⇒ Unlike the burden (which can only pass in equity, and then only in respect to restrictive covenants), the benefit of a covenant can pass at law and equity and in respect to both positive and negative covenants.

⇒ Also, as only burden of restrictive covenants may pass in equity, it is most common for the claimant (i.e. the subsequent owner of the covenantee's land) to plead that the benefit has also passed in equity (as explained in Gafford v Graham (1998)) - this is important, as there needs to be a symmetry of the running of the benefit and burden to sue (see here).

⇒ In practice, therefore, the passing of the benefit at law and in respect to positive covenants is only relevant when suing the original covenantor.

• To reiterate, passing the benefit of positive and negative covenants at law whill be relevant only when the claimant - the successor to the original covenantee - is claiming the benefit of such covenants in order to sue the original covenantor.
• If any other person is the defendant, the claimant may sue in equity, and only on a restrictive covenant, as it is only the burdens of these that are capable of passing.

⇒ Passing the benefit of positive and negative covenants at law:

1. The benefit of the covenant must "touch and concern" the land of the original covenantee.
2. The claimant must have a legal estate in land.
3. The benefit of the covenant must have been annexed to a legal estate in land, either expressly or by implication.

⇒ Passing the benefit of covenants in equity:

1. The covenant must "touch and concern" the land.
2. The claimant must have a legal or equitable estate in the land of the original covenantee.
3. The benefit of the covenant must have been transmitted to the claimant in one of three ways:
• i) Express or statutory annexation;
• ii) Assignment (express or implied);
• iii) A scheme of development.

⇒ Only a covenant relating to the use or value of the land should be capable of passing with a transfer of it → so we are concerned with matters affecting the land itself (i.e. in rem), not the personal preferences or desires of the parties to the covenant.

⇒ Whether a particular covenant touches and concerns land will depend on facts of each case.

⇒ A useful three part test as to when a covenant touches and concerns land was laid down by Lord Oliver in Swift Investments v Combined English Stores (1989):

• Could the covenant impose a benefit on any owner of an estate in the land, as opposed to the particular original owner?
• Does the covenant affect the nature, quality manner of use or value of the land?
• Is the covenant expressed to be personal so that, regardless of its substance, it is meant to operate only on the original covenantee?

⇒ In other words, the successor in title of the original covenantee must have a legal estate in land, although not necessarily same legal estate (Law of Property Act 1925, section 78)

• For example, if the original covenantee has the freehold in the land, but you then take the leasehold of that land, you will not have the same legal estate (you will have the leasehold instead of the freehold), but you will have a legal estate in the land.
• In other words, the original covenantee may have been the freeholder, but the claimant will succeed even if they have 'only' a legal lease.
• Section 78 of the Law of Property Act 1925 deems any "owners or occupiers" (including an adverse possession) to be successors in title for the purposes of enforcing a restrictive covenant (but not a positive covenant).

⇒ Express Annexation:

• Where 'words of annexation' are used, the benefit of the covenant is annexed with the land so that forever afterwards it passes automatically with the land to the new owner.
• In other words, a covenant may be annexed expressly by words which make it clear that the covenant is for the benefit of certain land or words which make it clear that the covenant is intended to endure for successive owners of the land. In either case, however, the land must be readily identifiable, and capable of benefiting from the covenant (Re Gadds Transfer [1965]), and this must be possible at the time the covenant is executed.

⇒ Implied Annexation:

• Where words of express annexation are not used, some cases suggest that it may still be possible for the court to identify the benefitted land by looking at the circumstances → where the facts are held to indicate with reasonable certainty the land which is to be benefitted, the benefit thereafter will run with the land.

⇒ Statutory Annexation:

• The rather complicated rules about express annexation, and the uncertainty about implied annexation, may be of less importance since Court of Appeal decision in Federated Homes v Mill Lodge Properties [1980], which introduced the idea that in certain cases statutory annexation may be effective:
• This case said that section 78 of the Law of Property Act 1925 has the effect of statutorily annexing the benefit of every covenant (both positive and negative) to all of the benefitted land.
• In order for section 78 to operate, the land must be capable of benefiting from the covenant and identifiable from the deed of covenant.
• The effect of section 78 is that, unless a contrary intention is shown, the benefit of most covenants will now be annexed to the covenantee's land.
• In consequence, the benefit of covenants created after 1925 will usually run to successors in title to the original covenantee, even if the benefitted land is sold off in parts.
• Note, it was said in Roake v Chadha [1984] that automatic statutory annexation can be avoided by express contrary intention.

⇒ As at law, the covenant must “touch and concern” the land. This is identical to the position at law already described, above.

⇒ In other words, the successor in title of original covenantee must have a legal or equitable estate in the land of the original covenantee.

⇒ By virtue of section 78 of the Law of Property Act 1925, the claimant does not need have the same estate as the original covenantee. Furthermore, as section 78 deems all "owners and occupiers" to be successors in title, any occupier may enforce the benefit of a restrictive covenant.

⇒ The benefit of the covenant must have been transmitted to the claimant in one of three ways:

• i) Express or statutory annexation;
• ii) Assignment (express or implied);
• iii) A scheme of development.

⇒ The benefit of a covenant can be annexed to the land at equity in the same way as at law: through use of express words, impliedly, or by statute.

⇒ Alternatively, the claimant may also seek to rely on the general rule that the benefit of a contract may be expressly assigned to another person.

⇒ This means that it is possible for the original covenantee to expressly assign (i.e. transfer) the benefit of a covenant to another person when they transfer the land.

⇒ Again (like with annexation) the land must be capable of benefiting from the covenant, and must be readily identifiable.

⇒ Assignment inter partes:

• It is important to note that express assignment is an assignment of the benefit inter partes (among people), not simply another route to annexation.
• In other words, if the purchaser who obtains the benefit of the covenant elects to transfer the land again, there must then be a further assignment of the benefit to the next purchaser – thereby forming a "chain of assignments" (Re Pinewood Estates [1958]).
• I.e. if one relies on this method it is necessary to show that there is an unbroken chain of assignments, so that on each sale of the benefitted land the benefit has been passed to the new owner and has finally come to the person who now seeks to enforce the covenant.

⇒ Building schemes arise where land has been developed by being laid out in plots and then sold to different buyers. Each buyer enteres into restrictive covenants with the common seller (such as a property developer or builder) retricting the use of their paritcular plot for the benefit of the estate generally.

• I.e. lets say a builder owns land that is divided into 10 plots. If one plot is sold to Mr A with a restrictive covenant saying he cannot use the land for business purposes, the benefit of the covenant will be given to all the other 9 plots of land

⇒ This allows a common vendor of land (such as a builder) to transfer the benefit of any covenants received by it from the purchasers of a plot of the land to every other purchaser of a plot of that land.

• So if Mr B later comes along and buys another plot of land with the same restrictive covenant, the benefit of the covenant will be given to the other 9 plots of land including Mr A’s land, despite the fact Mr B made the covenant after A had purchased a plot.
• In other words, the advantage of a building scheme is that it allows the benefit of covenants made with later purchasers to be annexed to the land already sold → notwithstanding that this should not be possible because the original covenantee (the builder or developer) no longer owns that particular plot of land.

⇒ In essence, this relies on the "common intention" behind the building scheme to generate a shared set of rules (i.e., the covenants) for all purchasers of the newly developed plots.

⇒ In order to generate this effect, it must be clear that the entire parcel of land (before being sold as plots) was intended to fall within a common scheme of covenants and be governed by common rules.

⇒ The criteria for a building scheme was laid down in Elliston v Reacher (1908):

1. There must be a common vendor (i.e. builder or property developer);
2. The land must be laid out in identifiable plots (i.e. 10 plots);
3. The benefit of every purchaser’s covenants must be intended to be mutually enforceable (i.e., among every other purchaser);
4. The purchasers must have bought the land on condition that this was intended, and;
5. The area subject to the scheme is well-defined (Whitgift Homes v. Stocks (2001)).

⇒ It should be noted that the exception for building schemes applies only to the running of benefits. A building scheme does not affect the running of the burden of covenants.

⇒ Federated Homes v Mill Lodge Properties [1980] has not escaped criticism. See Newsome G. (1982) 'Universal Annexation', 98 LQR 202.

⇒ Some other helpful legal resources on passing the benefit of covenants:

• Brainscape
• Challenging and Enforcing Restrictive Covenants