Author
Saleem Fazal

Saleem Fazal

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Author
Saleem Fazal

Saleem Fazal

Partner

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19 January 2022

Red alert - Winter 2022 – 6 of 6 Insights

Bath Rugby awarded a win on appeal: does anyone have the benefit of a restrictive covenant?

  • Briefing

Bath Rugby Limited v Greenwood and others [2020] EWHC 2662 (Ch)

Summary 

This case concerned a claim for a declaration about whether a 1922 restrictive covenant (the Restrictive Covenant) was enforceable by a subsequent owner of property in the neighbourhood. This involved reviewing the complex area of law surrounding the 'annexation' of the covenant to the burdened land.

The High Court found in favour of a neighbouring owner which had the effect of stopping a proposed development in its tracks. But, the Court of Appeal disagreed with the High Court Judge and ruled that the Restrictive Covenant was not enforceable.

The facts

Bath Rugby Limited (Bath Rugby) enjoys a long lease of part of the land known as the 'Rec' from which it operated a rugby stadium, the home of the Bath Rugby team. It wishes to redevelop the site to create a larger stadium with retail and commercial outlets.

The freehold of the Rec is currently owned by the Bath Recreation Ground Trust which intervened in the appeal so its case could also be heard.

The 'Rec' was originally conveyed in 1922 by the Bathwick Estate to The Bath and County Recreation Ground Company Limited. The conveyance (the 1922 Conveyance) contained a covenant by the purchaser for themselves their successors and assigns that:

"nothing shall be hereafter erected placed built or done [on the land] which may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood".

The Bathwick Estate subsequently sold off other parts of their estate and the evidence showed that this included the property at 77 Great Pulteney Street (77GPS). The 8th Defendant, Mr Godfrey White, owned a flat in 77GPS and was also a shareholder of the freehold company owning 77GPS.

A dispute arose between Bath Rugby and Mr White (and others) over the enforceability of the Restrictive Covenant. This led to Bath Ruby applying to the Hight Court seeking declarations and including as Defendants all parties who sought to rely on its enforceability. But, by the time of the High Court hearing, only Mr White and the freehold company objected.

The issues

Restrictive covenants are binding on the original parties. But, once the land is transferred, there is always the question of whether restrictive covenants are binding on future owners. In this case, it was agreed that Bath Rugby was burdened by the Restrictive Covenant. But, Bath Rugby disputed that Mr White or the freehold company of 77GPS enjoyed the benefit of the Restrictive Covenant.

Mr White argued that the Restrictive Covenant had been 'annexed' to the land and therefore he was entitled to enforce it. After the enactment of the Law of Property Act 1925, restrictive covenants are more easily annexed to the land under section 78(1) of that Act. But, this was a pre-1926 covenant and so Mr White could only rely on the words of the 1922 Conveyance.

The High Court judge correctly held that for there to be annexation, there must be an intention to benefit certain land having regard to the 1922 Conveyance construed in light of the surrounding circumstances.

So, the question was whether 77GPS was sufficiently identified.

There was no plan attached to the 1922 Conveyance which identified the 'adjoining premises or the neighbourhood'. But, the Judge noted that in another clause of the 1922 Conveyance, there was reference to the Bathwick Estate's other land adjoining the Rec. Consequently, the Judge held that the reference to 'adjoining premises or the neighbourhood'   concerning the Restrictive Covenant meant the Bathwick Estate's other land that it owned at the time. As the evidence showed that 77GPS was part of the Bathwick Estate, it was included in the land which enjoyed the benefit of the Restrictive Covenant.

Bath Rugby (and the freeholder) appealed on numerous grounds but central to the Court of Appeal's decision was the question of annexation and the analysis of the High Court Judge above. Essentially Bath Rugby argued that the Judge was wrong to hold:

  • that the covenant benefitted the adjoining land or neighbourhood; or
  • that the adjoining land or premises was the same as that set out in the other clause as meaning other land in the ownership of the seller.

The decision

The Court of Appeal agreed with Bath Rugby. First, the phrase 'adjoining premises or the neighbourhood' was too uncertain. It was not clear that it referred to land owned by the seller at the time and it was not possible to draw up a plan of a 'neighbourhood.'

Second, there was no obvious reason why the phrase should be taken to mean the same as the very different words used elsewhere in the 1922 Conveyance to refer to the Bathwick Estate's other land at the time. If that had been intended, it was difficult to see why the drafter did not use the same words.

Our comments

Pre-1926 restrictive covenants still burden many properties and so these issues arise regularly. Although they may appear on registered titles, it is worth obtaining advice on whether they are enforceable.

Bath Rugby can now plan its redevelopment. Although Mr White sadly passed away before the Court of Appeal delivered its judgment, there may very well be objections once the planning application is submitted. The match is not yet over.

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