Law Report: Equity will not enforce positive covenant against successor: Rhone and another v Stephens (executrix). House of Lords (Lord Templeman, Lord Oliver of Aylmerton, Lord Woolf, Lord Lloyd and Lord Nolan), 17 March 1994

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Although equity will prevent or punish a breach of a restrictive covenant which restricts the use of freehold land or deprives the owner of a right over land, equity will not enforce a positive covenant affecting freehold land requiring expenditure or action by an owner who had not himself covenanted.

The House of Lords unanimously dismissed an appeal by the appellant plaintiffs, the present owners of Walford Cottage, from the Court of Appeal's dismissal of the plaintiffs' action against the defendant, the executrix of the last owner of Walford House.

In 1960 Walford House and Walford Cottage ceased to be in common ownership when Walford Cottage was sold. The owner of Walford House covenanted to maintain in wind and watertight condition the roof of Walford House, which also covered Walford Cottage, and the owner of Walford Cottage was conferred the right to sue for breach of the covenant. Since 1960 both properties had been sold. The trial judge ordered the owner of Walford House to pay damages to the plaintiffs for breach of the covenant. The Court of Appeal reversed the decision.

James Munby QC, and John Virgo (Gregory Rowcliffe & Milners for Pardoes, Bridgwater) for the plaintiffs; David Spens (Alletsons, Bridgwater) for the defendant.

LORD TEMPLEMAN said that, on the true construction of the 1960 conveyance, the owner of Walford House was in breach of the covenant to repair. At common law a person could not be made liable on a contract unless he was a party to it. The rigours of the common law, which did not allow covenants to be enforced by and against successors in title, had been relaxed by the doctrines in Spencer's case (1583) 5 Co Rep 16a and then by statutory extensions. As between persons interested in land other than as landlord and tenant, the benefit of a covenant might run with the land at law but not the burden: see Austerberry v Oldham Corpn (1885) 29 ChD 750). Thus the conveyance did not confer on the owner, for the time being, of Walford Cottage the right at common law to compel the owner, for the time being, of Walford House to repair the roof or to obtain damages for breach of the covenant.

Equity supplemented but did not contradict the common law. A conveyance might impose restrictions which deprived the purchaser of some of the rights inherent in the ownership of unrestricted land. Equity did not contradict the common law by enforcing a restrictive covenant against a successor in title of the covenantor but prevented the successor from exercising a right which he never acquired: Tulk v Moxhay (1848) 2 Ph 774.

Equity could thus prevent or punish the breach of a negative covenant which restricted the user of land or the exercise of other rights in connection with land. Restrictive covenants deprived an owner of a right which he could otherwise exercise. Equity could not compel an owner to comply with a positive covenant entered into by his predecessors in title without flatly contradicting the common law rule that a person could not be made liable on a contract unless he was a party to it.

Enforcement of a positive covenant lay in contract; a positive covenant compelled an owner to exercise his rights. Enforcement of a negative covenant lay in property; a negative covenant deprived the owner of a right over property.

Morland v Cook (1868) LR 6 Eq 252 and Cooke v Chilcott (1876) 3 ChD 694, which suggested that any covenant affecting land was enforceable in equity provided the owner had notice of the covenant prior to his purchase, did not survive the decision in Haywood v The Brunswick Permanent Benefit Building Society (1881) 8 QBD 403, where the court said the doctrine in Tulk v Moxhay applied only to restrictive covenants and would not be extended to compel a man to lay out money or do any other act of an active character.

In Austerberry, the court said equity did not and ought not to enforce a covenant binding only in equity in such a way as to require the successors of the covenantor to expend sums of money in accordance with what the original covenantor bound himself to do.

For over a 100 years it had been clear and accepted law that equity would enforce negative covenants against freehold land but had no power to enforce positive covenants against successors in title of the land. To enforce a positive covenant would be to enforce a personal obligation against a person who had not covenanted. To enforce negative covenants was only to treat the land as subject to a restriction.

To overrule Austerberry would create difficulties, anomalies and uncertainties and affect the rights and liabilities of people who had for over 100 years bought and sold land in the knowledge that positive covenants affecting freehold land were not directly enforceable except against the original covenantor. Parliamentary legislation to deal with the Austerberry decision would require careful consideration.

The appeal would be dismissed.