Site%20Acquisition%20and%20Development%20Online%20Lecture

1
Site Acquisition and Development Online Lecture

• The use of Constructive Trusts in commercial
  negotiations
• Restrictive and Positive Freehold covenants

2
Constructive Trusts ofthe Family Home

• Typically a family home scenario will involve a
  couple where the house is held in the name of one
  of them and upon breakdown of the relationship
  the other seeks to establish that they have a
  beneficial interest in the house. An interest
  may be awarded by the court under a constructive
  trust
• Leading case Lloyds Bank Plc v Rosset (1991) 1
  A.C. 107

3
Constructive Trusts in Joint Venture Agreements

• Banner Homes Holdings Ltd (formerly Banner Homes
  Group Plc) v Luff Developments Ltd (No.1)
• (2000) 2 All ER 117

4
The Pallant v Morgan Equity

• Pallant v Morgan (1952) 2 All ER 951

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Articles

• Constructive Trusts and non-binding agreements
• M.P. Thompson, Conveyancer and Property Lawyer
  2001 (Conv. 2001, May/June, 265-276)
• The Pallant v Morgan equity?
• Nicholas Hopkins, Conveyancer and Property Lawyer
  2002 (Conv.2002, Jan/Feb 35-49)

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Restrictive and PositiveFreehold Covenants
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Restrictive or Positive Covenant?

• The general test
• What is the general test?
• Exercise or -?
• 1. To keep no sheep
• 2. To use for only as a public house
• 3. Not to build more than 20 houses
• 4. Not to build within 20 yards of the boundary
• 5. To contribute to the cost of maintaining a
  shared drive
• 6. Not to allow the property to become infested
  with rabbits
• 7. To keep the property in good repair

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Restrictive Covenants passing the burden

• AT LAW - the burden CANNOT pass
• Austerberry v. Oldham Corporation (1885).
• IN EQUITY -
• the burden CAN pass PROVIDED the conditions
• laid out in Tulk v Moxhay (1848) 2 PH 774 (and
• established by subsequent case law) are satisfied
  see
• next slide

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Restrictive Covenant Passing the Burden. Tulk
v Moxhay

• Covenant must be restrictive (negative)
• 2. Covenantee must retain land at date of
  covenant
• LCC v Allen 1914 3 KB 642
• 3. Covenant must accommodate covenantees land

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Restrictive Covenant Passing the Burden. Tulk
v Moxhay

• 4. Parties must intend the burden to run with
• covenantors land - can be express, or implied
  under s.79 LPA 1925 (next slide)
• 5. Notice/Registration requirements must be met

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Restrictive Covenants Passing the Burden

• s.79 LPA 1925
• A covenant relating to any land of a COVENANTOR
  shall, unless a contrary intention be
  expressed, be deemed to be made by the covenantor
  on behalf of himself and his successors in title

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Restrictive Covenants Passing the Benefit

• AT LAW
• the benefit can pass
• - see later
• BUT FIRST
• we will consider the rules
• IN EQUITY

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Restrictive Covenants Passing the Benefit in
Equity

• 3 METHODS-
• 1. ASSIGNMENT
• 2. ANNEXATION
• express
• statutory
• BUILDING SCHEMES (SCHEMES OF
• DEVELOPMENT)

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Express Assignment

• The benefit of a covenant is a chose in action
• Effect
• What is the effect of an assignment?
• There must be an unbroken chain of assignments

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Annexation

• means that the benefit
• - is nailed to the land
• - becomes dug into the soil of the land
• - is stamped on the land
• therefore automatically passes with the land
• whenever it is sold

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Express annexation

• Sample wording evidencing an intention to annex
• The Covtor with the intent and so as to bind
  the Property into whosoever hands the same may
  come and to benefit and protect the land retained
  by the Covtee or any part thereof, hereby
  covenants with the Covtee
• not to keep pigs on the Property

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Express Annexation

• An issue that arose in the case of
• Re Ballards Conveyance 1937 Ch. 473
• If a covt. purports to annex the benefit to all
  the land but, in
• fact, only part of the land is capable of
  benefiting, does the
• benefit get annexed to that part?

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Statutory Annexation

• Addressing the issue
• appropriate wording in the deed of covt
  
• The later case of Federated Homes v Mill Lodge
  Properties Ltd 1980 per Brightman L.J.
• I find the idea of annexation of a covt to the
  whole of the land but
• not to a part of it a difficult conception
  fully to grasp. ..I would
• have thought that, if the benefit of a covt
  isannexed to the land
• it is annexed to every part thereof, unless the
  contrary clearly appears

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Statutory Annexation

• s.78(1) LPA 25
• A covenant relating to any land of the
  covenantee shall be deemed to be made with the
  covenantee and his successors in title and the
  persons deriving title under him or them, and
  shall have effect as if such successors and other
  persons were expressed

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Statutory Annexation

• Brightman LJ
• if the condition precedent of s.78 is
  satisfied, that is to say, there exists a
  covenant which touches and concerns the land of
  the covenantee,
• that covenant runs with the land for the benefit
  of his successors in title

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Building Schemes

• THE EFFECT OF A BUILDING SCHEME
• A local law
• All purchasers of plots in the scheme can
• enforce the restrictive covts between themselves
  (irrespective of the date on which they or their
  predecessors in title bought their plots).

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Building Schemes

• What are the two requirements for a building
  scheme?
• - Elliston v. Reacher 1908 2 Ch 374.
• Re Dolphins Conveyance 1970 2 All ER 664

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Positive Covenants Passing the Burden

• AT LAW IN EQUITY
• the BURDEN of POSITIVE COVTS
• CANNOT pass
• Austerberry v. Oldham Corporation (1885) 29 CHD
  750.
• Rhone v Stephens (1994) 2 ALL ER 65
• per L.Templeman
• it is knowledge imparted at an elementary
  stage to every student of the law of real
  property that positive covenants affecting
  freehold land are not directly enforceable except
  against the original covenantor

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Positive Covenants Passing the Burden

• Indirect methods of enforcement include-
• the rule in Halsall v Brizell 1957 Ch 169 see
  next slide)
• 2. creating a chain of indemnity covenants
• E R sells to
  S sells toT
• i.c
  i.c.
• 3. E requiring a direct covenant from each
  successor
• Also
• 4. creating a long lease when the property is
  first sold
• 5. creating, instead of a covt, an easement of
  fencing (in the case of fencing!)

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Halsall v Brizell

• A successor cannot take the benefit of an
  agreement unless he also accepts its related
  burden

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Halsall v Brizell

• Rhone v Stephens
• The burden must be RELATED
• to the exercise of the right which gives
• the benefit
• The successor must be able to
• choose whether or not to accept
• the benefit
• Thamesmead v Allotey (21st January 1998 LSG 28)

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Passing the benefit at law

• Smith Snipes Hall Farm Ltd v River Douglas
  Catchment
• Board 1949 2 KB 500
• 1 The covenant must touch and concern the land
  of the original covenantee
• PA Swift Investments v Combined English Stores
  Group 1989 AC 632
• 2 The covenant must have been intended to
  benefit the covenantees land at the time it was
  made and it must have been intended for this
  benefit to run with the land
• - express words
• - implied under s.78(1) LPA 1925

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Passing the benefit at law

• 3. The original covenantee must have held a legal
  estate in the benefited land at the time the
  covenant was made
• 4 A successor in title must have acquired a
  legal estate (but it does not need to be the same
  legal estate as the original covenantee)
• Smith Snipes Hall Farm Ltd v River Douglas
  Catchment Board Mrs. Smith
  (freehold)
• Purchaser
  (freehold)
• Tenant
  (leasehold)

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Discharge of Covenants

• Automatic discharge dominant and servient land
  in same ownership
• Application to the Lands Tribunal to discharge or
  modify the covenant
• s.84(1) LPA 1925

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Application for Discharge of Covenants

• An application can be made to discharge or modify
  any
• restriction arising under a covt. or otherwise as
  to the user
• of land or the building thereon
• Grounds to be established
• 1. Obsolescence
• 2. Impediment to reasonable user
• 3. Holders of the benefit of the covt have agreed
  to its discharge
• 4. No injury to the holders of the benefit
• (plus certain additional factors)
• Tribunal has power to order compensation