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Restrictive or not?

So, what will this new year bring the property world? One issue highlighted by the Court of Appeal in December 2021 is the old legal chestnut of restrictive covenants.

The UK Law Commission had recommended in its report ‘Making Land Work: Easements, Covenants and Profits a Prendre’, published in June 2011, that the complex rules surrounding restrictive covenants should not apply to new covenants (introducing instead ‘legal obligations’). These were aimed at modernizing and simplifying the law. In 2017, the government announced it “intends to simplify the current restrictive covenant regime by implementing the Law Commission’s recommendations for reform and will publish a draft Bill for consultation as announced in the Queen’s Speech.” The draft Law of Property Bill, however, appears to have disappeared from the government’s present list of bills.

Meanwhile, the courts continue with the old regime (which will relate to existing restrictive covenants even if the new law is introduced). A covenant in a 1922 conveyance relating to, inter alia, the well-known rugby ground tenanted by Bath Rugby Club “by which the original purchaser, for itself and its successors, covenanted that nothing should be thereafter “erected placed, built or done” on the land “which may be or grow to be a nuisance, annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood”. The club wished to replace its present buildings on the land with a larger stadium incorporating retail and commercial outlets together with parking. In so doing, the club recognised that the development might breach the covenant. It therefore applied to the Land Tribunal pursuant to s84(2) of the Law of Property Act, 1925 to wholly or partially discharge or modify the restriction claiming there was now no one who could claim the benefit of the restriction. The application was opposed by local residents and the judge at first instance upheld their objections. The club appealed.

The Court of Appeal found no difficulty in deciding that the restriction ran with the land incorporating the club’s premises. The question was, however, whether the benefit of the covenant was enforceable by the opposing residents and whether the beneficial land could be sufficiently identified. Giving judgement, Lord Justice Nugee found it was asking too much of the words in the covenant to identify at the “level of conceptual certainty” the beneficial lands. The appeal succeeded.

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