Restrictive Covenants – Whose Consent is Needed?
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Restrictive Covenants – Whose Consent is Needed?
Restrictive covenants will only bind owners beyond the original contracting party where the covenant is negative and (in recent years) protected by registration with the Land Registry. The successors to the party who imposed the covenant will be able to enforce the covenant where the covenant benefits their land and has been annexed to it.
There have been a string of cases reported over the last few years concerning the interpretation of restrictive covenants which require the consent of third parties before development or other specified works are undertaken. The cases hinge on determining whether the consent required is specific to the original seller or (alternatively) its successors. Where it is and the seller (in the case of a company) has ceased to exist or (in the case of an individual) has died, the restrictive covenants will, in effect, fall away. Much will depend on the interpretation of the wording used in each case.
The High Court concluded in Crest Nicholson v McAllister that compliance with a restrictive covenant required the consent of a specific company (as opposed to successors in title). The company in question had been dissolved and the covenant was consequently deemed to have been discharged.
The High Court considered the meaning of “Vendor” and whether that term extended to successors in the case of Churchill v Templar and Others. They reached a similar decision to that in Crest Nicholson. In the absence of any express provision in the contract extending the definition of the term to successors, the restrictive covenant was interpreted literally (and restrictively) so as to require approval to development by only the original sellers. The parties in question had since died and the covenant was therefore deemed to have been discharged.
In Margerison v Bates [2008] EWHC 1211 (Ch), the High Court held that a restrictive covenant against alterations did not give the original covenantee’s successors in title the power to give or withhold consent to plans and was discharged in the event of the death of the original covenantee. In City Inn (Jersey) Ltd v Ten Trinity Square Ltd [2008] EWCA Civ 156, the court decided the term “transferor” was limited to the original transferor and did not include the current owners of the benefited land.
By contrast the case of Mahon v Sims concerned a covenant which was expressed to “benefit and protect the Transferor’s property”. The covenant was construed so as to benefit successors in title and the consent of those successors was therefore required in order to comply with the terms of the covenant.
These cases emphasise the importance of drafting restrictive covenants carefully when seeking to police or regulate future use of land. They also highlight the importance of subsequent and prospective owners of land burdened by restrictive covenants scrutinising historic covenants to ascertain whether, as is often the case, there are means available to circumvent them and if not, what steps need to be taken in order to comply with them.
If you require any further information in relation to the points raised in this Blog or wish to discuss any of the issues contained within it please contact Mark Withers.
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