The Law Commission

LAW COMMISSION

Item IX of First Programme

TRANSFER OF LAND REPORT ON RESTRICTIVE COVENANTS

To the Right Honourable Lord Gardiner, the Lord High Chancellor of Great Britain

A. BACKGROUND

At an early stage of our study of the law relating to the transfer of land we decided that restrictive covenants must go high on the list of subjects for consideration with a view to reform. Information received from well-qualified sources had convinced us that in numerous cases the conveyancing process was being complicated, and the position of the parties left uncertain, by the presence on the title of restrictive covenants of which, under the technicalities of the existing law, the enforceability was doubtful. We further had reason to think that the procedure for obtaining, in appropriate cases, the modification or discharge of such as were enforceable was unduly restricted.

2. Against this background we studied the Report of the Committee which had been appointed in 1963, under the chairmanship of Lord Wilberforce, to consider—

" whether and to what extent it is desirable to amend the law relating to the enforcement and assignability of positive covenants affecting land ".

Although that Committee (hereafter referred to as " the Wilberforce Committee ") had been concerned with the law relating to positive covenants, it was suggested in paragraph 17 of its Report (1965 Cmnd. 2719) that certain of its principal recommendations should be applied also to restrictive covenants: and the Report covered a number of other matters in respect of which it would be convenient that the law relating to positive and restrictive covenants should be assimilated. In considering the possibilities of assimilation we read with interest the Memorandum presented to the Wilberforce Committee by the Council of the Law Society which, after stating the problems relating to positive and restrictive covenants respectively, suggested that the solution for the future lay in abolishing the distinction between the two and making them subject to a common set of rules. We were also shown a Report to the Bar Council by the Chancery Bar Association, which suggested that the time was ripe for a searching inquiry into the whole position of the imposition, enforcement, modification and discharge of restrictive covenants and drew attention to the recommendations of the Wilberforce Committee as showing the way towards reform of the whole of the law relating to covenants.

B. THE PRESENT LAW

History

The place of Restrictive Covenants in the modern law

over planning control, in that it can cover matters of important detail with which a planning authority would not be concerned and the procedure of enforcement is available to a person who is entitled to the benefit of the covenant and is aggrieved by a breach, instead of depending upon the planning authority's decision to act.

buying his land subject to a mutually enforceable " common law ". To this extent, therefore, the objective character of the test has been replaced by the understanding of the parties and certainty has been lost.

28. Insofar as these Propositions require that land obligations shall be imposed only for the benefit of other land, they will not be wholly applicable to those special classes of covenants affecting the user of land which may be enforced by certain public bodies as if the benefit were annexed to land belonging to those bodies, notwithstanding that they own no land which is capable of being benefited. These covenants include—

(i) those arising by use of special statutory provisions such as the National Trust Act 1937 section 8, the Green Belt (London and Home Counties) Act 1938 section 3, the Forestry Act 1947 section 1, the National Parks and Access to the Countryside Act 1949 section 16, and the Water Act 1945 section 15:

(ii) covenants entered into with local authorities under the Housing Act 1957, the Town and Country Planning Act 1962 section 37, or under Local or Private Acts incorporating clause 17 of the 1963 Edition of Model Clauses published by H.M. Stationery Office and variants thereof, {see Wilberforce Report footnote to page 7).

the contractual connotation of the word " covenant" and the latinity and archaism involved in phrases such as " in rem", " real" and similar expressions.

Proposition 2—Creation of Land Obligations

(a) A valid land obligation will be created only by the use in the creating instrument of a formula which will—

(i) specify, by reference to a plan or by other adequate description, both the land to be benefited and the land to be burdened;

(ii) state that the obligation is imposed as a land obligation ;

(iii) where appropriate—i.e. where it is desired to create what is now called a "building scheme" or a similar scheme under which the benefit and burden of a common set of land obligations will affect all parts of an estate and be mutually enforceable by and against owners of the plots irrespective of the dates of acquisition—state that the transaction forms part of an " Estate Obligation Scheme ".

(b) The specific stipulations and restrictions comprised in the obligations will be set out in the creating instrument, if the parties choose to draw up their own list, or incorporated into it by reference to the prescribed sets of standard stipulations and restrictions (see Proposition 3) if any of the standard sets are appropriate.

(c) Notwithstanding the use of the proper formula of creation a restrictive obligation will take effect as a land obligation only if it satisfies the requirements of Proposition 1. If one or more of the restrictions fails to satisfy those requirements this will not necessarily affect the validity of the other restrictions in the same list.

NOTES

1. It is not intended that any specific form of words should be made obligatory for the creation of land obligations provided that the requirements of paragraph (a) are satisfied. It is thought desirable, however, that the Act should contain a specimen form which, in non-scheme cases, might be on the following lines—¦

" For the benefit of the land [hatched] on the plan annexed hereto [for the benefit of the vendor's Dale Estate] the land hereby transferred shall be subject to the land obligations set out in the schedule hereto [the land obligations set out in Part I of the Land Obligations Order S.I. 19 No. 1".

2. The expression Estate Obligation Scheme is intended to achieve the objects now obtained by " building schemes " and similar schemes of development which satisfy the requirements laid down in Elliston v. Reacher [1908] 2 Ch. 374, i.e. that the obligations are enforceable by the plot-owners amongst themselves. Use of this expression will avoid the doubts which have arisen in many cases as to whether such a scheme was contemplated at the outset. The consequences as regards modification, release, etc. are referred to in Proposition 5 (c) below.

3. A land obligation will create an interest in land analogous to an easement and, like a legal easement, it will give a present interest in the land, provided that it binds the land from its inception. In that event it will not be obnoxious to the rule against perpetuities and will be enforceable at any time.

Proposition 3—Standard Sets of Stipulations and Restrictions

Standard sets of stipulations and restrictions will be available for incorporation into creating instruments either in whole or in part and subject to such modifications as the parties may agree.

A number of sets will be available for use according to the type of property involved in the transaction (e.g. houses, flats, buildings other than dwellings, etc.). So far as dwellings are concerned there will be at least three sets, suitable respectively for—

A—Sales of dwellings, or of land for the election of dwellings, otherwise than under schemes for the general development of an estate.

B—Sales of dwellings, or of land for the erection of dwellings, under a general development scheme.

C—Sales of flats contained in a block (which will be similar to those contained in paragraphs 5 and 6 of Appendix C to the Wilberforce Report subject to any further thought which may be needed, in the light of Phipps v. Pears [1965] 1 Q.B. 76, to ensure that an obligation to give shelter is validly included).

Each set will contain both positive and negative obligations.

NOTES

1. In order to give flexibility to the contents of the standard sets it is proposed that they should be contained in a statutory instrument which can be amended as occasion requires. To facilitate ascertainment of the terms of the obligations which were incorporated into any instrument the relevant set (so far as adopted) must be attached to the creating instrument and, in the case of registered land, subsequently bound up in the Land Certificate or Charge Certificate.

2. The contents of the standard sets must be kept under review. If the Conveyancing Rule Committee proposed in the Report of the Non-Contentious Business Committee of the Law Society dated June 1965 were set up, it would be an appropriate body to consider and advise on these sets.

Proposition 4—Land to be Benefited and Burdened

(a) The benefit of a land obligation may, to the extent specified in the instrument, be annexed to land not at the time of its imposition in the ownership of a party to the creating instrument, provided that the requirements of Propositions 1 and 2 are satisfied (section 56 of the Law of Property Act 1925), as, for example, when a vendor wishes to impose burdens in a subsequent sale for the benefit of land which he has previously sold.

(b) The benefit will be annexed to each and every part of the benefited land, unless the contrary is expressed in the creating instrument, and will run with it until released, discharged, or, on a subsequent transfer, excluded by the person for the time being entitled to the benefit, in respect of the whole or any given part of the land.

(c) The obligation will be enforceable by the owners of interests in, and occupiers for the time being of, the land to which the benefit is

attached and by no-one else. On the subsequent sale of part of the land the benefit will pass unless and except in so far as the contrary is expressly provided in the instrument of transfer.

(d) The burden of a land obligation, until released or discharged, will bind and run with the burdened land and each part of it. It will, therefore, be enforceable by injunction against anyone who seeks to infringe it but not, for example, against persons who originally incurred, or subsequently became affected by, the obligation once they have parted with all their interests in the burdened land.

NOTES

1. Being annexed to the land the obligation must, it is thought, when registered be enforceable against any occupier, whether or not he knows of its existence. Propositions 7 and 8 are designed, inter alia, to improve his means of knowledge. The rights against his landlord of a tenant who has had to comply with a land obligation, at inconvenience or expense to himself, are being considered in the current study on codification of landlord and tenant law.

2. Equally it seems that the benefit must be enforceable by the owner of any interest and by the occupier, who may be the person most affected. Admittedly this raises, though less acutely in respect of restrictive than of positive obligations, the problem of the short-term occupier who takes proceedings without the support of the owners of superior interests. The Wilberforce Committee's Report (paragraphs 18 and 29) suggested that the Court or Tribunal should have a general power to refuse relief if the claim seemed unreasonable by reason, e.g. of the nature of the plaintiff's interest. The solution must be on those lines.

3. Generally it seems desirable that rules of procedure should be devised to prevent those burdened with land obligations being exposed to a succession of actions by different persons entitled to the benefit of an obligation, and to prevent interested parties being prejudiced by the settlement of proceedings of which they are unaware. This point is related to that made by the Wilberforce Committee in paragraph 18 of its Report, where, for the purposes of enforcing the obligations, it is suggested that a representative body or individual should be empowered to act for all the owners and to obtain contributions towards costs.

Proposition 5—Modification, Release and Discharge

(a) The owner for the time being of an interest in the benefited land may, to the extent of his interest, modify the terms of a land obligation or release the burdened land or any part of it from the obligation. Thereafter the obligation will be permanently varied or extinguished to that extent.

(b) A Court or Tribunal in the exercise of any relevant jurisdiction may also modify or discharge an obligation, with the same effect.

(c) Where the obligations are stated to be imposed for the purpose of an " Estate Obligation Scheme ", the following provisions will apply in the absence of express agreement to the contrary in the Scheme—

(i) Subject to (iii) below, the estate developer need not impose identical obligations on the sales of all plots (for example variations may be needed because some plots may be intended for shops rather than dwellinghouses, and minor variations may be appropriate as between one house plot and another). Moreover,

again subject to (iii), so long as the estate developer retains any land subject to the Scheme, he may release or reduce the burden of obligations already imposed on the sale of any plot.

(ii) Subject to (iii) below, the owner of land purchased under the Scheme may to the extent of his interest, modify, vary or release the burden imposed on other land.

(iii) Any variation, modification or release which will substantially affect the character of the estate can be effected only with the consent of all owners and of the estate developer, so long as he retains an interest in land subject to the Scheme.

(d) Land obligations may be extinguished by the exercise of powers of compulsory purchase on payment of compensation, as is the case with restrictive covenants under the existing law.

NOTE

As to the jurisdiction of the Court or Tribunal, see Propositions 9 and 10, below, which deal with the conferment of such jurisdiction and the conditions for its exercise.

Proposition 6—Transfer of Benefit and Burden

(a) A person who acquires an interest in, or goes into occupation of, any land will automatically be subject to the burden of any subsisting land obligations affecting that land and, subject to Proposition 4 (b) and (c), will take the benefit of any subsisting land obligation.

(b) When the owner of an interest in or occupier of land has parted with his interest or gone out of occupation he will cease to be able to enforce the obligation and will not be liable for any breach which his successors may commit.

(c) Specific assignment of the benefit of land obligations will be unnecessary in a conveyance of the benefited land, and will be ineffective if not accompanied by a conveyance of land to which the benefit is annexed.

(d) Since the benefit and burden will be attached to the land, joint owners of interests in and joint occupiers of land will jointly and severally be able to enforce and liable to observe the obligations.

NOTES

1. The intention is that a land obligation validly created and registered will run with the land automatically as to benefit and burden (subject to Proposition 4 (b) and (c)) so that a purported assignment will not pass to the assignee any right which he would not automatically acquire by the transfer of the interest in the land to himself.

2. Since land obligations will take on wholly different characteristics from restrictive covenants as now recognised, the provisions of sections 78, 79 and 80 (2), (3) and (4) of the Law of Property Act 1925 will not apply to them.

Proposition 7—Registration of Land Obligations

The burden of a land obligation created after the " appointed day " will not bind a purchaser for value unless registered in the appropriate manner. The position in relation to registered and unregistered land respectively will be—

(a) Registered land

(i) When a land obligation is created on the occasion of a transfer of the whole or pant of the land comprised in a registered title, the obligation will be entered on the register in the course of registration of the transfer.

(ii) In the case where a land obligation is created otherwise than on the occasion of a transfer, the person entitled to the benefit will apply for a notice to be entered on the register of title to the burdened land.

(iii) The modification, variation, release or discharge of a land obligation will also be entered in the register, as is the present practice in regard to restrictive covenants (see section 40 (3) of the Land Registration Act 1925 and Rule 212 of the Land Registration Rules 1925).

(iv) The burden of land obligations will be entered in a separate part of the register of title to the burdened land.

(b) Unregistered land

The burden of a land obligation will be registered as a new class of land charge in the Land Charges Register, against the name of the estate owner at the time of its imposition and in respect of the burdened land. On any modification affecting the burden, further registration will be required and the Land Charges Rules should so provide. On a discharge those entitled to the land formerly burdened will have the right to cancellation of the registration in accordance with Rule 10 of the Land Charges Rules 1925. When the title comes to be registered under the Land Registration Act the burden of the land obligation will be noted in the register of title to the burdened land.

NOTES

1. In paragraph (b) of this Proposition we differ from the recommendation in paragraph 53 (vii) of the Wilberforce Report that positive covenants in rem affecting unregistered land should not be registrable at all unless it should prove possible to set up a new register containing entries against land. We share the views of the Wilberforce Committee as to the shortcomings of the system of registration in the Land Charges Register ; but it is clearer now than it was when that Committee was deliberating that problems of this nature relating to unregistered land will become of reduced importance with the acceleration of the programme for extending compulsory registration of title. To revert for a limited period to the pre-1926 doctrine of notice would, in our opinion, cause confusion which should be avoided. Reluctantly, therefore, we recommend registration of land obligations in the Land Charges Register and we are hopeful that, for the reasons we have mentioned, the same view will be taken in framing legislation based on the Wilberforce Report.

2. We propose the creation of a new class of land charge because we consider this preferable to the inclusion of land obligations in Class D (ii) which contains existing restrictive covenants, since land obligations will possess characteristics quite different from those of restrictive covenants.

3. Registration in the Land Charges Register is intended to apply to land obligations affecting all unregistered land, including that situated in Yorkshire. We do not favour registration of land obligations in the Yorkshire Deeds Registries because the future of those registries is uncertain. We can foresee that, with the gradual extension of title registration, the local registries may have to be closed for economic reasons while substantial parts of the Ridings are still outside the compulsory registration areas. A purchaser of unregistered land in Yorkshire already searches at Kidbrooke for certain charges (e.g. writs and orders affecting the land) and the same search application will cover land obligations.

4. We have considered the provisions which now apply in respect of errors in a register or in an official certificate of search, and we make the following observations relating to registered and unregistered land respectively—

(i) Registered land

If owing to an error in the registry the burden of a land obligation were not properly registered, the legal position would depend upon the joint effect of sections 82 and 83 of the Land Registration Act 1925. If the register were rectified under section 82 by registering the land obligation, the purchaser would be entitled under section 83 (1) to compensation out of the Indemnity Fund. Normally, however, the register would not be rectified if the proprietor was in possession: section 82 (3). In that event those entitled to the benefit of the land obligation would be entitled to compensation under section 83 (2). Where the land obligation was properly registered but not disclosed by reason of an error in any official search, the purchaser would be bound by the obligation, but would be entitled to compensation for any loss he might suffer: section 83 (3). No change appears to be required in these respects.

(ii) Unregistered land

come to the conclusion, however, that it would not be desirable to recommend a change in the law so that a purchaser would be bound by a registered land obligation which had not been disclosed on the official certificate of search. We think that such a change might have unfortunate repercussions on conveyancing practice since a purchaser's solicitor would no longer be able to proceed with confidence on receipt of a clear certificate.

land obligations it will be provided that, notwithstanding the provisions of section 44 of the Law of Property Act 1925 or of any purported agreement to the contrary, on the grant or assignment of any lease the prospective lessee or assignee shaU be entitled to receive particulars of instruments creating land obligations, and the terms thereof, and all information necessary for making a fuU and proper search for land obligations in the Land Charges Register. The required information will consist of the names and addresses of previous owners since the " appointed day " and the description of the property in any documents executed since the " appointed day ".

NOTES

1. Paragraph (a) solves the problem, in relation to registered land, of discovering the new land obligations, with which these Propositions are concerned. Where both the freehold and leasehold titles to a piece of land are registered, a person proposing to acquire an interest in the land from the leaseholder may need to inspect the appropriate part of the register of each title, since he may be affected by land obligations noted on the freehold title in addition to those noted on the leasehold title.

2. In the case of unregistered land, paragraph (b) gives to prospective lessees and assignees certain specific rights which are necessary in view of the binding nature of land obligations, notwithstanding the general principles of section 44 of the Law of Property Act 1925. This Proposition does not raise the wider question of whether a right to investigate the title to the freehold or the leasehold reversion should be introduced.

3. Exercise of the rights conferred by this Proposition will not only involve changes in conveyancing practice but will also increase, to some extent, the legal expenses of transactions to which they relate.

Proposition 9—Modification or Discharge by the Court or Tribunal

(a) Section 84 (1) of the Law of Property Act 1925 should be re-written to give the Lands Tribunal powers of modifying or discharging land obligations wider than those which it has at the present time in respect of restrictive covenants. Under paragraph (a) of the subsection the Tribunal should be able to order modification or discharge where two requirements are satisfied ; first, that the restriction is, or unless modified or discharged would be, detrimental to the public interest by impeding the reasonable user of land for public or private purposes; secondly, that the persons entitled to the benefit of the restriction can be adequately compensated in money for any disadvantage which they will suffer as a result of the order, so far as that disadvantage cannot be alleviated by the imposition of conditions in the order.

The Tribunal should be directed to consider all the existing circumstances including the age of the restriction, the circumstances in which it was imposed, the planning position and the development policy for the area. So far as policy matters are concerned, however, the Tribunal, being a judicial body, should have regard only to settled policy and should not be involved at all in the formulation of future policy.

Under section 84 (3) the Tribunal has power to direct enquiries to be made of Local Authorities, and in practice it gives directions for the parties to make such enquiries in appropriate cases. This power should be extended to enable the Tribunal to direct enquiries to be made also of Government Departments.

All these wider powers should in future be available in respect of existing restrictive covenants as well as of the new land obligations.

(b) Under section 165 of the Housing Act 1957 the County Court has a limited jurisdiction in a particular class of case, where the conversion of a single house into two or more tenements or separate dwelling houses is prohibited or restricted by " the provisions of the lease of or any restrictive covenant affecting the house, or otherwise ", to vary the terms of the instrument imposing the restriction. This jurisdiction should be made available also where the restriction is imposed by a land obligation.

NOTES 1. The circumstances in which the Lands Tribunal has power wholly or partially to discharge or modify a restriction under section 84 (1) are—¦

(i) Paragraph (a), first limb—" that by reason of changes in the character of the property or neighbourhood or other circumstances of the case which the [Tribunal] may deem material, the restriction ought to be deemed obsolete ".

In Re Truman, Hanbury, Buxton & Co. Ltd's Application [1956] 1 Q.B. 261 the Court of Appeal explained that a covenant was obsolete only if the original object could no longer be achieved, as for example if an area intended to be residential had in fact become substantially commercial. Cases are likely to be few in which so drastic a change can be shown. (ii) Paragraph (a), second limb—" that the continued existence thereof would impede the reasonable user of the land for public or private purposes without securing practical benefits to other persons . . ."

This limb requires evidence " that the restriction is no longer necessary for any reasonable purpose of the person who is enjoying the benefit of it" (per Farwell J. in Re Henderson's Conveyance [1940] Ch. 835 at p. 846) and that the user proposed by the applicant for discharge or modification is the only reasonable user available (Re Leeds Road, Wakefield (1953) 103 L.J. 188: and see Re Ghey and Galton's Application [1957] 2 Q.B. 650). In other words the Tribunal must be satisfied not only that the permitted user is no longer a reasonable one but also that the applicant's proposed user is the only reasonable one. These tests are most difficult to satisfy.

(iii) Paragraph (b)—" that the persons of full age and capacity for the time being entitled to the benefit of the restriction . . . have agreed, either expressly or by implication, by their acts or omissions, to the same being discharged or modified ".

Cases of express consent require no comment. The provision as to implied consent would seem to cover cases in which the persons entitled to the benefit had shown so little interest in enforcing the covenant against previous breaches that their consent to its discharge might be presumed ; but such cases would probably fall within one of the other paragraphs as well.

(iv) Paragraph (c)—" that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction ".

Where an applicant is seeking a comparatively slight modification, e.g. to use a dwellinghouse as a guest house, to divide a house into flats or to exceed the density of building allowed under the covenant without seriously affecting the character of the area protected by the restriction, use has been made of the Tribunal's powers under this paragraph. Even in such cases, however, an applicant must be prepared to meet the argument that his proposal, though itself unobjectionable, would encourage similar applications and so threaten the whole basis of the restriction. Recently this paragraph has been described as being " so to speak, a long stop against vexatious objections to extended user", and as possibly being " designed to cover the case of the, proprietorially speaking, frivolous objector ", (see the judgment of Russell L.J. in Ridley v. Taylor [1965] 2 All E.R. 51 at p. 58.). The usefulness of the Tribunal's powers under this paragraph is therefore extremely restricted.

2. In view of the stringent requirements of those three paragraphs it is not surprising that, although the Tribunal has power to award compensation when it discharges or modifies a restriction, it has very seldom done so. There can be no justification for such an award where a restriction has become obsolete or the discharge or modification causes no injury to anybody. In recent years compensation is known to have been awarded in only two cases, in each of which the facts were rather special.

3. This Proposition is designed to contain a restatement of the powers of the Lands Tribunal in such terms as to enable it to take a broader view of whether the use of land is being unreasonably impeded ; and to make clear provision for an award of monetary compensation where the Tribunal thinks that the injury which an objector would suffer by a modification or discharge can properly be compensated in that way.

Proposition 10—Enforcement Jurisdiction of the Courts

(a) In the exercise of its enforcement jurisdiction in the case of restrictive land obligations, the Court should award damages in lieu of granting an injunction notwithstanding that there would he no oppression upon the defendant by such grant, where it is satisfied that the plaintiff entitled to the benefit of the obligation can be adequately compensated in money in respect of the harm done to his interests by the actual or contemplated breach complained of.

(b) The Court should have jurisdiction to grant declaratory relief in proceedings instituted by a person intending to carry out specific development which may contravene a restrictive land obligation. In the exercise of such jurisdiction the Court should be empowered, in appropriate cases, where a legally enforceable land obligation would be contravened, to award damages to any objecting party if the Court considers that he can thereby adequately be compensated in money in respect of the harm which will be done to his interests if such development proceeds.

NOTES

1. Paragraph (a) of this Proposition reflects recent tendencies in the Courts in restrictive covenant cases to depart from the somewhat inflexible principles formerly applied to the exercise of the jurisdiction conferred upon the Chancery Courts by the Chancery Amendment Act 1858 (Lord Cairns' Act) to grant damages in lieu of an injunction in appropriate cases. These principles are best

parties to be heard in opposition to, or support of, the application: and this may involve issues of law as to annexation to or imposition on particular land and enforceability by or against particular owners or occupiers. To enable those matters to be determined before the Tribunal considers the issue of modification or discharge, a procedure must be devised whereby—

(i) Notice of the application is served on all persons who appear to the Tribunal to be interested.

(ii) All persons who receive such notice and wish to be heard on the application are required to state in writing the grounds on which they assert that they are entitled to the benefit or subject to the burden of the obligation.

(iii) Discovery of all relevant documents may be ordered at the instance of any interested person.

(iv) The Tribunal will then decide, having regard to the written statements of grounds which have been furnished and on consideration of any relevant documents, who is entitled to be heard on the substantive application.

(v) Unless appealed against under (c) below, the Tribunal's decision under (iv) above will be conclusive and binding on all interested persons in respect of the particular application to which it relates.

(c) If any interested person does not accept the Tribunal's decision he will be able to require the Tribunal to state a case for the opinion of the High Court on a point of law, and the proceedings before the Tribunal will be suspended until that issue has been determined by the Court, or by the final Court of Appellate Jurisdiction to which it is taken.

(d) This procedure should be available in respect of existing restrictive covenants as well as the new land obligations.

NOTES

1. The decision In re Purkiss's Application [1962] 1 W.L.R. 902 has revealed an unsatisfactory situation in that the Lands Tribunal must either assume the covenant to be valid and enforceable and give a determination as to modification or discharge which may turn out to be a nullity or, if the validity or enforceability of the covenant is in doubt, adjourn the proceedings until the Court has decided this matter on an application under section 84 (2). The procedure suggested in paragraph (b) of this Proposition is designed to ensure that all questions of law are raised and conclusively determined in the simplest way before the issue of modification or discharge is considered. One advantage of this method is that when all the facts are known, some objectors may withdraw, or alternatively the applicant may decide to accept the titles of some objectors which he was at first inclined to dispute. The procedure is thought to be applicable both to restrictive covenants and to the new land obligations and it is desirable that it should be available in both cases.

2. Paragraph (b) introduces a procedure for ascertaining who are the interested persons entitled to be heard on applications for modification or discharge. Subparagraphs (i) to (v) indicate only the essential points which should be covered by rules of procedure. The detailed drafting of such rules is left to be undertaken by those who have devised the successful procedure for dealing with the interlocutory matters in the various branches of the Lands Tribunal's existing jurisdiction.

3. The procedure in paragraph (b) is not intended to replace any applications which can now be made under section 84 (2). If a clear issue as to title arises, and there is no doubt as to who are the parties interested, it may still be simpler for the matter to be taken direct to the Court, under that sub-section or its successor.

4. The procedure of case stated, (for which appropriate Rules of Court would have to be laid down) is thought to be the most expeditious way of getting the issue of law clearly before the High Court. The facts will all have been produced to the Tribunal and there seems no reason why the settlement of the case should not be completed in a short time and without any interlocutory proceedings.

5. The general rule as to costs should be that the costs of the preliminary enquiry to establish who is entitled to object to the application and on what grounds, should be borne in any event by the applicant, because he has set the proceedings in motion in order to clear the title for his purposes. Costs in proceedings to determine the legal issues which have arisen should be in the discretion of the Court or Tribunal. Prima facie, an objector whose title is not upheld should not be entitled to recover his costs but there may be cases where it would be unfair to order that he bears the applicant's costs.

Proposition 12—Procedure and Costs

(a) Implementation of these Propositions and of the Wilberforce recommendations would involve certain additions and alterations to the rules of procedure in the Lands Tribunal. Consideration might also be given to the desirability of ensuring generally that the parties before the Tribunal are more fully informed of the case which they have to meet, e.g. by discovery of documents, more detailed pleadings, etc.

(b) Discussions should be initiated on the possibility of agreeing uniform general principles as to awards of costs by the Courts and the Tribunal in these cases—see for example, the Practice Direction issued by the President of the Lands Tribunal on 27th May 1954 [Preston and Newsom on Restrictive Covenants, 3rd Edition page 263] and the decision of Stamp J. In re Jeff's Transfer (No. 2) [1966] 2 W.L.R. 841.

F. CONCLUSION

When submitting proposals for the reform of the law it is our usual practice to append to our Report a draft of the legislative provisions which would be appropriate to give effect to our proposals. We have not done so in this case because we are convinced that a new code should be prepared to deal, at the same time, with the implementation of this Report and of the substance of the Wilberforce Committee's recommendations.

Leslie Scarman, Chairman.
L. C. B. Gower.
Neil Lawson.
Norman S. Marsh.
Andrew Martin.

Hume Boggis-Rolfe, Secretary.

31^st January 1967.

© Crown copyright 1967

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