Rugby Club's Expansion Plans Not Inhibited by 1922 Restrictive Covenant

Land is often sold subject to restrictive covenants that inhibit the use to which it can be put. As a guideline Court of Appeal ruling showed, however, the distinction between restrictions that provide a personal benefit to the vendor alone and those that run with the land, binding future owners, could hardly be more important.

The case concerned open land, part of which was leased to a rugby club. The club wished to build a new, larger stadium on the site, together with retail and commercial outlets and car parking. Potentially standing in its way, however, was a restrictive covenant that formed part of a 1922 conveyance. The club launched proceedings seeking a declaration that the covenant was no longer enforceable.

By entering into the covenant, the purchaser of the land in 1922 promised, both for itself and its successors, that nothing would thereafter be erected, placed, built or done on the land that might be or grow to become a nuisance, annoyance or disturbance, or otherwise prejudicially affect the adjoining premises or the neighbourhood.

In refusing to grant the declaration sought, a judge rejected the club's argument that, following the original vendor's death, there was no one who could claim to have the benefit of the covenant. The judge found that the benefit was annexed to the land and bound all future proprietors. On that basis, the covenant could potentially be enforced against the club by any owner of land in the neighbourhood.

Upholding the club's challenge to that outcome, the Court found that the conveyance did not identify the land intended to be benefited by the covenant with sufficient clarity. The word 'neighbourhood' was inherently imprecise and lacked conceptual certainty. It was a singularly inapt term to use to identify properties to which the benefit of a covenant is intended to attach. The Court concluded that the benefit of the covenant did not run with the land and was therefore not binding on either the club or the land's freeholder.