A curious case about pre 1925 Restrictive Covenants law still has real world implications almost 100 years later
On 21 December 2021, the Court of Appeal in Bath Rugby Ltd v Greenwood & Ors v Bath Recreation Ltd [2021] EWCA Civ 1927 overturned the previous High Court decision, concerning the enforceability of a restrictive covenant pre-dating the Law of Property Act 1925 (the 1925 Act).
Background
To refresh the background of this case, from our earlier bulletin on 22 October 2020, Bath Rugby Limited (Bath Rugby) held a long lease of an area in the centre of Bath, known as "the Rec" and was planning to develop the land for a redevelopment of their stadium. Their landlord's predecessors in title had bought the land in 1922 where a restrictive covenant was imposed that would have inhibited the rugby club's development.
Bath Rugby sought a declaration that the 1922 restrictive covenant was unenforceable. They accepted that they had the burden of the covenant, but argued that the benefit had not been transferred to this Claimant, who, as a result, was not entitled to use the covenant to prevent the development of the stadium. The judge at first instance found that the covenant was enforceable. Bath Rugby, joined by their landlord, Bath Recreation Limited, appealed the decision.
The appeal
The crux of the appeal fell on a technical point of law. The benefit of a restrictive covenant passes when it is annexed to the land intended to benefit from it. With pre 1925 covenants, there has to be clear wording (i) showing an intention to annex the benefit to the land, and (ii) clearly identifying what land is intended to benefit. The statutory annexation in the 1925 Act does not apply.
The Court of Appeal disagreed with the High Court's interpretation of this covenant, and in particular that it sufficiently identified the claimant's land as land benefitting from it. The covenant described the land that benefitted from the covenant as ‘adjoining land or the neighbourhood’ and concluded that the wording here, in isolation, was not a sufficient indication of the land intended to be benefited by the covenant.
Moreover, the wording could not provide 'conceptual certainty'. An analysis of the word 'neighbourhood' was considered and defined by the Court, as an 'inherently imprecise term' and does not refer to any particular properties at all, rather a local area. As such, the land was incapable of being conceptually certain, nor sufficiently identifiable, either expressly or by necessary implication, for annexation to succeed.
The outcome
As a result, Bath Rugby were successful in their appeal and won on the basis that 'The 1922 conveyance did not identify the land intended to be benefited clearly or at all'. Had there have been a plan annexed to the covenant identifying the ‘adjoining land or the neighbourhood’ then the situation and outcome may have been very different.
Although the case relates to pre 1925 Act covenants and does not provide any current best practice tips for modern drafting, the commentary provides notable clarification about the annexation of covenants, both pre and post 1925 Act. The commentary also contains an interesting discussion on whether a condition of annexation for such covenants is that the land intended to benefit from the covenant has to be ‘easily ascertainable’, and whether this is in fact the same as being 'sufficiently identifiable'.
A bright and exciting start to 2022 for Bath Rugby and their fans. Now all they need to do is start winning a few games.