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Land was conveyed in 1993 subject to a restrictive covenant preventing the land from being used for any purpose other than agriculture. The covenant was stated to be made with the seller and his successors in title and the owners and occupiers for the time being of adjoining land edged red and blue on a plan (the “Retained Land”).
At the same time, a separate agreement was entered into (that was not registered at the Land Registry) by which the buyers (the claimants) promised to promote the land transferred for development and to pay to the original seller an overage payment. In return, the original seller agreed to release the restrictive covenant.
By 2005, only a small part of the Retained Land remained vested in the original seller (the bed of a track). This track bed was sold together with an express assignment of the benefit of the covenant. The track bed was then subsequently sold again in 2013 to the first defendant (without an express assignment of the benefit of the covenant).
The claimants obtained a release of the covenant from the liquidators of the 2005 buyer (to whom the benefit of the covenant had been expressly assigned), believing that this extinguished the covenant. However, the first defendant claimed that it still enjoyed the benefit of the covenant.
Did the covenant just create a purely contractual right (assigned in 2005, but not in 2013), so that it was extinguished by the release that the claimants had obtained?
The covenant created a proprietary right, the benefit of which was annexed to each and every part of the Retained Land (including the track bed now owned by the first defendant). As long as the bed was capable of benefiting from the covenant (a question for another day), the first defendant could enforce the covenant.
Points to note/consider
The Supreme Court (and House of Lords) has considered through various cases the correct approach to adopt when interpreting, or constructing, contracts.
The registration gap again – another case showing the danger of delayed registration for a buyer.
A case illustrating the importance of drafting complex commercial contracts precisely and consistently.
A case examining various issues arising out of a tenant’s application to its landlord for consent to assign three long residential leases.
The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.
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