Landlord and tenant – New lease – Restrictive covenant – First defendant owning freehold of block of flats – Second defendant holding overriding lease of flat – Claimant tenant serving notice of intention to claim new lease – Defendants challenging validity of notice – Claimant seeking declaration that notice validly served – Whether first defendant part of “the landlord” – Whether restrictive covenant “appurtenance of flat” – whether first defendant “party to the lease” – Whether notice valid – Claim allowed
The claimant was the tenant of the penthouse in a block of flats at 7-11 Princes Gate in Kensington, London SW7. The first defendant owned the freehold of the block. The second defendant held an overriding 999-year lease of the flat. Under the terms of the original lease the claimant was granted various easements over the remainder of the building. The original lease also contained a restrictive covenant, whereby the freeholder and its successors covenanted “not to build or erect any structure on the roof of the building”. The roof was not within the claimant’s demise. The terms of the restrictive covenant were not replicated in the overriding lease and only notice of the original lease was entered in the registered freehold title.
The claimant purported to give notice to the second defendant that it was exercising its right under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 to claim a new lease. The claimant subsequently served additional notices claiming that, under the 1993 Act, both defendants together were its landlord; alternatively, the second defendant was its landlord and the first defendant was a third party under the 1993 Act. The defendants accepted that the claimant was entitled to a new lease but asserted that the claimant’s landlord was the second defendant alone. They denied that the first defendant was a landlord or a third party and denied that the claim was valid.
The claimant brought a claim under CPR, part 8 seeking a declaration that it had served a valid notice. It argued that: (i) the first defendant was included in “the landlord” because it retained the reversion in respect of the building other than the flat; (ii) the first defendant was included in “the landlord” because only it had an estate in the roof and the roof was subject to the restrictive covenant which was an “appurtenance” of the flat, let with the flat; (iii) the first defendant was a “third party” because it was a “party to the lease” as it was bound by the restrictive covenant, but not as an immediate landlord; and (iv) a valid notice had been served under section 42.
Held: The claim was allowed.
(1) When the overriding lease was granted, the first defendant retained the reversionary estate in respect of the building other than the flat. There was a severance of the reversion of the land. The covenants therefore had to be apportioned under section 140 of the Law of Property Act 1925. Those relating to the building other than the flat, including the restrictive covenant, were apportioned to the first defendant. Therefore, the first defendant was the only person who satisfied the definition of “the landlord” in the 1993 Act in relation to those covenants. The first defendant had an interest in reversion expectant on the termination of the original lease such as to enable it to grant a new lease of the flat on the same terms as the existing lease: section 57 of the 1993 Act. It followed that the first defendant, as owner of the reversion expectant upon the termination of the easements over the building, and the second defendant, as owner of the reversion expectant upon the termination of the original lease of the flat itself, were together “the landlord” for purposes of giving notice under the 1993 Act. As owner of the reversion expectant upon termination of the easement, the first defendant was part of “the landlord” irrespective of the restrictive covenant: Cardwell v Walker [2003] EWHC 3117; [2004] P&CR 9; [2004] PLSCS 9 applied. Martyn v Williams (1857) 1 H&N 817 considered.
The first defendant was also part of “the landlord” because the restrictive covenant had to be apportioned to the reversion to the building simply because it touched and concerned the building. Therefore, the first defendant remained bound by the roof covenant pursuant to section 142 of the 1925 Act and was obliged to enter into a new lease to repeat it for an additional term.
(2) Under section 62(2) of the 1993 Act, a flat included any appurtenances belonging to, and usually enjoyed with, the flat and let to the tenant with the flat on the relevant date. But “appurtenances” was not defined in the 1993 Act. The restrictive covenant fell to be treated as a term or condition of the lease rather than an appurtenance. The purpose of section 62(2) was to set out what was included in the definition of the flat. In that context, an appurtenance was something positive which could be used or enjoyed. To say that the definition of the flat included an agreement by the landlord not to build on the roof, when the roof did not even form part of the demised property, would be to read the section in a strained and unnatural way: Cadogan v McGirk [1996] 2 EGLR 75 considered.
(3) The restrictive covenant was only enforceable against a purchaser or lessee of the building if it was protected by registration on the Land Register, in which case it was enforceable against the first defendant irrespective of whether it was an appurtenance within section 62(2). The mere fact of registration of the lease was not sufficient to protect the lessee’s right to enforce the restrictive covenant. The covenant had to be mentioned in the short particulars entered on the register. Otherwise a prospective purchaser would not have real and effective notice that the restrictive covenant existed. Since the roof covenant was not enforceable against the first defendant, it could not be a “third party”: Oceanic Village Ltd v United Attractions Ltd [2000] Ch 234 considered.
(4) The original notice served on the second defendant alone, together with the later notice served on the first defendant, together constituted a valid section 42 notice, with the time for serving a counter-notice being the date specified in the later notice. That had the effect of extending time for serving a counter-notice.
Stephen Jourdan QC (instructed by Hamlins LLP) appeared for the claimant; Philip Rainey QC (instructed by Wallace LLP) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read a transcript of Lupin Ltd v 7-11 Princes Gate Ltd and another
