3015LAW Lecture Notes - Lecture 10: Fide, Equitable Remedy, Consideration
1. RESTRICTIVE COVENANTS
Covenants
- Form of private planning law
- Special form of promise
oPositive covenant = requirement to do something (maintain fence eg – to do with money
generally)
oNegative/restrictive covenant = restriction on doing something with/to property (eg not to
build house higher than one storey)
Restrictive covenant
- Covenants create a real property right where they “run with the land”.
- Terminology:
o benefit – right to enforce promise (in favour)
o burden – obligation to perform promise.
o covenantor – holds the estate subject to the burden of the covenant (owner subject to
burden)
o covenantee – holds the estate enjoying the benefit of the covenant.
- Qld doesn’t allow restrictive covenants
- Covenants = might transformed from personal obligation to property right that can apply to
subsequent owners
BENEFIT
- The benefit of a covenant may be passed in one of three ways:
o at common law.
o in equity.
o under statute.
- Consider each in turn.
Passing the Benefit at Law
- Two means of passing the benefit at law:
o assignment.
o annexation.
LAW - Benefit - Annexation
- Passing the benefit at law by annexation requires satisfaction of three elements:
i. the covenant must “touch and concern the land”.
ii. the covenant must have been intended to be transferred when it was created.
iii. the covenantee must hold a legal estate in the land.
- Passes even if successor-in-title initially unaware of covenant: Rogers v Hosegood.
(i) Touch and concern the land
- proprietary not personal benefit for covenantee.
- covenant must either affect the land as regards its mode of occupation or affect the value of the
land: per in Smith and Snipes Farm Ltd v River Douglas Catchment Board
oaffect land mode of occupation or the value of land
- examples:
oa covenant to build only a single dwelling on a parcel of land: Rogers v Hosegood
ocovenants restricting building heights or preserving a view;
oa covenant to repair and maintain the banks of a river to prevent the flooding of
benefited land: Smith and Snipes Farm Ltd v River Douglas Catchment Board
find more resources at oneclass.com
find more resources at oneclass.com
oa covenant to supply land with pure water: Sharp v Waterhouse
- a covenant which has been held not to touch and concern the land is a right of pre-emption/right
of first refusal to purchase: see, eg, Sandhurst Trustees v Australian Country Cinemas
- benefited and burdened land need not be contiguous but must be reasonably proximate: see,
eg, Newton Abbot Cooperative Society Ltd v Williamson & Treadgold Ltd (across the road from
each other okay); Baramon Sales v Goodman Fielder Mills (protection of business interests - 12
km okay); Clem Smith Nominees v Farrelly (sports related - 35 km away too far).
- Right of first refusal to purchase/preemption = NO
- How close burden and benefit land have to be= no clear cut rules= don’t have to be side by side
but close reasonably proximate
- Business efficacy = how close is close enough
(ii) Intention to transfer
- First, look to words of the agreement: “the covenant is made for the benefit of the covenantee
and her or his successors in title and assigns and others deriving title to the land” or “the
covenant is made for the benefit of the land retained by the covenantee”.
- If no express intention, is the need for intention in agreement rendered irrelevant by s 53(1)
PLA?:
- Express words of covenant
- S 53(1) implies it anyway – mention both
A covenant relating to any land of the covenantee shall be deemed to be made with the
covenantee and the covenantee’s successors in title and the persons deriving title under the
covenantee or the covenantee’s successors in title, and shall have effect as if such successors
and other persons were expressed.
oEnglish Courts would say no need for express intention: see Federated Homes Ltd v Mill
Lodge Properties Ltd
“The effect of this interpretation is quite revolutionary in that, provided that the covenant
touches and concerns the land, it appears that the benefit will be presumed to run with the
land regardless of whether the rules relating to express annexation and express assignment
are satisfied. The decision appears to achieve in one stroke a major simplification of a body
of laws which has long been argued to be unnecessarily complex and legalistic.”
- In Australia the same interpretation probably correct, although position technically open: see
Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (trial judge affirmative); (High Court
leaves the question open).
(iii) Covenantee must hold legal estate in land
- relevant time is at the making of the covenant.
- successor-in-title must also hold the same legal estate, but abrogated by s 53(1) of the PLA
(“persons deriving title under the covenantee”).
- Find the benefit should run
- Possible for party that derives benefit from original covenantee can still rely on benefit of
covenant = eg lease
- Establish three requirements and therefore enforceable against coventor.
Passing Benefit in Equity
- subject to limited exceptions, burden can only pass in equity èwhere have successors-in-title to
covenantee and covenantor, then covenantee will need to enforce benefit in equity (regardless of
whether the benefit runs in law).
- Same as law
- If can pass in law why in equity too?
oBecause subject to exceptions, the burden cannot pass at law = only at equity
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Special form of promise: positive covenant = requirement to do something (maintain fence eg to do with money generally, negative/restrictive covenant = restriction on doing something with/to property (eg not to build house higher than one storey) Covenants create a real property right where they run with the land . Covenants = might transformed from personal obligation to property right that can apply to subsequent owners. The benefit of a covenant may be passed in one of three ways: at common law, in equity, under statute. Two means of passing the benefit at law: assignment, annexation. Right of first refusal to purchase/preemption = no. How close burden and benefit land have to be= no clear cut rules= don"t have to be side by side but close reasonably proximate. Business efficacy = how close is close enough. If no express intention, is the need for intention in agreement rendered irrelevant by s 53(1) S 53(1) implies it anyway mention both.
