Rees & Anor v Peters

The meaning and scope of a restrictive covenant in a conveyance depend on the instrument read as a whole, in its own context and against the surrounding circumstances. A clause annexing the covenant to the property conveyed, or the part remaining unsold and every part thereof, distinguishes the whole property from a retained part. The words “remaining unsold” qualify only the part. The benefit therefore remains annexed to the whole property and passes to successors in title, including purchasers. Where the covenant is omitted from a registered title, rectification may be ordered under Schedule 4 to the Land Registration Act 2002 where the omission is a mistake, the statutory conditions are met, and it would otherwise be unjust not to correct the register.

The appellants claimed the benefit of a restrictive covenant in a 1957 conveyance concerning meadow land retained by the original vendor. The benefited property, Farne House, and the burdened property, Court Barn, were later sold into separate ownership. The covenant was omitted from the Charges Register of Court Barn, although the respondent had notice of it.

The appellants brought a Part 8 claim for a declaration that the covenant remained binding and for rectification of the registered title. His Honour Judge Kaye QC held that the covenant ceased to be enforceable when the relevant property was sold, in [2010] EWHC 2806 (Ch). The appeal concerned the proper construction of the covenant and whether the Charges Register should be rectified.

Appeal allowed unanimously. Lord Justice Aikens agreed with the Chancellor. Sir Stephen Sedley agreed with the entirety of the Chancellor’s judgment and added a concurring observation on contextual construction.

1. The construction of clause 6(ii) was a question of construing the 1957 conveyance as a whole, in its own terms, and in the light of the surrounding circumstances. The court derived no assistance from the cited authorities because similar wording may bear different meanings in different contexts.
2. The opening words of clause 6 referred expressly to the purchasers and their successors in title. In clause 6(ii), the word “or” created a contrast between the whole property conveyed and a part remaining unsold. The words “remaining unsold” qualified the part, not the whole. The benefit was therefore annexed to the whole of Farne House and remained enforceable by successors in title who had purchased it.
3. The court expressed an obiter preference that, if part of the benefited land were sold, the benefit would remain annexed to the retained land while it remained recognisably the same property. The effect of a later sale of the whole retained part was left open. The words “and every part thereof” supported that view, consistently with Miles v Easter [1933] Ch. 611.
4. Schedule 4 to the Land Registration Act 2002 applied. The omission of the covenant was a mistake, and the statutory conditions for rectification were satisfied. Compensation was inadequate compared with specific enforcement. The respondent had actual notice of the covenant, the passage of time did not justify preserving the status quo, and the similar omission from the Farne House title was irrelevant.
5. The respondent’s later purchase of the equitable interest in the meadow remained subject to the restrictive covenant. It would be unjust not to rectify the register. The Charges Register of title WSX155728 was ordered to be altered to refer to the covenant.

• Court of Appeal (Civil Division): Allowed the appeal and ordered alteration of the Charges Register of title WSX155728.
• High Court of Justice, Chancery Division: His Honour Judge Kaye QC held that the restrictive covenant was no longer enforceable following the sale of the property, in [2010] EWHC 2806 (Ch).