A recent case affecting Bath Rugby Club may mean that the club has to abandon its plan to build a new 18,000 seater stadium. The High Court has held that the land which Bath Rugby Club occupies on a long lease is subject to a historic restrictive covenant, which is still enforceable 98 years after it was first entered in to as part of a conveyance.
The restrictive covenant states that no action can be taken on the land which would prejudice the adjoining premises or cause a nuisance or disturbance to them. Unusually, the covenant was entered in to in 1922 prior to the Law of Property Act 1925 coming into force which meant that the court had to consider different legal principles when making their decision to those which cover most land in England.
So that they could start developing the site, Bath Rugby Club sought a declaration that the restrictive covenant was unenforceable. As part of this, Bath Rugby Club were obliged to contact over one thousand owners of neighbouring premises whose land may potentially benefit from the restrictive covenant. A number of owners did come forward and argue that their property benefited from the restrictive covenant.
For the restrictive covenant to be enforceable, the judge had to determine two points:
Firstly, whether the benefit of the covenant was annexed to the neighbouring land. If this was shown, then it would mean that the benefit of the covenant would pass from the original owner of the neighbouring land, to the owners today.
Secondly, the judge had to decide whether the land with the benefit of the covenant could be properly identified. This would then show that the current owners, who now owned this identifiable land, could enforce the benefit of the restrictive covenant.
In relation to the first question, the judge held that the benefit of the covenant was annexed to the neighbouring land. The original person with the benefit of the covenant, when it was made in 1922, stated that this benefit was for them and their ‘successors in title’. This was enough to persuade the judge that the benefit of the covenant could be annexed to the neighbouring properties, and was not just a personal benefit for the original party to the conveyance.
In relation to the second question, it was impossible to identify the extent of the land benefiting from the covenant from the conveyance alone. However, the judge was able to use information from the conveyance and external evidence to identify the land sufficiently for these purposes. Although the precise extent of the land could not be identified, there was enough evidence for the judge to be convinced that the current owners of the neighbouring properties did own land which would benefit from the covenant.
The judge held that the covenant was enforceable on both points which may severely impact Bath Rugby Club’s ability to develop its land freely. This case highlights the danger which historic restrictive covenants can still pose to a development nearly a century later and emphasises the value of careful property title review in advance of incurring significant costs in planning a development or acquiring potential development land.