Landlord and tenant – Breach of covenant – Alterations – Respondent lessee carrying out alterations without appellant landlord’s consent – Appellant alleging breach of covenant – First-tier Tribunal (FTT) unable to resolve difference of expert opinion and resorting to burden of proof to determine issue – Appellant appealing – Whether respondent in breach of covenant – Appeal allowed
The appellant owned the freehold of 47 Marmion Road, London, SW11, a two-storey bay-fronted end of terrace Victorian house traditionally constructed of brick under slated roofs with a basement below part of the ground floor. The property was divided into two flats, both accessed from the front door through a communal entrance lobby.
In 1989, the appellant granted a lease of the ground floor flat to the respondent’s late wife (B) for a term of 99 years. By clause 2(3), the lessee covenanted not to cut any of the walls, ceilings, floors or partitions of the demised premises. By clause 2(4), she covenanted not to make any structural alterations without the previous consent in writing of the landlord. By clause 3(1), she covenanted to keep the demised premises “in good substantial and tenantable repair and condition … so as to support shelter and protect the parts of the property other than the demised premises …”
In 2010, the appellant granted B a licence to carry out alterations to the ground floor flat. The work carried out exceeded that permitted by the licence and allegedly caused damage to the first-floor flat. The lease subsequently became vested in the respondent following B’s death.
The appellant applied under section 168(4) of the Commonhold and Leasehold Reform Act 2002 for a determination that breaches of covenant had occurred. The First-tier Tribunal (FTT) was satisfied that works had been undertaken for which no consent had been obtained. The FTT found that there had been breaches of clause 2(3) of the lease by the removal of the living room chimney breast and the lowering of the basement floor. However, a difference of expert opinions led it to conclude that the applicant had failed to discharge the burden of proof in connection with the alleged breach of clause 3(1). The appeal appealed.
Held: The appeal was allowed.
(1) The FTT had the opportunity to consider the whole of the material put before it and, where it could be seen to have made a proper assessment of that material and explained why it had reached its conclusion on the main contentious issues, the Upper Tribunal should not prefer a different conclusion. However, there were circumstances in which the tribunal could and had to interfere with the fact finding of the FTT, including where the FTT had resorted too readily to the burden of proof as the means of resolving a disputed question of fact, including a disagreement between expert witnesses.
(2) The court could despatch a disputed issue by resort to the burden of proof only in exceptional circumstances, where it could not reasonably make a finding in relation to a disputed issue, though the issue did not have to be of any particular type. A court which resorted to the burden of proof had to ensure that others could discern that it had striven to make a finding in relation to a disputed issue and could understand the reasons why it had concluded that it could not do so. The parties had to be able to discern the court’s endeavour and understand its reasons in order to be able to perceive why they had won and lost. An appellate court also had to be able to do so because otherwise it would not be able to accept that the court below was in the exceptional situation of being entitled to resort to the burden of proof: Constandas v Lysandrou [2018] EWCA Civ 613 followed. Ashraf v Akram [1999] EWCA Civ 640, Cooper v Floor Cleaning Machines Ltd [2003] EWCA Civ 1649, Verlander v Devon Waste Management [2007] EWCA Civ 835 and Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 considered.
(3) In the present case, there was no doubt that there had been breaches of clause 2(3) of the lease. The remaining question for the FTT was whether the ground floor flat had been kept “in good substantial and tenantable repair and condition… so as to support shelter and protect” the first floor flat. Faced with the divergence of view between the experts, it was essential for the FTT to ask itself what the evidence as a whole contributed to the picture. The FTT had taken an extremely limited approach the evidence. It said that it had considered all of the documents provided but it was not possible for anyone reading the decision to know whether it made use of them or not. The FTT had not shown that it had undertaken the examination and evaluation of the evidence which was essential before a fact-finding tribunal might fall back on the burden of proof to make the decision for it.
(4) The weight of the material available to the FTT ought to have caused it to be satisfied that the leaseholder was in breach of the covenant to keep the ground floor flat in good condition so as to provide support to the first floor flat. The documentary material provided by the parties to the FTT was amply sufficient to lead to the conclusion that the alterations carried out on the ground floor had caused a loss of support which had precipitated the occurrence of damage to the first floor flat. The FTT ought to have made a finding of fact to that effect, rather than relying on the burden of proof to sustain the opposite conclusion. In the absence of other credible causes for the condition of the first floor flat, it was attributable to the removal of support as a result of the respondent’s works. Those works were undertaken before the respondent acquired his interest in the flat, but they were a breach of clause 3(1) of the lease at that time. They remained a breach of the respondent’s own continuing obligation to keep the ground floor flat in good substantial and tenantable repair and condition so as to support the first floor of the building.
Neil Mendoza (instructed by Brachers LLP) appeared for the appellant; Stephanie Wookey (instructed by Smithfield Partners) appeared for the respondent.
