This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
(i) Sug. 14th ed. 452.
(k) Barclay v. Raine, (1823) 1 S. & S. 449.
(l) Bare v. Tucker, (1801) 6 Yes. 460; Cooper v. Emery, (1844) 1 Ph. 388.
(m) 8. C. As to the abolition of enrolment of instruments executed after 1925 which, under the F. & R. Act, 1833, ss. 41, 46, 58, 59, 71 and 72, would require enrolment, see s. 133 of the L. P. Act, 1925.
(n) See Re Punell and Deakin, (1893) W. N. 152; Wolst. & Cherry, 11th ed. vol. i. pp. 239, 240; 1 Prid. 22nd ed. p. 480.
The right to a covenant for production is, however, as a general rule, confined to those documents which affirmatively evidence the vendor's title (o), and does not extend to those not in his possession, or which are required to negative mere possibilities. It appears to have been decided by Shadwell, V.-c. (p), that a purchaser from an heir-at-law, whose ancestor left a will not affecting the property, can require no covenant for its production; but the correct view seems to be that where the negative evidence is necessary for the satisfaction of the purchaser, and is in the custody of the vendor, there is no sufficient reason why it should not be covenanted to be produced (q).
To what documents it extends.
Where a building estate is sold in lots under conditions which provide that each purchaser shall covenant with the vendor and with the other purchasers not to use his plot for a specified purpose, a purchaser of one lot cannot refuse to covenant with the vendor on the ground that, the other lots being unsold, he does not get the advantage of covenants by other purchasers (r); and the fact that the conveyance of one purchaser contains a departure from the general stipulations of the building scheme will not prevent him from enforcing them against other purchasers (s).
Mutual covenants on sale of building estate.
On the other hand, the vendor may, in certain cases, require covenants on his own account: for, as a general rule, whenever he is personally subject to liabilities, either in respect of the estate, or for the performance of which the estate stands as a security, the purchaser, taking the estate, must undertake the liabilities, and covenant to indemnify the vendor against them (t).
Purchaser's covenants with vendor.
(o) Including, of course, deeds of covenant for production entered into by prior vendors; Sug. 14th ed. 452.
(p) Cooper v. Emery, (1844) 1 Ph. 888; 2 Dav. pt. i. 663.
(q) Sug. 14th ed. 452; and see Stevens v. Guppy, (1825) 2 S. & S. 439; 6 L. J. Ch. 164.
(r) Re Mordy and Cowman, (1884) 51 L. T. 721; and see Davis v. Corp. of Leicester, 1894, 2 Ch. 208, 229, 232; 63 L. J. Ch. 440.
(s) See Rowell v. Satchell, 1903, 2 Ch. 212; 73 L. J. Ch. 20.
(t) See Re Poole and Clarke, 1904, 2 Ch. 173; 73 L. J. Ch. 612; Reckitt v. Cody, 1920, 2 Ch. 452.
Thus on the sale of property which is in mortgage the purchaser, even in the absence of express stipulation, incurs a liability to pay the mortgage debt and future interest (u): and may be required to covenant so to do (x). In the same way, on the sale of a share in a partnership the purchaser must personally indemnify the vendor against the partnership liabilities (y).
On purchase of equity of redemption, the original lease so far as the same relate to the property comprised in his own underlease (d).
On the sale of a reversion, the purchaser, it is conceived (z), must covenant to pay the succession duty, unless compounded for (a) at the time of the sale. ' or a reversion,
On the sale of leaseholds, either by the original leases or by an assignee who has entered into a similar covenant with a prior owner, the purchaser must covenant (b) to pay the rent and perform the covenants contained in the lease, and to indemnify the vendor against the same (c). Such a covenant is now implied by s. 77 (1) (C) and (D), and 2nd Sched., Parts IX. and X. of the L. P. Act, 1925. And, on a sale of leaseholds in lots by way of underlease, each purchaser must covenant to perform the covenants contained in or leaseholds.
(u) Waring v. Ward, (1802) 7 Ves. 332, 337; Adair v. Carden, (1802) 20 L. R. Ir. 469. As to whether the rule applies to the case of the purchase of the equity of redemption in a contingent reversionary interest whilst such interest remains reversionary, see Mills v. United Counties Bank, 1911, 1 Ch. 669; 1912, 1 Ch. 231, 237.
(x) Bridgman v. Daw, (1802) 40 W. R. 253.
(y) Dodson v. Downey, 1901, 2 Ch. 620; 70 L. J. Ch. 854; and see Bradford v. Gammon, 1925, Ch. 132.
(z) See inf. p. 1058.
(a) See Succession Duty Act, 1853, ss. 41, 44.
(b) The usual words in the habendum, "subject to the payment of the rent and performance of the covenants," have been held not to be equivalent to such a covenant by the assignee, Wolveridge v. Steward, (1833) 1 Cr. & M. 644; 3 L. J. Ex. 360.
(c) Pember v. Mathers, (1779) 1 Br. C. C. 52, 54; Staines v. Morris, (1812) 1 V. & B. 8; Close v. Wilberforce, (1838) 1 Beav. 112; 8 L. J. N. S. Ch. 101; Cochrane v. Robinson, (1840) 11 Si. 378; 10 Lr. J. Ch. 109; Morley v. Clavering, (1861) 7 Jur. N. S. 904. As to the form of the covenant, see Oooch v. Clutterbuck, 1899, 2 Q. B. 148; 66 L. J. Q. B. 808; Be Poole and Clarke, 1904, 2 Ch. 173; 73 L. J. Ch. 612. As to enforcement by the vendor of the negative covenant contained in the lease, see Harris v. Boots, Cash Chemists, Ltd., 1904, 2 Ch. 376; Reckitt v. Cody, 1920, 2 Ch. 452, 460. As to what can be recovered in an action on the covenant, see Smith v. Howell, (1851) 6 Ex. 730; 20 L. J. Ex. 377.
The trustee of a bankrupt has power to disclaim his leasehold property (e); and such a disclaimer operates to determine, as from its date, the rights, interests, and liabilities of the bankrupt and his property in respect of the property disclaimed, and also discharges the trustee from all personal liability in respect of such property, as from the date when the property vested in him (/).. But as the leaseholds of a bankrupt vest in his trustee on his appointment, subject to his right to disclaim, the trustee becomes personally liable, so long as the lease remains vested in him, for the rent and upon the covenants of the lease, if he does not disclaim it (g). He can, however, rid himself, as from the date of the assignment, of all liability under the lease by assigning it, even though the assignee is to his knowledge a pauper (A). There being, therefore, no continuing liability in the trustee after assignment by him, it would seem that he cannot now, any more than under the old law as it existed prior to 1869 (i), require from the assignee any covenant for payment of rent, performances of the covenants in the lease, or indemnity. In such a case, therefore, the usual implied covenants (k) should, it seems, be expressly excluded. But the case is different where an equitable mortgagee of the lease from the bankrupt opposes an application by the trustee for leave to disclaim, and insists on an assignment of the lease to himself. In such a case the assignee must covenant to indemnify the trustee against all liability under the lease (l); the principle of the decision being that, as the assignee has himself prevented the trustee from disclaiming, and so getting rid of all liability whatever from the date of his appointment, he must indemnify the trustee against any liability which he may have incurred, as a continuing lessee up to the date of the assignment. The Court has, under the Act of 1914, wide discretionary powers, on the application of any person either claiming any interest in any disclaimed property, or under any liability not discharged by the Act in respect of any disclaimed property, to make an order for the vesting of the property (m).