The parties contracted for the sale of land for development. The contract allowed for the costs of environmental remediation, but disputed the true figure set by the eventual builder and retained. The court now heard argument about whether the sum retained by the sub-purchaser was held on trust for the claimant under the terms of the main contract.
Held: The appeal succeeded. The defendant was not burdened with the obligation suggested. A mere ‘clear understanding’ was insufficient to base the argument, a document creating legal obligations was required.
The court set out three propositions for the transfer of the benefit and burden of contractual provisions: ‘(1) The benefit and burden must be conferred in or by the same transaction. In the case of benefits and burdens in relation to land it is almost inevitable that the transaction in question will be effected by one or more deeds or other documents.
(2) The receipt or enjoyment of the benefit must be relevant to the imposition of the burden in the sense that the former must be conditional on or reciprocal to the latter. Whether that requirement is satisfied is a question of construction of the deeds or other documents where the question arises in the case of land or the terms of the transaction, if not reduced to writing, in other cases. In each case it will depend on the express terms of the transaction and any implications to be derived from them.
(3) The person on whom the burden is alleged to have been imposed must have or have had the opportunity of rejecting or disclaiming the benefit, not merely the right to receive the benefit.’
Chancellor, Lewison, Scott-Baker JJ
[2010] 1 P and CR 22, [2009] 46 EG 142, [2009] NPC 126, [2010] 5 EG 114, [2009] EWCA Civ 1164
Bailii
England and Wales
Citing:
Cited – Halsall v Brizell ChD 1957
Land in Liverpool was sold in building plots. The vendors retained the roads and sewers and a promenade and sea wall. A separate deed of covenant of 1851 between the vendors and the owners of the plots which had by then been sold, recited that the . .
Cited – Tito v Waddell (No 2); Tito v Attorney General ChD 1977
Equity applies its doctrines to the substance, not the form, of transactions. In respect of the rule against self dealing for trustees ‘But of course equity looks beneath the surface, and applies its doctrines to cases where, although in form a . .
Cited – Rhone and Another v Stephens HL 17-Mar-1994
A house was divided, the house being retained along with the roof over the cottage, and giving a covenant to repair the roof on behalf of the owner of the house. The cottage owner sought to enforce the covenant against a later owner of the house. . .
Cited – Thamesmead Town Ltd v Allotey CA 21-Jan-1998
A successor in title to the original covenantor would not pay his share of the costs of repairing and maintaining sewers he used as appurtenant to his house. The covenantee in which the relevant housing estate was vested sued for their recovery. The . .
Cited – Baybut v Eccle Riggs Country Park Ltd ChD 2-Nov-2006
The purchaser of a caravan park purported to terminate the 10 year licences under which the owners of the various caravans occupied their respective pitches. The sale agreement of the caravan site had contained a covenant by the purchaser with the . .
Cited – Lidl UK Gmbh and Another v Davies and others CA 10-Jul-2008
The claimants had sold land to Lidl. The parties now disputed the interpretation of the development contract.
Held: Permission was given to amend the claim to assert a claim under trusts as between a party to the head contract and a party to . .
Cited – IDC Group Ltd and others v Clark and others CA 25-Jun-1991
Sir Nicolas Browne-Wilkinson VC reviewed the cases about constructive trust claims summarising the result as follows: ‘That decision [Lyus] was approved by the Court of Appeal in Ashburn Anstalt v Arnold . . The Court of Appeal put what I hope is . .
Cited – Jenkins v Young Brothers Transport Ltd SCCO 22-Jun-2005
A solicitor had, in the name of his then firm, entered into a conditional fee agreement with a client. While the litigation proceeded he moved firms and then again. The benefit of the CFA was assigned by the former firm to the subsequent firm each . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 22 December 2021; Ref: scu.377777