Federated Homes v Mill Lodge [1980] 1 All ER 371

Key point
  • s78 LPA 1925 has the effect of annexing the benefit of a covenant to the land it benefits, it is more than a word saving provision
Facts
  • Vendor sold green and red land to F and blue land to M
  • M promised for the benefit of the green and red land that they would not build more than 300 houses on blue land
  • There was an unbroken chain of express assignments of the benefit with the green land but no assignments for benefit of the red land
  • F sought an injunction to prevent M from building more than 300 houses
Held (Court of Appeal)
  • Injunction ordered as both lands have the benefit of the covenants
    • Green land through express assignments
    • Red land through annexation under s78 LPA 1925
Brightman LJ
  • Where benefit is annexed to the land, express assignment is not necessary as the benefit runs with the land
  • Unlike s79, s78 is not just a statutory shorthand to reduce the length of legal documents
  • If the condition precedent of s78 – that the covenant touches and concerns the covenantee’s land – is met, the benefit runs with the land
  • Annexation applies to each and every part of the land even after it is severed into smaller pieces, unless there is contrary intention of the covenantee
  • Smith v Douglas Catchment Board can be explained only if s78 allows the benefit to run with the land since the agreement was not expressed to be for the benefit of the successors in title and there was no express assignment of the benefit of the agreement to the tenant
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