#7583 - Other Proprietary Interests Covenants And Easements

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

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

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

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 this far away
- There was also nothing in the encumberance to suggest another land would benefit – it was intended to be a covenant in gross
As far as admitting evidence goes to identifying a dominant tenement – for Torrens land the burden of the restrictive covenant should at least be capable of being identified in some way from the registered document containing it or some related documents discoverable from the Land Titles Officer (Bursill v Berger)

The client as an encumbrancee has sufficient interest in the land to create a quasi-dominant tenement for his purposes

No, the cases relied upon are strictly only applicable to English mortgagors and mortgagees who are in a unique relationship similar to that of landlord and tenant which, as a result, the mortgage covenant will run with the land is it would ordinarily in a case of landlord and tenant
Such a relationship does not exist in the case of a mortgage OR and encumberancee under Torrens land

Hence there was no quasi-DT sufficient to create an equitable interest under the T v M rule – his honour pointed out that there was never any interest in doing so, it was merely intended to protect the business of the Virginia companies.

For a restrictive covenant to be enforceable against a successor in title of the covenatnor it must ‘touch or concern’ the land of the covenantee – expert evidence is admissible on this question (Marten v Flight Refuelling)
- English authortieis are liberal with this requirement – covenants prohibiting the conduct of specific business have been upheld as benefiting the covenantee’s land (Newton Abbbot Co-op v Williamson & Treadgold)
  - McGuigan Investments v Dalwood Vineyards – covenant in terms that the burdened land would not be used for sale of wine under the name of ‘Dalwood’ did not ‘touch/concern’ the land since it was 35km away; Newton Abbott distinguished on the business competition point
- The Quadramain Case – whether restrictive covenants subject to common law doctrine under which contracts which unreasonable restrain trade are contrary to public policy
  - Held (HCA): No, the doctrine didn’t apply to restraints imposed by restrictive covenants
- TPA ss 6, 45B – Transactions which have the effect of ‘substantially lessening competition’ will be voided
- Baramon Sales v Goodman Fielder – 11km distance no obstacle to benefit being realized. Distances can prove fatal in some cases but are irrelevant in others. In this case evidence showed that the defendant’s land would be benefited if no flour mill operated on the plaintiff’s land
London County Council v Allen – the LCC executes an indenture with A under which him and his assigns agreed not to erect a building without consent. A’s successors had notice but began building. The council issued a writ claiming a mandatory injunction to have it torn down
- Held: The council did not own ladn ni the vicinity with respect to which the covenant was given, so could not enforce the covenant
88D, 88E CA – public and local authorities can impose restrictions on land notwithstanding that they do not retain land for the benefit of which the restriction is imposed; this includes positive obligations
A landlord’s reversion on a tenancy is a sufficient interest in land within the rule in LCC v Allen – hence landlords can restrain sublessee’s for breaching restrictive covenants in original leases even though the landlord has no other land that can benefit from it (Regent Oil Co v J A Gregory)
Clem Smith Nominees v Farrelly – the land was Torrens; there are lots of problems with Torrens and...

#7583 - Other Proprietary Interests Covenants And Easements - Property and Equity 2

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