Appeal ruling is a reminder to carefully considered lease terms when planning alterations to a flat.

In the recent case of Duval v 11-13 Randolph Crescent Ltd (2019) 2 WLR 761 (CA (Civ Div)), W was the lessee of flat 13, and D (Claimant) was the lessee of flats 11G and H in a block of flats.

Both held their flats on long leases, and the reversion was held by the landlord, 11-13 Randolph Crescent Ltd (Defendant).

In 2015, W asked the landlord for permission to carry out improvement works to her flat. The proposed works included the removal of part of a load-bearing wall, which would breach an absolute covenant of the lease and would also have extended beyond the current demise (as load-bearing walls were specifically excluded from the demise).

The landlord was willing to grant consent, but D argued that their covenant under the lease prevented it from doing so.

Issue

The issue was whether the landlord of a block of flats is entitled, without breach of its covenant, to grant a licence to a lessee to carry out work which would breach an absolute covenant against cutting, maiming or injuring walls.

Lease

Lessee's Covenants

The lease included the following lessee's covenants:

Clause 2.6: "Not without the previous written consent of the landlord to erect any structure pipe partition wire or post upon the demised premises nor make or suffer to be made any alteration or improvement in order addition to the demised premises".

Clause 2.7:  "Not to commit or permit or suffer any waste spoil or destruction in order upon the demised premises nor cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the demised premises or any sewers drains pipes radiators ventilators wires and cables therein."

Landlord's Covenant

Under Clause 3.19, the landlord made the following covenant: "That every lease of a residential unit in the building hereafter granted by the landlord at a premium shall contain..., covenants of a similar nature to those contained in clauses 2 and 3 of this lease AND at the request of the tenant and subject to payment by the tenant of (and provision beforehand of security for) the costs of the landlord on a complete indemnity basis to enforce any covenants entered into with the landlord by a tenant of any residential unit in the building of a similar nature to those contained in clause 2 of this lease".

In other words, Clause 3.19 was a promise that each lease would contain similar legally binding covenants on each lessee, and the landlord promised expressly to enforce the covenants, contingent on a tenant's request and expense.

Decision

The Court of Appeal held that the landlord would be in breach of its enforcement covenant (Clause 3.19) to D by giving a licence to do an act that would be in breach of W's lease, as, to do otherwise, would defeat the purpose of the covenant.

In reaching its decision, the Court of Appeal reviewed previous cases in which the courts had consistently held that where an obligor undertook a contingent or conditional obligation, like that under Clause 3.19, it could not prevent the contingency from occurring or put it out of its power from complying with the obligation if and when the contingency arose.

The Court of Appeal also focused on the fact that the lease would not have practical or commercial coherence if the landlord had compete freedom to vary/modify the covenants or to authorise what would otherwise be a breach of them.

Importantly, the Court of Appeal did hold that the landlord had no obligation in advance to inform the tenants of what it proposed to do, and that if the landlord had already granted the licence and it had been acted upon, the Claimants only remedy would have been damages.

This case is another reminder of the need for both Landlords and Lessees to review carefully the terms of leases when planning to make alterations to a flat, or within a block. The Leasehold experts at Judge & Priestley can offer professional advice on any leasehold disputes or issues you may have. Please feel free to contact us on 020 8290 0333 or via our contact form