Positive Covenants – do they or don’t they bind successors in title?

In the recent decision of Wilkinson and others -v- Kerdene Limited the Court of Appeal has provided a valuable reminder that successors in title will not necessarily escape the burden of a positive covenant.  As was established in the case of Halsall -v- Brizell [1957], where a party chooses to enjoy the benefit of rights granted by a deed they must also accept any corresponding burdens (even if the two are not expressly linked).

The Kerdene case involved a number of bungalow owners in a holiday village.  Some of the owners were original purchasers and others were successors in title.  Kerdene Ltd had purchased the common parts of the village in 2000 including the roads, car parks and some of the leisure facilities, and had embarked on a major program of renovation.

The original conveyances granted the bungalow owners the right to use the common parts of the village.  They also contained a positive covenant requiring the bungalow owners to pay a fixed annual sum for maintenance of the common parts.

Kerdene Ltd sought to recover the fixed maintenance payment from the bungalow owners, and when they refused to pay, it obtained judgment against them.

On appeal, the Court of Appeal confirmed that the bungalow owners could not enjoy the benefit of the right to use the common parts without accepting the burden of paying the maintenance sum.  It held that provided there is a sufficient degree of correlation between the rights being exercised and the positive obligation pursuant to the same deed then the benefit and burden principle will apply.  It is not necessary for the deed to expressly link the two provisions.

The payment was intended to enable the bungalow owners to continue to exercise their rights over the common parts, albeit that in terms it was a payment for maintenance and not a fee for the exercise of those rights.

The Court recognised that, where some but not all of the rights are being exercised, the relevant corresponding obligation can be apportioned accordingly.  However, in this case, because the payment was a fixed annual sum, apportionment was not possible.  It was therefore sufficient that the payment related in part to the rights that were being exercised for the full payment to be recoverable.

This decision highlights that it is important to look at the full picture when considering the obligations imposed by an historic deed to determine to what extent they remain relevant.  For a full transcript of the case please visit: http://www.bailii.org/ew/cases/EWCA/Civ/2013/44.html
 
 
by Tom Evans, Solicitor