UK Construction and Law

A school trust's 4.5m pound overage claim fails because nobody assigned it

By Staff Writer  |  4 September 2026

A builder swapped land with an Essex school and took the field back under a twenty five year covenant with an overage clause. When the school company was dissolved and its academy trust demanded millions, the High Court found the trust had never been given the benefit of the covenant at all.

Rose Builders (Properties) Limited, a family building company working around Lawford, Mistley and Manningtree, entered into a land swap agreement with Manningtree High School Limited on 13 February 2015. The school company received land near its site for playing fields, a coach turning space and a multi-use games area, all funded by the builder. In return the builder took a green field off Long Road that the school had only used for grazing sheep.

The Education Funding Agency consented to the disposal on 4 August 2014 on condition that the school company would receive fifty per cent of the development value of the field if it was developed within 25 years. The transfer, executed on 6 July 2018 in the form agreed in 2015, carried a covenant that the land would not for 25 years be used for anything other than agriculture, given to the school company "for its own personal benefit". A schedule set out the mechanism: on commencing development the builder serves a Price Notice with a surveyor's valuation, the other side may counter, an expert settles any dispute, and on payment of the Variation Price a deed of variation releases the covenant.

Who had the benefit

Manningtree High School Limited transferred its whole undertaking and assets to Alpha Trust, a multi-academy trust running five schools, by an agreement dated 23 August 2019, and was then dissolved. No document expressly identified the benefit of the covenant as passing to the trust. A deed of variation in April 2022 between the builder and the trust recited that the trust was the school company's successor in title and entitled to the covenants, but the school company was not a party to it because it no longer existed.

A permission of 17 March 2023 allows 35 dwellings and a convenience store on the field. The builder's amended Price Notice of 31 May 2023 was for 549,026 pounds. The trust's counter-notice of 27 June 2023 put the figure at 4,536,090.34 pounds, and its amended counter-notice of 11 June 2024 at 3,615,729.56 pounds. The builder issued a Part 8 claim on 9 January 2025, heard over 8 to 10 June 2026.

Saira Salimi, sitting as a Deputy High Court Judge, held on 3 September 2026 that the covenant was not annexed to any land. The school site is on the other side of the village and could not benefit from a restriction over the field. It was a covenant for the personal financial benefit of the school company, which she said "would more accurately be described as an overage agreement". The benefit is a thing in action, and section 136 of the Law of Property Act 1925 requires an absolute assignment in writing with express notice to the person bound.

In my view this must, as a minimum, identify the thing to be transferred.

Saira Salimi, sitting as a Deputy High Court Judge, on what section 136 of the Law of Property Act 1925 requires of a written assignment

The 2019 transfer agreement was wide enough to catch the covenant, but its schedule of contracts did not list it and no notice was given to the builder. The 2022 deed could not transfer anything because the party entitled to the benefit was not a party to it. Both sides had assumed it had passed. The judge called that a common mistake.

Estoppel, and a benefit nobody holds

The trust argued the builder was estopped by the recital in the 2022 deed. Estoppel by deed is read restrictively and needs a statement that is certain, precise and unambiguous. The recital rested on an unexpressed assumption, and the party which in law still held the benefit was absent from the deed. The argument failed.

The covenant over the field has fallen away. Clause 26.2 of the 2015 agreement lets the builder terminate it if the school company ceases to exist, and nobody now holds the benefit of the restriction.

The trust does hold the benefit of an identical covenant over a small sliver of land it transferred itself in April 2022, and the judgment answers the valuation questions for that strip. It also decides that the mechanism does not oblige the builder to request a release once a price is fixed, because nothing in the schedule says the builder must pay. Compelling a request with no intention to pay would, the judge said, be "an absurd construction".

A trust that took over a school in 2019 lost a seven figure claim on paperwork. Overage is a chose in action. When the beneficiary changes, it has to be assigned like one, and the party bound has to be told.