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Covenants, Consent & Caution: Commenting on Duval v 11-13 Randolph Crescent Ltd [2020]

As you may be aware, the Supreme Court recently handed down its decision on the high profile and long running case of Duval (Respondent) v 11-13 Randolph Crescent Ltd (Appellant) [2020], which arose from an appeal by the landlord and freehold owner of the building. The appeal considered whether, on the construction of the clauses in the lease, the landlord was entitled, without breach of covenant, to grant a licence to a lessee to carry out work which, but for the licence, would breach a covenant in the lease, where the leases of the other flats required the landlord to enforce such covenants at the request and cost of any one of the other lessees. There has been considerable comment already made on the decision, and we thought we would share a balanced perspective on the case and its implications.

The Case in Context:

At the heart of the case was the issue of breach of covenant. A leaseholder had sought a licence from the landlord to carry out works to a flat, which involved removal of a substantial part of a load bearing wall. Each of the flat leases for the block included:

  1. a covenant against making improvements to the demised premises without previous written consent;
  2. an absolute covenant against cutting any wall within or enclosing the demised premises;
  3. a covenant that each other flat lease would contain like covenants, and that the landlord would enforce those other covenants at the request of the lessee, subject to payment of, and security for, its costs.

Following objection from another leaseholder (Duval), the licence was refused, but the landlord subsequently reconsidered the matter and granted a licence. Duval consequently issued proceedings against the landlord seeking, amongst other things, a declaration that the landlord did not have the power to licence the works, which were in breach of the lease, specifically an absolute covenant, which prevented lessees from cutting into any roofs, walls, ceilings or service media. It was agreed by all parties that the works would breach the covenant. The initial decision found that the landlord had no power to waive any of the covenants without the prior consent of all of the lessees of the flats in the building – a decision that was appealed by the landlord. 

The appeal, in 2017, then found that the landlord had the power to license works that would otherwise amount to a breach of a clause within the lease and that, once licensed, such works could not be the subject of enforcement action.

In response, a further appeal was filed by Duval in October 2018, in which the Court of Appeal declared that in granting a licence, the landlord would be in breach of Duval’s lease, thereby finding in Duval’s favour. The landlord consequently appealed to the Supreme Court.

The Recent Decision at the Supreme Court:

The decision on the 6th May dismissed the landlord’s appeal, holding that the complainant lessee was entitled, on provision of security, to require the landlord to enforce it as an absolute covenant. In essence, this decision held that the landlord could not give its consent without breaching Duval’s lease.

In Consideration of the Decision:

There has been considerable discussion on the impact of the decision for landlords over the last two weeks. Some commentators have highlighted the extreme importance of the decision, noting that it will have a serious impact on how landlords manage their estates going forward and challenge existing practices for issuing retrospective or prospective licenses of consents.

The Practical Implications of the Case:

In our experience, landlords often already provide careful consideration on requests for permission against the covenants within a lease. There is also a question of balance - as to whether, as seen in many breach of covenant claims, a lessee would have to suffer a loss to claim any damages? Does a request for license significantly impact or impede the other leaseholders in a significant way? Theoretically, it could argued that many alterations actually improve a building.

Advice:

In many regards, the case does offer a cautionary note to landlords in reiterating the need to be vigilant in the drafting and consideration of lease covenants and licensing consent – specifically noting the need to be clear and specific regarding absolute covenants and mutual enforceability – however, in practical terms it may well that be the impact of such breaches will continue to be minimal and the majority of breach of covenant matters continue to follow form. We will watch with interest the level of influence the decision provides.

 

Covenants, Consent & Caution: Commenting on Duval v 11-13 Randolph Crescent Ltd [2020]

“Let There Be Light”

“Let There Be Light”

Associate Camilla Waszek draws upon recent case law and first-hand experience to comment on the challenges and remedies associated with establishing rights to light.

A "right to light" can be defined as an easement that gives a landowner the right to receive light through defined apertures in buildings on his or her land. This could be seen as the right to receive uninterrupted light, which passes across adjacent land, into a window. If a building owner has a right to light and the path of light is interfered with or obstructed - for example by a new building or development, then a legal challenge could be brought to ensure the value, amenity and utility that available light brings, are preserved.

Background:

The issue of the right to light has a long history in English property law, extending as far back as 1663, with the Ancient Lights act being based on the theory that a landowner acquired an easement to the light by virtue of his use of the windows for that purpose for the statutory length of time. Since the Prescription Act of 1832, the right to light is protected under common law, adverse possession or by establishing a claim to the right to light where you have:

  • Acquired the right;
  • Not have the claim defeated by having lost the right; and
  • Be able to prove an actionable nuisance.

Casting a Shadow:

Typically, rights to light are lost if the right is interrupted for more than 12 months, within a 20 year period, so if a right is obstructed then swift action needs to be taken, otherwise any claim will be statute barred. Interruption includes actual physical interruption or by service of a Light Obstruction Notice, which is a notional physical interruption, which has the same effect of an actual physical interruption.

If there is an interruption to the right to light, in order to be actionable, it must be a substantial interference so that that the amount of light left following the interference provides insufficient light “according to the ordinary notions of mankind” rendering it uncomfortable.

In order to assess whether an interference is substantial, the Court will typically consider whether the room with the right has moved from being adequately lit to poorly lit, by reference to the Waldram method.

An Illuminating Approach:

The Waldram method essentially involves plotting the area of a room which receives adequate light before the proposed infringement, and the area that will be adequately lit afterwards. Light is measured in lumens, and one lumen is regarded per square foot. It is then possible to ascertain how much of a room was adequately lit before and after the infringement with the convention being that if the remaining area of adequate light exceeds 50% of the area of the room, there is no infringement or nuisance. This is commonly referred to as the “50/50 rule”. Remedies for the interference can include injunctions or damages in lieu of an injunction, including diminution in the value of the owner’s interest to the value gained by the infringement.

A Case in Point:

In Beaumont Business Centres Ltd v Florala Properties Ltd the property was already deemed to be poorly lit prior to the interference, however it was held that where a room is already poorly lit, in order to establish a claim in nuisance the Claimant needed to prove that the reduction in light to its premises had made them substantially less comfortable than prior to the interference. The Waldram method therefore remained a useful starting point for considering the interference.

As the defendants premises were occupied by a third party tenant, not a party to the proceedings, Beaumonth was awarded a declaration against the freeholder that it was entitled to an injunction so, if so advised, it might join the tenant to the proceedings to seek an injunction. In the alterative, Beaumont was entitled to “negotiating” damages of £350,000 representing just under 1/3 of the defendant’s profits gained from its nuisance.

Shining a Light on Some Key Points:

The Beaumont case also provides some useful points for consideration, specifically:

  • That artificial light is not considered when assessing a right to light claim and that poorly lit rooms can still have actionable loss, even if the reduction in light is small.
  • Reiterates the decision in Coventry v Lawrence that the Court has an unfettered discretion to award damages in lieu of an injunction where the facts of the case warrant it, however, injunction remains the primary remedy and the onus remains on the infringing party to show why it should not be granted; and
  • Profits gained from the nuisance may be used when assessing damages.

For landlords and leaseholders, the decision in Coventry v Lawrence, as reaffirmed in Beaumont, is a useful tool when considering injunctive action for a breach of covenant or, alternatively, the assessment of damages in lieu of the injunction as a consequence of a breach.

If you would like to discuss rights to light further, please contact Camilla directly:

c.waszek@jbleitch.co.uk


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