Tenants should strike out long outdated waste covenants in leases, writes Ronald Goldberg
Twenty years ago, the Law Commission recommended that the law of waste should no longer apply to a tenant holding under a lease (LC238, “Landlord and Tenant – Responsibility for the State and Condition of Premises”). However, it does still apply and, indeed, has had its scope extended.
What is waste?
The tort of waste has been defined as “such damage to houses or land as tends to the permanent and lasting loss of the person entitled to the inheritance”. Of course, the expression “houses or land” should now be construed as referring to any kind of building.
There are two principal types of waste: voluntary waste and permissive waste. Voluntary waste is any positive act which tends to the destruction of premises or changes their nature; permissive waste is any failure to act that leads to substantial damage to premises.
There are two sub-types of voluntary waste: ameliorating waste (improving the premises) and equitable waste (acts of wanton destruction). The distinctions between these categories may be significant in terms of the remedies available to the reversioner, but do not require to be explored further here.
The history of waste
The tort of waste was evolved in medieval times to fill in a gap to protect reversioners where tenancies had arisen by operation of law and where therefore the reversioner had not been able to protect himself by a contractual term. However, the liability was extended by the Statute of Marlborough 1267 to tenants holding for a fixed term. That statute remains in force, and has been held to render such tenants liable for both voluntary and permissive waste.
The liability may be excluded by express contractual stipulation or by necessary implication.
It will not have escaped readers that the subject matter of waste falls within the ambit of covenants in leases relating to repairs, alterations and change of use. However, it has been held that the tortious liability is not excluded merely by express covenants relating to the same matter (Dayani v Bromley London Borough Council [1999] 3 EGLR 144), in spite of the dictum in the Privy Council in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80:
“Their Lordships do not accept that the parties’ mutual obligations in tort can be any greater than those to be found expressly or by necessary implication in their contract.”
See also the comments of Kerr LJ in Mancetter Developments Ltd v Garmanson Ltd [1986] 1 EGLR 240.
If it had remained the situation that landlords might simply have had a choice whether to claim in contract or in tort or both, the tort of waste might have been forgotten, or died, but that situation did not remain. At some time between the fourth edition of the Encyclopaedia of Forms and Precedents published in 1966 and the fifth edition published in 1986, the practice developed of inserting in leases of commercial property a covenant on the part of the tenant: “Not to commit any waste.” And now covenants to that effect seem to have become common form.
A problematic covenant
Quite why landlords want covenants of this nature in addition to the usual covenants dealing with repairs, etc, is somewhat baffling. However, it is even more perplexing that tenants have allowed this to happen. From the point of view of the tenant, such a covenant raises a multiplicity of problems.
Firstly, the covenant is absolute, meaning that the tenant has no power to apply to the court for a declaration that the landlord has unreasonably withheld his consent to the proposed works or change of user. The absolute nature of the covenant would rule out any resort by the tenant to either section 19(2) or section 19(3) of the Landlord and Tenant Act 1927.
Secondly, it is not clear whether the covenant prohibits only voluntary waste (as the use of the word “commit” may suggest) or whether it extends to permissive waste.
Thirdly, the relationship between this covenant and the covenants for repair, etc, is wholly uncertain.
Fourthly, it is not clear whether the tenant might have the benefit of section 18 of the Landlord and Tenant Act 1927, or of the Dilapidations Protocols having effect under the Civil Procedure Rules, or of the usual exception in repairing covenants for damage caused by insured risks.
Tenants, take action
Although the government accepted the recommendation of the Law Commission, it stated that implementation was not a priority.
So instead, the remedy lies in the hands of prospective tenants. They should strike out the proposed covenant against waste, and also insert in the lease an express stipulation excluding liability for the tort of waste.
Ronald Goldberg is a retired solicitor and lecturer
