Carne v Debono
The judges in Carne v Debono completely lost sight of how a restrictive covenant fundamentally binds land, turning established property law entirely on its head.
Anyone with a basic understanding of property law knows that a restrictive covenant legally obligates the landowner (the vendor) to clear their own title before delivering it to a buyer. In fact, the Court of Appeal explicitly admitted that, in the abstract, one might have thought it was for the vendors to negotiate the removal.
Yet, for some bizarre reason, the court abandoned this sound reasoning. By ruling that the legal burden somehow shifted to the purchaser simply because he handled the practical legwork, the judges put the cart before the horse.
To allow a vendor to escape accountability and enforce a notice to complete when they had completely failed to obtain a formal Deed of Release is a profoundly disingenuous contradiction of justice.
Summary
The judgment stated:
"Looking at the matter in the abstract, one might have thought it was for the vendors to negotiate the removal of those covenants from the title. But it is clear that they were not so treated and that all negotiations relating to those covenants and the price to be paid for them were conducted by the purchaser."
So "there's the rub."
The restrictive covenant was between the Covenantee and the Covenantor. The covenant runs with the land, meaning successors in title are strictly bound by the restrictive covenants that apply to that land. The contract was explicitly conditional upon the release of the restrictive covenants, and ALL parties concerned were fully aware of that.
The purchaser, the purchaser's solicitors, the vendor's solicitors, the barrister, Master Munrow, the Vice-Chancellor, and Lord Justice Smith were all completely aware that a formal release would have to be obtained.
The vendor asked the purchaser to forward the Planning Notice of Approval to Liverpool Victoria. Liverpool Victoria wrote back to the purchaser stating they required Building Regulation Approval.
The purchaser notified the vendor. The vendor knew that Liverpool Victoria had requested Building Regulation Approval. To enable the vendor to obtain the release of the covenant, the vendor either had to agree to the covenantee's financial terms or apply to the Upper Tribunal (Lands Chamber) under Section 84 of the Law of Property Act 1925.
The Building Regulation Approval had absolutely nothing to do with the purchaser's contractual obligations. The vendor asked the purchaser if he could personally apply for the Building Regulation Approval to keep things moving. The purchaser agreed, acting in good faith, and paid for the application to the Local Authority out of his own pocket.
Upon receipt of the Building Regulation Approval, the purchaser forwarded the official Notice of Approval to Liverpool Victoria, who then indicated their willingness to release the restrictive covenant and outlined the associated costs.
The Legal Reality:
The contract remained strictly conditional upon the formal release of the restrictive covenants. The purchaser had no legal relationship with Liverpool Victoria and was not legally bound by the restrictive covenant on title.
At no stage was a formal physical Deed of Release of the covenant ever given.
The vendor's solicitors issued a notice to complete
The vendors issued a notice to complete the sale despite being completely unready to fulfill their own obligations. Because there was no formal release of the restrictive covenant, Special Condition 12.i. had not been met. This failure led the purchaser's solicitor to rightly declare the notice invalid due to the absence of a proper, legally compliant completion landscape.
