There is a general rule in property law that successors in title will not be bound by the burden of a positive covenant – such as a positive payment obligation. Of course, as with most rules in life, there are exceptions; the exception of note in this case being the equitable mutual benefit and burden principle.
The principle was first established in 1957 in a case which concerned a positive covenant to pay towards the cost of maintaining a private road. The High Court held that while a positive covenant (to pay) did not generally bind successors, the obligation could be enforced against successors who were enjoying the benefit of any associated rights; i.e. if they were using the road they had to pay to maintain it.
Subsequent cases have introduced conditions that must be satisfied in order for the principle to apply; the benefit and burden must be conferred in, or by, the same transaction; the benefit has to be reciprocal to, or conditional upon, the burden; and the person to be bound by the burden should, at least in theory, be able to choose between: (a) enjoying the right and accepting the associated burden; or (b) giving up the right and saving their money.
More than fifty years after the benefit and burden principle was established it has been reinforced by the Court of Appeal. The Goodman v Ellwood case involved a dispute over the liability of purchasers to maintain a road on an industrial estate that provided access to their units. When Ellwood originally bought the land (including the road) the seller retained a right of way for the benefit of its retained land over the road and agreed that it and its successor in title would pay towards the cost of the road’s maintenance. The seller later sold off the retained land with the benefit of the right of way as industrial units to individual owners, including Goodman. Goodman and others argued that they could not possibly be bound by the positive payment obligation to pay towards the maintenance of the road as it was a positive covenant. In addition, it was not listed on the title documents. The Court of Appeal held that this did not matter; as the original benefit and burden were conferred by the same transaction and, because the individual owners were enjoying the benefit of using the road, they were bound by the associated burden.
The benefit and burden principle and its recent confirmation by the Court of Appeal seems to support one of life’s most important lessons; no pain, no gain.
Goodman v Elwood (2013)