Enforcability
Enforceability of Restrictive Covenants
The Courts of Equity enforce negative covenants on the basis that a person who purchases property with notice of a restrictive covenant which affects it should be obliged to perform and observe it. In order to be enforceable in equity, a restrictive covenant must be intended to benefit the land concerned. If it is for personal benefit only then it is enforceable by successors.
Issues may arise as to whether a restrictive covenant may be upheld where there is a fundamental breach. In this case, the innocent party may terminate the contract and being no longer bound by it. Where this arises, it may not be possible to enforce the restrictive covenant. That contract no longer subsists.
The covenant must attach to an interest in land. Where there is a mere licence only, such as in respect of advertising holdings, there is no interest in the licensee. The right to use the land is contractual only. A squatter to a lessee’s interest does not acquire title, but he must, in effect comply with the covenants in the lease if he wishes to benefit from them.
A covenantee may be estopped from enforcing a restrictive covenant. If he knowingly permits a breach of the covenant and leads or causes the covenantor or his successor to act to his detriment in reliance on this belief, the covenantee may be estopped (prevented) from relying on the covenant or breach to the extent it is unjust. However, non-enforcement of the covenant by itself, will not raise an estoppel.
The general principle is that the covenantee need not show any damage. The breach of the covenant is sufficient and a perpetual injunction is usually granted to enforce a negative covenant.
However, in some cases, even if the covenant is enforceable, an injunction may not be available for its breach. If there is an equity against the covenantee’s successor, an injunction may be denied. An injunctions remain discretionary. If the covenantee has is delayed, acquiesced in the breach or induced the covenantor to act to his detriment, he may be limited to a to an award of damages. In such cases, damages may be minimal and comprise the loss of the mounts which would have been payable, to buy out the covenant.
Succeeding to the Benefit
At common law, the successor of the covenantee must have obtained an assignment of the covenant or the covenant must be annexed to the land. This required that it was expressed for its benefit and protection or that it is o otherwise expressly annexed to the land which it binds.
If the covenantee is the successor to the original covenantee in relation to part only of the land, he may enforce the covenant, provided that it is expressed or impliedly for the benefit of each part of the land, and not just the whole of the land only. If it is so annexed, it will attach to each part of it and may accordingly be enforced by each successor as owner of the part.
Even if the benefit of the covenant has not been annexed to each part of the lands, but is annexed to the entirety only, the covenant may be enforceable in equity by an owner of part of the land, provided that
- if it has been expressly assigned in successive parts to their respective purchasers;
- that the land is benefited by the covenant;
- it is as ascertainable in scope; and
- the covenantee cannot enforce the covenant after all the lands have been transferred.
For this purpose, the covenant may not be assigned once this is no longer necessary to benefit the land for which it was originally created.
Succeeding to the Benefit II
Where a covenant benefits a substantial part of the land, the question may arise as to whether it is intended to be annexed to the whole of the land. This is a matter of interpretation in the circumstance. Annexation will be readily found where there is a scheme of development affecting land or a group of units on land. A covenant which has been annexed to the land cannot be dealt with separate to it.
Covenants pass in the same manner as real property generally. They may devolve on the death of the owner to his representatives, and ultimately to his beneficiaries. Once annexed to the land, the covenant passed automatically with the land wthout separate assignment.
In apartment schemes, mutual obligations including in particular those with the management of common parts are put in place by way of leasehold covenants. Formerly, it was possible to grant long leases of dwelling , containing positive and restrictive covenants. Long leases of new dwellinghouses (but not apartments) have been prohibited since 1978.
Mutual Estate Schemes
Estate schemes arise in relation to residential or commercial developments.
The Courts of Equity have derived principles for the mutual enforceability of restrictive covenants in freehold estate schemes. Freehold estate scheme may arise in relation to residential or commercial developments. Provided certain criteria are complied with, the covenants are mutually enforceable.
Mutual estate covenants may be enforceable in the following circumstances may
- title must be derived from a common owner;
- the estate must be laid out in lots, which are subject to the restrictions; they need not necessarily be identical
- the purpose of the covenants must be to benefit the land sold; they need not benefit all the lots;
- the covenantor and covenantee must have acquired the property from a common owner, on the basis of the restrictions which are imposed for the benefit of all the lots;
- the areas concerned must be reasonably defined.
The above criteria, which were first set out in the early 20th century have been relaxed in later cases. The courts may infer a building scheme intent, in circumstances where the above test is not necessarily fulfilled. The principle has been extended to estates which were not laid out in lots prior to the first sale, but were laid out as such over time.
The courts apply the principle of mutually enforceable covenants to building schemes where it was clearly intended. The courts have applied the principle, notwithstanding that the strict estate scheme requirements did not apply. A scheme may be upheld where the intention of the parties as evidenced by the deeds in the circumstances is such that a mutually binding estate scheme can be inferred
Unlike the position with mutual covenants, the obligations under an estate scheme are not destroyed once a single owner buys a number of plots. This is notwithstanding that at common law, the person may not covenant with himself. The Courts of Equity in effect went beyond the common law to go beyond what contract law could provide.
In many developments, there are sub-schemes within the development which vary from the main development. Questions of interpretation arises as to how far the general estate schemes covenants apply. In many cases, they really apply together with further variations thereof on matters specific to the sub scheme
If the covenants between the various owners vary significantly, there may not be an enforceable scheme, even if they are in broadly similar terms. Where there were different types of scheme covenants within the development, it may cast doubt on the intention that they are all mutually enforceable.
The presence or absence of recitals of an estate scheme in the such cases may tip the balance for or against an estate scheme being found, where the variance in covenants is signficant. Accordingly, the courts may not infer an intention of mutual enforceability.
Extinguising
Prior to the 2009 Act, there existed only a limited mechanism for extinguishing restrictive covenants. Under the Registration of Title Act, a covenant might be discharged on foot of an application to court if it could be shown that the covenant and condition
- did not run with the land.
- as not capable of being enforced against the owner of the land or
- that the modification or discharge of the covenant would be beneficial to persons principally interested in its enforcement.
The above provisions applied only to a registered title. A court order was necessary unless all parties consent to the discharge of the covenant.
Leasehold Discharge
Leasehold covenants usually become automatically discharged upon acquisition of the fee simple subject only to a limited category, which were preserved by statute.
The Landlord and Tenant Ground Rents Act is preserves the following categories of covenant and acquisition of the fee simple.
- covenants affecting amenities of land occupied by the immediate lessor;
- covenants relating to the statutory duties of the immediate lessor;
- covenants concerning a right of way over the land or concerning rights of drainage over other land and
- rghts necessary to secure or assist the development of the land.
The ground rents legislation extinguishes covenants notwithstanding the lease relates only to part of the land. This may have the effect of extinguishing the lease restrictions even as regards other lessees in the lease under the same lease subject to the same restriction. It appears that the wording of the ground rents legislation mandates this conclusion.
Arguments have been had made that this is the wholesale extinguishment of covenants may be unconstitutional. The matter was heard by an Irish High Court but not fully argued. The High Court applied the presumption of constitutionality and did not hold the legislation to be unconstitutional.