business man with magnifying glass, looking at contract. concept image for reading a restrictive covenant in contract

How enforceable is a restrictive covenant? We look at a recent case.

The recent Court of Appeal case, Bath Rugby Ltd & Anr v. Greenwood & Ors [2021] EWCA Civ 1927, involved a restrictive covenant that dated back to 1922. The case highlights the importance of clearly identifying who or what would benefit from the covenant.

The facts – the restrictive covenant

Bath Rugby Limited has a lease of part of the Recreation Ground in Bath, commonly known as “the Rec”. The Rec is home to Bath Rugby Stadium and used for various events. Bath Rugby Limited has plans to redevelop the stadium.

The land is subject to a restrictive covenant imposed by a conveyance dated 6 April 1922, which could have interfered with the redevelopment plans.

The covenant restricts activities “which may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood”.

The High Court

Bath Rugby Limited brought a claim stating that the covenant contained in the 1922 conveyance was not enforceable, pursuant of s84(2) Law of Property Act 1925.

The question was whether there was anyone who could claim to be entitled to the benefit of the restrictive covenant. HHJ Matthews sitting in the High Court decided that the covenant was enforceable as the benefit had been annexed to “adjoining premises or the neighbourhood”.

The Court of Appeal

Bath Rugby Limited appealed the decision and were joined by Bath Recreation Limited.

On 21 December 2021, the Court of Appeal held that the covenant is not enforceable. This is because the covenant must give “sufficient indication” of the land intended to be benefited. Here, the covenant states, ‘adjoining premises or the neighbourhood’ which is “imprecise” and does not sufficiently identify such land.

The judgment also discussed the need for land, that is to benefit from a covenant, to be “easily ascertainable” from the conveyance – a point of disagreement between the members of the court.

Importance of clarity with a restrictive covenant

This case highlights the importance of clearly identifying land intended to be benefited by a restrictive covenant. It is also a welcomed result for Bath Rugby Limited amidst their redevelopment plans.

For more information on restrictive covenants, please see our article here.

If you would like to discuss a restrictive covenant or any other property matter, please get in touch and our team would be happy to assist you.