Rhone v Stephens

Outside the landlord and tenant relationship, the burden of a positive covenant affecting freehold land does not run with the land at common law or in equity. Notice of the covenant does not impose personal liability on a successor.

Equity may enforce a restrictive covenant because it limits rights acquired over the land. It cannot enforce a positive covenant requiring a successor to act or spend money.

The benefit-and-burden principle applies only where a burden is relevant to the exercise of a conferred right and the successor can choose whether to take that right. Section 79 of the Law of Property Act 1925 concerns the form of covenants. It does not make the burden of a positive covenant run with freehold land.

The appellants owned Walford Cottage. The respondent was the executrix of the last owner of adjoining Walford House. A 1960 conveyance created mutual rights of support and contained a covenant by the owner of Walford House to keep the part of its roof covering Walford Cottage wind and watertight.

The trial judge awarded damages to the appellants for breach of that covenant. The Court of Appeal reversed the decision and dismissed the action. Although the covenant had been breached on its proper construction, the central issue was whether its positive burden could be enforced against a successor to the original covenantor, either in equity, under section 79 of the Law of Property Act 1925, or through the benefit-and-burden principle.

1. Appeal dismissed unanimously. Lord Templeman delivered the leading speech. Lord Oliver of Aylmerton, Lord Woolf, Lord Lloyd and Lord Nolan agreed with his reasons. The Court of Appeal's order dismissing the action was affirmed.

2. Per Lord Templeman, a person cannot ordinarily incur contractual liability without being a party to the contract. Statutory and common-law rules permit positive and restrictive leasehold covenants which touch and concern the land to run between landlord and tenant. Outside that relationship, the benefit of a freehold covenant may run at law, but its burden does not.

3. Equity supplements rather than contradicts the common law. Under Tulk v Moxhay (1848) 2 Ph. 774, a restrictive covenant can bind a purchaser with notice because the purchaser never acquires the unrestricted right which the covenant removes. A positive covenant is different. Its enforcement would impose a personal obligation to act or spend money upon someone who never covenanted.

4. Per Lord Templeman, the House would not overrule Austerberry v Oldham Corporation (1885) 29 Ch. D. 750. The distinction between positive and restrictive freehold covenants had been settled for more than a century. Judicial alteration would undermine the distinction between law and equity, affect established property arrangements and create difficulties requiring legislative consideration.

5. Section 79 of the Law of Property Act 1925 removes conveyancing difficulties concerning the expression of successors in title. It does not make the burden of a positive covenant run with freehold land. Decisions concerning the transmission of a covenant's benefit under section 78 supplied no corresponding conclusion about section 79.

6. The broad benefit-and-burden principle suggested in Tito v Waddell (No 2) [1977] 1 Ch. 106 was rejected. Halsall v Brizell [1957] Ch. 169 was approved as a case where the burden was relevant to the exercise of granted rights and the successor could choose whether to exercise them. Here the mutual rights of support were independent of the repair covenant, and the owner of Walford House could not relinquish the benefit of support. The repair burden was therefore unenforceable against the successor, notwithstanding the breach.

1. House of Lords: In Rhone v Stephens [1994] 2 AC 310, the House unanimously dismissed the appeal and affirmed the Court of Appeal's order.
2. Court of Appeal: The court reversed the trial judge and dismissed the action. No citation is stated in the judgment.
3. Trial court: The judge awarded the owners of Walford Cottage damages for breach of the covenant to keep the roof wind and watertight. The court and citation are not stated.