Bryant Homes Southern Ltd and others v Stein Management Ltd and others

Sale of land – Conveyancing – Restrictive covenant – Vendor selling land subject to covenant registered at Land Registry to use it for agricultural purposes only – Vendor entering into separate unregistered personal obligation to release covenant in certain circumstances – Defendants claiming to be entitled to enforce covenant as vendor’s successors – Preliminary issue arising whether registered covenant enforceable by successors in title where it “touches and concerns” land notwithstanding unregistered agreement – Preliminary issue determined in favour of defendant The vendor owned Middlefield Farm, Witney, Oxfordshire. In 1985 he sold 10 acres for a school and, by a deed of easement, granted a right of way over a farm track on his adjoining retained land, with provision to vary the arrangements if any of his adjacent land came to have development potential. In 1993 he conveyed two parcels of agricultural land (the property) of 127 acres to the claimants, a consortium of property developers, subject to but with the benefit of the deed of easement so far as it related to the property. Amongst the land retained by the vendor were the farmhouse and its curtilage, and the farm buildings and yards, including part of the bed of the track. By clause 3 of the conveyance, the claimants covenanted with the vendor and his successors in title, described as the owners and occupiers of the adjoining land edged red and blue on the plan, to use the property for agricultural purposes only. The red and blue colouring included part of the farm track. The conveyance was registered at the Land Registry. At the same time, the vendor and claimants entered into an agreement by reference to a plan on which further agricultural land owned by the vendor was tinted pink and the property conveyed by the conveyance was tinted green. By that agreement, which was not registered at the Land Registry, the vendor promised to release the covenant imposed by the conveyance in relation to any of the green land if planning permission was obtained. The vendor sold off the pink land and part of the bed of the track, which was all that remained in his possession. When the buyer of those parcels of land defaulted on his registered charge, they came within the ownership of the defendants. On the basis that the benefit of the covenant had not been included in the charge and remained vested in the buyer, the claimants obtained a release of the covenant. A preliminary issue arose concerning the covenant. The defendants claimed that they remained entitled to enforce the covenant as the vendor’s successor. The claimants argued that the covenant was unenforceable by the vendor’s successors in title to whom he had not assigned its benefit because it did not “touch and concern” the red land or the blue land. Held: The preliminary issue was determined in favour of the defendants. (1) At law the benefit of the covenant ran with the land only if the assignee had a legal estate in the land and the covenant was one which “touches and concerns” the land. The parties should have intended that the benefit of the obligation should attach to the land into whosoever hands it should come ie it should be an incident of the estate. One had to start with the words of the covenant itself, rather than regarding all of the words used in the course of the transaction as a jigsaw out of which a picture had to be assembled. The covenant was expressed in conventional terms which, by themselves, indicated an intention that its benefit was to be enjoyed by the vendor’s successors in title. In general, it would be odd that the parties objectively intended that there should run with the land the benefit of an obligation which they also intended would be incapable of so running for failure to touch and concern the land: P&A Swift Investments v Combined English Stores Group plc [1989] AC 632 followed. (2) If an owner of land imposed a restriction on its user for the purpose of benefiting the land retained, the court would normally assume, in the absence of some exceptional reason to the contrary, that the restriction was capable of providing that benefit. The burden was thus on the buyers to establish that the position was otherwise: on this preliminary issue the buyers had not established that the restriction to agricultural user was incapable of benefiting the red land and the blue land: Marten v Flight Refuelling Ltd [1962] Ch 115 applied. (3) Clause 3 disclosed an intention to create a right enforceable by the vendor and by his successors in title. The obligation it imposed was an obligation relating to the user of the property acquired by the buyers. That was an entirely conventional obligation which was to be taken (in the absence of the contrary being established) as capable of benefiting the red land and the blue land. Even if the agreement contained a mechanism for the release of the covenant which constituted a personal arrangement, it was possible that clause 3 created an obligation which related to or touched and concerned the red land and the blue land, and was therefore enforceable by the vendor and his successors in title, notwithstanding that the vendor had entered into a personal obligation to release it in certain circumstances. It was not permissible to treat the 1993 Conveyance and the 1993 Agreement as if they were a single document (although they relate to a single transaction) and to treat the contents of the latter as subverting the apparent meaning of the former. (4) The obligation imposed by clause 3 related to the user of the property acquired by the claimants and was capable of benefiting the red land and the blue land. Since the covenant touched and concerned that land, the effect of section 78 of the Law of Property Act 1925 was to render it capable of transmission without assignment. If the benefit of a covenant was annexed to a parcel of land, there was a strong presumption that it was annexed to each and every part of it. In the present case, that presumption was not displaced either by the language of the covenant or by the nature of the arrangements for its release contained in a separate document. The language of clause 3 contemplated enforcement by successors in title. Accordingly, the covenant might be enforced by the defendants if it proved to be capable of benefiting the bed of the track: Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 EGLR 113 followed. Joanne Wicks QC (instructed by Eversheds LLP) appeared for the claimants; John Randall QC and Anthony Verduyn (instructed by Wilkes Partnership) appeared for the first defendant; John Dagnall (instructed by Coles Miller LLP) appeared for the second and third defendants. Eileen O’Grady, barrister Click here to download the transcript of Bryant Homes Southern Ltd and others v Stein Management Ltd and others