Restrictive covenants – Discharge or modification – Leasehold property – Section 84(1) and (12) of Law of Property Act 1925 – Applicants applying to modify covenants in leases to permit conversion of two flats into one – Whether leases meeting requirement in section 84(12) that at least 25 years of lease term expired – Whether deed of variation of lease taking effect as surrender and re-grant so as to create fresh term – Whether covenant to use and occupy solely and exclusively as self-contained flat taking effect as positive covenant to which section 84 not applying – Preliminary issues determined in favour of applicants
The applicants were the long leaseholders of two of the four flats in a building in London, NW3, namely the garden flat and another flat on the hall floor above it. They obtained planning permission to connect their two flats together to form a single maisonette; however, those works were contrary to covenants in the leases against permitting the making or acquisition of any new easements over the demised premises and a further covenant in the lease of the hall floor flat requiring it to be used and occupied solely and exclusively as a self-contained residential flat. The applicants applied to modify the covenants, pursuant to the provisions of section 84(1) of the Law of Property Act 1925 applicable to restrictive covenants, to enable the development to go ahead.
The leaseholder of one of the other flats objected to the application. He contended that a deed of variation of the garden flat lease executed in 1998 prevented that lease from meeting the requirements of section 84(12) for the application of section 84 to leasehold property, namely that the lease should be for a term of more than 40 years of which at least 25 years had expired. He contended that the term under the garden flat lease should be regarded as running only from the date of the deed of variation, which should be regarded as taking effect as a surrender and re-grant, with the result that less than 25 years of the term had expired.
The deed of variation had been executed after the after the completion of works to extend the garden flat to the rear and side. It granted a right to park and a right of vehicular access over land at the front of the building, as marked on an attached plan, but otherwise stated: “Save as hereby varied, the covenants and conditions contained in the… Lease shall continue in full force and effect in all respects”.
The objector further contended that the user covenant in the lease of the hall floor flat took effect as a positive covenant, not a restrictive covenant, and therefore fell outside the jurisdiction under section 84(1). Preliminary issues were determined accordingly.
Held: The preliminary issues were determined in favour of the applicants.
(1) The variation of an existing lease to add additional land to the demise would operate as a surrender of the old lease and a grant of a new lease from the date of the variation. However, the law would give effect to a clear intention not to grant a new lease, but to continue an existing lease on varied terms, unless the only way in which the arrangement could be implemented was by implying a surrender of the old lease and the creation of a new one: Friends Provident Life Office v British Railways Board [1996] 1 All ER 336 applied.
Properly construed, the deed of variation executed in relation to the garden floor flat simply had the effect of adding a right to park on the land at the front of the building over which the lessee had previously enjoyed only a right of way on foot. That was not be sufficient to terminate the term created by the original lease and create a new term by the legal fiction of a surrender and re-grant. The terms of the deed did not indicate any intention of the parties to effect any change in the boundaries of the demised premises. They disclosed a single purpose of granting a right to park on the marked area. That purpose, and the absence of any overt intention to surrender the original lease and grant a new term with an enlarged demise, were apparent from the language which the parties had used.
The use of a plan which showed the premises as they existed in 1998 was not sufficient in itself to operate as a demise of those parts which had not been included in the original lease. The deed of variation contained no words of demise and the new plan was not intended to show the boundaries of the demise any more than had the original plan. The parties to the 1998 deed had proceeded on the assumption that the existing extensions were already part of the premises comprised in the lease. Given the limited purpose of the deed of variation, the demised premises remained the garden floor flat as it had existed at the date of the original lease.
Since the deed of variation was capable of achieving its limited purpose without resort to the legal fiction of a surrender and re-grant, the proper conclusion was that it did not have that unintended effect. It followed that more than 25 years of the lease term had elapsed with the result that the tribunal had jurisdiction to vary the restrictive covenants.
(2) Read in context, the user covenant in the hall floor lease was a restrictive rather than a positive covenant. A covenant to use premises in a particular way was ordinarily treated as limiting the use which could be made of those premises rather than as compelling their use in the specified manner. The obligation under the user covenant was not simply to use and occupy the demised premises as a self-contained residential flat but to use and occupy it “solely and exclusively” for that purpose. That form of words indicated an intention that, if the demised premises were to be used and occupied at all, then it had to be as a self-contained flat. However, if the owner chose not to use and occupy the premises, then he was free to leave them vacant. The covenant had the same character as the conventional covenant not to use premises other than for a specified purpose; the employment of the composite expression “to use and occupy” did not convert that conventional emphatic negative into a positive obligation. It would be unusual to find a positive obligation in an otherwise unexceptional lease of a residential flat requiring that it be kept occupied and used for the purpose for which it was designed. Such a covenant would be so unusual and potentially onerous that much more emphatic and unambiguous language would be needed to justify a finding that the parties had intended such a result. It followed that the tribunal had jurisdiction to modify the user covenant in the lease of the half floor flat: Westminster City Council v Duke of Westminster (1990) 23 HLR 174 and Shepherd Homes Ltd v Sandham (No 2) [1971] 1 WLR 1062 distinguished.
Robin Green (instructed by direct access) appeared for the applicants; Timothy Polli (instructed by Housing and Law Partnership) appeared for the objector.
Sally Dobson, barrister
