Restrictive covenants

Citation

Waterson, G. and Lee, R. (2000), "Restrictive covenants", Property Management, Vol. 18 No. 2. https://doi.org/10.1108/pm.2000.11318bab.006

Restrictive covenants

Oceanic Village Ltd v. United Attractions Ltd (1999) EGCS 152; The Times 19 January 2000

The question at issue in this case was whether a restrictive covenant, entered into by the landlord as part of the terms of a lease of part of the former London County Hall (on the South bank of the Thames) was binding on the tenants of another part of the same building.

The lease in question was granted on 28 February 1998 and provided for part of the building to be operated as a shop. The lease provided, inter alia, that the landlord would not allow any other gift shop to be operated in the building. Subsequently, on 15 July 1998 the landlord granted a lease of another part of the same building to the defendants who were subsequently requested to give an assurance that they would not operate a gift shop on their part of the premises.

The case turned mainly on the interpretation of section 3(5) of the Landlord and Tenant (Covenants) Act 1995, which provides as follows:

Any landlord or tenant covenant of a tenancy which is restrictive of the user of land shall, as well as being capable of enforcement against an assignee, be capable of being enforced against any other person who is the owner or occupier of any demised premises to which the covenant relates, even though there is no express provision in the tenancy to that effect.

The question was whether the expression "any demised premises" in that sub-section of the 1995 Act meant "any premises demised by the landlord" as the claimant contended, or simply referred to the premises demised, in this case, to the claimant by the lease of 28 February 1998.

Neuberger J referred to the fact that the same phrase was used elsewhere in the Act in circumstances where it was accepted by both sides that it was intended to have the more restricted meaning contended for by the defendant, and held that the same interpretation should be placed upon the words used in section 3(5). The restriction was not registrable as a land charge; moreover, said his lordship, the effect of the working of sections 19(2) and 20(1) and 50 of the Land Registration Act 1925 meant that the doctrines of actual and constructive notice did not apply either. In consequence the restriction contained in the first lease could not be enforced directly against the defendant.

As regards application for modification of a restriction contained in a s.106 planning agreement whereby use of certain golf club premises by non-members was limited to two days a week and a total of 52 days in the year, see In Re Caton and Another's Application (1999) 38 EG 193.

As regards the availability or otherwise of equitable remedies such as injunctions to enforce restrictive covenants where the plaintiff had stood by for some years without taking any action to enforce his rights, see Gafford v. Graham (1999) 41 EG 159, where the Court of Appeal limited the remedy to the award of damages, calculated so as to represent "such sum that the plaintiff might reasonably have demanded as a quid pro quo for relaxing the restrictions in perpetuity" which the court assessed at £25,000.