Enforcing positive covenants

Cantrell v Wycombe District Council [2008] EWCA Civ 866 concerns enforcement of positive covenants by a Local Authority.

In return for funds towards the purchase of another property, a housing association had granted the Council nomination rights to six properties, including the one at issue, the agreement was said to be made pursuant to s.609 Housing Act 1985. Clause 3 of the agreement stated that the covenants would be:

enforceable without any limit of time against any body or person deriving title from the original covenantor in respect of its interest in the properties and any person deriving title under it in respect of any lesser interest in the properties … as if that body or person had been an original covenanting party …

Among those covenants was:

the Association will let each of the properties on a periodic tenancy to a nominee of the Council … 

The original HA undertook to carry out repairs, but apparently didn’t and sold the property to another HA who sold the property at auction to the appellant, C. The covenant had been registered as a local land charge and C had seen a local search revealing it when he bought the property. The Council sought to enforce the covenant against C. 

S.609 HA 1985 states:

Where—
(a) a local housing authority have disposed of land held by them for any of the purposes of this Act and the person to whom the disposal was made has entered into a covenant with the authority concerning the land, or
(b) an owner of any land has entered into a covenant with the local housing authority concerning the land for the purposes of any of the provisions of this Act,
the authority may enforce the covenant against the persons deriving title under the covenantor, notwithstanding that the authority are not in possession of or interested in any land for the benefit of which the covenant was entered into, in like manner and to the like extent as if they had been possessed of or interested in such land.

The County Court held this did enable the Council to enforce the covenants, acknowledging there was no precedent on the meaning of the section. C appealed.

Held: At common law, the burden of a covenant is not binding. Negative covenants, so far as they protect land held by the covenantee are binding in equity. Enforcement by injunction or damages in lieu. S.609 should be considered in the light of the Law Commission’s report that led up to its introduction. The discussion in the report concerns solely negative covenants, in the context of the old s.151 Housing Act 1957. If parliament had intended s.609 to apply to positive covenants, it would have been necessary for it to expressly say so. Lord Denning in Gee v National Trust [1966] 1 WLR 170 followed.

If the result is absurd, it is no more so than the law on positive covenants in general. Commentators either way have not given reasons and do not advance the argument.

The purpose of s.609 is to allow the Council to enforce a negative covenant where it no longer holds the land benefited by the covenant. No more.

[Post particularly for J ;-)]

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Housing law - All, Leasehold and shared ownership and tagged , , .

7 Comments

  1. Thank you!
    If you’re Wycombe District Council and you’re running such a brave point (ie, all land law on this topic is wrong!) then you must have been praying for a Court of Appeal made up of a PI lawyer, a tax lawyer and a shipping lawyer.

    The last thing you would have wanted is to see Lewison J (Kim Lewison QC, Falcon Chambers, Editor of Woodfall and general property law deity) making a guest appearance in the Court of Appeal. I wonder if he he even called on the other side? :-)

    J

  2. Well, at least now we have a binding decision and can all look forward to new updating supplements for our books!

  3. I’ve come to this one rather late in the day, after the Times report today. I agree that it must be right and the point is, on its face, trite – s 609 modifies the common law rule in LCC v Allen – but the decision must be really quite significant in the context of nominations agreements, more particularly so in these times of crisis when one can expect a shake up in RSL property ownership. I don’t know how many LAs have made noms agreements using s 609 – probably not many – but they should probably revisit them! Academics have got a lot to answer for.

  4. NL, in a few of you articles, the content in quotes (ie between “S.609 HA 1985 states” and “The County Court held this did enable the Council…”) is ‘invisible’.

    Do I need to enable anything, or select a different view or… any other technical tips?

  5. Michael, I noticed that recently while at work. Are you using Internet Explorer 6? The text seems to appear when you reload, or re-size the window. Very odd. I think it is something to do with IE 6 and italics.

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