In Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18; [2020] PLSCS 84, the Supreme Court has upheld the decision of the Court of Appeal that a landlord cannot waive a breach of an absolute covenant, which under the terms of a mutual enforceability covenant the landlord has promised to enforce if a request is made by another tenant at their expense.
11-13 Randolph Crescent, Maida Vale, London, was a block containing nine flats. The appellant landlord was the freehold reversioner and management company. The respondent was a long leaseholder.
The leases of the flats were all in substantially the same form. Clause 2.6 of the lease contained a qualified covenant preventing any alterations, improvements or additions without the landlord’s consent. Clause 2.7 was an absolute covenant, preventing the lessee from committing acts of waste or destruction to the demised premises, including cutting into any roofs, walls or ceilings. Clause 3.19 was a mutual enforceability covenant under which the landlord covenanted to impose similar covenants on each tenant including clause 2.7 and enforce the same if a request was made by any other tenant, at their cost.
The landlord received a request from a tenant in the block for permission to carry out works, including the removal of part of a load-bearing wall at basement level. This was a breach of clause 2.7. The landlord was minded to grant the licence, but the respondent objected and commenced proceedings.
The primary issue was whether the landlord could license, at the request of a lessee, structural works within the scope of clause 2.7 and which, absent a licence from the landlord, would amount to a breach of that absolute covenant, which, under the terms of the mutual enforceability covenants contained in the other leases, the landlord had promised to enforce at the request and costs of any one of the other lessees. In the county court the landlord succeeded on appeal. The respondent successfully had that decision reversed in the Court of Appeal.
The Supreme Court unanimously dismissed the landlord’s appeal. In doing so it read clause 2.6 and 2.7 conjunctively. Clause 2.6 was directed to routine improvements and alterations that a lessee would be able to carry out, subject to landlord consent. By contrast, clause 2.7 was directed to acts of waste or destruction, which were intrinsically damaging or destructive to the building. If the landlord permitted such works, without the consent of the other lessees, it would constitute a clear derogation from grant.
Although clause 3.19 did not expressly prohibit the landlord from granting a licence to carry out structural work falling within the scope of clause 2.7, the Supreme Court implied the same.
Having regard to the practical coherence and commercial effect of clause 3.19, the Supreme Court found that it served an important protective function. Under clause 3.19 the respondent lessee was entitled, on provision of security, to require the landlord to enforce the absolute covenant contained in clause 2.7. The landlord simply could not put it out of its power to enforce the same by licensing structural works in breach of covenant. Further, the valuable right contained in clause 3.19 could not be defeated by a landlord acting first in licensing the works before another lessee could make an enforcement request upon providing security.
The decision of the Supreme Court is likely to have far-reaching consequences – in particular on how landlords manage their estates and deal with requests for alterations, no matter how reasonable, where absolute covenants exists.
Elizabeth Dwomoh is a barrister at Lamb Chambers
