Enforcement Covenants and ensuring that the landlord does not end up in breach itself

Whether a grant of consent to works would breach landlord’s enforcement covenant

Enforcement Covenants and ensuring that the landlord does not end up in breach itself

The background

In Duval v 11-13 Randolf Crescent [2018], a tenant – Mrs Winfield – held a long lease of a flat in a building containing 8 other units. The appellant, Dr Duval, held long leases of two such units. A company owned by all tenants owned the freehold reversion. Mrs Winfield asked for consent from the landlord to carry out works to her flat. Whilst the landlord was prepared to grant consent, Dr Duval claimed that the terms of the long leases of each property prevented it from doing so.

Mrs Winfield’s lease contained an absolute covenant not to alter any load-bearing walls. Her proposed works included removal of around 7m of load-bearing wall in the basement. All parties agreed that this would have breached the absolute covenant in the lease. Dr Duval brought a claim centred on the landlord’s enforcement covenant in the lease, which stated that the landlord shall ‘…enforce any covenants entered into with the Landlord by a tenant of any residential unit in the Building…’.

 

The decision

The Court of Appeal allowed Dr Duval’s appeal, which centred simply on the fact that Mrs Winfield’s lease contained an absolute covenant which Dr Duval wished the landlord to enforce in accordance with its own covenants under each of the other tenants’ leases. The landlord argued that it should be able to do as it pleases with its own property; ordinarily, a landlord may consent to an action which may be a breach of covenant, and the landlord suggested that, in this case, the enforcement covenant did not prevent the landlord from granting a licence for an action which may constitute a breach.

Finding in favour of Dr Duval, the Court held that if the landlord granted consent to an action which otherwise breached the terms of the tenant’s lease, the landlord breached its own enforcement covenant.

 

Advice and action for landlords

Enforcement covenants such as this are common in residential leases where a building contains multiple units, and landlords are advised to be wary of granting consents which may otherwise breach tenants’ lease terms.

Here, the other tenants were aware of the request for consent. However, a landlord is not obliged to tell other tenants of actions or decisions it proposes to take so it is entirely possible for a landlord to grant a consent and subsequently be unable to enforce that covenant where other tenants require it to do so. In those cases, damages for breach of the enforcement covenant may be sought by other tenants, or perhaps an injunction preventing the grant or licence for which the other tenants would need to demonstrate good reasons.

Allowing the appeal, the Court held that if the landlord granted consent to an action which otherwise breached the terms of the tenant’s lease, the landlord breached its own enforcement covenant.

Author

Richard Owen
Richard Owen
Associate

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