Bath Rugby Limited v Greenwood, Greenwood and others

[2020] EWHC 2662 (Ch)

An interesting case this month involved Bath Rugby Limited and a decision on the effect of a restrictive covenant.

Bath Rugby intends to redevelop part of its ground in central Bath.  As is often the case, the part of the ground (known as the Rec), once formed part of a much larger estate, in this case the Bathwick Estate.  Bathwick Estate has been chopped up and transferred through various different landowners since the 18th century.  Bath Rugby’s land is currently subject to a 1922 restrictive covenant that essentially restricts what may be built on the Rec.  Bath Rugby were seeking a declaration from the court that the covenant was no longer enforceable by anyone, and so not binding on Bath Rugby.

Restrictive covenants imposed on land prior to 1925 are subject to various tests to decide whether or not they are enforceable.  One of these tests is to prove that the restrictive covenant is ‘annexed’ to some other land in the vicinity which benefits from the restrictive covenant’s existence.  Annexation can be shown by making it clear in the wording of the restrictive covenant that the restriction is intended to benefit that other land’s owners and successors in title, ie, that the person imposing the restrictive covenant wants its benefit for himself and anyone who owns that plot of land after him.  Problems arise, however, especially with these very old restrictive covenants, in identifying the land that is intended to benefit from the restrictive covenant. If that land cannot be identified then the restrictive covenant will no longer be enforceable since there is no one to enforce. It’s not unusual to find that documents imposing restrictive covenants do not go out of their way to make identification easy, often failing to include plans of the benefiting land, or simply by defining the benefiting land as ‘any land in the vicinity’.

The identifying words in this case were ‘the adjoining premises or the neighbourhood’, not exactly the most precise wording ever committed to paper.  The court found, though, that precise wording is not necessary for geographic interpretation.  So long as the benefiting land is described ‘in terms which enable it to be identified from other evidence’, the description does not need to make that land ‘easily ascertainable’.  The test also applies at the date of creation of the covenant, regardless of how much the surrounding area has changed since 1922, or how difficult it may be now to identify the benefiting land.  Although the court did not find that it could state with absolute certainty the full extent of the benefitting land, the fact that some of it could be identified with some certainty was sufficient to enable the owners of that identifiable land to bring enforcement action against Bath Rugby should they choose to do so. 

So, what to do if your land is affected by an old covenant which, on the face of it at least, may not seem particularly troublesome?  Investigation into the extent of land that may benefit from restrictive covenants can be time consuming and expensive, and can involve not just the inspection of legal documents, but also research at local libraries, newspapers and other records holders, or mailshots to properties in the area.  This may not turn up any definitive results, as was the case in the Bath Rugby case.  Insurance companies can provide indemnity insurance to cover property owners against the risk of enforcement of restrictive covenants, but will usually require that nothing has been done to alert any third party who may have the benefit of the covenant.

And if you’re planning to impose restrictive covenants on land, make sure that the land to benefit is clearly defined, preferably by reference to a plan.