On 6 February 2013, the Court of Appeal handed down judgment in the case of Alan Wilkinson & Others -v- Kerdene Limited  EWCA Civ 44I, a decision which confirms the principles which will be used to determine when a positive covenant can be enforced against someone who was not a party to the original agreement.
The appellants were the owners of a number of bungalows situated in a Cornish holiday village developed in the 1960s and expanded between 1987 and 1988 ("the Village"). The Village also included a number of leisure facilities such as a pub, a shop and a swimming pool, all connected by a network of roads and footpaths.
In around 1988, the developer sold the bungalows with the benefit of a right to use the footpaths, access roads and car parks in the Village. The right to use the recreational facilities was also granted. In turn, the developer covenanted to maintain the roads, drives, car parks, footpaths and other recreational facilties in the Village and to paint the outsides of the bungalows and maintain the foul sewer system. The original owners agreed to pay an annual sum in respect of the developer’s costs of maintaining the roads, car parks and recreational areas in the Village.
From 1989 onwards, the ownership of the Village changed hands a number of times and fell into a state of disrepair. The respondent, Kerdene Limited (“Kerdene”), purchased the Village in 2000 and made great efforts to bring the Village back into a proper state of repair. Kerdene sought to recover the costs of the maintenance works it carried out under the terms of the original transfers. However, by 2000, the majority of the bungalows had been sold and were not owned by the original owners against whom the positive covenant to pay towards the maintenance costs could be enforced. Many of the owners refused to pay and Kerdene issued proceedings against them.
At first instance, the High Court found in favour of Kerdene and held that the covenant to pay the maintenance costs was enforceable against the bungalow owners. The bungalow owners appealed to the Court of Appeal. The Court of Appeal dismissed the Appeal.
A positive covenant does not run with the land when it is sold and, other than by express agreement, can only be enforced against a successor in title if it comes within the equitable principle set down in the case of Halsall -v- Brizell  1 Ch 169, namely that a party may not take the benefit of a covenant without also accepting the burden which goes with it.
Guided by the principle in Halsall -v- Brizell, the Court of Appeal confirmed that a successor in title will only be liable to perform a positive covenant if the covenant bears some real relation to a right which is continuing to be exercised. As long as the bungalow owners wished to continue exercising the rights granted in the original transfers, they could only be released from the obligation to contribute to the maintenance costs if they could establish that there was no link whatsoever between the two.
The Court found that the payments had a real relation to the rights granted in the bungalow owners’ favour, which they continued to exercise, namely the use of the facilities. The principle of mutual benefit and burden applied and the bungalow owners were obliged to continue with the payments.
Our Property Litigation Team can advise you if you have any concerns about your obligations under a positive covenant or, alternatively, you wish to enforce your rights against a third party. For further information please contact Kate Harris on email@example.com or on 01223 461155.