Landlords often turn a blind eye when tenants commit minor breaches of their lease terms. Usually, these involve reasonable compromises allowing a tenant to fully enjoy their property while still complying with the spirit of the provision.
Following a recent Court of Appeal decision, landlords will need to think carefully before agreeing to these types of reasonable compromises. In the case of Duval v 11-13 Randolph Crescent, Julia Duval was the long leaseholder of two flats in the building 11-13 Randolph Crescent, which consisted of 9 flats in total. Each flat’s lease contained similar provisions. Three of the covenants in the leases were at issue in this case. First, the leases contained a covenant prohibiting tenants from carrying out any improvement work that involved cutting into the walls. Second, the leases contained a covenant stating that all leases would be on similar terms. Third, the leases contained a covenant that the landlord must enforce covenants, at the request and expense of another tenant. Consequently, in relation to the third covenant, each individual lessee was given the right to compel the landlord to enforce the covenants in the lease, whether it wanted to or not.
Common Terms in Flats and Multiple Occupancy Retail
All of these terms are common in leases of flats in the same building. Similar terms also appear in leases for multiple occupancy retail premises.
A tenant of one of the flats wanted to carry out improvement work, which included cutting into the walls of the flat. She asked permission from the landlord. The landlord was inclined to give permission, despite the prohibition in the lease. Duval objected on the basis that granting consent would be in breach of a number of covenants in the lease.
The landlord argued that if it granted consent, then there would be no breach and nothing to enforce.
Landlord in Breach
The Court of Appeal found that the landlord was free to grant consent to something that would ordinarily be a breach of a term in a lease. However, in this case, that grant of consent also constituted a breach of the covenant requiring the landlord to ensure that the leases were all on the same terms. Duval was, therefore, able to sue the landlord for damages resulting from a breach of this covenant.
Landlords will now have to review their leases carefully to see whether they contain similar covenants. Landlords will need to weigh up the pros and cons of strictly enforcing all covenants. It may be that the damage suffered by other tenants would be nominal and, therefore, unlikely to be an issue. It is important to note, however, that landlords will not be able to get out of giving express consent through wilful ignorance. Wilful ignorance about a breach of a covenant by a tenant may be construed by the courts as implied consent.
Landlords: Qualify Enforcement Covenants
In new leases, it will be prudent for landlords to ensure that any enforcement covenants are qualified by a reasonableness requirement, as determined by the landlord.
Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.
More Commercial Property Articles
This case demonstrates the impact of technology on practices that have developed prior to that technology.
The case provides a lesson to all involved in the sale/purchase of a property. Make it clear, from the outset, both in negotiations and in the contract, what is included in the sale and [...]
The High Court has granted the European Medicines Agency the right to appeal its decision that its Canary Wharf lease has not been frustrated by Brexit.
The background to this case provides sober reading for any landowners of vacant sites. In this instance, around 2000 tonnes of waste including food and medical waste was deposited on Newark’s vacant land without [...]
The government is keen to afford residential tenants greater security and the increasing obstacles to service of a Section 21 Notice appear directed at this. There is now a consultation upon removing the blanket [...]
Anybody entrusted with selling property on the behalf of a lender can take comfort in the robust approach shown by the Court.
It is always preferable for leases to contain express reservations to alter, build and erect scaffolding in favour of a landlord who might want to develop at some point in the future.
When opposing the grant of a new tenancy, the Supreme Court has introduced an additional “acid test” for landlords in relation to reconstruction work as a reason to oppose the grant of a new tenancy. [...]
A Court of Appeal decision serves as a warning to developers of the dangers of proceeding with developments in breach of a restrictive covenant.
The Supreme Court held that the landlord’s intention to demolish or reconstruct must be independent of the tenant’s claim for a new tenancy and not conditional upon it.