Court of Appeal kicks Bath Rugby Club covenant into touch

A recent Court of Appeal decision was welcome news for Bath Rugby Club as it enables the planned construction of a new 18,000-seater capacity stadium. A previous decision of the High Court had held that the land occupied by the Rugby Club was subject to a restrictive covenant, entered in to in 1922, which prevented the proposed development.

Previous High Court decision

The 1922 restrictive covenant stated that nothing could be “erected, built or placed upon the land occupied by the Rugby Club which may be or grow to be a nuisance or disturbance to the adjoining premises or neighbourhood”. Bath sought a declaration that this restrictive covenant was unenforceable on the grounds that there is no-one who can now claim to have the benefit of this covenant.

The High Court Judge held that owners of nearby properties were entitled to the benefit of this covenant, rendering it enforceable against Bath should they have started to develop the land. Bath appealed against the decision, maintaining that the benefit of the covenant could not be enjoyed by the owners of the nearby properties.

The Court of Appeal’s decision

The Court of Appeal overturned the judgment handed down in the High Court, stating that the wording of the restrictive covenant did not precisely identify the properties which had the benefit of the restrictive covenant. 

In reaching its decision, the Court of Appeal undertook a detailed examination of how a restrictive covenant is transferred and the precise wording of the 1922 covenant.  For the covenant to benefit the objectors’ land it needed to be “annexed” to that land, rather than personal to the original parties to the 1922 covenant.  

As the covenant was entered in to before the enactment of the Law of Property Act 1925 (which made it easier for restrictive covenants to be annexed to a piece of land) the Court of Appeal had to analyse the wording of the covenant itself to establish whether it was enforceable.  Although the covenant suggested that the original parties intended it to bind future owners of each relevant piece of land it was the description of the relevant land, or rather lack of, which was the focus of this appeal.

The 1922 covenant specified two areas of land which had the benefit of the 1922 covenant – (1) the adjoining properties; or (2) the neighbourhood. Whilst the High Court had held that these descriptions were enough, the Court of Appeal disagreed and held that neither gave a ‘sufficient indication’ of the land which would benefit from the covenant. 

In particular, while “neighbourhood” is a commonly used term it is not a conveyancing term. It neither refers to a particular property, nor does it specify the particular relationship or proximity required between two properties. The Court of Appeal contrasted the term ‘neighbourhood’ with ‘neighbouring’. While for the latter, it is possible to determine that a piece of land must be adjacent or next to another for it to be ‘neighbouring’, the former does not go further than merely indicating that the two pieces of land must be in some way near to each other.

The Court of Appeal held that the description of properties in ‘the neighbourhood’ which benefitted from the covenant was not enough - a more precise description of the property or the relationship between the properties was required. Based on this, the Court of Appeal held that the covenant was unenforceable as it was not possible to identify which land (and therefore which property owners) enjoyed the benefit of the covenant.

While Bath Rugby Club will be excited by the news that the proposed redevelopment of the stadium looks set to go ahead, the Court of Appeal’s decision is a timely reminder of the importance of investigating whether land is subject to any restrictive covenants or other adverse interests.

The judgment handed down in this case is also important for those seeking to obtain a restrictive covenant for the benefit of their own land. Failure to demonstrate with certainty the land to which the benefit is to be directed could be fatal to any potential enforcement of it. Better to precisely outline the properties than to end up in a scrum over vague or uncertain language.