Bath Rugby win appeal to green-light stadium redevelopment delayed by a restrictive covenant

Another reminder of the importance of due diligence and investigation in respect of restrictive covenants has been handed down in the case of Bath Rugby Ltd v Greenwood & Ors v Bath Recreation Ltd [2021] EWCA Civ 1927. In this case, there has been a significant ‘delay in play’ due to a restrictive covenant causing development uncertainty. The restriction might have resulted in Bath Rugby relocating from its home ground since 1894 – which the Bath Chamber of Commerce has noted would be a “disaster” for the city.

Bath Rugby (and their landlord, Bath Recreation Limited) are seeking to comprehensively redevelop their central-Bath stadium, ‘The Rec’, with an ambition to “create new jobs, boost visitor spends, enhance the river frontage and help to provide education and support opportunities for young people who need it most”. However, the land housing ‘The Rec’ is the subject of a covenant imposed in a 1922 conveyance restricting activities “which may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood”. Bath Rugby consequently sought a court declaration (under section 84(2) of the Law of Property Act 1925) that the 1922 restrictive covenant was unenforceable. 

In the first instance, Bath Rugby had a bit of a ‘penalty’ decision go against them, as the High Court determined that the restriction was, in fact, enforceable – meaning that redevelopment would either not be possible or significantly more expensive. However, the decision was overturned by the Court of Appeal (the judicial system’s equivalent to a TMO) where it was decided that the restriction was not enforceable as “adjoining land or the neighbourhood” does not give the required “sufficient indication” of the benefitting land, which should be “easily ascertainable”.

The decision highlights the importance on land disposal of taking appropriate professional advice to ensure any restrictions intended to bind the land are obvious and accurate. It will also be of interest to developers as it illustrates that some historic covenants will not be enforceable – particularly where the benefitting land has not been sufficiently identified in a manner that is clear to ascertain.

At Ardent, our multi-disciplinary teams can help support clients assess the impact of restrictive covenants on interests in land by:

• identifying restrictive covenants that may impact land required for a development scheme through due diligence exercises undertaken by our land referencing team.
• assisting in the creation of binding restrictions on the disposal of land by preparing clear plans identifying the land that will benefit from a restriction and the land that will be burdened by it.
• valuing a restrictive covenant and the likely cost of removal by negotiated agreement (as well as leading the negotiation with the landowner that benefits from the interest).
• advising on the use of planning powers (under s203 Housing and Planning Act 2016) to override restrictions to ensure prompt and viable scheme delivery without the risk of injunctions delaying the project and escalating costs, or;
• promoting CPO/DCO where a title needs to be cleansed and interests acquired compulsorily.  

To discuss these issues or how we can support you in respect of a regeneration or development scheme you are promoting (or are impacted by), please contact Rob Quaile on 07355 035 049 or robquaile@ardent-management.com or Colin Cottage on 07768 070255 or colincottage@ardent-management.com.