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Law Notes Property and Equity 2 Notes

Other Proprietary Interests Covenants And Easements Notes

Updated Other Proprietary Interests Covenants And Easements Notes

Property and Equity 2 Notes

Property and Equity 2

Approximately 262 pages

UNSW Property and Equity 2 notes. Includes detailed case and materials notes and super summaries ideal to take into an open book exam. Structure of cases and materials notes:

Class 1: The Torrens System and Indefeasibility
Class 2: Indefeasibility of What?
Class 3 - The in personam exception
Class 4 - Other exceptions and overriding statutes
Class 5 - The register, equitable interests and caveats
Class 6 - Competing equitable interests
Class 7 - Co-ownership
Class 8 - Rights of enjoymen...

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The following is a more accessible plain text extract of the PDF sample above, taken from our Property and Equity 2 Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Class 11.1 – Covenants

Introduction

  • Property law was formulated when government played little part in developing community land and hence the law unsurprisingly evolved to regulate land use by private agreement

    • This was in part due to the deficiencies of contract law in its limited sphere of enforceability – courts made the decision to enforce agreements against successors to the person who made the agreement

    • This was the definitive move from contract law to property law

  • It is generally commonplace for landlords to enter into agreements to regulate development on their land (not always by purchasers when they take the conveyance) – e.g. subdividers anxious to preserve the value of their land and obtain the higher price may restrict the land to be used in a certain way

    • If the purchaser really wants it he will buy it; especially if the subdivider agrees to do the same on their land

    • Sometimes this is used to establish the ‘character’ of a certain neighbourhood by private agreement – developers sometimes do this on a large scale by comprehensive schemes of covenants to bind all purchasers

  • In modern times the state has taken over some functions once done by private landowners – e.g. through statutory/administrative controls that restrict activities in certain areas, regulate subdivision, construction and preserving historical land sites

  • Sometimes it is suggested that private planning is no longer desirable in light of the large number of government agencies who do this

    • But ‘Chicago School economics’ suggests that government controls have little effects on the pattern of land use and private covenants lead to more efficient allocation of resources at lower cost

  • With covenants both property and contract are involved since covenants aren’t restricted in their sphere of enforceability to the original contracting parties but also successors in title

The running of covenants in equity

Tulk v Moxhay (1848) 41 ER 1143

Facts: T held fee simple in vacant land and a garden in Leicester Square and certain houses adjoining it. He conveyed the land and garden to E who covenanted to himself and his assigns that he would keep the garden in repair. After intermediate conveyances it ended up in M’s hands without the covenant itself but with notice of it. M wanted to build on the graden, T, who still had ownership in the other houses, filed a bill for an injunction to restrain – this ended up on appeal to the LC.

Lord Cottonham LC

Disagreed with the idea that a covenant that does not run with the land could not be enforced against those not privity – the issue is “whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased”

On grounds of policy he disagreed – the original purchaser would be able to sell for a greater price than the vendor in consideration of the assignee being able to escape the covenant

  • The irrelevance of the covenant running with the land is evidence from this – if there was a mere agreement and no covenant the court would enforce it against a party taking with notice.

  • If an equity is attached to the property by the owner, no one purchasing with notice of it can stand in a different position to the original purchase

Hence an equity was attached to the property by the original owner.

  • The case of Keppell v Bailey was referred to and disagreed with in Tulk v Moxhay – in that case it was concluded that the burden of covenants affecting land didn’t run at law and equity should follow the law.

  • In Torrens system caveats can be lodged by persons claiming estates/interest in land. The nature of the interest created is important in deciding whether or not the caveat can be lodged

  • Since restrictive covenants prohibit, rather than permit, activities on burdened land there is generally no direct conflicts between covenants and restrictions of planning law – but both covenants and zoning together can prevent use of land

Covenant must benefit the land

Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227

Facts: M owned a land with a motor racing circuit at Mallala. A acquired M and built another site for racing at Virginia 35km away. M later transferred Mallala to F with an encumberance for A for the payment of $1 annually if demanded for Ft o never engage in motor sport on the land. F transferred the land to S who applied for a declaration that the covenants were void or unenforceable.

Bray CJ:

Remarked that the covenant was valid security for the payment of rent for $1 per year but pointed out that the restrictive covenant was not linked to the rent charge and did not depends on the performance of any covenants and hence their contractual enforceability against F did not imply enforceability to the plaintiff.

Pointed out that at common law only covenants between landlord and tenant would run with the land but in equity the rule in Tulk v Moxhay remained in doubt.

Agreed with the rule based on the idea of covenants created quasi-easements on the land for which there had to be a quasi-ST and quasi-DT; else there would be an quasi-easement in gross:

  • “The burden of restrictive covenants will only run with the land in equity against a subsequent holder of the land with notice of the covenant when the covenant is entered into for the benefit of some parcel of land, or possibly some interest in land

He then went on to discuss its application in Torrens land concluding that equitable interests under T v M are interests capable of being protected just like any other equitable interests (under the SA RPA – should be the same in NSW):

Submissions of the Respondent

  1. That the Virginia land was a quasi-dominant tenement

  • His honour disagreed with this solely on the basis of the 35k distance between the two lands.

    • In some cases (e.g. Newton Abbot Co-op Soc v Williamson & Treadgold) where the land are on opposite sides of the road it is conceivable – but not from...

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