Billson and Others v Residential Apartments Ltd
| Jurisdiction | England & Wales |
| Judge | THE VICE-CHANCELLOR,LORD JUSTICE PARKER,LORD JUSTICE NICHOLLS |
| Judgment Date | 11 February 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0211-1 |
| Docket Number | 91/0079 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 February 1991 |
[1991] EWCA Civ J0211-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE MUMMERY)
Royal Courts of Justice
The Vice-Chancellor
(Sir Nicolas Browne-Wilkinson)
Lord Justice Parker
Lord Justice Nicholls
91/0079
MR MICHAEL DRISCOLL instructed by Messrs Frere Cholmeley, appeared for the Appellant (Defendant).
MR ROBERT REID Q.C. and MR G.I. BENNETT, instructed by Messrs Gouldens, appeared for the Respondents (Plaintiffs).
This appeal raises a number of points relating to alleged breaches of covenant by the defendants, as assignees of the residue of a term of 33 years from 25th March 1964 granted by a lease dated 15th July 1964. The property is 17 Gledhow Gardens, London SW5. The plaintiffs are the freehold reversioners who, as is now common ground, terminated the lease by peaceable re-entry.
The original lessees were two brothers, Edwin and Leslie Rogers, but the term became vested in Leslie Rogers alone. The lease is rather unusual. The parcels clause describes the property as having been "used and occupied for letting in furnished service rooms or service suites". The original lessees covenanted by clause (c) to carry out certain specified alterations to the property and further covenanted
"(f) Subject to the provisions of Clause (c) hereof not to make any alteration in or addition to the demised premises or any part thereof without the consent in writing of the Lessors first had and obtained
(g) To allow the Lessors and all persons authorised by them at all reasonable times to enter upon the demised premises or any part thereof and inspect or examine the same or the condition thereof
(h) [Not to contravene the planning laws]
(m) During the personal occupation of the demised premises by the Lessees Edwin Henry Rogers and Leslie George Rogers or the survivor of them to use and occupy the demised premises for letting in furnished service rooms or service suites
(s) So soon as the survivor of the said Edwin Henry Rogers and Leslie George Rogers cease personally to occupy the demised premises the consent to the letting of the demised premises in furnished service rooms or service suites shall cease until the Lessors shall upon application being made to them in writing give their written consent to the continuance of such user hereinbefore authorised by a successor in title of the said Edwin Henry Rogers and Leslie George Rogers
(u) During the last seven years of the said term not to assign underlet or part with the possession of the demised premises or any part thereof without the previous consent in writing of the Lessors such consent not to be withheld in the case of a reputable and responsible assignee or underlessee being proposed by the Lessees."
On 3rd May 1989 Leslie Rogers assigned the residue of the term to the defendants in consideration of the payment of £280,000. The defendants planned to use the property for letting in self-contained furnished suites, a proposed user which would manifestly breach covenant (s) unless the plaintiffs' consent was obtained. In pursuance of their desire, on the day after the completion of the assignment, 4th May 1989, the defendants embarked on major works of reconstruction in order to convert the furnished accommodation into self-contained flatlets. This involved major structural work as well as comprehensive refurbishment. The defendants neither sought nor were given the consent of the plaintiffs to such works which, on the face of it, involved plain breaches of covenant (f). The works were done at great speed, there being as many as 52 people working on the property from 8am to 8pm at one stage. The works were completed in mid-August 1989 at a cost to the defendants of between £260,000 and £375,000.
During the course of the negotiations for the assignment of the term in 1988 and early 1989, the plaintiffs' solicitors made it absolutely clear to the defendants that (a) the defendants could not use the property for letting in furnished suites without the plaintiffs' consent (b) the plaintiffs' written consent to alterations was required and was not subject to any proviso as to reasonableness; (c) the plaintiffs would consider consenting to the continued use of the property for furnished lettings but subject to certain specific conditions, including a condition that "No alterations shall be carried out without our Clients' consent and any alterations will be strictly subject to the Trustees' surveyors being satisfied as to the proposed work. A formal licence will be required and the works will be supervised by the Trustees' building surveyor. No lettings may commence until all works have been completed to the satisfaction of the Trustees' surveyors."
One of the mysteries of the case is that, despite that clear warning, the defendants proceeded to start the extensive works I have mentioned without asking for any consent from the plaintiffs either to carry out the alterations or to use the property for furnished lettings. At least part of the explanation appears to be that the defendants and their then solicitors, Messrs Piper Smith & Basham (who are not acting for the defendants in these proceedings) were in a state of some confusion as to the applicable law. Under section 19 (2) of the Landlord and Tenant Act 1927, any covenant against making alterations which are improvements without the consent of the landlord is subjected to a proviso that the landlord's consent shall not be unreasonably withheld. In Part I of the same Act there are different provisions relating to improvements by tenants. If a tenant serves on the landlord notice of his intention to make improvements, together with a specification and plan showing the proposed improvements, and the landlord objects the court can certify the improvements to be proper and the tenant can thereafter lawfully effect such improvements: section 3 (4). The defendants seem to have become hopelessly confused between these two sets of provisions. They never asked for the landlords' consent under section 19 (2); they never provided a specification of the proposed works or applied to the court under section 3 (4).
By a letter dated 3rd May 1989 the defendants informed Messrs Frere Cholmeley (the plaintiffs' solicitors) of the assignment to the defendants and of immediate steps being taken to "restore the property to the decorative order and condition required by the lease" in the course of which internal improvements would be effected. "As a matter of courtesy" they supplied them with various plans of the proposed works in a reduced form and confirmed that compensation for those matters would not be sought by their clients at the end of the lease in accordance with section 19 (2) of the Landlord and Tenant Act 1927.
On 17th May 1989 Frere Cholmeley wrote to the defendants pointing out that the letter dated 3rd May had in fact been posted on 11th May and had only been received by them on 16th May. They drew attention to the covenant against alterations and said that no alteration or addition should be carried out until formal written licence had been obtained and that work of this nature must cease immediately. In subsequent correspondence, Frere Cholmeley unsuccessfully made repeated attempts to persuade the defendants to submit an application for written consent to the alterations in the normal way. In addition visits were made to the site by the plaintiffs' surveyors to ascertain what works were being carried out to the property. The surveyors requested specifications, calculations, justifications and full size working drawings, but these, though promised, were never provided. Instead, the defendants pressed on with the work. Serious reservations were expressed by the plaintiffs' structural engineer about the works.
On 4th July 1989 a section 146 notice was served on the defendants. It referred, inter alia, to the covenant in clause (f) of the lease and specified the alleged breach in these terms:
"The Lessee has made and continues to make alterations to the premises for which the Trustees' consent has not been sought or given."
The plaintiffs then requested the defendants "within a reasonable time to remedy the said breaches in so far as they are capable of remedy".
In the letter accompanying the notice, Frere Cholmeley expressed the view that the defendants' breaches were irremediable but added that, as the plaintiffs were anxious to establish precisely what had been done to the property, their surveyors wished to see all working drawings, specifications and other documents from which the scope and extent of the works could be accurately determined. They also reminded the defendants that consent had not been sought under clause (s) of the lease, and would not be given, to the use of the premises as "furnished service rooms or service suites". Reference is made to the general prohibition in clause (n) against the use of the property for any trade or business whatsoever.
On 10th July 1989 Messrs Piper Smith & Basham sent to Frere Cholmeley what they described as "a counter notice". That counter notice alleged that the works were "improvements adding substantially to its value and accordingly the landlord is restrained from objecting thereto by virtue of section 19 of the Landlord and Tenant Act, 1927." It was contended that no remedy or damages were appropriate and the works were, in any event, remediable by reinstatement. It was also contended that the plans in respect of the proposed works had...
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