Landlord and tenant — Covenant for quiet enjoyment — Scope of covenant — Application of covenant in a case where interference with business of subunderlessees was caused by erection of scaffolding by superior lessees — Appeal from decision of Mr Edward Nugee QC, sitting as a deputy judge of the Chancery Division — The subunderlessees, who were retailers of clothing, complained that the scaffolding obstructed the view of the shop by passers-by and caused loss of business — Covenant in subunderlease was expressed to be against ‘any interruption by the landlord or any person or persons lawfully claiming under or in trust for the landlord’, but the expression ‘the landlord’ was defined to include not only the successors in title of the landlord but also ‘the superior lessors’ — The questions which arose, having regard to the wording of the covenant as thus defined and the law as stated in earlier authorities, were (a) whether the immediate landlords, the subunderlessors, were liable for an interruption to the quiet enjoyment of their tenants, the subunderlessees, occasioned by the superior lessees, and (b) whether the interruption covered only lawful acts or whether it covered acts lawful or unlawful — The judge in the present case held that the covenant made the subunderlessors liable for interruptions by the superior lessees and covered acts lawful or unlawful — The subunderlessors appealed.
the judge and before the Court of Appeal a number of authorities were reviewed,
the most directly relevant of which was the early case of Nash v Palmer — It was
common ground that the normal covenant for quiet enjoyment bound the lessor in
respect of interference with the lessee’s enjoyment whether the acts in
question were lawful or unlawful — However, in the unusual case, such as the
present, where the covenant extended to acts by persons whose claims were
adverse to the landlord, the authorities had drawn a distinction between a
covenant against interruptions by persons generally and a covenant against
interruptions by a named person — In the latter case the covenantor is liable
whether the interruption is lawful or unlawful — The appellants here argued
that the reference to ‘superior lessors’ was to a class of persons and not to a
named or identified individual — Held, rejecting this argument, that at the
date when the subunderlease was executed the superior lessors were, and were
known to be, a particular insurance company, ie they were named and identified
— The obligation of the subunderlessors was not, therefore, limited to that
company’s lawful acts — Appeal accordingly dismissed — It may be noted that a
certain difference was revealed, purely of an obiter nature, as to the position
if the present superior lessees were to assign their reversionary interest to
someone else — Sir Denys Buckley thought that in that event the obligation
would be limited to lawful interference by the assignees; Mustill and Mann LJJ
reserved their position on this point.
The following
cases are referred to in this report.
Nash v Palmer (1816) 5 M&S 374
Sanderson v Mayor of Berwick-on-Tweed (1884) 13 QBD 547
Williams v Gabriel [1906] 1 KB 155; (1906) 94 LT 17
David di
Mambro (instructed by Adlers) appeared on behalf of the appellants; L D J
Henderson (instructed by Fremont & Co) represented the respondents.
Giving the
first judgment at the invitation of Mustill LJ, SIR DENYS BUCKLEY said: This is
an appeal from the judgment on May 22 1984 of Mr Edward Nugee QC sitting as a
deputy judge in the Chancery Division. It relates to the construction and
effect of a covenant for quiet enjoyment contained in a subunderlease dated
August 17 1979.
Shortly stated
the facts were as follows. At all material times Norwich Union Insurance Group
(Pensions Management) Ltd have been leaseholders of a building known as Premier
House, 150 Southampton Row, London WC1. By an underlease dated April 29 1977
Norwich Union (as I will call them) sublet part of those premises, that is to
say the ground-floor shop and a restaurant also on the ground floor and the
basement beneath the shop and the restaurant, to the defendants, Associated
Restaurants Ltd, for a term of 20 years from Christmas 1976. In August 1979 the
defendants subunderlet the shop and basement comprised in the underlease
granted by Norwich Union to the plaintiffs for a term expiring 10 days before
Christmas 1996.
The question
arose on the covenant for quiet enjoyment contained in this subunderlease. We
have been shown both the underlease granted to the defendants and the
subunderlease. I need refer to very little in the underlease. That underlease
contained in clause 4(A) a landlord’s covenant, that is to say a covenant by
Norwich Union:
To keep the
load bearing members of the floors ceilings and walls of the
the roof overlying the demised premises in good and tenantable repair and
condition . . .
Clause 4(C)
contained a covenant:
That the
Tenant paying the rent or rents and observing the covenants on the Tenant’s
part herein contained shall during the term quietly enjoy the demised premises
without any interruption by the Landlord or any person lawfully claiming under
or in trust for it.
I only say in
passing that it is I think common ground that under a covenant in that form the
covenantor is liable for any interruption, whether it is an interruption
occasioned by an alleged lawful act or an unlawful act; but, as regards persons
lawfully claiming under the covenantor, it extends only to lawful acts. I need
refer to nothing else in that lease.
It was the
subunderlease the construction and effect of which we have to consider. The
lease is expressed to be made between the defendants who are named, and their
name is followed by an interpretation clause:
hereinafter
called ‘the Landlord’ which expression where the context admits shall include
the person or persons for the time being entitled to the reversion immediately
expectant upon the termination of the term hereby created
which affords
some justification for supposing that the parties recognise that the term
‘landlord’ alone would not embrace persons who were successors in title of the
original landlord to his reversionary interest.
Clause 2(29)
of the subunderlease is of some significance. It reads as follows:
To observe
and perform all the covenants and conditions affecting the demised premises
which are contained in the Superior Lease dated the Twenty ninth day of April
One thousand nine hundred and seventy-seven and made between Norwich Union
Insurance Group (Pensions Management) Limited of the one part and the Landlord
of the other part except the covenants for the payment of rent and insurance of
the demised premises and not at any time to do or permit or suffer to be done
anything whereby such Superior Lease may be avoided or forfeited and subject to
the provisions contained in the Superior Lease to permit every superior lessor
to enter upon the demised premises for any purpose mentioned in the said
Superior Lease and to allow the Landlord to enter upon the demised premises for
the purpose of performing thereon any of the covenants and agreements on the
part of the lessee contained in the said Superior Lease and at all times to
indemnify the Landlord against all claims for breach of any such covenant or
condition made against the Landlord under the provisions of the said Superior
Lease.
Clause 3 of
the subunderlease provides:
The Tenant
paying the rents hereby reserved and performing and observing the covenants on
the Tenant’s part herein contained the Landlord hereby covenants with the
Tenant as follows:
(1) That the Tenant may peaceably hold and enjoy
the demised premises during the said term without any interruption by the
Landlord or any person or persons lawfully claiming through under or in trust
for the Landlord.
Stopping at
that point, the covenant does not, of course, extend to anything done by the
superior landlords, Norwich Union. But, if one turns on to clause 6(4), the
subunderlease provides as follows:
The expression
‘the Landlord’ includes the successors in title of the Landlord and shall be
deemed to include the Superior Lessors and in particular but without prejudice
to the generality hereof all consents or approvals required by the Tenant from
the Landlord shall where appropriate be deemed to include a requirement to
obtain the consent of the Superior Lessors and the Superior Lessors have the
same rights of entry as the Landlord.
The learned
judge was asked by the originating summons to answer two questions, the first
of which was:
That it may
be determined whether on the true construction of Clause 3(1) of the
above-mentioned Underlease (‘the Lease’) the Defendant (a) is; or (b) is not
liable to the Plaintiff for an interruption to the Plaintiff’s quiet enjoyment
of the premises demised by the Lease occasioned by the grantor of the term out
of which the Lease is derived.
The second
question asked, which was introduced by way of amendment when the matter was
before the learned deputy judge, is this:
In the event
that the answer to question 1 is in the affirmative that it may be further
determined whether on the true construction of Clause 3(1) of the Lease (a) any
act of such grantor (lawful or unlawful); or (b) only any lawful act
constitutes such an interruption.
The learned
judge answered those two questions comprehensively in one answer as follows:
This court
does declare that on the true construction of Clause 3(1) of the
above-mentioned Sub-Underlease the Defendant is liable for the acts of the
Superior Landlord which constitute an interruption of the Plaintiff’s enjoyment
of the premises demised by the said Sub-Underlease whether those acts are
lawful or unlawful.
It is from that
declaration that this appeal is brought.
The appellants
contend that in the relevant passage of the subunderlease the person described
as ‘superior lessor’ is not a named or identified person but consists of a
class of persons identified by reference to their interest in the land: that is
to say, as I understand the argument, who ever may be the superior lessor or
the owner of the reversionary interest expectant on the subunderlease from time
to time.
The learned
deputy judge was referred to certain authorities to which I shall have to refer
and, having dealt with those authorities, he said this (at p 6 of the
transcript)*:
In the
present case the covenant is against the acts of the superior lessors, by which
must be meant the Norwich Union or their successors in title, owners for the
time being of the reversion expectant on the determination of the term granted
by the underlease to the defendants. Mr di Mambro submitted that this was not a
covenant against the acts of a named individual but a covenant against the acts
of a class of persons, and that in such a case, as in Williams v Gabriel,
the lessor should not be taken to be covenanting against wrongful acts. Mr
Norris, for the plaintiffs, submitted that the restrictive interpretation
placed on covenants against the acts of persons claiming under the lessor had
no application where the covenant was against the acts of the superior lessors.
The defendants knew what their rights were against the acts of the superior
lessors when they entered into their covenant, and could frame their covenant
accordingly. If the matter was evenly balanced, the covenant should be
construed most strongly against the covenantor.
*Editor’s
note: See (1984) 271 EG 1106 at p 1110, [1984] 2 EGLR 73.
The learned
deputy judge then said that he favoured the argument presented by the
plaintiffs and went on to say:
A covenant
for quiet enjoyment is, as I have said, primarily a covenant for title. Where
the lessor covenants against the acts of all the world, it is clear that his
covenant extends only to lawful acts and amounts to a covenant that no one in
the world has a lawful right to interrupt the lessee’s quiet enjoyment of the
demised premises. Similarly, where the lessor covenants against the acts of all
persons claiming under him, his covenant extends only to lawful acts and
amounts to a covenant that he has not authorised anyone to interrupt the
lessee’s quiet enjoyment of the demised premises. But where the lessor
covenants against the acts of a single identifiable person, whether he is named
in the covenant or defined by reference to his interest in the property of
which the demised premises form part, the covenant must in my judgment be
construed as a covenant that that person will not interrupt the lessee’s quiet
enjoyment of the demised premises, and not merely as a covenant that the lessor
has not authorised that person to interrupt, or a covenant that that person has
no lawful right to interrupt. Where the person against whose acts the lessor
covenants is named in the covenant, this construction is settled by many
decisions of the courts, of which Nash v Palmer is but one
instance.
On that ground
the learned judge reached the conclusion which he did.
It is common
ground that the covenant for quiet enjoyment given by a lessor binds the lessor
himself in respect of acts of his which interfere with the quiet enjoyment of
the lessee, whether those acts are or purport to be in pursuance of some right
or are unlawful. But it was decided in Williams v Gabriel [1906]
1 KB 155 that the position in regard to successors in title of the covenantor
is different and that in respect of such persons the law implies a limitation
upon the extent and effect of the covenant.
In that case a
lease was granted to the plaintiff of certain property which contained a
covenant for quiet enjoyment of the premises demised to the plaintiff without
any interruption or disturbance by the lessor or any person claiming under him.
The lessor assigned his reversion in the whole of the building. A part of the
premises became dilapidated and as a result of the remedial works damage was
done to that part of the premises which had been let to the plaintiff. It was
held that the assignees of the reversion could not claim under the lessor a
right to do the acts which caused the interruption and that the representatives
of the lessor were not liable. Bray J, who decided that case, determined that
there had been an interruption of the plaintiff’s quiet enjoyment, a point
which he said was not seriously contested, but the interruption was by the
assignees of the reversion. Then (at p 157) he says this:
I have to
consider whether it was an interruption by any person claiming under the
lessor. The word ‘lawfully’ is not in the covenant, but I do not think its omission
is of any importance. The words ‘any person claiming under the lessor’ were
interpreted by Lord Esher
there he is
referring to what Lord Esher said in Sanderson v Mayor of
Berwick-on-Tweed (1884) 13 QBD 547
to mean a
person claiming under him (ie the lessor) the right to do the acts which caused
the interruption. . . . It may perhaps be only a dictum, as the Court of Appeal
in that case held that the defendant was not liable on grounds which do not
apply here; but whether this be so or not, or whether I am bound by this
decision or not, Lord Esher’s interpretation is in my opinion the correct one.
If it were not so the lessor would be responsible for all interruptions by any
person claiming title through him whether assignee or under-tenant, and however
wilful or negligent the interruption was. There must be some limit, and I think
the limit suggested by Lord Esher is the right one. It comes to this, that the
lessor agrees to become bound for any act of interruption by himself or by any
person whom he has expressly or impliedly authorised to do the acts.
I do not think
I need read further. So all that that case decided was in fact that an assignee
of the covenantor in such a case is liable only for acts which the covenantor
has purported to put him in a position or to authorise him to carry out. It did
not in any way decide the extent of the covenantor’s own liability, but it is I
think common ground in the instant case that in such a case the liability of
the covenantor is absolute and not qualified.
The case that
is of greater significance, I think, to the present case is that of Nash
v Palmer decided in the year 1816 and reported in 5 M&S 374. There
the plaintiffs had bought a cottage from one Woodroffe. That sale was
eventually completed in conjunction with a bond which was given by the
defendant Palmer. It was a bond in the sum of £880, the purchase price for the
property having been £440 and the condition of the bond was that the defendant,
that is to say the party who entered into the bond,
his heirs,
executors, or administrators, should, from time to time and at all times
thereafter, well and effectually save harmless the plaintiffs, their heirs and
assigns, and the said cottage and premises, of and from all manner of
mortgages, judgments, extents, executions, and other incumbrances whatsoever,
at any time theretofore given by Woodroffe to T Times, or any other person . .
.
It was in fact
a bond to indemnify the purchasers of the cottage against any damage resulting
from defects in the title of the vendor or against infringements of their quiet
enjoyment of the property. At a later date Times obtained an order for
possession against the plaintiffs and the plaintiffs sued on the bond. The
bond, I think, really stands in exactly the same position as a covenant for
quiet enjoyment in the form of the lease to which we are accustomed today,
except that it did specifically name Times as one of the parties whose conduct
might bring the bond into play. It not only names T Times himself specifically
but also extended to ‘any other person’. The plaintiffs sued on the bond. The
defendants pleaded certain defences and the plaintiffs demurred to those
defences. The case reported is the decision on the demurrer. Lord Ellenborough
CJ, who was the judge presiding, said that it seemed to him that, on the pleas
relied upon, the plaintiffs were entitled to judgment. That is to say, the
defences pleaded were not good defences. Now I cite from what Lord Ellenborough
is reported to have said (at p 379):
The question
on the first plea is, as to the extent of the defendant’s undertaking to
indemnify; as to which the rule has, I think, been correctly stated at the Bar,
that where a man covenants to indemnify against all persons, this is but a
covenant to indemnify against lawful title. And the reason is, because, as it
regards such acts as may arise from rightful claim, a man may well be supposed
to covenant against all the world; but it would be an extravagant extension of
such a covenant, if it were good against all the acts which the folly or malice
of strangers might suggest; and, therefore, the law has properly restrained it
within its reasonable import; that is, to rightful title. It is, however,
different where an individual is named; for, there, the covenantor is presumed
to know the person against whose acts he is content to covenant, and may,
therefore, be reasonably expected to stipulate against and disturbance from
him, whether by lawful title or otherwise.
Bayley J, who
also delivered a judgment, said at the top of p 382:
The
authorities cited by my brother Hullock
that is Mr
Serjeant Hullock who argued the demurrer
establish
this principle, that if there be a covenant or obligation to indemnify against
the acts of a person specified, it is good against the obligor, whether the
eviction be by lawful title or not.
Although Lord
Ellenborough refers to somebody who is named in the obligation, Bayley J refers
to a person specified in the obligation.
The question
is how that case — which I think we must regard as authority, as it has stood
now for very many years — applies in the present case. The argument presented
to us by the appellant, it seems to me, really amounts to this. When clause
6(4) of the subunderlease refers to the superior lessors, it refers to a class
of persons and not to any identified individual, a class the composition of
which may differ from time to time as the result of changes in the title to the
reversion. For myself, and reading the language in a strictly accurate sense, I
think that the term ‘superior lessors’ is only properly applicable to the
particular party who grants the lease — in this case Norwich Union, who granted
the underlease in favour of the defendants. But it is quite true, as was
mentioned in argument, that there are references — and I draw attention to one
of them in clause 2(29) — which suggest that the draftsman entertained the view
that there might be a succession of superior lessors properly so described, and
in those circumstances I do not think it would be right to rely too readily
upon the strict interpretation of the words ‘superior lessors’. But this at
least must be true in my opinion: that Norwich Union were at the date when the
lease was executed the superior lessors and, as I have indicated, they are
expressly referred to in clause 2(29). It must have been within the knowledge
of the parties concerned that they were the superior lessors. They are, in my
judgment, properly to be regarded as persons who are identified as being
superior lessors in clause 6(4) and as such the principles enunciated in Nash
v Palmer seem to me to apply directly.
When the
defendants covenanted in the subunderlease that they would keep the plaintiffs
indemnified against interference with their quiet enjoyment by Norwich Union,
there is no reason to restrict that obligation undertaken by the defendants to
lawful acts of Norwich Union. The fact that, if Norwich Union were to assign
their reversionary interest in the property to someone else, only lawful
interference with the quiet enjoyment of the property by their assignees would
attract the operation of the covenant is, in my judgment, neither here nor
there. So far as Norwich Union is concerned, it is only their acts that we are
required to consider. That was the view taken by the learned judge and the
reason given for his decision and, in my judgment, that was proper application
of the principles which have now been long established. He was, I think, right
in the conclusion at which he arrived and I would dismiss this appeal.
Agreeing that
the appeal should be dismissed, MANN LJ said: I would reserve my position in
relation to the situation which would obtain should Norwich Union assign their
reversionary leasehold interest.
Also agreeing,
MUSTILL LJ said: I would add only a few words to explain why, in my opinion, Williams
v Gabriel, which was cited as authority before us, has no bearing on the
present case. It will be recalled that in Williams v Gabriel the
premises had been let to the plaintiff on terms which included a covenant in
the following language:
And the
lessor for himself, his heirs, executors, administrators and assigns doth
hereby covenant with the lessee that the lessee paying the rent hereinbefore
reserved and performing and observing the covenants on his part hereinbefore
contained shall and may peaceably enjoy the demised premises during the said
term without any interruption or disturbance by the lessor or any person
claiming under him.
The lessor had
assigned the reversion in the premises to one Jackson, who subsequently allowed
them to fall into disrepair. In due course Jackson was obliged by the London
County Council to reinstate them pursuant to the London Building Acts. So much
disturbance ensued that the lessee was compelled to vacate the premises. His
executors claimed against the lessor under the covenant. It was held by Bray J
that the action must fail.
The case
turned on the meaning of the words ‘any person claiming under the lessor’. Bray
J concluded, in reliance on a dictum of Lord Esher in Sanderson v Mayor
of Berwick-on-Tweed, that these words denoted a person claiming under the
lessor the right to do the acts complained of. Any other interpretation would
have left the lessor responsible for acts which he had no power to prevent, and
a meaning must be found which would prevent the lessor from being at the mercy
of the assignee, whatever the latter might choose to do.
Now, this
decision, the authority of which I do not call in question, would be material
if we were here dealing with the second part of clause 3(1) of the subunderlease.
But we are not. The question is whether there is any need to impose an implied
restriction on the words of the indemnity against interruptions by ‘the
landlord’.
As Lord
Ellenborough asked in Nash v Palmer, ‘why then should this
indemnity be abridged?’ In company with
my Lords, I can see no reason why it should be so abridged, at least in so far
as concerns acts done by Norwich Union, who fairly and squarely fall within the
natural meaning of the word ‘the landlord’ as expounded in clause
as meaning what they say.
I, too, would
wish to reserve my position as to the status of any acts which might be done by
any person who in future might become the assignee from Norwich Union of the
reversionary interest which that company possesses.
I, too, would
dismiss the appeal.
The appeal
was dismissed with costs in the Court of Appeal and below.
