The Court of Appeal in Bath Rugby Ltd v Greenwood & Ors v Bath Recreation Ltd has found that the term “neighbourhood” is insufficient to describe the land which benefits from a restrictive covenant. This reversed the original decision of the High Court in a case concerning Bath Rugby Club’s plans to redevelop its ground. It is a decision which is likely to be of interest to anybody purchasing land which may be subject to historic restrictive covenants.
The case was originally brought by a group of claimants who owned property near to Bath Rugby Club’s stadium at Bath Recreation Ground (‘the Rec’). They objected to the club’s plans to redevelop its ground, which include plans for additional retail and commercial outlets. They were seeking to rely on a restrictive covenant from a 1922 conveyance which they argued benefited them. At first instance in the High Court they were successful in arguing that by the wording of the 1922 conveyance the benefit of the restrictive covenant had been annexed to their land.
The restrictive covenant prohibited anything being “erected, placed, built or done…which may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood”.
The judges hearing the case in the Court of Appeal had no reason to question whether the covenant burdened Bath Rugby Club as owner of the Rec, so it was a question of whether the property owners from the local neighbourhood were entitled to the benefit.
The original decision had found that the benefit had successfully passed to them by the principle known as ‘annexation’. To establish this it is necessary firstly for the conveyance to be worded in such a way as to show an intention for the benefit of the restrictive covenant to be annexed to the land in question, and secondly for the benefiting land to be defined in a way which makes it clearly identifiable.
It was on the second point that the Court of Appeal disagreed with the original decision. They held that the phrase “neighbourhood” does not refer to certain properties, but rather to a local area. The judgement described it as a “singularly inapt expression to use to identify properties to which the benefit of a covenant is to be annexed”, and held that it gives an insufficient level of ‘conceptual certainty’.
If the conveyance had referred, for example, to ‘neighbouring land of the vendor’, or there had been a plan showing which land was intended to have the benefit, then there would have been conceptual certainty. It would have been possible to say whether a given property fell within the definition.
This is more an issue for restrictive covenants created before 1925, because post-1925 a covenant is deemed to be made with the covenantee and its successors in title under section 78 of the Law of Property Act 1925. The benefiting land does still need to be identifiable from the document creating the covenant though.
The case serves to highlight that if you are creating a restrictive covenant, it is important to be clear about the land that is intended to have the benefit, ideally by reference to a plan. It also demonstrates that if you are looking to develop land which is subject to ambiguously-worded restrictive covenants, those covenants may be open to challenge.
More generally, if you are looking at challenging the enforceability of a restrictive covenant, you can speak to our Property Litigation team.
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