Restrictive covenants

Citation

Waterson, G. and Lee, R. (2001), "Restrictive covenants", Property Management, Vol. 19 No. 2. https://doi.org/10.1108/pm.2001.11319bab.006

Restrictive covenants

Restrictive covenants

Morrell of Oxford Ltd v. Oxford United Football Club [2000] 45 EG 176 at first instance and [2000] EGCS 96 in the Court of Appeal

As indicated by the case references above, this case came before Lloyd, J. in the High Court on 9 June 2000, and the claimant lost; the claimant appealed to the Court of Appeal and the appeal was heard in very short order, on 21 July 2000. The claimant lost again, and essentially on much the same grounds.

Briefly, the facts were as follows: in 1962 the claimant's predecessor in title acquired land from Oxford City Council to be used as the site of a public house.

The conveyance contained, in clause 2, restrictive covenants entered into by the purchaser restricting the use of the land to use for a public house and providing that no buildings would be erected on the site until the plans had first been approved by the Council's Estates Surveyor.

In clause 3, the council for its part covenanted that "for the benefit of the land hereby conveyed … [the council] will not at any time hereafter permit any land or building erected thereon within half a mile radius of the land hereby conveyed which is in the ownership of [the council] at the date of this conveyance, to be used as a brewery or club or licensed premises for the preparation, manufacture, supply sale or consumption either on or off the premises of intoxicating liquors".

The restrictive covenant contained in clause 2 of the 1962 conveyance was expressed to be entered into "with intent and so as to bind, so far as practicable, the property hereby conveyed into whosoevers hands the same may come, and to benefit and protect the estate of the [council] known as the Blackbird Leys Estate …". Clause 3 contained no corresponding declaration of intent that the restrictions in clause 3 would likewise bind the council's successors in title if it subsequently disposed of other land which it owned in the area. The question thus arose: was such an intention to be implied under s. 79 of the Law of Property Act 1925? No, said both the High Court and the Court of Appeal: s. 79 only applied where there was no evidence of contrary intent; the different wording used in clause 2 and in clause 3 in this case indicated such contrary intent. Accordingly, when the council had sold land for the purpose of building a new football stadium, together with a hotel and a leisure complex, the new owners of the land were not bound by the restrictive covenant.

As to the amount of damages payable where a hotel had been built across a flank boundary building line contrary to the provisions of a restrictive covenant, see: Amec Developments Ltd v. Jury's Hotel Management (UK) Ltd [2000] EGCS 138.

As to the scope which exists for modifying the nature of applications for the discharge or modification of restrictive covenants under s. 84 of the Law of Property Act 1925, pursuant to the Lands Tribunal Rules 1996, see: In Diggens and others' Application [2000] 48 EG 121.