Summary of the decision
Long leases in a block of flats contained an absolute prohibition against lessees carrying out certain works and a covenant by the landlord (if requested by a lessee) to enforce covenants against other lessees. The Supreme Court held that, in those circumstances, the landlord was not entitled to grant one lessee a licence to carry out works which would be a breach of the absolute prohibition. To do so would be a breach of covenant by the landlord.
Introduction
Long leases of flats frequently contain prohibitions on the carrying out of works by lessees. Some covenants constitute a qualified prohibition, that is, the leaseholder cannot carry out works without the landlord’s consent. Other covenants are absolute, that is, there is no provision for allowing the works with the landlords consent. Typically, structural or other substantial works are likely to be absolutely prohibited.
Qualified covenants frequently provide that consent will not be unreasonably refused and, even if this is not the case, a landlord cannot unreasonably withhold consent in relation to improvements by virtue of s.19(2) of the Landlord and Tenant Act 1927. As a result, a common type of dispute is whether a landlord’s refusal of consent or unreasonable.
Duval v 11-13 Randolph Crescent Ltd concerned a different situation i.e. whether the landlord was entitled to grant permission to one lessee to carry out works which would otherwise be a breach of an absolute covenant.
Facts
The premises in question was a block of nine flats. Each flat was let on a long lease in substantially the same terms. Under each lease the interior parts of the flats were demised but structural walls were retained by the landlord. There was an absolute prohibition on cutting, maiming or injuring the roof, wall or ceilings of the building (clause 2.7) and a qualified covenant against lesser alterations or improvements (clause 2.6).
Clause 3.19 of each lease provided that other leases granted by the landlord would contain similar covenants and regulations and that, at the lessee’s request (subject to the lessee giving security for costs) the landlord would enforce such covenants against another lessee.
One of the lessees, Mrs Winfield, wished to carry out works which would constitute a breach of the absolute covenant in clause 2.7 because they would involve removing part of a load-bearing wall. Following representations by Mrs Winfield’s engineers and architects, the landlord was minded to grant a licence. However, another lessee ,Dr Duval, objected. Dr Duval asked the landlord to obtain an undertaking by Mrs Winfield not to breach clause 2.7. When this did not occur she issued the claim for a declaration that the landlord did not have the power to permit Mrs Winfield to breach clause 2.7.