Does CPO s.31 apply to equitable leases? Does the tenant need to sign an agreement for lease to bring the lease within CPO s.31?

CPO s.31 allows assignees of the reversion to enforce the terms of a written agreement for lease. This is true even though only the landlord has signed the written agreement.

In Rye v Purcell ([1926] 1 KB 446) L’s authorised agent wrote to T granting T a lease of property. T remained in possession under the terms of the lease and paid the rent mentioned in the letter. L assigned the reversion and the assignee brought an action claiming that T had failed to keep the property in repair in breach of the terms of the written agreement. T argued that the assignee did not have the benefit of the covenant. It was accepted that the equivalent of section 31 of the Conveyancing and Property Ordinance covered agreements for lease. T argued, however, that there was no agreement as T had never signed any written agreement. The assignee succeeded. The letter was a sufficient agreement to bring the lease within CPO s.31. Further, either party could have obtained specific performance of the agreement based on the landlord’s signature or the tenant’s remaining in possession. In any event, privity of estate arose where T went into possession under the terms of a deed or written agreement executed or signed by L without any need for T to execute or sign a counterpart.

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CPO s.39 and the annexation of the benefit of covenants

In Federated Homes Ltd v Mill Lodge Properties Ltd ([1980] 1 WLR 594) Mill Lodge bought one part of a larger development site. It agreed with the seller that it would not build more than 300 houses on the land that it had bought. If it were to exceed this limit, it would reduce the number of houses that could be built on the rest of the site because of a limitation imposed by the local authority. Federated Homes bought the rest of the development land in two separate portions. They learned that Mill Lodge planned to build an extra 32 houses on their land and they sought an injunction to restrain any breach of the covenant not to build more than 300 houses. There had been no assignment of the benefit of the covenant in respect of part of the land owned by Federated Homes. The question then was whether the benefit of the covenant was annexed to that land. Brightman LJ held that the English equivalent of CPO s.39 did indeed annex the benefit to each and every part of Federated Homes’ land:

‘If …  a covenant relating to land which is restrictive of the user thereof is enforceable at the suit of (1) a successor in title of the covenantee, (2) a person deriving title under the covenantee or under his successors in title, and (3) the owner or occupier of the land intended to be benefited by the covenant, it must, in my view, follow that the covenant runs with the land, because ex hypothesi every successor in title to the land, every derivative proprietor of the land and every other owner and occupier has a right by statute to the covenant. In other words, if the condition precedent of section 78 is satisfied — that is to say, there exists a covenant which touches and concerns the land of the covenantee — that covenant runs with the land for the benefit of his successors in title, persons deriving title under him or them and other owners and occupiers.’ (at 605)

The annexation was to each and every part of the land (at 606)