This case concerned a holiday village of bungalows in Cornwall. In around 1988, the developer sold the bungalows with the benefit of a right to use the footpaths, access roads, car parks and some recreational facilities in the village (the Common Parts). In turn, the developer promised to maintain the Common Parts and the sewer system and to paint the outsides of the bungalows. The original owners of the bungalows agreed to pay an annual sum in respect of the developer’s costs of maintenance of the Common Parts.
From 1989 onwards, the ownership of the village changed hands a number of times and fell into a state of disrepair. Kerdene Limited purchased the holiday village in 2000 and made great efforts to bring the village back into a proper state of repair. Kerdene sought to recover the cost of the maintenance works it carried out under the terms of the original transfers. However, by 2000, the majority of the individual bungalows had been sold and were no longer owned by the original owners who had agreed to pay towards the maintenance costs. Many of the current 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, but their appeal was dismissed by the Court of Appeal.
The judgment confirmed that a positive covenant (such as an obligation to pay money) does not bind future owners unless there has been express agreement, except where the equitable principle set down in the case of Halsall v Brizell (1957) applies - that a party may not take the benefit of a covenant without also accepting the burden which goes with it.
The Court of Appeal found that the payments by the bungalow owners had a real relation to the rights granted in the bungalow owners’ favour, which they continued to exercise, namely the use of the Common Parts. The principle of mutual benefit and burden applied and the bungalow owners were obliged to continue with the payments.
Wilkinson & Others v Kerdene Limited (2013).