MLL327 Study Guide - Final Guide: Fee Simple, Fide, Internal Validity
24 May 2018
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Property Law Topic Ten
• appreciate the contractual nature of the land covenant
• Covenant is a type of contract in which the covenantor makes a promise to a covenantee to do or not
do some action
• Contractual relationship exists between parties
• Covenant is enforceable between original parties on ordinary contract principles:
• (a) must be valid, enforceable contract; and
• (b) must be enforceable between parties to the original contract
• Common law principle of privity of contract – a person cannot be made liable upon a contract unless
he is a party to it
• Restrictive covenants: usually regulates the way in which land may be used
• Rationale: Market value of land may be affected by activities upon adjacent land and agreement can
be used to protect such values
• Main issue: whether restrictive covenants are enforceable against third parties not privy to original
contract ?
• Common law can enforce benefit of restrictive covenant touching and concerning the land but not
burden
• Only equity can enforce burden to restrictive covenant touching and concerning the land
DEFINITION:
◼ Covenant over land is a contractual agreement, set out in a deed, whereby the parties agree either to
carry out or not to carry out specific obligations with respect to land
◼ Promise in a deed
◼ Benefits one piece of land (benefited land) and burdens another piece of land (burdened land)
◼ Unlike an easement, a land covenant is contractual in nature and does not constitute a proprietary
interest
◼ Restrictive covenant ensures that the future use of land preserves the character and quality of the
neighbourhood
find more resources at oneclass.com
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understand the circumstances in which a private contractual agreement can become annexed to the land and
bind successors in title to the land
◼ Two categories of land covenants:
◼ Restrictive covenant prevents covenantor from doing particular acts on burdened land
(enforceable @ successors in title of burdened land)
◼ Restrictive covenant imposes no positive obligation on owner of burdened land
◼ RC does not involve expenditure of money
◼ Positive covenant requires the covenantor to carry out particular acts on burdened land for
benefit of other land (unenforceable @ successors in title of burdened land)
◼ Ex, duty to repair premises
◼ A positive covenant requires spending of money: put had i poket
◼ A positive covenant does not run with the land
◼ In determining whether a covenant is + or – in nature, a court must determine its effect rather
than wording
AUSTERBERRY V CORPORATION OF OLDHAM
FACTS
• In 1830s landowners created a private road between two villages. Land
forming the road was acquired by the Trustee Co who covenanted to maintain
the road. Trustee Co sold road to Corporation of Oldham. When it was
declared not to be a public highway the landowners along road were required
the road to maintain it. A landowner (s.i.t) claimed Oldham was, as s.i.t of
Trustee Co with notice of covenant, under obligation under covenant to
maintain road.
ISSUE
• Was Corp of Oldham burdened by the covenant? Does covenant to repair
road (burden) run with land as to bind Corporation
HELD
• At common law, no authority to hold that a burden under a covenant ran with
the land (unless it amounts to an easement/rent charge)
• A mere covenant to repair or do something does not run with land in such a
way at to bind those who may acquire it
• Positive covenant: personal obligation not running with land – not
enforceable against parties who are not privy to contract
• If the original parties had wanted it to run with the land there were other
ways such as rent charge
• Did not intend it to run with land
• PRINCIPLE:
• Thus, a burden of a positive covenant does not run with the land and is not
enforceable against a successor in title of burdened land
• Enforcement of positive covenant would be a breach of he principle that
contracts are only enforceable against persons who entered them
• Austerberry principle applies to Aus law
• Statutory exceptions in Aus: s 88B Conveyancing Act 1919 (NSW) allows a
positive easement requiring maintenance or repair of land
• Ito s 73 of Planning and Environment Act 87 (Vic) a responsible authority may
require applicant to enter into an agreement with it as a condition of a permit.
If agreement is recorded by the Registrar it runs with the land and is
enforceable against successors in title
• Exception to Austerberry rule: One cannot take benefit of a transaction
without also subscribing to burden imposed by the transaction (example right
to use roads but duty to maintain roads)
find more resources at oneclass.com
find more resources at oneclass.com
• appreciate the different approaches of common law and equity to the annexation and the assignment
of covenants.
ANNEXATION OF COVENANT IN EQUITY: BURDEN
• Requirements in equity
1. Covenant must be restrictive (rather than positive) in nature;
◼ Distinction is made by courts between positive and restrictive covenants
◼ Rule: if covenant requires spending of money it will be positive in nature; if it can be satisfied
without active performance by covenantor it will be restrictive covenant
◼ Enforcement of a burden of positive covenant lies in contract
◼ Will not enforce the burden of a positive covenant, because positive acts involves further
expenditure and efforts – unfair even with notice
◼ Equity may only enforce burden of a restrictive covenant
◼ Restrictive covenant deprives an owner of a right over property/ restricts behaviour of
covenantor: enforcement of restrictive covenant lies in property
◼ Effect is given to restrictive covenant by means of land itself
◼ Imposition of onerous positive duties is a serious intrusion on doctrine of privity
◼ Determination: focus on effect of covenant rather than wording - euit looks to sustae
athe tha fo
◼ If the covenant is partly restrictive and partly positive equity will attempt to sever the positive
parts and enforce restrictive obligations: Pirie v Registrar-General (1962).
◼ Positive covenants can run against land if permitted by statute – Positive covenant imposed
by Crown/local council even though benefit not annexed to land enforceable(NSW)
2. Benefited land must be identifiable;
3. Must benefit the land itself;
◼ The benefited land must be clearly identifiable from the terms of the deed in order to be
enforced
◼ S 79A PLA assumes that benefit applies to the whole and every part of land capable of
benefiting from such restriction
◼ Covenant must benefit identifiable land of the covenantee
◼ Depends on all the circumstances.
◼ Relevant factors:
1. Distance between burdened and benefited land
2. Whether covenant relates to the way in which land is used (similar to touch an
concern test)
3. Whether restriction is capable of providing benefit for whole of land
◼ Relationship is required between burdened and benefited land whereby the burden provides
a clear benefit to the oeatees lad
◼ Must benefit the land itself, not personal benefit
◼ Covenantee must have owned benefited land at time of covenant
4. Must be intended to run with the land and it would be inequitable for successor in title to deny this;
◼ Burden only enforceable in equity if:
◼ covenant was intended to bind successor in title to the covenantor; and
◼ successor in title to covenantor has taken with full knowledge
◼ purchaser without notice who is purchaser in good faith and for value will be relieved of
burden by equity
◼ Focuses on culpability of successor in title rather than character of covenant
◼ In absee of epess itetio to id suessos i title heis, assigs ad s.i.t, statuto
provisions may deem an intention to bind s.i.t to the covenantor
◼ Burden S79(1)PLA: A covenant relating to land of a covenantor shall, unless a contrary
intention is expressed, be deemed to be made by the covenantor on behalf of himself and
successors in title and, shall have effect as if such successors were expressed. (named)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Property law topic ten appreciate the contractual nature of the land covenant. Covenant is a type of contract in which the covenantor makes a promise to a covenantee to do or not do some action. Covenant is enforceable between original parties on ordinary contract principles: (a) must be valid, enforceable contract; and (b) must be enforceable between parties to the original contract. Common law can enforce benefit of restrictive covenant touching and concerning the land but not burden: only equity can enforce burden to restrictive covenant touching and concerning the land. Covenant over land is a contractual agreement, set out in a deed, whereby the parties agree either to carry out or not to carry out specific obligations with respect to land. Benefits one piece of land (benefited land) and burdens another piece of land (burdened land) Unlike an easement, a land covenant is contractual in nature and does not constitute a proprietary interest.
