Forfeiture — Alleged breach of covenant — Notice under section 146 of the Law of Property Act 1925 — Alleged unlawful installation of air-conditioning equipment — Whether tenant knew of works — Whether breach of covenant — Whether section 146 notice effective — Whether landlord entitled peaceably to re-enter — Judgment for tenant
dated November 6 1984 the plaintiff was the tenant of three shops in the
basement and ground floors of 120-122 New Bond Street, London — Lease granted
for term of 25 years from June 24 1984 — Defendant was the grantor of the lease
and the immediate landlord to the plaintiff — Two of the three subject
buildings are listed — First and second floors have been empty for some years —
Plaintiff had rights over property outside the demise in connection with
easements benefiting the demised premises — Plaintiff covenanting not to make
structural alterations or additions to the demised premises — Covenant not to
cut any main walls or timbers without the defendant landlord’s licence — In
1989 plaintiff decided to replace air-conditioning system — Work involved
replacement of condensers on roof of building and outside the demised premises
— Landlord’s managing agent on learning of works on the roof and outside the
demised premises instructed that no further rent be accepted but did not take
any further step to prevent the work continuing — Contract placed on behalf of
plaintiff with air-conditioning contractor to replace condensers and pipework —
Air-conditioning contractor an independent contractor — No reference in
contract to precise positioning of units or pipework — Independent contractor
commencing work — Following inspection by landlord’s surveyors, independent
contractor placing pipework in notches in joists in upper floors above the
demised premises — Plaintiff, not aware of change in detail of installation,
paid independent contractor’s bill — On December 20 1989, some three months
after commencement of work, landlord served notice under section 146 of the Law
of Property Act 1925 alleging breaches of covenant — Defendant landlord
effected peaceable re-entry at 3 am on February 20 1990 — Plaintiff readmitted
to premises by order of Knox J on February 20 1990 — On following day the
plaintiff issued the writ in the present action
determination of the court — What breaches of covenant were established? — Was there a reasonable time for remedy
between service of the section 146 notice and the re-entry? — Was there an effective re-entry? — Was there any jurisdiction in the court to
grant relief from forfeiture once a complete re-entry had been effected? — If yes, upon what terms should relief be
granted? — Defendants conceding that if
there were jurisdiction to grant relief, this would be a case where, upon terms
to be discussed, the court would grant relief
the air-conditioning condensers and pipework — Works of notching for joists,
the subject of most of the alleged breaches of covenant, were not done by or on
the instructions of the plaintiff but were contrary to its instructions and
carried out by an independent contractor and its subcontractor without the
plaintiff knowing of the acts at the time they were done — Plaintiff did not
ratify unauthorised work of its independent contractor by simply paying the
contract price in ignorance of how the work was carried out — It followed that
the plaintiff had committed no breach of its covenant with the landlord by
reason of the fact that works were carried out in the building —
Notwithstanding the plaintiff’s right to maintain easements, assuming that the
pipework and supports to the air-conditioning plant were part of the easements,
the plaintiff was not entitled to override a covenant — The acts of cutting the
joists, which are main timbers, if done by the plaintiff or at its direction,
would have amounted to a serious breach of covenant — No breach of covenant not
to make any alteration to the architectural appearance of the demised premises
by substitution of new condensers — No breach of covenant not to do work which
contravened the Planning Acts — No breach of covenant that landlord not
provided with all plans and documents — Landlord’s conduct not reasonable in
merely placing rent stop to avoid charge of waiver of breach —- Replacement of
existing permitted air-conditioning plant no breach of covenant not to make any
addition or alteration
alteration — Plaintiff tenant would have committed a serious breach of cutting
main timbers had it authorised the work — Whether landlord entitled to re-enter
peaceably following breach of a negative covenant being an irremediable breach
not decided — Judgment for the plaintiff
The following
cases are referred to in this report.
Lister v Lane and Nesham [1893] 2 QB 212, CA
Pearlman v Keepers and Governors of Harrow School [1979] QB 56;
[1978] 3 WLR 736; [1979] 1 All ER 365; (1978) 38 P&CR 136; [1978] EGD 721;
247 EG 1173, [1978] 2 EGLR 61; [1978] JPL 829, CA
This was a
claim by the plaintiff for declarations and for damages arising out of a
purported peaceable re-entry by the defendant landlord of premises at 120-122
New Bond Street, London W1. The plaintiff was Hagee (London) Ltd, a subsidiary
company of Moss Bros. The defendant was the grantor of a lease dated November 6
1984 in respect of shop premises at 120-122 New Bond Street, London W1, and the
plaintiff’s immediate landlord.
John McDonnell
QC and David Parry (instructed by Jaques & Lewis) appeared for the
plaintiff tenant; Michael Barnes QC and John Male (instructed by Nabarro
Nathanson) represented the defendant landlord.
Giving
judgment, HARMAN J said: This is an action by a subsidiary company of
the well-known outfitters Moss Bros. The plaintiff (hereafter Hagee) was the
tenant of three shops in the basement and ground floors of 120, 121 and 122 New
Bond Street under a lease dated November 6 1984, which granted a term of 25
years from June 24 1984. The term granted therefore runs for another 18 years
from the present time. The defendant to the action is the Co-operative
Insurance Society Ltd, which was the grantor of the lease and is the immediate
landlord of the premises. The defendant is itself a tenant of part of the
premises under long leases but nothing therein affects the issues in this
action. The defendant has, after many years’ endeavour, obtained from the
Secretary of State for the Environment on March 8 1989 all the multitude of
permissions nowadays needed to enable it to carry out extensive development
works on an area of land in the City of Westminster bounded by New Bond Street,
Brook Street, Avery Row and Lancaster Court. The three shops let to the
plaintiff form part of the eastern edge of the area of the projected
redevelopment.
Two of the
buildings in which the plaintiff has shops were originally early 18th-century
dwelling-houses of the typical London-terrace type. Both buildings are listed
as Grade II. The third building is of early 20th-century date. The first and
second floors of all three buildings have been empty, save for the second floor
of no 120, for many years. The plaintiff alleged in its statement of claim that
the upper floors of the buildings were ‘derelict’. The defendant admits they
were empty and unused but denied the allegation that they were ‘derelict’. At
the invitation of the parties I had a view of the buildings and, in my view,
the word ‘derelict’ can aptly be applied to them. No modernisation appeared to
have been carried out on the upper floors and the structures remain those of an
unimproved 18th-century dwelling-house. The ground-floor shops occupied by
Hagee have modern shop fronts and internally the ground floor and basement are
well-fitted modern men’s clothes shops.
The plaintiff
was the tenant of the whole of no 122 from March 1970. It is notable that that
grant, 21 years ago, contemplated redevelopment in the near future. The
plaintiff became the underlessee of the shop premises in nos 121 in March 1973.
In 1978 the tenancies were revised and the plaintiff became the tenant of the
three shops in nos 120, 121 and 122. The 1984 lease granted to Hagee 25-year
terms for the basement and ground-floor shops, excluding therefrom the entrance
door, hallway and staircase leading to the upper floors of no 120. It also
granted a right to enter other parts of the building (although limited to entry
by prior appointment) for the purpose of connecting with and inspecting,
maintaining and renewing ‘sewers, drains, pipes, wires and cables serving the
demised premises’. Thus Hagee had rights over property not let to it in
connection with, broadly, easements benefiting the demised premises. The 1984
lease contained extensive covenants by the plaintiff to this action. By clause
4(5)(a) the plaintiff covenanted not to make structural alterations or
additions to the demised premises, and by clause 4(5)(b) not to cut any main
walls or timbers of the building without the licence of the defendant. It is
important to notice and remember the distinction between ‘the demised premises’
and ‘the building’. By clause 4(8) the plaintiff covenants not to do anything
to the demised premises which contravened the Planning Acts (as defined in the
lease). By clause 4(9)(c) the plaintiff covenanted not to install on the
demised premises machinery which was noisy or which caused dangerous
vibrations. The lease also contained a fairly usual covenant for re-entry on
breach of covenant.
In 1972 the
plaintiff had originally installed air-conditioning for the three shops in no
122. Late in 1976 further air-conditioning apparatus was installed with the
knowledge of the defendant’s then agents, Bernard Thorpe. The apparatus
involved air-dispensing units suspended from the ceiling of each shop, which
were connected to six condenser units installed outside the demised premises on
the flat roof of the back extension to no 121. The connecting pipes and wires
ran through the building and out to the condensers. These condensers were
large, rectangular box-like shapes of varying colours, pink, orange and yellow.
In 1989 the air-conditioning in the shops was not working adequately and Moss
Bros decided to replace the system. No leave was sought from the defendant as
landlord, or from any of the other bodies — English Heritage and the local
planning authority, which is the Westminster City London Borough Council —
which might have an interest in the appearance of the building for these works,
which were plainly thought to be unimportant as merely the replacement of
existing approved apparatus. I say that, although I have not had evidence from
the then property director of Moss Bros who was responsible for the plaintiff’s
activities, since the inference as to his attitude is, in my judgment,
inevitable. The grant of new leases in 1978, after the installation of the
air-conditioning condensers on the roof of part of the building outside the
demised premises, followed by the new lease granted in 1984 plainly amounted to
waivers of any breach of covenant down to that date and to a licence to
continue to use and enjoy the apparatus as it stood.
The start of
the installation of new air-conditioning units, both condensers on the roof
outside the demised premises and units delivering cool air inside the three
shops, was observed by two professional men employed by the landlord’s advisers
in the design and carrying out of the major redevelopment scheme on September 1
1989. The fact of work being done was reported at once to the defendant
landlord’s managing agents — a wholly-owned subsidiary of the defendant, not an
independent agent — and a conscious decision was taken to do nothing about the
works being carried out. I had evidence from a Mr Keith Chappell [ARICS], a
chartered surveyor, who was the employee of the managing agents in day-to-day
charge of the development scheme. His office is in St James’s Street, as he
said to me about 200 yds away from New Bond Street. On learning that works were
being done in the building but outside the demised premises Mr Chappell placed
an instruction that no further rent was to be accepted from the plaintiff. He
did not walk the short distance to look at the building or to inspect the works
then being started. He took no step to prevent the work continuing. I formed
the opinion that Mr Chappell, who said that the development scheme would be
easier to carry out if the plaintiff’s lease were at an end, deliberately did
nothing in the hope that a breach of covenant might occur and forfeiture be
possible to the advantage of the defendant landlord. Had he wished, he could
have stopped the work without difficulty on Monday, September 4 1989 and this
action would never have become necessary.
I now turn to
find the facts as to the actual events which are relevant to the issue in this
action. I had evidence from the following witnesses: Mr Male, a director in BNA
Engineering Services, the contractor for supplying and fitting the new
air-conditioning units, whose evidence was not challenged; Mr Williams, who was
an installer of air-conditioning units who worked on the installation at nos
120, 121 and 122; Mr Joiner, an independent subcontractor engaged by the
air-conditioning engineers and in charge of the installation at nos 120, 121
and 122; Mr Moss, a director of the plaintiff and of the eponymous parent
company; Mr Barter, the other director of BNA Engineering Services, who
actually visited the shop premises, obtained instructions from Mr Michael Gee,
then property director of Moss Bros, about the replacement air-conditioning,
gave instructions to Mr Joiner who was his company’s subcontractor and later
altered those instructions; all those were for the plaintiff. I am satisfied
that each of them gave me his honest recollection of events to the best of his
ability.
For the
defendant I had evidence from Mr William Assheton [RIBA], a chartered surveyor
employed by the consulting architects to the landlord for the redevelopment
scheme; and Mr Bonano, an Australian structural engineer employed by Kirk
Wilson Scott Patrick, the landlord’s consulting engineers, who was present with
Mr Assheton on September 1 1989 when both young men were in the building at
120, 121 and 122 New Bond Street on behalf of the defendant, although not
visiting the demised premises and without any contact with the plaintiff. Both
these young professional men gave me, in my judgment, honest accounts to the
best of their recollection of what they saw and said that day. Both were
intelligent and straightforward and I accept both of them as reliable witnesses
with a good recollection of events. In addition, both of them had made affidavits
in March 1990, which was only some six months after the event and was therefore
at a time fairly close to the relevant date.
On the basis
of all that evidence I find the following facts. Mr Male, as a director of BNA
Engineering Services Ltd, gave a quotation as an independent contractor to the
plaintiff to supply and install new air-conditioning units at 120, 121 and 122
New Bond Street. No reference was made to the precise positioning of the units
or the pipework. Mr Barter, as a director of BNA Engineering Services Ltd,
visited the premises on August 24 1989 with the quotations and there met Mr
Michael Gee, the property director of the group. He was instructed by Mr Gee in
August 1989 to install new air-conditioning units, both condensers and air
dispensers, in place of the existing units. Mr Barter was instructed by Mr Gee
and agreed that the pipework and the steel channels required to support the new
air-dispenser units in the shops should be laid above the floorboards in the
upstairs part of the building. Two new condenser units were to be supplied and
sited on the rear flat roof of the building near to but in a different position
from the existing condensers. New air dispensers inside the demised premises
were also to be supplied and installed in place of the existing dispensers.
Thus the major part of the work, all of which was the replacement of existing
services, was to take place outside the demised premises but in or on the
building. As BNA Engineering Services were an independent contractor the
general instructions were agreed, notably that the pipework and electric wiring
should follow one common route and should be above the floorboards of the first
floor of the building, but no discussion of the detail of the work to be done
took place, as was to be expected. Mr Barter returned to Birmingham and
instructed workmen; one was an employee and the other two independent subcontractors
of whom one was Mr Joiner, who was to be in charge of the actual carrying out
of the work.
Mr Barter
instructed Mr Joiner and the others to lay the pipework and the channels on the
floor in the first floor of the building and to bolt the suspended air
dispensers to the channels above the floor. Mr Barter knew that the upper
floors of the building were not let to the plaintiff. He did not know that nos
120 and 121 are listed buildings. Mr Joiner received his instructions in
Birmingham from Mr Barter. He went to London and to New Bond Street and began
work. He had no contact with or any instructions from anyone with authority to
deal with property matters in the employ of either the plaintiff or Moss Bros.
He was to install the new condensers on the flat roof at the rear of the
building and to run all pipework above the floorboards on the most convenient
route. Mr Joiner believed that the upper floors of the building were intended
to be demolished. On Friday September 1, while Mr Joiner, who was in charge,
and the other two men were working on installing above the floorboards the
channels for the support for the first air dispenser, Mr Assheton and Mr Bonano
entered the building at about 11 o’clock in the morning. They saw but did not
speak at once to Mr Joiner and the others and went upstairs to the second floor
of the building. After some 10 minutes or so they returned to the first floor
and Mr Assheton asked what the men were doing. He was told ‘Installing
air-conditioning’. Mr Assheton expressed the view that his employer — not
identified but understood by Mr Joiner to be the landlord — would not like the
pipework and channels being installed above the floorboards. I am satisfied
that Mr Assheton in the course of the conversation said he had no authority on
behalf of the landlord to make any decisions. Mr Assheton was keen for his own
good reasons not to get involved in any argument and had been instructed not to
give anything away. He told the group of three workmen that he could not tell
them what to do but that he would be reporting to his client. I am satisfied
that Mr Assheton wished to and did say as little as possible. I am also
satisfied that Mr Bonano added nothing to the conversation between Mr Assheton
and the workmen.
There followed
two telephone conversations between Mr Joiner and another of the workmen in
London and Mr Barter in Birmingham. Mr Joiner gave me little evidence other
than that he understood that the landlord would not approve of what he was
doing. Mr Barter gained the impression that surveyors on behalf of the landlord
had instructed Mr Joiner not to lay pipework and channels above the floor. Mr
Barter told the workmen to lift the floorboards and inspect the joists. Later
that day a further telephone conversation took place and Mr Barter instructed
Mr Joiner and the others to lay the channels and the pipework in notches in the
joists below the floorboards. He had inquired about the condition of the joists
and was told that the wood was sound. He gave general instructions as to the
number of joists to be spanned, and therefore notched, by the channels. The
pipework was half an inch or five-eighths of an inch in diameter so did not
require large cuts in the joists for it to be accommodated. I find that no one
at Moss Bros or the plaintiff knew of this change of plan which was contrary to
the express instructions given to Mr Barter when the tender was accepted.
Mr Barter
informed an employee at the head office of Moss Bros that the new
air-conditioning would not be working until a week or so later than the
original date but he did not given any reason or explanation for the extra time
to be taken. Mr Joiner and the workmen did not speak to any person in Hagee or
Moss Bros who had any authority to do with the works. Mr Barter, as I find,
regarded his company as entitled to carry out its contract at its discretion as
to method of performance and, since he was not raising his price to Moss Bros,
did not consider he needed any further authority to vary the method of
installation of the new air-conditioning. I accept that Mr Barter believed that
the landlord by its surveyors had required the channels and pipework to be laid
under the floor which must involve notching of joints where they cross the line
but, as I have held above, I am satisfied that no such requirement had been
made, let alone instructions given to lay pipes below the floor.
Mr Joiner and
the other workmen then proceeded to install the pipework and channels by
lifting the floorboards and notching the joists. They also placed the two new
condenser units on the flat roof at the back of the building. They completed
the work and Moss Bros paid the bill without realising how the installation had
been carried out. On September 8 1989 Nabarro Nathanson for the landlord wrote
to Jaques & Lewis for the plaintiff asking for details of the works. A most
unsatisfactory correspondence continued until late November with no clear
answer ever being given to the landlord’s inquiries. On December 20 1989 a
notice under section 146 of the Law of Property Act 1925 was served by Nabarro
on Jaques & Lewis alleging breaches of covenant. This was unfortunately
treated as frivolous by Mr Gee as property director of Moss Bros themselves,
who wrote on January 5 dated 1989 but obviously 1990, so saying. The service of
the section 146 notice was reported to the Moss Bros board but in a manner
which gave the impression that it was not of importance and that surveyors and
solicitors would deal with it. In fact very little was done by the plaintiff or
Moss Bros.
The next event
was, to me, a startling one. At about 3 am on February 20 1990 the defendant
landlord by its agents effected what can only be called a forcible entry into
the shops. The defendant instructed a well-known firm of certificated bailiffs
to effect an entry. A locksmith drilled out the lock, enabled the security
grill to be lifted and another specialist disconnected the burglar alarm. When
the security to the premises had been forced the bailiffs entered and purported
to take lawful possession of the demised premises. Thus the demised premises
were effectively repossessed by the defendant exactly two months after the
service of its section 146 notice. There followed various telephone
conversations and an application ex parte to Knox J in the afternoon of
February 20. On undertakings in damages and otherwise the learned judge made an
order readmitting the plaintiffs to the premises. There followed the issue of
the writ on February 21, various inter partes hearings of the motion and
the actual pleadings in the action.
I had a great
deal of evidence tendered as to the effect upon the joists as load-bearing
parts of the building. In the end I am not satisfied that any serious
impairment of the load-bearing capacity was caused by the notches cut by Mr Joiner
and his fellow workmen.
Mr Barnes
provided a helpful outline of his argument for the
action which he listed as follows:
(1) What
breaches of covenant were established?
(2) Was there
a reasonable time for remedy between service of the section 146 notice on
December 20 1989 and the re-entry of February 20 1990?
(3) Was there
an effective re-entry?
(4) Was there
any jurisdiction in the court to grant relief from forfeiture once a complete
re-entry had been effected?
(5) If yes,
upon what terms should relief be granted?
He submitted,
and Mr McDonnell for the plaintiff did not demur, that questions (4) and (5)
should not be decided in this judgment since a pending decision in the Court of
Appeal* would affect, and probably determine, the question of jurisdiction to
grant relief. Mr Barnes had acknowledged after the mid-day adjournment on the
third day of the trial that if there were jurisdiction to grant relief then
this would be a case where, upon terms to be discussed, the court would grant
relief.
*Editor’s
note: This refers to Billson v Residential Apartments Ltd now reported at p 43
ante.
However,
question (1) does not raise simple issues of fact as to what has been done in
breach of covenant. The plaintiff’s first contention in the affidavits on the ex
parte application and in the pleadings is that the acts were all done in
pursuance of permission granted by the landlord’s agents, Mr Assheton and Mr
Bonano. To that were raised two defences: first, that no permission, express or
implied, was in fact given by Mr Assheton and Mr Bonano or either of them and,
second, that neither of them in fact had or was held out as having authority to
grant permission on behalf of the defendant landlord. I am satisfied that no
permission was in fact granted. I am also satisfied that neither Mr Assheton
nor Mr Bonano had or was held out as having authority on behalf of the
landlord. Indeed I am satisfied that Mr Assheton expressly disclaimed any
authority. That defence must therefore fail. The bona fide belief of Mr
Barter, based on some misunderstanding by Mr Joiner, who seemed to me of
limited general intelligence however competent a fitter of air-conditioning
plant he may be, of what had been said to him, cannot affect the matter.
The second
contention of the plaintiff is that it cannot be in breach of covenant in a
case where none of the acts complained of was done by the plaintiff or any servant
or agent of it. Further, the plaintiff argues, the acts alleged to constitute
breaches of covenant were not authorised by the plaintiff to be done by an
independent contractor but were expressly forbidden by the plaintiff in its
instructions to its independent contractor. The plaintiff contends, and I have
held, that it had no knowledge of the doing of the acts until long after they
were all completed. The plaintiff contends by counsel that it cannot be held to
be liable for breach of covenant by acts which it never authorised, which were
not done by its officers, servants or agents, and of which it had no knowledge
at any relevant time.
Mr Barnes
argued that the evidence on behalf of the plaintiff was inadequate in that the
director who gave Mr Barter his instructions was not called before me, there
was no written record of the instructions and it was reasonable to hold that Mr
Barter was given authority by Moss Bros on behalf of Hagee to vary the mode of
carrying out the work. In my judgment, that is not the correct view of the
matter. I am satisfied that Mr Barter was specifically instructed to lay the
pipes and channels above the floorboards in the building. Had he done so almost
all the alleged breaches of covenant would not have occurred. I hold that Mr
Barter believed, on the erroneous statement of Mr Joiner, that the laying of
the pipes and channels under the floorboards by notching the joists was
authorised and indeed required on behalf of the landlord. Mr Barter did not, in
my judgment, consider that he needed authority from the plaintiff or Moss Bros
to vary the performance of the contract. Had he expressly considered the point
he would, in my judgment, have thought it necessary to seek further
instructions, since he was proceeding in direct contravention of a term of his
instructions. I therefore hold that the works done which are alleged to
constitute breaches of covenant were not done by or on the instructions of the
plaintiff but contrary to its instructions by an independent contractor and its
subcontractor without the plaintiff knowing of the acts at the time they were
done.
Mr Barnes
argued that even if the plaintiff did not do or authorise the doing of the
works in the building in the manner which involved notching joists yet the
plaintiff had adopted the works and so was liable to forfeiture. In my
judgment, that argument is unsound. Hagee had no power to undo the works that
had been done; indeed Mr Barnes’ contention that notching joists was an
irremediable breach of covenant supports the view that Hagee cannot turn the
clock back. Mr Barnes argued that a breach of a negative covenant by an act
that was complete and not continuing must in logic constitute a breach that is
irremediable and I accept the force of that argument. But Mr Barnes’ reference
to Hagee ‘ratifying and adopting’ the acts of BNA Engineering, which he
described inaccurately as Hagee’s agent, is not, in my judgment, a proper use
of those words. Once the work was done, and the new air conditioning installed,
there was nothing Hagee could do which would aptly be described as ratifying
the work. No owner who employs an independent contractor to do some work can be
said to ‘ratify’ that work by simply paying the contract price in ignorance of
how the work was carried out. Nor can an owner who uses plant installed by an
independent contractor thereby be said to ‘adopt’ the method of installation
No authority
on this point was cited to me, no doubt because the facts are extremely unusual
in that the works in this case were not done in or to the demised premises or
with the knowledge, which might imply approval, even if tacit, of the tenant
whose lease is sought to be forfeited for breach of covenant by the tenant. In
my judgment, a tenant cannot be held responsible for work not done by it, not
authorised by it or known of by it. I hold that Hagee committed no breach of
its covenant with the landlord by reason of the fact that these works were
carried out to the building.
Had I been of
opinion that Hagee was responsible for the acts done in the building I would
have held that some of the acts were breaches of covenant but that some of the
acts alleged by the section 146 notice to amount to breaches were not. Mr
Barnes, in his final submissions, which I found most lucid and helpful, relied
upon five breaches. He abandoned reliance upon any of the other breaches
alleged in the section 146 notice. The first was clause 4(5)(b) of the lease,
by which Hagee covenanted that it would not without licence in writing cut or
remove the main walls or timbers or structural members of the building. I
accept Mr Barnes’ argument that the adjective ‘main’ qualifies both ‘walls’ and
‘timbers’ but not structural members. I accept that the joists are main timbers
and also structural members. Mr McDonnell argued that the rights to maintain
easements granted with the term by the lease entitled Hagee to enter the
building for the purpose of maintaining the easements (which may well include
the pipes and wires serving the air-conditioning plant), which is plainly correct,
subject to there being prior appointment, which there was not. But the right to
maintain easements, assuming that the pipework and supports to the
air-conditioning plant were part of the easements, cannot entitle Hagee to
override a covenant in the lease and cut a main timber. In my judgment, the
acts of cutting, if done by Hagee or at its direction, would have amounted to
serious breaches of covenant. The claim that Hagee was performing the
obligation in clause 4(4)(a) to repair pipes outside the demised premises which
served only the demised premises is not, in my judgment, made out — see Lister
v Lane and Nesham [1893] 2 QB 212 especially per Lord
Esher MR at p 216.
The second
breach relied upon was of clause 4(5)(a), which binds Hagee not to make any
alteration to the architectural appearance of the demised premises. Mr Barnes
submitted that the flat roof at the rear of no 121 formed part of the demised
premises and that siting the new condensers thereon constituted a structural
alteration and an alteration to the structural appearance of the demised
premises. He cited Pearlman v Keepers and Governors of Harrow School
[1979] QB 56* and in particular the judgment of Lane LJ (as he then was) at pp
72D to 73A. Mr Barnes submitted that any change beyond de minimis
matters amounted to an alteration of architectural appearance. As I have
observed, I had a view of those buildings and the demised premises. The rear of
the buildings gives on to an area which can be described only as a hideous
jumble of backs of buildings, old fire escapes and much debris. In my judgment,
such alteration as was made by substituting two new condensers for those that
were there must have been de minimis to the architectural appearance of
the building and the demised premises. Further I am of opinion that the flat
roof itself, as opposed to its inner skin, was not part of the demised
premises. I am of opinion that no breach of this covenant was made out.
*Editor’s
note: Also reported at (1978) 247 EG 1173, [1978] 2 EGLR 61.
The third
breach alleged was of clause 4(8)(a) of the lease whereby
demised premises anything which contravened the Planning Acts (as defined). Mr
Barnes argued that the cutting of notches in the joists (and the other works)
were done in connection with the demised premises because (a) physically the
cool air delivered inside the shops was connected with the works in the
building in that the pipes and condensers provided the means of cooling the air
and (b) the works were done to serve the demised premises. In my judgment, this
is to read the covenant altogether too literally. The words are written for a
purpose and upon their true construction were never intended to apply to works
such as those done here outside the demised premises and in the building. Mr
Barnes took me on a learned tour of the Town and Country Planning Act 1971. In
my judgment, the claim that cutting notches in joists which are then covered by
floorboards falls within section 55 of that Act as amounting to an alteration
to a listed building which will affect its character is fanciful and playing
with words. I accept that the physical removal of wood from the notches is an
alteration, although trivial, to the building. But the character of both nos
121 and 122 does not derive from details of their construction and the
alterations by notching of joists are so trivial as far as character is
concerned as to be de minimis. I am of opinion that this breach was not
made out.
The fourth
breach alleged was clause 4(8)(d) in that Hagee was bound upon request to
provide the landlord with all plans and documents it may reasonably require to
satisfy itself that the earlier parts of clause 4(8) had been complied with. Mr
Barnes referred to the requests for information in Nabarro’s letters of
September 6 and September 20. The first produced a reasoned response but no
documents or plans. The second, unhappily, was dealt with very tardily and
incompletely. In my judgment, the landlord fails to make good its claim by
reason of the fact that its agents so carefully and deliberately refrained from
the obvious and easy step of inspecting the premises at any time from September
4 onwards. It is not reasonable conduct when activities are known of simply to
place a stop upon receipt of rent (so as to avoid any charge of waiver of
breach of covenant) and instruct solicitors to write letters. The landlord’s
conduct, by its agents, was not reasonable and the landlord did not reasonably
require plans or documents for the purpose specified when an easily made
inspection was deliberately not made. It follows that the breach was not made
out.
Finally Mr
Barnes alleged a breach of clause 4(12)(a) whereby Hagee covenanted not to make
any addition or alteration without the landlord’s consent. In my judgment, the
replacement of permitted air-conditioning plant (condensers, pipes and wires
and the air-dispensing units) by new items to perform exactly the same
functions cannot properly be called an alteration or addition. A replacement is
not an addition, nor can it fairly be called an alteration in any other but the
most literal-minded way. I am of opinion that no breach of this covenant has
been made out.
I thus would
hold, were it the act of the tenant, that the landlord has proved one
substantial breach of covenant. Mr Barnes submitted that such a breach, being a
completed (that is a once and for all) act in breach of a negative covenant,
would be an irremediable breach. Upon that basis the landlord was entitled to
serve its section 146 notice and to re-enter in pursuance of it. I find this a
difficult point. Mr Barnes’ argument follows logically step by step to its
conclusion, but the result is so surprising that absent clear authority I would
not expect the law to be to such effect. Since I do not have to decide the
point, because I have held that Hagee has not itself done or by its direction
caused any act which is a breach of its covenants, I shall leave the point open
for future debate.
In the result
I hold that the plaintiff succeeds in its claim that the section 146 notice
served on December 20 1989 by the landlord was and is of no effect. It follows
that the declaration sought in para 2 of the prayer ought to be granted. I will
hear counsel as to what orders, if any, other than an inquiry as to damages,
should be made at this time.
