Re Union of London and Smith’s Bank Ltd [1933] Ch 611

Key point
  • For the benefit of a restrictive covenant to be assignable, it must benefit the dominant land  and be ascertainable from the deed
  • A vendor who already has disposed of whole of the benefited land can no longer assign the benefit of the covenant in equity
Facts
  • Two conjoined cases concerned deeds of conveyance entered into in 1908 and 1909 respectively, which contained restrictive covenants from purchasers benefiting the land retained by the vendors
  • The assignees of the vendors (covenantees) sought to enforce restrictive covenants against assignees of the purchasers (covenantors)
Held (Court of Appeal)
  • The assignees of the vendors had no right to enforce the restrictive covenants in either case
Romer LJ

Assignment of benefit

  • Other than in building scheme cases, unless the benefit of a covenant was annexed to the land, the purchaser will not acquire the benefit of the covenant unless that benefit be expressly assigned to him: p. 628
  • For the benefit of a covenant to be assignable (p. 631B):
    1. the land of the assignor must be ‘capable of being benefited by the covenant’
    2. this land must be ‘ascertainable’ or ‘certain’ from the deed of conveyance, ‘vague references’ do not suffice, and
    3. the covenant cannot be enforced by the covenantee against an assign of the purchaser after the covenantee has parted with the whole of his land

Current case

  • In the first case (deed of 1908), the assignees of the vendors could not enforce as the deed of 1908 had not sufficiently ascertained their land has benefiting from the covenant: p. 637
  • In the second case (deed of 1909), the assignees of the vendors could not enforce either as the vendors had assigned the land before they assigned the covenant: p. 638
Commentary
  • Romer LJ argued that the first two requirements were necessary in order to infer that the original parties to the covenant intended the benefit of the covenant to be assignable
  • The third requirement has a doctrinal basis: once the covenantee has parted with his land, the covenant loses effect since there is no land it operates in relation to and he no longer has a right he can assign
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