Landlords jilted at the altar by Supreme Court decision
The Supreme Court has handed down its eagerly anticipated judgment in the case of Duval v. 11-13 Randolph Crescent Limited . It unanimously found that the landlord would be in breach of its promise to enforce covenants against the other lessees in the building (known as a mutual enforceability clause) if it granted consent to a leaseholder to carry out structural works which were absolutely prohibited in the lease of a residential flat.
The dispute concerned 11-13 Randolph Crescent, in Maida Vale, London containing 9 flats let under long leases. Mrs Winfield (the lessee of Flat 13) wanted to carry out works to her flat including the removal of a section of an internal structural wall which was absolutely prohibited under the terms of the lease.
Mrs Winfield approached the landlord, 11-13 Randolph Crescent Limited, for permission to carry out the works. The landlord was willing to grant consent to the works but Dr Duval, the owner of two neighbouring flats, objected. She brought a claim against the landlord for a declaration that the landlord would be in breach of the mutual enforceability clause in the lease if it granted consent to the works. The Supreme Court found for Dr Duval on grounds that the landlord would have effectively “put it out of its power” to enforce the covenants in the leases.
The Judgment refers to a simple example of this principle in the 1846 case of Short v. Stone. This was a case where Mr Stone had promised to marry Miss Short but before she could do so, he had married someone else! Effectively Mr Stone had “put it out of his power” to marry Miss Short by marrying someone else. In the same way, the Supreme Court accepted the lessee’s argument that by granting consent to a tenant to carry out structural works which were absolutely prohibited in the lease, the landlord would no longer be able to enforce the terms of the lease on behalf of the other leaseholders in the building.
Practically speaking, this decision may remove much of the flexibility that previously existed between landlords and tenants and both will need to consider the promises in their leases very carefully when leases are purchased or entered into. The risk being that Duval appears to leave little wriggle room to vary absolute covenants in the future, unless all of the lessees in a building agree to a landlord granting consent.
I recognise that if a landlord waives its right to complain of an activity by a lessee in breach of clause 2.7 it cannot subsequently bring a claim against that lessee for breach of the covenant. But that does not mean to say that the landlord has not acted in breach of its obligation under clause 3.19 to another lessee.
