The Supreme Court has given a significant judgment that potentially restricts the abilities of landlords of blocks of flats to approve a tenant’s works where they are not supported by all residents.
The key question raised by the case was whether the landlord of a block of flats in Maida Vale was entitled to grant a licence to a lessee to carry out work which would breach an absolute covenant contained in a lease of the flat, where the leases of other flats on similar terms require the landlord to enforce covenants at the request of a lessee of one of those other flats.
At the outset of his judgment, Lord Kitchin said that “such covenants are common and so the issue is an important one”.
The Supreme Court unanimously upheld the landmark 2018 ruling of the Court of Appeal that the landlord was not entitled to grant such a licence without the consent of the other lessees.
Joanne Wicks QC, of Wilberforce Chambers, who represented the appellant in the case, said the judgment is “of great significance” to many landlords of blocks of flats and the owners of those flats.
She said: “The court has taken a highly purposive approach to the interpretation of the lease clauses concerned with works to the flats and the building, emphasising the width of the clause under which works may be carried out to flats with the landlord’s consent, and the more limited scope of the clause which absolutely prohibits works which may be damaging to, or destructive of, the building. This flexibility will be welcome.
“However, significant issues remain. Landlords which have given a covenant to lessees promising to enforce the covenants in their neighbours’ leases have, in doing so, given away the ability to allow any tenant to depart from the strict terms of their lease unless all the other residents in the block agree.
“In the case of large blocks, or where neighbours are not on friendly terms, this is a significant limitation and may be the source of dispute and contention. Landlords should consider, and take advice on, how to protect themselves in the future if they are approached by a lessee requesting a licence and what to do about licences they have granted in the past.”
At the hearing last October, Wicks argued the matter was of “very significant practical importance to thousands of residential lessees” and that the Court of Appeal decision below had had “far-reaching and unforeseen consequences”, causing “very real practical problems” in the management of blocks of flats.
Laura Bushaway, knowledge development lawyer at Charles Russell Speechlys LLP, added: “When it comes to residential leases, it appears that promises which are made can never be broken.
“More than ever before, landlords and tenants will need to be prudent in checking the promises in their leases before they are purchased or entered into.”
She said that the Supreme Court was not persuaded by the landlord’s argument that, as residential leases are often granted for a long period of time exceeding 99 years, it is inevitable that a lessee would wish to carry out repairs and alterations falling within an absolute prohibition.
Bushaway said: “The Supreme Court stressed that there was a distinction between routine repairs and improvements and more fundamental structural works, and took the view that where there was an absolute prohibition against those more fundamental works and a promise by the landlord in all of the leases to enforce the terms of the other leases in the building, a landlord would require the consent of the other lessees in the building.
“Practically speaking, this decision may remove much of the flexibility that previously existed between landlords and tenants.”
Landlord 11-13 Randolph Crescent Ltd is a company owned by the lessees of 11-13 Randolph Crescent in Maida Vale, W9. In 2015, the lessee of flat 13 (Martha Winfield) approached the landlord asking for permission to carry out improvement works to her flat, which would involve cutting into walls. It was willing to grant consent – however, Dr Julia Duval, the lessee of flats 11G and 11H, said the lease terms prevented it from doing so.
The 125-year leases each contain an absolute covenant prohibiting lessees from cutting into walls or ceilings, and Duval sought a declaration that the landlord could not grant permission to Winfield.
The case see-sawed through the courts prior to reaching the Supreme Court. At first instance, the district judge ruled the landlord was not entitled to grant a licence for the works to be carried out, but on appeal Judge Parfitt found that it was entitled to do so. However, the Court of Appeal then agreed with Dr Duval.
Now the Supreme Court has rejected the landlord’s final appeal.
Giving judgment on the court’s behalf, Lord Kitchin said: “The purpose of the covenants in clauses 2 and 3.19 is primarily to provide protection to all of the lessees of the flats in the building. Each of those lessees would have known that every other lessee was and would continue to be subject to the same or similar obligations and, in particular, to the qualified covenant in clause 2.6 and the absolute covenant in clause 2.7. Each lessee would also have known that, under clause 3.19, the landlord would, upon satisfaction of the necessary conditions, enforce those obligations. Clause 3.19 would therefore have been understood by every lessee to perform an important protective function.”
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