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Bath Rugby wins crushing victory in the Court of Appeal

In the same week that Bath Rugby (“Bath”) were soundly defeated at home by Gloucester Rugby (40-20 for those interested!), its lawyers appeared in the Court of Appeal and on 21 December 2021 successfully overturned the decision made by HHJ Paul Matthews (sitting as a Deputy High Court Judge) on 29 October 2020. In the long-term, the successful appeal could turn out to be far more important (and lucrative) than the short-term pain of losing heavily to a local rival.

Bath play at “The Recreation Ground”, commonly (and depending on who you support, either lovingly or with disdain) referred to as “The Rec”. Bath has a lease of the Rec i.e. it does not own the freehold title of the land. Bath hopes to redevelop the stadium located on the Rec to increase its capacity from 14,500 to 18,000.

In the High Court claim referred to above Bath sought declarations (pursuant to section 84(2) of the Law of Property Act 1925) that the Rec was free from a covenant imposed in a conveyance dated 6 April 1922 (“the 1922 Conveyance”). The 1922 Conveyance contains a covenant that seeks to restrict certain activities on the Rec “which may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood…” 2 people objected to the application for declarations, claiming to own land that benefited from the covenant; those people respectively owned a flat overlooking the Rec and a house of which the flat formed part.

The crux of the matter was: for the benefit of the covenant to be “annexed” to land and therefore enforceable by the objectors,  it must be taken for the protection of “defined land”. Therefore, did the words “adjoining premises or the neighbourhood” sufficiently identify the land to which the benefit of the covenant was intended to be annexed?

In the original decision, in 2020 HHJ Paul Matthews found in favour of the objectors, namely in his opinion the covenant was enforceable on the basis that the above detailed phrase could be interpreted as a reference to “buildings and land of the vendor…adjoining or near to” the land. As this would stop Bath being able to redevelop the Rec, Bath appealed.

Late in 2021 the Court of Appeal disagreed with the decision previously made, deciding instead that there must be a “sufficient indication” of the land intended to be benefited by the covenant, either expressly or by necessary implication, and, crucially, that the words “adjoining land or the neighbourhood” were neither sufficient, nor could they be construed in the way HHJ Paul Matthews had done. While it is common for covenants preventing nuisance to refer to a “neighbourhood”, in this case that term did not sufficiently identify the land to which the benefit of the covenant was intended to be annexed i.e. it referred not to particular properties, but to a local area.

The appeal was successful and the Court of Appeal held that the covenant is not enforceable.  It remains to be seen whether the matter is referred to the Supreme Court.

Interestingly, two of the Lord Justices took the view that not only must the land to be benefitted by the covenant be identifiable but that it should be “easily ascertainable” from the conveyance itself at the time it was entered into. This is important because in older conveyances it is common to see restrictive covenants taken to benefit “the Vendor’s adjoining or neighbouring land” (or words to that effect); it could be the case from now on that it may be difficult for anyone seeking to enforce such a covenant to prove that the land that they own originally formed part of such “adjoining or neighbouring land”.

If you require any advice regarding restrictive covenants (including what they prohibit, enforceability, modification or removal) please do not hesitate to get in touch using the details below.

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