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Week 9 Covenants - Coggle Diagram

- - - - This is called the annexation principle
    - - Annexation of the benefit to the land
        
        Covenant touches and benefits the land
        
        Requisite intention exists that the covenant runs with the land: s 53 PLA
        
        s 53 implies the intention once it is established that the covenant touches and concerns the land.
        
        The covenantee (the original party) held a legal estate to the land at the time the agreement was created.
        
        The benefit of the covenant then becomes annexed to the land and can be passed on.
        
        See Rogers v Hosegood [1900] 2 Ch 388 at 407
  - - - Applies to protect the interests of beneficiaries to enforce a benefit where they are not named as a party in the original document creating the benefit.
      - HOWEVER
        
        It must be clear from the terms of the original agreement that the intention was to grant an interest to them.
        
        The third party does not need to formally accept the benefit.
        
        The case of Bahr v Nicolay is an example. The Bahrs were not a party to the contract which sold the land to Nicolay but their interest which was a benefit was expressly mentioned.
        
        Another example, A has an agreement with B to sell her property to B. The contract of sale contains a clause “that B agrees with A & C to use the property for residential purposes only.” RPLIQ [17.100] 896. See Ecclesiastical Commissioner for England’s Conveyance [1936] 1 Ch 430.
      - Further, section 13 of the PLA relates to a third party to a contract taking an interest in land, or the benefit of any condition, right of entry, covenant or agreement in respect of land.
    - - S 55 PLA “is similar in operation to section 13…Both sections modify the law with respect to privity of contract. However, the main difference between section 13 and section 55 is that section 55 requires acceptance of the benefit by the third party by words or conduct, communicated to the promisor.
      - Section 55 of the PLA is broader and relates to benefits to third parties to contracts generally.
- - - - Over the years there have been many ingenious devices developed to overcome this difficulty.
      - For example, “creating a chain of covenants”. It obliges each successive owner to include in the contract of sale of land a covenant that they will comply with the negative covenant.
  - - - (a) Covenant must be negative;
      - (b) Covenant must be made for the purpose of protecting the land of the covenantee (benefit);
      - (c) Burden must have intended to run with the covenantor’s land (burden);
      - (d) Equitable remedies apply.
      - RPLIQ [17.230] p 911
- - - - The covenant must touch and concern the land of the covenantee (benefit land) – same considerations as common law.
      - There must be an intention to annex the covenant to the land, where covenants created after 1/12/75 s 53(1) applies. Same considerations as common law
      - Land which benefits must be able to be identified (ascertained) by the terms of the covenant. This is an issue of certainty in the description of the covenant