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Insights // 17 January 2022

Restrictive Covenants Benefitting Land – The Court of Appeal Decision in the Case of Bath Rugby Ltd v. Greenwood

Consultant solicitor Jane Gunnell, in our Commercial Property team, looks at restrictive covenants benefitting land and the recent case of Bath Rugby Ltd v. Greenwood.

One hundred years ago, the then president of Bath Rugby Club, Captain Forester, sold land to the Club subject to covenants providing that nothing was to be built or done on the land that “may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood”

Fast forward to 2020, and following an application by the Club for a declaration that no one was entitled to enforce the restrictive covenants imposed in 1922, the High Court decided that the owners of land nearby could enforce the covenants.  The neighbouring owners could prove that their properties formed part of Captain Forester’s retained land, even though its extent was not evident from the 1922 conveyance. .

Restrictive covenants imposed on land after the coming into force of The Law of Property Act 1925 benefit from the deemed annexation provisions in Section 78 which have the effect that a covenant is deemed to be made with the covenantee's successors in title and persons deriving title under them. "Successors in title" include the owners and occupiers of the land of the covenantee intended to be benefitted.

For statutory annexation to occur, the land intended to be benefitted must be identifiable (from a description, plan or other reference in the conveyance itself but aided, if necessary, by external evidence)  Section 78 did not assist in this case because the covenants were imposed before the law was changed, so the court had to apply earlier law.

The Club did not dispute that it was bound by the restrictions, so the case turned entirely on the question of whether or not Captain Forester’s successors in title, the current owners of land that he had retained, could enforce them. Prior to 1 January 1926 the transfer of the benefit of the covenants could occur in one of three ways, by annexation, by assignment, or by the land being part of a building scheme. Neither of the second or third alternatives applied so the court focused on whether the benefit of the covenants had been annexed to Captain Forester’s land. The judgment was made on the basis that annexation required only a reasonably accurate assessment of the extent of the seller’s retained land.

Following the High Court decision, it seemed that the Rugby Club’s plan to improve the Club facilities and provide a number of commercial outlets was not going to be achievable, however the Club took the case to the Court of Appeal.

In the Court of Appeal’s late 2021 judgment there was good news for the Rugby Club when the High Court’s decision was reversed as the Court of Appeal decided that the restrictive covenants imposed by Captain Forester had not been annexed to benefiting land, because the extent of that land had not been identified. The covenant was for the benefit of the "neighbourhood" and this was insufficient as the term did not identify the property to which the benefit of the covenant was intended to be annexed.

Blandy & Blandy’s Commercial Property team has significant experience in advising landowners and developers on development land transactions. Analysing and reporting on the enforceability of restrictive covenants, and finding ways to solve client covenant conundrums is a challenging area of law that we are very familiar with.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Jane Gunnell

Jane Gunnell

Consultant Solicitor, Commercial Property Law

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