The grant of a lease creates a legal estate in a specific parcel of land for a defined term. Consequently, a “variation” that extends the term or adds to the demise will operate as a surrender and re-grant, irrespective of the parties’ intentions. Few statutes cater for this. Hence the litigation in Stevens v Ismail [2016] UKUT 43 (LC).
Section 84(1) Law of Property Act 1925 empowers a tribunal to discharge or modify covenants restricting the use of freehold land. Section 84(12) extends that jurisdiction to covenants affecting leasehold land, but only where the term created by the lease was for more than 40 years and 25 years of that term have expired. The legislation does not include any saving provisions that preserve the tribunal’s jurisdiction – by ensuring that the clock remains ticking – where a lease has been surrendered and re-granted.
The claimants wanted to modify covenants in leases of two of the flats in a building in order to create a single maisonette, but first had to deal with an objection on the ground that there had been a surrender and re-grant of one of the leases less than 25 years previously. The objector argued that this deprived the tribunal of jurisdiction because the conditions in section 84(12) had not yet been satisfied.
The judge dismissed the claimants’ argument that the registers of title at the Land Registry still referred to the original lease, as varied. It was the effect of the variation that mattered – and, if the variation had effected a surrender and re-grant, the tribunal must proceed accordingly.
The parties had entered into the deed of variation to grant the tenant vehicular rights of way to and from the highway, together with an exclusive right to park in a defined area shown on the plan attached. The deed stated that “save as hereby varied the covenants and conditions contained in the registered lease shall continue in full force and effect”.
The parties agreed that the law will give effect to a clear intention to continue an existing lease on varied terms, unless the only way in which the arrangement can be implemented is by implying a surrender and re-grant. They also agreed that the additional rights granted had not effected a surrender and re-grant here.
Instead, the objector relied on the fact that the red edging on the plan attached to the deed of variation now enclosed new areas into which the flat had been extended by the creation of a kitchen and conservatory. The objector claimed that this showed that the demise had been enlarged to reflect the tenant’s encroachment onto land that had not previously been demised to him.
Fortunately for the claimants, the judge accepted their arguments that the use of the plan showing the premises as they now existed was not sufficient in itself to operate as a demise of the parts that were not included in the original lease. The deed of variation did not contain any words of demise and had not purported to alter the extent of the demise. Therefore, more than 25 years of the term had elapsed and the tribunal was able to deal with the claimants’ application.
Allyson Colby is a property law consultant
