Breach of covenant – Determination by leasehold valuation tribunal (LVT) – Section 168 of Commonhold and Leasehold Reform Act 2002 – Tenant’s covenant requiring notice to landlord within 28 days of any assignment – Failure to serve notice – Landlord becoming aware of new tenants – LVT determining failure to serve notice remedied by landlord’s knowledge – Whether breach of covenant – Extent of LVT’s jurisdiction – Appeal allowed
The appellants were the freeholders of a property that was let for a term of 125 years from 2003. A covenant in the lease required the tenant “within 28 days of any assignment to give notice to the Landlord of such deed or document… and to pay the Landlord’s solicitor’s charges of £25 together with value added tax thereon for the registration of every such document”. In September 2005, the respondents became registered as proprietors of the lease. No notice of the change of ownership was given to the appellants.
In 2007, the appellants wrote to the respondents, drawing the matter to their attention and requesting that they remedy it by providing the appropriate notice and a registration fee for each notice. This was not done, and the appellants subsequently applied to the leasehold valuation tribunal (LVT), under section 168 of the Commonhold and Leasehold Reform Act 2002, for a determination that a breach of covenant had occurred.
The LVT decided that, although notice had not been given within 28 days in accordance with the covenant, time was not of the essence and later notice would suffice to remedy non-compliance. It noted that the appellants had become aware of the identity of the respondents and were in contact with them and their solicitor, and concluded that there was no longer any material breach of the covenant.
On appeal to the Lands Tribunal, the appellants contended that time was of the essence of the obligation and that only action on the part of the respondents could remedy any breach. They submitted that the LVT had jurisdiction to make only a finding of fact as to whether there had been a breach, and not as to whether such breach was actionable by reason of remedy or otherwise.
Held: The appeal was allowed.
The LVT had erred in refusing to determine that a breach of covenant had occurred on the ground that the breach had been remedied by the appellants’ discovering the tenants’ identity. The LVT’s jurisdiction was to determine whether a breach of covenant had occurred. The question of whether the breach had been remedied, so that no loss had been occasioned to the landlord, was a question for the court in an action for forfeiture or damages for breach of covenant. The respondents were in breach of covenant by failing to give notice of the assignment to them within 28 days and in failing to pay the appellants’ solicitor’s charges of £25 plus VAT. They had done nothing to remedy the breach, which did not cease to exist merely by reason of the fact that the appellants were aware of the assignment and the names of the assignees. Whether that breach was material or had been remedied were questions that went to whether any relief should be granted to the landlord, which was not, under the terms of section 168, a matter for the LVT. In any event, remedying a breach was something that only the tenants could do.
The appeal was conducted by way of written representations.
Sally Dobson, barrister
