UK: Restrictive Covenants: Transfer Of Benefit And Burden

Last Updated: 3 December 2013
Article by Emma Humphreys

Goodman & Ors v Elwood [2013] EWCA Civ 1103


This dispute centred on the Defendants' liability to contribute to the cost of maintaining an estate road used to access their industrial units.

Prior to 1986, the estate – including its roads – was owned by Dobson Park Properties Limited ("D") and there were negotiations for the Defendants to purchase the freehold of their units (which they occupied as tenants). At the same time, D was negotiating with Mr Elwood ("E") to sell part of the estate to him, including the estate roads. The Defendants were aware of this and were informed that E would grant them the necessary rights of way over the estate roads and that E would be responsible for maintaining the road, provided that the Defendants contributed to the cost of doing so.

In September 1986, D sold part of the estate to E. The Transfer reserved a right of way over the road in favour of D, its successors and their tenants and licensees. In return for E's covenant to maintain the road, D covenanted that D and its successors in title would contribute a fair and reasonable proportion of the expenses. Subsequent to this, in December 1986, D sold the freehold interests in the industrial units to the Defendants and granted them the right to use the estate road. In return, they covenanted to contribute to the expenses "incurred by the Vendor and its successors" in maintaining the road.

The Defendants initially challenged E's method of assessing their contribution to the costs incurred in maintaining the road, but subsequently disputed any contractual liability at all. There were two key bases for the challenge, both resulting from the fact that - at the time of the transfers to the Defendants - the road had already been transferred by D to E: (1) E did not have any contractual relationship with D under either of the transfers so as to enable him to force the Defendants to pay the contribution; and (2) E was not D's "successor" so the costs incurred by him in maintaining the road did not fall within the costs recoverable via the contribution covenant contained in the December Transfers to the Defendants.

Following this challenge, D assigned to E the benefit of the contribution covenant given by the Defendants in the December Transfers of their units. The effectiveness of this assignment was not challenged and it therefore dealt with the first of the Defendants' arguments. However, the Court was asked to consider the construction of the contribution clause and whether the costs incurred by E were recoverable from the Defendants pursuant to the December Transfer, or on the basis of equitable principles of benefit and burden (as illustrated by the decision in Halsall v Brizell [1957] Ch 169).

There was a dispute between the parties as to whether the Defendants had been aware of the fact that E already owned the road at the time they purchased their units but the Judge at first instance was satisfied that the Defendants had had no reason to think that the sale to Mr E had not completed nor to expect anyone other than E to become the owner of the road.

The proceedings focused on one of the purchasers of the industrial units ("G"), with the findings to bind the other Defendants.


The Court had three issues to address on appeal:

  1. G's liability (as a purchaser of one of the industrial units) under the covenants contained in the December Transfer;
  2. G's liability under the equitable principles of transferring benefit and burden;
  3. if so liable, whether the extent of the liability extended to additions to the roadway which post-dated G's acquisition of the unit.


Liability in contract: the covenant in the December Transfer

G submitted that it was irrelevant that D had assigned the benefit of the covenant contained in the December Transfer to E, on the basis that "successor" could not be construed widely enough so as to include E because it applied only to prospective owners of the estate. Although the Court accepted that a reference to "successors in title" will usually mean subsequent owners of the relevant property, it felt that this would be a "surprising" conclusion where the purpose of a clause was to continue G's liability regardless of a change in the ownership of the estate.

The Court emphasised that the meaning given to words in any contractual document depends upon construing the language against the admissible background facts. Since E's ownership of part of the road would have been a matter of public record by the time of the December Transfer, the Court found that this information would have been available to the reasonable bystander as part of the admissible background and not merely as "extrinsic evidence". Construing the language against this background, the Court felt that the intention of the covenant was to require the owners of the industrial units to contribute towards the costs incurred by D or its successors on maintaining the road and that there was no reason to give the words a "time restricted meaning" which would "exclude the very person who would be the owner and repairer of [the road] for the foreseeable future" and "destroy the commercial purpose of the bargain". The Court described E as "on any view, a "successor" to [D]".

Thus, G was held to be contractually liable to contribute towards E's costs of maintaining the road.

Liability in equity: benefit and burden under the December Transfer

The Court reviewed the three conditions which had been outlined in Davies v Jones [2009] EWCA Civ 1164 as needing to be satisfied in order for the burden of a positive covenant to be enforceable against the covenantor's successors-in-title, namely:

  1. the benefit and burden should be conferred in or by the same transaction;
  2. the receipt/enjoyment of the benefit must be relevant to the imposition of the burden in the sense that it is conditional on/reciprocal to the latter; and
  3. the person with the alleged burden must have/have had the opportunity to reject the benefit, not merely the right to receive it.

E accepted that the second requirement was not satisfied by the December Transfer because the covenant had not been given in return for or in relation to the grant of the rights of way by E. However, E argued that the obligation came from the September Transfer where D covenanted that it and its successors-in-title would contribute to the maintenance costs of the road. Emphasising the importance of substance rather than form, the Court confirmed that there was a "clear and obvious link" between the rights of way reserved over the road and the obligation to contribute to the cost of repairs. The Court rejected the Defendants' argument that D's covenant with E to contribute to the maintenance costs was personal to D and noted that the language of the September Transfer contradicted this.

The Defendants also pointed out that the covenant in the September Transfer assumed that the transferor (i.e. D) continued to own all of the units and not merely one of the units; there was no machinery to cater for sub-division. However, the Court held that a purchaser who obtains part of retained land must assume the burden of contribution appropriate to the land which he acquires, namely "a fair and reasonable proportion of expenses incurred in the maintenance of a portion of [the road] upon which the unit (rather than the units) abuts".

The Defendants also sought to argue that equity required the burden of the contribution covenant to have been registered under s.20(1) Land Registration Act 1925 in order to bind successors-in-title, as a positive covenant which did not constitute an overriding interest. The Court noted the lack of authority on this point and the fact that the Registrar had introduced the concessionary practice of allowing positive covenants to be registered on an annex to the registered title in order to assist parties to decide on the need for indemnity covenants. It also noted that the burden of a positive covenant only gives a third party the personal right to enforce the covenant in equity against the registered proprietor.

The Court concluded that the effect of registration under s.20(1) was to ensure that the purchaser takes the legal estate subject to registered incumbrances but otherwise free for all estates and interests. It therefore felt that – to be registrable – an incumbrance should be capable of creating an estate of interest in the registered land. Since the burden in equity of positive covenant does not do so, the Court concluded that it did not need to be registered in order to bind successors.

Liability for the widened road

On the issue of whether the Defendants were liable to contribute to the costs of maintaining an extra strip of roadway which E had added to the road adjacent to their units, the Court noted that there had been no finding that the Defendants had acquired a right of way to use this additional strip (which did not form part of the road at the time of either the September or December Transfers). The Court therefore held that the Transfers should be construed as referring only to the road existing at that time. Repeating the point that the burden of a positive covenant should only pass where there is a correlation between the rights granted and the obligations imposed, the Court stated that it could not see a liability for the Defendants in relation to the additional area.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Emma Humphreys
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.