West Law Report

Positive land covenant not enforceable against buyer

Posted in Times Law Report by mrkooenglish on October 19, 2008

From The Times
October 10, 2008
Positive land covenant not enforceable against buyer
Court of Appeal
Published October 10, 2008
Cantrell v Wycombe District Council
Before Lord Justice Moore-Bick, Lord Justice Stanley Burnton and Mr Justice Lewison
Judgment July 29, 2008

An agreement by a housing association with a local authority to house council-nominated tenants in its property was a positive obligation which could not be enforced against a subsequent buyer of the property.

The Court of Appeal so stated allowing an appeal by the claimant, Michael Cantrell, from Judge Ann Campbell in Reading County Court on July 5, 2007, who had held that the covenant was enforceable against him.

Mr Cantrell had bought 155 Bowerdean Road, High Wycombe, for £130,000 on March 25, 2005 in an auction from a housing association which had acquired it from another housing association which had entered into an agreement with the defendant, Wycombe District Council, pursuant to section 609 of the Housing Act 1985, to grant the council tenant-nomination rights in return for financial help provided by the council towards the purchase price of the property.

Mr Robert Craven for Mr Cantrell; Mr Ashley Underwood, QC and Mr Richard Moules for the council.

MR JUSTICE LEWISON said that at common law the burden of a covenant affecting freehold land did not bind subsequent purchasers: see Rhone v Stephens ([1994] 2 AC 310).

The burden of a covenant would bind subsequent purchasers in equity, but not at common law, where, inter alia, the covenant was negative and made to protect land retained by the covenantee.

His Lordship did not consider that in section 609, Parliament could have intended to put a local authority into a position that no private landlord could achieve, namely to make the burden of positive covenants run with the land, without saying so.

Academic commentators were divided on whether section 609 applied to positive covenants but gave no reasons for their conclusions. With all respect to them, their conclusions did not advance the argument one way or the other.

The words were clear. The concluding part of section 609 put a local housing authority into the same position as a landowner who had taken a covenant on a disposal of freehold land for the benefit of retained land and who continued to retain that land.

Section 609 did not permit the enforcement of positive covenants against a subsequent purchaser of the freehold.

Lord Justice Stanley Burnton delivered a concurring judgment and Lord Justice Moore-Bick agreed.

Solicitor: Brinley Morris Rees & Jones, Llanelli; Mr David Dongray, High Wycombe.

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