Landlord and tenant — Covenant for quiet enjoyment — Express covenant of qualified kind giving protection against ‘any interruption by the landlord or any person lawfully claiming through under or in trust for the landlord’ — Interpretation of claiming ‘under’ — Predecessors in title of present freeholders granted a number of tenancies of flats and garages with rights of way over driveways and parking areas — Present freeholders, after acquiring the reversion, granted a long lease of part of the land to an oil company which established a petrol filling station and proposed to set up a car-wash — The effect was that the demise to the oil company included land over which the tenants of the flats and garages enjoyed and were currently exercising rights of way, which would be interfered with by the car-wash — These tenants in previous proceedings before Scott J obtained an injunction restraining the construction of the car-wash — The oil company then contended that the injunction constituted a breach of the covenant for quiet enjoyment contained in the lease to the company by the freeholders — In the proceedings giving rise to the present appeal Scott J rejected this contention, holding that the tenants of the flats and garages did not ‘claim under’ the freeholders — On appeal by the oil company the Court of Appeal held that Scott J had reached the right conclusion — Although the tenants might well be properly described as ‘holding under’ the freeholders, they did not ‘claim under’ them in the context of the covenant — ‘Claim’ in this context meant claiming a lawful right to interrupt the oil company’s occupation of the demised property — The tenants did not claim this right under the freeholders; the right was derived from the freeholders’ predecessors in title — It was created by a title paramount to that of the freeholders — Textbooks cited and Law Commission’s recommendations noted — Appeal dismissed
The following
case is referred to in this report.
Griffiths v Riggs (1917) 61 SJ 268
This was the
second instalment of litigation concerning Cavendish House, 21 Wellington Road,
London NW8. The first instalment ended in a judgment given by Scott J in
November 1984, reported in [1985] 1 WLR 204. The judgment from which the
present appeal was brought was reported at [1986] 1 WLR 666. The appellants
were Mobil Oil Ltd, the second defendants in the action Celsteel Ltd and
Others v Alton House Holdings Ltd and Another, and the respondents
were Alton House Holdings Ltd, the first defendants in the action. Third
parties, a firm of solicitors, against whom Alton House Holdings Ltd had
commenced third party proceedings, were represented, although the issue in such
proceedings was not before the judge in the present case.
Michael Barnes
QC and Edward Davidson (instructed by Metson Cross & Co) appeared on behalf
of the appellants; Dennis Levy QC and George Laurence (instructed by Crellins,
of Walton-on-Thames, Surrey) represented the respondents; A G Steinfeld
(instructed by Reynolds Porter Chamberlain) represented the third parties.
Giving
judgment, FOX LJ said: This is an appeal from a decision of Scott J, and it
raises a question of construction on a covenant for quiet enjoyment in a lease.
The essential
facts are as follows. Calflane Ltd was the owner of the freehold of a property
called Cavendish House in St John’s Wood. The site was acquired by Calflane in
the 1970s. By 1981 the site was developed as a block of flats and, in that
year, Calflane leased the flats, together with garages, to various persons. The
leases contained grants of rights of way to the tenants over ‘the drives’ and
certain other areas of the property.
On March 1
1982 Calflane conveyed the freehold of Cavendish House to Alton House Holdings
Ltd subject to the leases — all of which Scott J found had then been granted.
On October 27
1982 Alton House granted to Mobil Oil Company Ltd, for the term of 99 years, a
lease of part of the property. The effect of this lease was that Alton House
demised to Mobil part of the driveway over which the tenants of the flats and
garages enjoyed, and were then currently exercising, rights of way.
Mobil proposed
to build a car-wash on the land demised to it. The tenants of the flats and
garages then commenced this action to restrain Mobil from building the car-wash
which, they said, would interfere with their rights of way.
That issue was
tried before Scott J and, on June 27 1984, he gave judgment for the tenants,
and granted injunctions against Mobil and Alton House restraining the
construction of the car-wash. That judgment (which was not appealed from) is
reported at [1985] 1 WLR 204. Mobil contended that the injunction constituted a
breach of the covenant for quiet enjoyment contained in the lease by Alton
House to Mobil. Consequently, Mobil claimed an indemnity against the costs of
the action, and damages for the breach of covenant. It was
judgment contains a more detailed account of the background facts than I have
given.
I should
mention that, upon the agreement for the lease to Mobil, the material parts of
the leases to the tenants were disclosed, but it does not seem to have occurred
to either party that the rights of the tenants would give rise to the problems
which arose.
I come now to
the covenant for quiet enjoyment in the lease to Mobil. It was in these terms:
The Landlord
hereby covenants with the Tenant that . . . the Tenant shall peaceably hold the
demised premises for the term hereby granted without any interruption by the
Landlord or any person lawfully claiming through under or in trust for the
Landlord.
Mobil contend
that the exercise by the flat and garage tenants of their lawful rights of way
over part of the premises leased to Mobil so as to prevent Mobil from building
the car-wash constitutes an interference with Mobil’s enjoyment of the premises
demised to it. It is Mobil’s case that the tenants are persons claiming ‘under’
Alton House, and that Alton House are accordingly liable on the covenant.
It is accepted
by Mobil:
(a) that the express covenant for quiet
enjoyment excludes any implied covenant for quiet enjoyment, and
(b) that the tenants do not claim ‘through’ or
‘in trust for’ Alton House.
The case,
therefore, turns on the ambit of the words ‘claiming under’.
Scott J
rejected Mobil’s claim and held that the tenants of the flats and garages did
not claim ‘under’ Alton House. Mobil, appealing against that decision, accepts
that covenants for title are commonly qualified to exclude liability for acts
of predecessors in title and that the covenant in this case is qualified. Mobil
contends, however, that when an assignor of a reversion upon a term warrants to
an assignee freedom of interruption by the assignor’s lessees, he is not taking
on liability for acts of his predecessors in title, but merely of his own
immediate tenants whose rights will be known to him, and that this is so
whether the leases were granted by the assignor himself or by a predecessor.
In my opinion
Scott J came to the right conclusion. It may well be that the tenants can
properly be described as ‘holding’ under Alton House, but I do not think that
they ‘claim’ under Alton House in the context of this covenant. The covenant
warrants that Mobil shall hold the premises ‘. . . without interruption by . .
. any person lawfully claiming . . . under . . . (Alton House)’. This language,
it seems to me, raises the question: ‘claiming what?’
The answer to
that, I think, is: claiming a lawful right to interrupt the lessee’s occupation
of the demised property. That indeed is what the tenants of the flats and
garages did claim — and successfully so, as was determined at the 1984 hearing.
The next question
is: did the tenants claim that right ‘under’ Alton House? In my judgment they did not. In asserting and
establishing the right, the tenants did not need to refer to Alton House, or
any act or disposition of Alton House, at all. They derived their right from
Calflane, and it would be from and through Calflane alone that they would
deduce the title which gave them the right to claim the injunctions. Alton
House formed no part of that title and it never conferred upon the tenants any
rights in respect of the premises at all. The rights were created by virtue of
a title paramount to Alton House which, at all times, had effect in priority to
Alton House’s title and was superior to it. In those circumstances, I do not
think it would be a proper use of English to say that the tenants of the flats
and garages claimed ‘under’ Alton House. Their relevant rights were wholly
independent of anything ever done by Alton House.
We were
referred to certain paragraphs in the leading textbooks, which were as follows:
Woodfall, 28th ed, 1978, vol 1, para 1-1289:
The wrongful
acts of a tenant of the lessor, under a previous lease, who does things not
authorised by such lease, do not amount to a breach of the usual qualified
covenant for quiet enjoyment, and, where a subsidence was caused by the lessees
under a lease of mineral rights, a lessor on a subsequent lease of the surface,
who was not a party to the mineral lease, will not be liable under the covenant
for quiet enjoyment in the surface lease, as the damage was not caused by a
person ‘claiming from or under’ him.
To that
statement there is a footnote citing Re Griffiths, Griffiths v Riggs
(1917) 61 SJ 268, as authority. I will deal with that case later.
Hill and
Redman, 17th ed, 1982, vol 1, p 196:
The
restricted form
which
corresponds to that in this case
is commonly
adopted, and under it the lessor, whether or not his own title is defective, is
not liable for acts of persons claiming by title paramount even though those
acts are the consequence of his own default.
Hill and
Redman further states, at p 197, that
in view of
the limited effort of the restricted covenant, it must be considered
unsatisfactory from the tenant’s point of view and where it is desired to give
him the fullest protection it should be extended so as to apply to the acts of
persons rightfully claiming by title paramount.
Halsbury’s
Laws, 4th ed, 1981, vol 27, p 253, para 323:
Under the
heading ‘Effect of Qualified Covenant‘, it is stated:
. . . the
covenant only protects against the acts of persons claiming under the landlord
so far as they are successors in title of the landlord, or actually have
authority from him to do the acts
These
statements are, at any rate, not inconsistent with the view which I have
expressed above as to the effect of the words ‘claiming under’ the landlord.
Foa’s
General Law of Landlord and Tenant, 8th ed, 1957,
pp 299 to 300:
Lessor and
persons claiming under the lessor —
The covenant
is usually expressed to extend to the acts of the lessor and persons claiming
‘by, from or under’ him. A person claiming under a settlement made by the
lessor, . . . is within such words; and so is a prior lessee of the premises
demised or a lessee of adjacent premises holding under the same lessor. Where a
lease granted by two trustees of a will contained a covenant, as to their own
respective acts only, that there should be no lawful interruption by any person
rightfully claiming ‘from or under’ them, it was held that disturbing acts of a
company, to whom a previous lease of the underlying minerals had been granted
by earlier trustees of the same will (only one of whom was a party to the later
lease), were an interruption at the instance of a person rightfully claiming,
by virtue of the devolution of the reversion ‘under’ them . . . and that the trustee
common to both leases, and he alone, was liable.
Re
Griffiths, Griffiths v Riggs, to which I
have already referred, is cited as authority for the example about the
disturbance by the mineral lessees.
Mobil place
some reliance upon the Griffiths case, and I should refer to it in more
detail. It was a summons to determine whether the plaintiff trustees were
liable for damage caused by colliery workings. Griffiths and Martin, who were
the trustees of the will of one Webb, demised to the defendant for a term of 99
years from 1904 a piece of land on which a house was being built; the defendant
contracted to complete the house. Minerals were excepted from the lease. There
was, in the lease, a covenant that the lessee should quietly enjoy the premises
‘without any lawful interruption from or by the lessors or any person
rightfully claiming from or under them’.
The mines
underlying the premises had been demised in 1896 by the then trustees, who were
Griffiths and Shenton, to a colliery company for a 60-year term. The house
being completed, it suffered damage by subsidence from the mineral workings.
The question was whether the colliery company (the lessee under the mineral
lease) claimed ‘under’ the plaintiffs. The report is very short.
Younger J said
he would have been glad to read the covenant for quiet enjoyment as protecting
the lessee by anybody claiming or holding under the present or any previous
trustee. That is understandable, since the trust owned the freehold at all
times and the changes in the legal title to the reversions were simply
consequent on changes of trustees.
The judge’s
actual decision, however, was that only Griffiths was liable. Griffiths was a
party to the mineral lease as well as the surface lease. Therefore, as the
judge said, the lawful interruption was due to Griffiths’ own act as a joint
grantor of the mineral lease. That seems correct. But if Mobil’s case on this
appeal is correct, it is not clear why Martin was not liable as well. The
judge’s reason for making Griffiths liable seems to have been simply that he
was a party to the grant of the mineral lease. In view, however, of the brevity
of the report, I do not feel that much help can be obtained from the case, at
any rate in relation to the question of the liability of Martin.
In support of
its case, Mobil puts the following example as demonstrating the practical
objections to Alton House’s contentions:
(1) L demises parcel B to B
and parcel C to C.
(2) In the demise of parcel B
there is a grant of rights to B over a part of parcel C.
(3) The exercise of B’s
rights would constitute a breach of covenant for quiet enjoyment in the present
form in the lease
(4) Suppose, however, that A
assigns the reversion in parcels B and C to X and that C then assigns his lease
of parcel C to Y. What then would be the remedy of Y if his enjoyment of parcel
C were interrupted by B’s exercise of his rights over parcel C?
Mr Barnes, for
Mobil, says that if Alton House is right, Y could not sue X; B, though holding
under X, would not be ‘claiming under’ X for the purposes of the covenant. Nor
could Y sue A, since there was neither privity of estate nor privity of
contract between them. Thus Y is without remedy.
This suggested
anomaly was considered by Scott J on pp 9 to 11 of his judgment, and he was not
satisfied that it represented the true state of the law. In particular, he was
of opinion that section 142(1) of the Law of Property Act 1925 was wide enough
to enable an action to have been brought by Y against A, and if that were so,
he was not satisfied the cause of action could not be asserted against X, the
successor in title to A. I take the same view for the same reasons as Scott J.
It is not, however, necessary to decide the matter since, even if the anomaly
exists, it does not alter my view of the construction of what is undoubtedly a
limited covenant in the present case.
As regards
policy, the Law Commission’s Report (No 67) of June 1975 on Obligations of
Landlords and Tenants states, in para 37:
The
obligation
under the
common form of covenant for quiet enjoyment or the implied covenant which is
similarly qualified
is also
limited to the lawful acts of people claiming through or under the landlord; it
does not extend to lawful acts of anyone with a title better than the
landlord’s own title. It was originally uncertain whether the implied covenant
extended also to interruption or disturbance of the tenant by people having
title paramount to that of the landlord . . . but it is now settled that the
obligation is limited to the acts of people claiming under the landlord.
The commission
(in para 43) was of opinion that the present effect of covenants for quiet
enjoyment, whether implied or in the common-form express covenant, gives
inadequate protection to the tenant.
In para 51 (b)
the commission recommends:
A landlord’s
responsibility ought not to be limited to the acts of people who derive their
rights from him; it should extend to the lawful acts of anyone, whether the justification
for the disturbance depends on a title superior to the landlord’s or on a title
created out of the landlord’s title.
Limitations
upon the landlord’s liability were, however, proposed. In para 54 it is stated:
If he
a landlord
does disclose
everything that he can of his own title and everything that he knows of which
might interrupt or disturb the tenant’s occupation, we do not think that he
should be liable to the tenant for risks he cannot know about. The obligation
arises out of a covenant for quiet enjoyment and we are not proposing an
absolute covenant for title. This qualification of the landlord’s ignorance
would result in a clear distinction between a case in which the person
disturbing the tenant derived his right from the landlord himself and one in
which the right was superior to the landlord’s own title. This defence could
only exist in the latter case; if the right were derived from the landlord, the
landlord could not claim that he did not know of it.
Clause 5 (2)
of the draft Bill in the report deals with the matter.
In the present
case the judge, after hearing oral evidence, found that ‘everything Alton House
actually knew had been disclosed to Mobil’. The parties evidently
misapprehended the effect of the documents in relation to the state of the
land. It seems, therefore, that even under the Law Commission’s recommendation,
Mobil would probably be without a remedy against Alton House. I mention these
matters only for completeness. They do not affect my view of the law as it
stands in relation to the covenant in the present case.
For the
reasons which I have given, I take the view that Scott J was right in his
conclusion. I would dismiss the appeal.
PARKER and
STEPHEN BROWN LJJ agreed and did not add anything.
The appeal
was dismissed with costs.