Bryant Homes and others -v- Stein Management and others [2016] unreported involved a dispute over the enforceability of a restrictive covenant which had been used as a mechanism to protect an overage payment. On the sale of part of his land (Plot A) a farmer imposed a restrictive covenant on Bryant Homes, restricting use of Plot A to agriculture. The covenant was for the benefit of the farmer's retained land (Plot B). However the drafting did not state whether that benefit of the covenant was attached to the whole and all parts of Plot B.
Bryant Homes had entered into an agreement with the farmer to promote Plot A for development. If acceptable planning consent was granted, Bryant Homes would pay overage, and the farmer would release the restrictive covenant over Plot A. The restrictive covenant was properly noted against Plot A’s registered title. The farmer then sold off various parts of Plot B. One of the purchasers was Stein Management Ltd.
Bryant Homes then asserted that the successors in title to Plot B could not enforce the restrictive covenant. This was obviously an attempt to circumvent the overage obligation.
Bryant argued the restrictive covenant was designed to secure payment of the overage, and did not benefit Plot B. This failed the test that a restrictive covenant must “touch and concern” the benefited land. As a result successors in title (e.g. Stein) could not enforce the benefit of the covenant. Bryant pointed to Cosmichome -v- Southampton CC [2013] where a restrictive covenant imposed by Southampton County Council prohibiting use by anyone other than the BBC failed the same test, because its purpose was to keep the BBC on the land or force it to pay for consent to sell, and was of no benefit to Southampton County Council's neighbouring land.
However Bryant's argument failed. The judge said a reasonable person would base their view on the title information. They might not know about the separate overage agreement which was not noted on the title. The restrictive covenant was in conventional form and made sense as it stood, since Plot B might benefit from restricted use of Plot A.
Alternatively Bryant argued that the restrictive covenant only benefitted Plot B as a whole, not its various parts, so Stein could not enforce it as owner of part only. Bryant pointed to the overage agreement as displacing the strong presumption that the benefit of a restrictive covenant is annexed to the whole and each part of the benefited land (Federated Homes -v- Mill Lodge Properties [1981]). The judge again disagreed.
This was only the preliminary hearing. Another round will examine whether Stein’s part of Plot B could actually benefit from the restrictive covenant.
The moral of all this might be to find a better way to secure overage.
| Some other commonly used ways to protect overage: |
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- restriction on the title and deed of covenant
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