Enforceability of Restrictive Covenants

In the recent case of Bath Rugby Ltd v Greenwood and Others [2020] EWHC 2662 (Ch) the High Court ruled on the enforceability of a restrictive covenant.

A restrictive covenant is an agreement by one party that will restrict the use of its land in some way for the benefit of another party’s land. A restrictive covenant must be distinguished from a positive covenant which will impose an obligation to carry out some positive action or require expenditure of money. Positive covenants do not automatically bind successors in title, but it may do so in the case of restrictive covenants.

This case centred around the enforceability of a restrictive covenant in a 1922 conveyance which would potentially affect the redevelopment of  an area of land known as “The Rec” by Bath Rugby Ltd and it sought a declaration that the covenant was unenforceable. Pursuant to Section 78 of the Law of Property Act 1925 (which came into force on 1 January 1926) covenants relating to land are deemed to be made with successors, however, as the conveyance containing the covenant predated the 1925 Act the court had to consider the wording of the conveyance to ascertain if the benefit was annexed to the land. As the conveyance referred to the covenant being for the benefit of the vendor and his “successors in title” the court found that this indicated annexation.

The court next examined whether the conveyance sufficiently identified the land that enjoyed the benefit of the covenant. The court held that it is necessary to look at the conveyance itself in the context of the surrounding evidence when the covenant was created, and decide whether it sufficiently identifies the land to be benefitted by the covenant i.e. enforceability is not affected by any evidential difficulties in identifying the land at a later date (in the case of pre-1926 covenants at least). As such the rugby club’s claim was dismissed.

If you have any queries regarding covenants affecting your property or a property you are intending to acquire, please contact:

Jay Bhandal
Partner
DDI: 020 7003 8135
Email: jbhandal@cclaw.co.uk

Cannings ConnollyCannings Connolly
17 November 2020

Disclaimer:
This Legal Update is published as a general guide only and it is not intended to contain definitive legal or professional advice, which should be obtained as appropriate in relation to any particular matter. This publication relates to matters prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.