NOTE - The decision dealt with in this article was subject to appeal to, and ruling by, the Supreme Court on 6 May 2020 and so the up to date position is set out in our later articles here and further guidance here.

The Court of Appeal’s recent decision in the case of Duval v 11-13 Randolph Crescent Limited [2018] EWCA Civ 2298, has caused ripples throughout the leasehold sector, with serious implications for landlords concerning the issue of consents.

The message to be taken away is that landlords should ensure, when faced with requests for consents under a lease, that consent is only provided where they are able to do so under the terms of the lease. Where the lease contains an absolute prohibition against certain action or works, the landlord should not, and indeed may not, provide consent. Where consent is provided in those circumstances, a landlord should be prepared for legal action by complaining leaseholders to compel the landlord to enforce the prohibitions under the lease, or a claim in damages. This warning is not to be taken lightly!

The Facts

Dr Duval was a long leaseholder of two flats within a block of 11 inclusive of those owned by Dr Duval. The landlord was willing to grant consent to another leaseholder, Mrs Winfield, to remove part of a wall within the basement of her flat. Mrs Winfield’s lease contained the following covenant:

“Not to commit or permit or suffer any waste spoil or destructions in or 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…”

Dr Duval objected to the proposed works and argued that the clause above was an absolute prohibition on alterations being made by a tenant to the property. Accordingly, Dr Duval requested that the landlord enforce the mutual enforceability clause in the lease. A mutual enforceability clause is a common clause in most leases which requires the landlord, at the cost of the tenant, to enforce the covenants entered into by the landlord with the other tenants.

The debate therefore centred around whether or not the landlord was entitled to grant consent for the proposed works, despite there being no provision under the lease for the landlord to do so, due to the absolute prohibition against such alterations.

The Debate

Dr Duval argued that it was “necessarily implicit” that the landlord must not grant consent for the works to be undertaken when another tenant could force them to stop.

The landlord argued four main points in response:

• Landlords may consent to what may otherwise be considered a breach of lease;

• The landlord would not have intended, when creating the lease, that the purpose of the mutual enforceability clause would be to restrain the landlord’s power to deal with the property;

• Providing consent for works to be done, prior to the works commencing, would not amount to a breach of lease as the works would not have started at that stage. Furthermore, as the landlord would have provided consent, they would have waived the requirement for Mrs Winfield to comply with covenant against alterations, thus there would be no breach of lease to enforce; and

• Enabling one tenant to have the ability to stop works in certain situations could lead to conflict within a development between tenants or with the landlord, and would potentially be a dangerous precedent to set.

The Court of Appeal disagreed and held that the landlord could not lawfully grant consent for the works to take place. The Court made their decision on the following grounds:

• The landlord had covenanted with all the tenants that they would be required to adhere to similar obligations;

• The landlord was the only person who was able to enforce the covenants in the lease and, by providing consent, the landlord would be preventing enforcement action being taken against those tenants who are otherwise in breach;

• There is also a positive contractual requirement on the landlord to ensure that they do not do anything that would prevent them from fulfilling their contractual obligations; and

• The ability to provide consent in this instance would effectively nullify the enforcement provisions in the lease. The landlord should not be granted ‘carte blanche’ to vary the covenants as they see fit; this would defeat the object of entering into a contractual agreement in the first instance.

Conclusion

Mutual enforceability clauses are commonplace in most residential leases, therefore landlords should avoid providing consents where certain actions (such as the keeping of pets) or works are prohibited in the lease. Landlords should therefore carefully check the terms of the lease before granting consents, or risk facing legal action or indeed damages claims by complaining leaseholders.

Whilst a Landlord could seek unanimous agreement from all the leaseholders in the development before granting consents for actions or works which would otherwise be prohibited under the lease, to minimise the risk of later challenge, this is a dangerous precedent to set going forward for other leaseholders who may later seek consent for the same or different actions or works. A landlord is therefore always best advised to insist on strict compliance with the terms of the lease.

For more information, please feel free to contact us on 01435 897297 or at info@kdllaw.com.

Disclaimer

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