When the Port of London Authority sold some land in 1962, the transfer contained restrictive covenants that prevented alterations ‘without the prior approval in writing of the estate officer of the transferor’. Subsequently, the PLA sold its adjoining land, and the question then arose as to whether the covenant could be enforced by the current owner of that land (ie the successor in title to the PLA).

The CA has now confirmed the High Court decision in this case, noted in our September issue (p20). The court decided that ‘the transferor’ meant the PLA (only). The court took the view that you had to look at the actual lease and its precise wording. For the court to decide that the draftsman had intended the words ‘the transferor’ to mean ‘the transferor and its successors in title’ would only have been justified if the defined meaning of ‘transferor’ would have resulted in ‘an absurdity’. It is not sufficient that an alternative interpretation simply makes better commercial sense. In the High Court, the judge had placed great emphasis upon the fact that the document referred to ‘successors in title’ in another clause, but not in the restrictive covenant. In the CA’s view, one had to look to see whether there was an ‘absurdity’. In short, the lease made sense with its current wording – there was no ‘absurdity’ resulting, and thus ‘the transferor’ meant the PLA (and not its successors in title).

The end result in this case was that the restrictive covenant could not be enforced by the PLA’s successors in title. Accordingly, buyers should not assume that they will necessarily inherit the right to enforce any restrictive covenants, unless the documentation makes it clear that this is the case. Perhaps it is even more important to appreciate that a buyer of land may find that his predecessor in title does have power to give consent to something that does directly affect the buyer; that being so, if a client acquires land as a successor, but is not sure whether or not the benefit passes to him, then it might be prudent to approach the predecessor in title to see whether it is possible to negotiate that consent will not be given without the buyer (ie the successor in title) agreeing. City Inn v Ten Trinity Square [2008] EWCA Civ 156. © Practical Lawyer