Tulk v Moxhay (1848)

Section 40 of the Act is Tulk v Moxhay in statutory form. It is the section that lets a purely contractual obligation about land bind a later owner of that land, provided he took with notice. Everything examinable about it — that the covenant is negative, that it does not run with the land at common law, that notice and not privity is the key, and that a purchaser for value without notice is safe — comes from this judgment.

In 1808 the plaintiff, Tulk, owned in fee the vacant piece of ground in Leicester Square, London, with the equestrian statue and the iron railing round it, and also several of the houses forming the square. He sold the garden to one Elms in fee. The conveyance contained a covenant by Elms for himself, his heirs and assigns, with the plaintiff, his heirs, executors and administrators, that they would at their own cost

"keep and maintain the said piece of ground and square garden and the iron railing round the same in its then form, and in sufficient and proper repair as a square garden and pleasure ground, in an open state, uncovered with any buildings, in neat and ornamental order"

and that the inhabitants of Leicester Square who were the plaintiff's tenants might, on payment of a reasonable rent, have keys and the privilege of admission.

The land passed through several mesne conveyances to the defendant, Moxhay. His own purchase deed contained no such covenant with his vendor. But he admitted that he had purchased with notice of the covenant of 1808. He then showed an intention to alter the character of the garden and asserted a right to build on it. Tulk, still owning several houses in the square, sued for an injunction. The Master of the Rolls granted it. Moxhay moved to discharge the order.

Can an owner who bought land with notice of a restrictive covenant, but who is not a party to it and whose own deed does not repeat it, be restrained from using the land inconsistently with it — even though the covenant does not run with the land at law?

Yes. The motion to discharge was refused with costs, and the injunction stood.

1. The jurisdiction is not in doubt. Lord Cottenham begins with the proposition that a contract between the owner of land and a neighbour purchasing part of it, that the purchaser shall use or abstain from using it in a particular way, is enforceable — something "what I never knew disputed".

2. The consequence of the contrary view. If the covenantee could bind his purchaser but not that purchaser's assignee, "it would be impossible for an owner of land to sell part of it without incurring the risk of rendering what he retains worthless". That is the practical justification for the whole doctrine, and it is the sentence to quote.

3. The question is reframed. The defendant argued that the covenant did not run with the land and so could not be enforced. Lord Cottenham's answer redefines the question:

"the question is not whether the covenant runs with the land, but whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, with notice of which he purchased."

4. Why running with the land is beside the point. Two reasons are given. First, the price was affected by the covenant, and "nothing could be more inequitable than that the original purchaser should be able to sell the property the next day for a greater price, in consideration of the assignee being allowed to escape from the liability which he had himself undertaken". Second — and this is the decisive doctrinal step — even a bare agreement without a covenant would be enforced, because where an equity is "attached to property by the owner, no one purchasing with notice of that equity can stand in a different situation from that of the party from whom he purchased".

5. Authority. Duke of Bedford v British Museum Trustees and Mann v Stephens are treated as consistent; and Lord Brougham's observations in Keppell v Bailey, so far as they suggest that equity would not enforce such an obligation unless an action lay at law, are disapproved.

A restrictive covenant affecting land, though it does not run with the land at law, will be enforced in equity by injunction against a subsequent owner who took the land with notice of it. The foundation is not privity but conscience: an equity attached to property by its owner binds everyone who takes with notice.

Section 40 has two limbs. The first covers the case where, "for the more beneficial enjoyment of his own immovable property", a third person has, independently of any interest in the other property or any easement over it, a right to restrain the enjoyment of that other property in a particular manner. The second covers an obligation arising out of contract and annexed to the ownership of immovable property but not amounting to an interest in it or an easement over it. The enforcement clause is the operative one:

"such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands."

Three points follow, and each is examinable.

- The obligation binds a transferee with notice and a gratuitous transferee, whether or not he had notice. A donee cannot shelter behind ignorance. - It does not bind a transferee for consideration without notice. That is the same protection the bona fide purchaser has everywhere in the Act. - The illustration to s. 40 shows the section covering more than restrictive covenants: A contracts to sell Sultanpur to B, then sells to C who has notice; B may enforce the contract against C as against A. That is the statutory root of the buyer's right against a second purchaser with notice.

It does not make a positive obligation run: the covenant here was to keep the ground open and unbuilt on, that is, in substance negative. It does not give the covenantee an interest in the land — s. 40 says expressly that the obligation does not amount to an interest or an easement. And it does not help against a purchaser for value without notice, which is why the doctrine of notice in s. 3 has to be learned alongside it.