When you are considering developing land you need to carefully investigate for restrictive covenants that could ruin your plans. You could argue that older covenants are less of a problem because their age means they are unlikely to be enforceable. However even pre-1926 covenants are harder to discount than you might think and if you do not investigate them early on they can have a serious impact the timescale of a development and could even prevent it completely.

That is the outcome of the High Court decision in Bath Rugby Ltd v Greenwood and Others (13 October 2020). The restrictive covenant was created in 1922 and was a potential threat to the planned redevelopment of the Bath Rugby stadium. Therefore, the claimant applied for this covenant to be declared unenforceable.

The covenant could only be enforced if:

1). the benefit of the covenant had been successfully connected to, and so passed with, the benefiting land when it had been sold under a sale contract. The court considered the wording of the contract itself rather than s.78 Law of Property Act 1925 because the covenant predated the Act. The contract referred to the covenant being for the benefit of the original seller (the “Covenantee”) but also for his successors in title. This was enough to connect the covenant benefit to the land owned by the original Covenantee (now owned by his successors in title); and

2). the benefiting land was adequately identified in the covenant. The court decided (for pre-1926 covenants at least) that the covenant was enforceable if the description of the benefiting land was clear enough for the land to be identifiable at the time the covenant was created. It did not matter that the claimant was having problems identifying the full scope of the benefiting land now.

Consequently, the court refused the application as this covenant was still potentially enforceable. This is because anyone who clearly owned at least some of the benefiting land could enforce it and obstruct Bath Rugby’s grand development plans.

The match may not be over yet as Bath Rugby ponder their chances of success at the Court of Appeal.