Part 2 set out the basics of putting an application to the court together and examined if the proposed Defendant was subject to the burden of the covenant. Now….do you have the benefit of it?
Sometimes, however, it is little bit more difficult to show that the Claimant, as your client will now be called, as having the benefit of the covenant and that the restriction is for a legitimate purpose
There was a case reported recently. The BBC had sold a recording studio down in Southampton and took a restrictive covenant from the buyer that the premises were not to be used in the future as a recording studio.. The courts said that it was unenforceable because restrictive covenants were to protect neighbouring land. The BBC had sold all their land in the area. This clause was intended to stifle competition and that was not a legitimate purpose
Say the introductory wording to the restrictive covenants reads as follows
The Transferee so as to bind the owner for the time being of the Property and so that the following covenants in this [Third] Schedule shall be for the benefit and protection of the proprietor of the Nominal Rent Charge and the Estate Charge the Transferee hereby covenants with the Transferor and [Estate Management Company] and every other person who is the registered proprietor of a Dwelling as follows: –
1. The first phrase is clearly meant to bind the current owner of the house into the restrictions
2. The second phrase explains who gets the benefit and protection. It might be better if there were added the words “the benefit and protection of the owners and occupiers of neighbouring properties”.
3. The third phrase says that the Transferee is covenanting with various parties.
3.1. The Transferee is covenanting with the Transferor. As developer, it clearly has an interest in keeping the estate “looking tidy”, at least until it has sold all the units
3.2. The Transferee is covenanting with [Estate Management Company] who have the job of looking after the general estate. Say a paragraph in the transfer reads
[Estate Management Company] further covenants with the Transferee that at the request of the Transferee and subject to the payment by the Transferee of (and the provision beforehand of proper security for) the cost to be incurred or likely to be incurred by [Estate Management Company] (on a complete indemnity basis) to enforce the covenants entered into with [Estate Management Company] by a transferee of a freehold Dwelling of a similar nature to those contained in the Third Schedule
So a householder may be able to go to [Estate Management Company] and get them to enforce the restrictive covenant, if the householder cannot proceed directly against the Defendant, perhaps because
3.3. The Transferee is covenanting with the registered proprietor of other dwellings on the estate. This may well allow any neighbouring owner on the estate, with common restrictions, to enforce them directly if the court is inclined to construe the whole set up as a “building scheme” with these restrictions for the mutual benefit and protection of all houses
Part 4 will look at miscellaneous matters of which your will need to be aware