Landlord and tenant – Quiet enjoyment – Derogation from grant – claimant landlord seeking declaration of entitlement to develop new flat on roof of block – Leaseholder with terrace and management company opposing application – Whether lease precluding claimant from building new flat – Whether construction of flat breaching covenant for quiet enjoyment and/or derogation from grant by restricting direct sunlight on terrace – Whether construction of flat unlawfully interfering with management functions of ninth defendant – Declaration granted
The claimant was the freeholder and landlord of a property known as The Optic, 2A Rochelle Close, London SW11. The building was a purpose-built block of eight flats, each of which was leased for a term of 125 years. Paragraph 4.1 of the fifth schedule to each lease preserved the right of the landlord to build on the development (other than the building), “notwithstanding that such buildings … may obstruct any lights windows or other openings in or on the demised premises [the flat]”.
The eighth defendants were the lessees of flat 8 which had the benefit of a private roof terrace with a balcony edge. The ninth defendant was a company which had acquired the right to manage the building pursuant to the Commonhold and Leasehold Reform Act 2002.
The roof of the building had been retained by the claimant and planning permission had been granted for a one storey two bedroomed flat on the roof. A new staircase was to be erected adjoining flat 8 for access to the new flat. The eighth defendant objected to the plan on the basis that the new flat would significantly restrict the sunlight to their terrace. In the absence of agreement, the claimant applied for a declaration that it was entitled to develop the new flat. The eighth and ninth defendants opposed the application. The remaining defendants, who were the other leaseholders in the building, took no active part in the proceedings.
The issues were: (i) whether paragraph 4.1 of the fifth schedule to the lease precluded the claimant from altering, developing or building upon the building; (ii) whether the construction of the new flat would amount to a breach of the covenant for quiet enjoyment and/or derogation from grant by reason restricting the amount of direct sunlight received by the terrace; and (iii) whether the construction of the new flat would unlawfully interfere with the management functions exercisable by the ninth defendant.
Held: The claim declaration was granted.
(1) It was common ground that the roof was part of the claimant’s retained parts and had been specifically excluded from the demises premises. Therefore, absent an express or implied prohibition, the claimant was entitled to develop the roof of the building. Paragraph 4.1 was not required in order to permit per se building, rebuilding or alteration upon property retained by the claimant. The key words were those starting with “notwithstanding that such buildings …” and following. On its face, the commercial purpose of the clause, which was fairly standard in leases, was therefore to act as a consent under section 3 of the Prescription Act 1832 and thereby prevent the tenant acquiring the right to light over the adjoining land of his own landlord, which might prevent the landlord developing such land: see Century Projects Ltd v Almacantar (Centre Point) Ltd [2014] EWHC 394 (Ch). The clause operated to extend, or at least protect, the claimant’s rights. Its primary purpose had nothing to do with the right of the claimant to develop or alter the very building in which the flat was situated. Much clearer words would be required entirely to oust the landlord’s ordinary right to carry out building work on its own property, the building: Hannon v 169 Queens Gate Ltd [2000] 1 EGLR 40 followed.
(2) There was little difference between the scope of the covenant on the part of the claimant for quiet enjoyment of the flat and the obligation upon any grantor not to derogate from his grant. The test was whether the claimant’s proposed act would cause the premises to become unfit or substantially or materially less fit for the purpose for which they were let. The question whether or not the clause had been breached had to be approached on the basis that it should reasonably have been within the contemplation of the parties that a new building might be built in a manner that restricted sunlight; that there was a real difficulty in identifying the irreducible minimum of sunlight contemplated as being not necessarily inconsistent with the landlord’s right to build a new building; and that this was not a case where there was a right to build that expressly qualified the covenant of quiet enjoyment. The court was required to strike a balance between those competing rights. On the evidence, the building of the new flat would not render the eighth defendants’ flat substantially or materially less fit for purpose. It could not be said that the increased shadowing was beyond that contemplated by the parties at the time of the grant or that it reduced the rights of the lessees to below the irreducible minimum: Platt v London Underground Ltd [2001] 2 EGLR 121 applied. Southwark London Borough Council v Mills [1999] 3 WLR 939 and Petra Investments Ltd v Jeffrey Rogers plc [2000] L & TR 45 considered.
(3) The 2002 Act provided for the acquisition of the right to manage a self-contained building without having to prove shortcomings on the part of the landlord and without having to pay compensation. Under section 96(2), the management functions of the claimant, as landlord, were functions of the ninth defendant, as the management company. Management functions were wider than obligations and duties and included powers. However, it was not part of the ninth defendant’s function to construct new dwellings. The claimant’s proposal was not something that the ninth defendant was required or empowered to do under the lease. It was required and empowered to manage the roof. A landlord was permitted to carry out development works provided that it had taken all reasonable steps to minimise the disturbance to the management functions of the management company both during and after the works. The fact that the development works might later the size and scope of a building and therefore the responsibilities of a management company was not an absolute bar, although it would clearly be relevant to the reasonableness of the works: Kintyre Ltd v Romeomarch Property Management 2002 Act Ltd distinguished. Accordingly, on the proper interpretation of the 2002 Act, the ninth defendant’s appointment as managing agent did not prevent the claimant from building the new flat on the roof, but the claimant’s right was not untrammelled and it was required to take all reasonable steps to minimise the disturbance to the ninth defendant’s management functions.
Michael Walsh (instructed by direct access) appeared for the claimant; Jonathan Upton (instructed by Judge Priestley LLP Solicitors) appeared for the eighth and ninth defendants.
Eileen O’Grady, barrister
Click here to read transcript: Francia Properties Ltd v Aristou and others
