thecovenantwilltake

onaproprietarynatureandbecomeaffixedtoland• Anyconveyanceoflandwillalsoconveythecovenantandbindthethirdpartypurchaser

• CovenantcontractuallyenforceablebetweenXandY• Ifitsatisfiestherelevanttests,covenantcanattachtolandandpasstoanyTPpurchaserYsells

to• BindstheTPandallowXtoenforcethecovenantagainsttheTP

Successorsintitle,andpassingbenefit/burdenforpositive/restrictivecovenants

SuccessorsintitleforBENEFITTEDland• Commonlawallowsbenefitofcovenanttopasstosuccessorintitle,aslongasthecovenanttouches

andconcernstheland• Purchaserofbenefittedlandmayenforcethecovenantagainstownerofburdenedland,ifthe

benefitpasseswiththeland

• Atcommonlaw,benefitwillpassbyannexationorexpressassignment• IfXisbenefittedbyrestrictivecovenantforY,thenXandYareinprivityofcontract• XiscovenanteewhosellsthelandtoZ–Zbecomesthecovenantee• Cantransferthebenefitofrestrictivecovenantasanexceptiontoprivityofcontract

• XandZowenoobligationandsounderprivityofcontract,XcanassigncovenanttoZSuccessorsintitleforBURDENEDlandofnegativecovenant

• Thereisprivityofcontractforburdenedland• IfYsellsburdenedlandtoZwithnotice,atcommonlaw,Xcannotenforcetherestrictivecovenant

againstZ• Inequity,thecovenantcanbeenforced• Burdenofcovenantcannotpasstosuccessorintitle,butitcanbepassedinequity• Butmustbeannexedtoland,covenantmustbenegativeonly,andthatthereisanintentionto

bindsuccessorsintitle

PrivityofcontractXsellslandtoY

XsellslandtoZ

CanZenforcetherestrictivecovenantagainstY?Covenantmustbeannexedtoland

PrivityofcontractXsellslandto

YsellslandtoZ

IfYsellsburdenedlandtoZ,canXenforcetherestrictivecovenantagainstZ?Commonlaw=noEquity=yes Mustbeannexedtoland

CovenantmustbenegativeIntentionthatsuccessorsintitle

bound

SuccessorsintitleforBURDENEDlandofpositivecovenant• IfXsellslandtoYwithcovenantthatYmustbuildandmaintainfences

• YisburdenedbythecovenantandXisbenefitted• Thereisaprivityofcontractforburdenofpositivecovenant

• IfYsellsburdenedlandtoZ,XcannotenforcethepositivecovenantagainstZ• Burdenofpositivecovenantdoesnotbindsuccessorsintitle–AusterberryvCorporationof

Oldham(1885)

• ExceptionstoAusterberryvCorporationofOldhamthatpositiveburdencannotbepassedonto

successor• Chainofdeeds

• Eachcovenantoragreestoalwaysincludesamecovenantinanysubsequentsale• Subsequentpurchaseragreestobeliableofcovenantisbroken

• Ancientprincipleofbenefit/burden–ThamsemeadTownvAllotey(1998)• Cannottakebenefitofdeedwithouttakingitsburden• Benefitsrunwithland• OnlyapplieswherecovenantwasintendedtoconveyabenefitontheSTaswellasa

burden• Usuallyinsituationswerenumberpeoplehaveenteredintocovenantsubjecttoa

burden,butformutualbenefitofallpartiestothecovenant

AusterberryvCorporationofOldham(1885)• 1937,peopleformedacompanyandsoldafractionoftheirland• Positivecovenantthatthecompanywhoownedthehighwayhadtobuildandmaintainthehighway• CompanybuiltthehighwayandsoldittoOldham• Austerberryboughtthebenefittedlandfromthecompany,andOldhamwasthesuccessorintitlefor

theburdenedland• Thecompanywasoriginallyburdenedbypositivecovenanttopayforroadrepairs,butcompanysold

thatlandtoOldham• AusterberrysoughtcostsofrepairfromOldhamin1881• HELD:Positivecovenantdoesnotbindsuccessorsintitle

• Personalobligationtoperformcannotbeenforcedagainstapersonnotprivitytothecontract• Covenantbetweenoriginallandownersandcompanywhoboughtthelandwasapersonal

covenant• Cannotenforcepersonalobligationonsomeonewhoisnotprivytocontract

ThamsemeadTownPtyLtdvAllotey(1998)• Landdevelopersoldlandtopurchaserwithcovenant• Successorintitleownedanestatewithcommunalgardenpathsandroads• Onehousesoldtoapurchaserunderacovenantthat“purchaserandsuccessorintitlemust

contributeandpayforthemaintenanceofthepathsandroadsandgardens”• Partofinitialcontractwasthatpurchaser,iftheysoldtheland,hadtoincludesamecovenantto

obligenextowner• PurchasersoldtoXandforgottoincludecovenantthatXwouldpayforpathandroadsandgardens• Ruleofreciprocityneedstwoconditions:

• Correlationbetweenburdenandbenefit• Covenanter’ssuccessorsintitlemusthaveopportunitytoelectwhethertotakeorrenounce

benefit• HELD:Willrecogniseruleofrecpriocity,butnotfulfilledhere

PassingBENEFITofpositivecovenantatcommonlaw• • Requirementsforpassingbenefitofpositivecovenantatcommonlaw

• Mustbeabenefitandnotaburden• Musttouchandconcerntheland

• Directaffectsthebenefitedland• Intentionforsuccessorsintitletobenefitfromthecovenant• Thesuccessorsintitletotheoriginalcovenanteemusthavelegalinterestinthelandtobe

benefited• Thelandwhichisbenefitedmustbeidentifiedoridentifiable

• “Touchandconcerntheland”test• Theburdenofpositivecovenantcannotbeenforcedagainstsuccessorintitlewithnonotice• Thebenefitofpositivecovenantcanbindsuccessorsintitleifittouchesandconcernstheland• Theremustbeanintentionthatbenefitofthecovenantrunwiththeland–SmithandSnipes

HallFarmvRiverDouglasCatchmentBoard• Thereisastatutorypresumptionthattherewasanintention–PropertyLawActs78

• “Itmustaffectthelandasregardsmodeofoccupation,oritmustbesuchasperseandnotmerelyfromcollateralcircumstances,affectsthevalueofland,anditmustthenbeshownthatitwastheintentionofthepartiesthatthebenefitthereforeshouldrunwiththeland”–SmithandSnipesHallFarmvRiverDouglasCatchmentBoard

PrivityofcontractXsellslandtoY

XsellslandtoZ

CanZenforcethepositivecovenantagainstY?Covenantmustbeannexedtoland

X(covenantor)ownsLot1andLot

2XsellsLot2with

Y(covenantor)purchases

benefittedland

Z(covenantee)purchasesburdenedlandwithcovenantthathemustrepair

thefences

TownofCongletonvPattison(1808)• TownleasedthelandtoXfor300years,Xcovenantedandburdenedhimselfthathewouldgive

noticeofthepersonsworkingatthesilkmillandnotemployanypersonfromoutsidetheparish• XsoldmilltoPattison,whobreachedthecovenants• HELD:Pcouldonlybeboundbythecovenantifittouchesandconcernstheland

• “Inordertobindtheassignee,thecovenantmusteitheraffectthelanditself,suchasthosewhichregardthemodeofoccupation;oritmustbesuchasperseandnotmerelyfromcollateralcircumstances,affectthevalueofthelandattheendoftheterm”

• Barringoutsidesfromworkinginthemillhasnodirecteffectontheland’svalue• Maycollaterallyaffectthevalueifthetownisseenas‘ghetto’,butwon’taffectthe

land• Covenantstorestraintheexerciseofparticulartradesdonottouchandconcernland• Here,stateofpremiseswouldbethesameattheendoftheterm,whethertheparishbe

moreorlessburdenedwithpoor

• PropertyLawActs78• Atcommonlaw,rulethatassigneehadtoacquiresameestateastheoriginalcovenantee

• EG.Tenantcouldnottakebenefitiftheoriginalestatewasfeesimple• S78(1)–“Acovenantrelatingtoanylandofthecovenanteeshallbedeemedtobemadewith

thecovenanteeandhissuccessorsintitle,andthepersonsderivingtitleunderhimorthem,andshallhaveeffectasissuchsuccessorsandotherpersonswereexpressed”

• Covenantappliestoallcornersoffeesimple• Evenifyouforgottowriteintentiontobindsuccessorsintitle,there’llbeanassumption

thatyouintendedtoPassingtheBURDENofarestrictivecovenantinequity• Equitywillenforceburdenofacovenantbywayofaninjunctionorcompensationinlieu,whereitis

clearthatthepurchaserwasawareofthecovenant–TulkvMoxhay• Successorsintitle

• IfXsellstoYwithanegativecovenanttonotbuildaskyscraper,andYsellstheburdenedlandtoZ,XcannotenforcethecovenantonZatcommonlaw

• XcanenforcethecovenantonZinequity,underTulkvMoxhay• Requirementsforpassingburdenofarestrictivecovenantinequity–TulkvMoxhay

• Restrictivecovenantmustbeannexedtotheland• Covenantmustbenegative• Intentionthatsuccessorsintitlebebound

• Restrictivecovenantmaybeenforceableagainstsuccessorsintitleinequity,whereitisclearthat

successorhasenteredintocontracttobuythelandandisawareoftheexistenceofthecovenant• Notwhethercovenantrunswithland

TulkvMoxhay• TownedlandinLeicesterSquarethathadhousessurroundingagarden,Tretainedownershipof

somehousesandsoldthegardentoELMSwithrestrictivecovenantsayingELMSandsuccessorsintitlewouldkeepandmaintainsquaregardeninanopenstate,uncoveredwithanybuildings,allowinhabitantsofLeicesterSquaretohavekeysandadmissionatanytime

• ELMSsoldtoMwithnoticeofcovenant,butnoformalinclusionofcovenant• Msoughttodevelopongarden,Tsoughtinjunction• Atcommonlaw,Misn’tboundbytherestrictivecovenantasMnotprivytocontract• HELD:BurdencouldbepassedbecauseMknewoftheburden

• Didn’tmatterwhetherburdenranwiththelandornot• “Thequestioniswhetherapartyshallbepermittedtousethelandinamanner

inconsistentwiththecontractenteredintobyhisvendor”• Nothingcouldbemoreinequitablethanthattheoriginalpurchasershouldbeabletoseelthe

propertythenextdayforagreaterprice• Ifitwascontractbetweentwopeople,courtmaygiveestoppel,andthereforetheyshouldbe

abletodoithere• Requirement–“theburdenofrestrictivecovenantswillonlyrunwiththelandinequity

againstsubsequentholderwithnoticeofthecovenantwhenthecovenantisenteredintoforthebenefitofsomeparcelofland”

• Havetoknowwhatparceloflandwillbebenefited• Morevaluablelandiflivedingardens,thannexttoskyscraper• “Certainarrangementsdesignedtoprotectsuchvalueandwhichgobeyondtheframe

ofcontractmaybeenforcedinequity,ifnotatlaw”•

• Requirementsforpassingburdenofrestrictivecovenantinequity–ForestviewvPerpetual• Itisarestrictivecovenant• Thereisanintentiontoimposetheburdenonaknowingsuccessorintitle• Noticeismadetothesuccessorintitle• Thebenefitedlandcanbeidentified

• Itisarestrictivecovenant• Restrictivecovenant=restrictsortakesawayrightofpurchaseroverlandthatthepurchaser

wouldhaveotherwisehad• Equitywillonlyenforceburdenofrestrictivecovenant• Todetermineifrestrictiveorpositive,courtexamineseffectofcovenant,ratherthanwording• Generally,ifrequiresinactionofsomekind/refrainingfromactinginaway,itisrestrictive

• Intentiontoimposeburdenonknowingsuccessorintitle• Designedtopreventpersonfromescapingcovenantthattheywereawareofwhenpurchasing

theland• Focusonpurchaserratherthanwhethercovenanttouchesandconcernsland• Intentionofpartiesdeterminedwithreferencetotermsofcovenant

• EG.“toXandhisheirs,assigneesandsuccessors”• Noticetothesuccessorsintitle

• Successorintitleonlydeemedtohavebeennotifiedofcovenantwhereexistenceandnatureofrestrictionandlandsaffectedbyrestrictionareclearlyindicatedindocument,notedontitleoravailabletopersonssearchingtheregister–ReDennerstein91963)

• Identificationofbenefittedlandorbenefitofaninterestintheland• Covenant,tobeenforceableagainstsuccessorsintitle,mustspecifyandidentifythebenefitted

land,asopposedtomerelyprovidingapersonalbenefittoowner–LondonCountyCouncilvAllen(1914)

• Equitywillonlyenforceburdenofcovenantagainstsubsequentpurchaserwithnoticeifcovenantisenteredintoforthebenefitofaninterestinland–ClemSmithNomineesPtyLtdvFarrelly

• Benefittedlanddoesnotcurrentlyneedtobeownedbyoriginalcovenanteeforownerofburdenedlandtobeboundbycovenant

• Todeterminewhethercovenantbenefitsidentifiablelanddependsoncircumstances

Forestview&SilkchimevPerpetual• Perpetualboughtshoppingcentreandabitofextraland,Xretainedsomeofthelandadjacentto

P’slane• XagreedtorestrictivecovenantsayingthatXdoesnotuselandforretailsaleofgoods• Phadthebenefittedland• ForestviewboughtthelandXhadretained,andFwantedtobuildshoppingcentreonburdened

land• Psaidno,andthatitbreachedtherestrictivecovenantwithX• FsaidthewaytheagreementwasdraftedmeantthatTulkvMoxhaydidn’tapply• Phadtheshoppingcentre,andwantedrestrictivecovenantbutdidn’twanttenantsinthe

shoppingcentretryingtoenforcetherestrictivecovenant• HELD:“Itwouldbeunconscionableinthosecircumstancesforthecovenanttobeunenforceable

againstF”• Ptooknoticethatrestrictivecovenantwasinplace,anditwasenforceableevenifitwas

notannexedtotheland• Thecovenantdid‘touchandconcern’thelandbecauseitenhancedthelandsvalue

• Solongastherestrictivecovenantprovidesabenefit,itcanbeconsideredastouchingtheland

• Tenantscouldnotenforcethecovenantbecausetheylackedprivityofestate

• Factorstakenintoaccount:• Distancebetweenburdenedlandandpurportedbenefittedland• Whethercovenantrelatestothewayinwhichthelandisused• Whethertherestrictioniscapableofbenefitingthewholeland

• WherelandisregisteredonTorrenssystem,covenantmustbereasonablyidentifiablefromdocumentationofregisteredtitle–ClemSmithNomineesvFarrelly

PassingtheBENEFITofrestrictivecovenantatcommonlaw• Benefitofpositiveorrestrictivecovenantmayrunwiththelandsoastobeenforceablebysuccessorin

titletooriginalcovenantee• Passingthebenefitofrestrictivecovenantatcommonlawisthesameaspassingthebenefitofa

positivecovenantatcommonlaw• Musttouchandconcerntheland• Intentionforsuccessorsintitletobenefitfromtherestrictivecovenant• Thesuccessorintitletotheoriginalcovenanteemusthavelegalinterestinlandtobebenefited• Thelandwhichisbenefitedmustbeidentifiedoridentifiable

• Allowssuccessoroforiginalcovenanteetoenforcethecovenantonlyagainsttheoriginalcovenantor

PassingtheBENEFITofarestrictivecovenantinequity• Forbenefittopassinequity,itmustbeestablishedthatittouchesandconcernsthelandandan

intentionforthebenefittorunwiththeland,subjectivetolegislativepresumptionins78• Forestviewtestsfor“touchandconcern”and“identifyingthebenefittedland”

• S78–oncethresholdrequirementisreached(thatcovenanttouchesandconcernstheland),s78deemsthatcovenantwillinfactrunwiththelandandshallhaveeffectasifthecovenantwasmadewithallthesuccessorsintitle–FederatedHomesvMillLodgeProperties

• Equitycanfillthegapsandenforcethecovenantwhereclaimantonlyhasanequitableinterestinland

• Requirementstopassthebenefitofrestrictivecovenantinequity

FederatedHomesvMillLodgeProperties(1980)• Mowneddevelopmentsite,3acres• 1871,MtransferredbluelandtoD,Drequiredtoenterintocontractrestrictingnumberof

dwellingsbuiltonlandsoasnottoreducethenumberofunitswhichthevendormighteventuallyerectontheretainedland(greenandredland)

• intentiontoburdenbluelandandbenefitredandgreenland• Partiescouldonlybuild900dwellingsallup,soifmorethan300housesbuildonblueland,it’ll

eatintotheamountofhousesthatcanbebuiltongreenandredland• Fwasthecovenantee,andbecameownersofgreenandredland,benefitwasannexedin

paperworktogreenland• Forredland,transfersdidn’tcontainexpressassignmentofbenefitofcovenants• HELD:Benefittoredlandwasannexedasaconsequenceofs78PropertylawAct

• Aslongasbenefittouchesandconcernsland(requiredbys78),s78deemsthatcovenantistobindallfuturesuccessorsofthatland

• Determineds78tobeappliedbroadly• S78providespresumptionofintentioninsituationwherenointentiontothe

contrarycanbeinferredfrompartiesconduct• Ifthebenefittouchesandconcernstheland,s78immediatelymakesbenefitenforceable

bycovenantee’ssuccessorsintitle

• Musttouchandconcerntheland• Intentionforsuccessorsintitlebenefitfromtherestrictivecovenant• Thesuccessorsintitletotheoriginalcovenanteemusthaveanequitableinterestinthelandto

bebenefitted• Thelandwhichisbenefittedmustbeidentifiedoridentifiable

Assignments

Assignmentofthebenefitnotannexedtoland• Wherethebenefitofacovenanthasnotbeeneffectivelyannexedtothecovenantee’slandortoavoid

ambiguityaboutwhetherthecovenantwilltouchandconcerntheland,thepartiesmaydoaformalassignment

• Canbeexpresslyassignedtosuccessorintitle• Equivalentoftransferralofchoseinactionfromoriginalcovenanteetosuccessorintitleofcovenantee• AssignmentmustbecontemporaneouslywithtransferofbenefitedlandtoTP

• Annexationpreferred–moreconvenientthanannexationwherecovenantautomaticallytransferstoland

• Assigneewhoseekstoenforceagainstoriginalcovenantoronlyhastocomplywithstatutoryprovisionsforassigningchoseinaction

• “Anabsoluteassignmentbywritingunderthehandoftheassignorofanydebt,orotherlegalthingin

action,ofwhichexpressnoticeinwritinghasbeengiventothedebtor,trusteeorotherpersonfromwhomtheassignorwouldhavebeenentitledtoclaimsuchdebtorthinginaction,shallbeandshallbedeemedtohavebeen,effectualinlawtopassandtransfer,fromthedateofsuchnotice(a)thelegalrighttosuchdebt,(b)Alllegalandotherremediesforthesame;and(c)thepowertogiveagooddischargeforthesamewithouttheconcurrenceoftheassignor”–S134PropertyLawAct

• Requirements:• Assignmentmustbesetoutinwritingbyassignor• Covenantmustbeintendedtobenefitidentifiableland,notthecovenanteepersonally

• Beanabsolutetransferoftherightandthewholeblockofland• Assignmentmustoccurcontemporaneouslywithtransferofbenefitedland

• Covenantcanonlybeenforcedoverthebenefittedlandandtherefore,mustbemutuallyconferred

• Covenantcannotbetreatedasindependentinterestbecauseitformspartoftheland

• Oncethelandistransferredwithoutcovenant,itceasestoexist

Vendorofbenefitedland

Successorintitleofbenefitedland

Covenantor

Expressassignment

Enforceablesolongasexpressassignmentcomplieswithstatute

• Adequateproofofanintentiontoassignthebenefitofthecovenantandcovenanteemusthavedoneeverythingnecessarywhichtheyalonecandotovalidassignment

• Expressnoticeinwritingmustbegiventocovenantor• Annexationvassignment

• Oncecovenantisannexed,itrunswiththeland• Assignmentrequiresapositiveactoftransfer

• Mustbesetoutexpressly• Assignmentinvolvestransferinitsownright,andcovenantisnotattachedtoland

Failuretocomplywithformalities• Assignmentwillbeinvalidandbenefitofcovenantwillnotbelegallyenforceablebyassignee• Assignmentmaybeenforceableinequityifequitabletestofintentionissatisfied

• Clearthatintentionofpartieswastoassignthebenefitofthecovenantdespitefailingtocomplywiththeformalityrequirements

• PresumptiveintentiontoensurethatthebenefitrunswiththelandRequirements• Ifassigneewishestoenforcecovenantagainstsuccessortotheoriginalcovenantor,theymustcomply

withrequirementsforassignmentinequity• Therestrictivecovenantisintendedtobenefitthecovenantee’sland• Thecovenantwasassignedwiththeland

• Cannotassignburdenofrestrictivecovenantatcommonlaw• Equitywillassist,andwillonlydosoforcovenantsthatareannexedtotheland

Buildingschemes

• EG.Allhousesofasimilartype–reciprocalcovenant• Subdivisionanddevelopmentoflargeareasoflandinthecaseofahousingestate

• Subdividesthatlandandsellsoffpartsofittopurchasersatdifferenttimes• Developmentmayrequirethatallpurchaserstoenterintorestrictivecovenanttomaintain

characterofestate• Restrictivecovenantovereachlotaimedatsustainingthevalue,characterandamenityofthe

land• Purposetoprovidereciprocalbenefitsandburdenstoeachlottoprovidesystematisedland

developmentscheme• Problemwithdevelopmentschemes

• Difficultytoanyrestrictivecovenantsovertheentirelandbecausebenefitofacovenantwillonlybeenforceablebytheoriginalcovenanteeorsuccessorsintitleofbenefitedland,wherebenefitrunswithland

• EG.Xowneroflargeblock,subdividesintodevelopmentscheme;makeseveryonesignrestrictivecovenantsayingtheywon’tbuildinacertainway;it’llbenefitotherpeoplesothathousesandneighbourhoodaresimilar;everyoneburdenedbyeveryonebenefits

• Issuethatdeveloperwon’tsellallthelotsatthesametime• XsellsLot1toA,XcovenantswithAthatAwillnotdoanythingtochangethecharacter

oramenityofherlot,Aisburdenedandrestofthelargeblockbenefited;• XsellsLot2toB,andcovenantsthesame,butBisburdenedandbyA’scovenant,A’slot

cannotreceivebenefitofB’scovenant–ithasalreadybeensoldsonolongerbelongstoX

• Continuesupuntillastlotwhichwillhavebenefitofallthecovenantsitself,butthereisnolandlefttoreceivebenefitfromitscovenant

• Equitableprinciplessetoutthatincaseofdevelopmentscheme,mutualcovenantscanbeenforced,despitedateofsale

• Basisisequitableprincipleofmutuality

• Buildingschemes

• Mutuality/reciprocityunderlyingelementofbuildingscheme• Commonvendorintendedtoconferreciprocalburdensandbenefitsoversubdividedlots• Purchaserswereawareatthetimeofpurchasethatrestrictionsweretobenefit

commonvendorandsubsequentpurchasersderivingtitlefromcommonvendor• Mutualitymustbeclearlyestablishedonthefacts–SmallvOliver&Saunders• Purchaserintendedtotakeboththebenefitandburdenoftherestriction• Anintentiontoconfermutualitymustbeclearfromthegeneralbuildingschemeplan

EllistonvReacher(1908)• Restrictivecovenantthatpurchasercouldn’tbuildhotelonpropertyorusebuildingashotel• PandDeventuallyboughtlots,DbuiltahotelandPsoughttoenforcetherestrictivecovenant

againstD• HELD:Doctrineofbuildingschemes–requirementtohavereciprocalcovenantsenforced

• Benefitofcovenantcannowbeenforcedbymutualownersoflotsunderabuildingscheme,regardlessofdateofsale

• Ifitcanbeestablishedthatdevelopmentexists,thebuildingschemeruleswillbeenforcedbyequity:

• Thereisacommonvendorfromwhomalltherespectivetitlesintheestatescanbederived

• Generalschemeofdevelopment,thatentirelandissubjectedtocovenants• Vendorhaslaidouttheestateindefinedlotssubjecttorestrictions

intendedtobeimposedonallthelots• Therestrictionswereintendedbythecommonvendortobeandwereforthe

benefitandburdenofallthelotsintendedtobesold• Bothpartiespurchasedtheirlotfromthecommonvendorwiththeintention

mutualitythattherestrictionsweretorunwiththelandforthebenefitofallthelotsincludedinthegeneralscheme

• Ifallrequirementsabovearemet:• Eachlotshallbesubjecttotheburdenandhavethebenefitoftherestrictive

condition• Restrictivecovenantswillbeenforcedagainstsuccessorsintitlebyequity

• BuildingschemesandTorrensland

• WherebuildingschemeexistsoverTorrensland,theexistence,benefitsandrestrictionsofanyrestrictivecovenantsonlyvalidifnotedonthetitleorinaninstrumentthatisavailabletoapurchaserwhoissearchingtheRegister–ReDennerstein

• Mustbeindicatedinthenotification

Extinguishment

Modificationandextinguishmentofcovenants• Mutualownership

• Restrictivecovenantextinguishedbylawifbenefitedandburdenedlandcomeintocommonownership

• Onceextinguished,cannotberetrieved–ReTiltwood(1978)• Notapplicabletobuildingschemes,becauseofequitablecreation

• Wheretherehasonlybeenpartialunityandthewholeareahasnotcomeintocommonownership,itisinappropriatetoassumethatthepartiesintendedextinguishment–TexacoAntillesLtdvKernochan

• Theremustbecompleteunity,notmerelyofownershipbutalsoofpossession–PostInvestmentsPtyLtdvWilson(1990)

• Release• Expressagreement–s84(1)(b)PropertyLawAct

• Deedofreleasebetweenownersofbenefitedandburdenedland• Impliedagreement–s84(1)(b)PropertyLawAct

• Ownercannotenforcetherestrictivecovenantwhereshehassubmittedtoacourseofusagewhichisdirectlyinconsistentwiththerestrictivecovenant

• Statute

SmallvOliver&Saunders(2006)• Lotssubdividedovertime,eachhadsamerestrictivecovenanttouselandasprivateresidence• N1chosetosubdividelandandusepartofitforaroad• N2saidthatitwasnotusingitforuseofprivateresidence• Noclearevidencethatpurchaserswereawareofreciprocalnatureofthecovenants• HELD:Nocovenant

• Wasn’tclearthatpurchasersknewthattherewerereciprocalcovenantsinplace• Smallhadthebenefitviaannexation,butnotviabuildingscheme• Noevidencetoshowthatthepersonusinglandasroadkenwofthereciprocalcovenants

involved• EllisonvReachertestused

• Despitetwosuccessivetransferors,itdidnotdetractfromcommonvendorrequirement

• Clearlycommonvendor,anddoesn’tmatterthatpartiesweregenerationsdowninsuccessorsintitle

• Therewassystematicsale,anddevelopmentofestateisindicationthatestatehasbeenlaidoutinplots

• Therequirementofthecommonbenefitisindicatedbycovenantsthemselves• Therewasnomutualintentiontobenefitorbeburdened

• Areamustbedefinedandmustbenoticetovariouspurchasers• “Reciprocityisthefoundationoftheideaofascheme…hemustknowboththeextentofhis

burdenandtheextentofhisbenefit”

• Statutoryprovisionsallowingformodificationofextinguishmentsofrestrictivecovenantuponspecificstatutorygrounds

• Cangotocourtandaskthemtochangeorextinguishrestrictivecovenant• Iftherearechangesmakingtherestrictivecovenantobsolete,orifrestrictivecovenant

continueditwouldimpedereasonableuseoftheland

Remedies• Infringement

• Contractualremediesapplytocovenants• Generallydamagesforbreachofcovenant• Alllossflowingfrombreachtorestorecovenanteetooriginalposition

• Actuallossincurredandlossofbargaindamage• Equitableremedies

• Specificperformance• Equitycompensationincludingdamages• Mandatoryinjunction• Usualequitablediscretionsapply

StanhillPtyLtdvJackson&Ors(2005)• Jwantedtoknockdownhouseanddeveloptownhouses• 81ownersofotherhousesprotested,soughttomodifyrestrictivecovenantunders84• Jarguedtherehadbeensignificantchangesinthecharacterofneighbourhoodsincethecovenant

wascreatedthatrenderedthataspectofthecovenantobsolete,andthatnopersonwouldbesubstantiallyinjuredbymodification

• HELD:Covenantnotobsolete,despitechangestoneighbourhood• Covenantsobjectiveistopromoteresidentialareathathasonehouseperlot• Willonlybeobsoleteiforiginalpurposecannolongerbefulfilled• Questionoffacts• S84(1)(a)–reasonableuseofthelandisbeingimpededbythecovenantbecauseitisa

reasonableuseofsuchlargelandtohavemorethanonedwelling• S84(1)(c)–fivetownhouseswouldcreatesubstantialinjurytoothers,detrimentalto

neighbourhood