Dr Julia Duval v 1113 Randolph Crescent Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Newey,Sir Stephen Richards |
| Judgment Date | 18 October 2018 |
| Neutral Citation | [2018] EWCA Civ 2298 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 October 2018 |
| Docket Number | Case No: B2/2017/2455 |
[2018] EWCA Civ 2298
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
CHANCERY BUSINESS
His Honour Judge Parfitt
C10CL920
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Lewison
Lord Justice Newey
and
Sir Stephen Richards
Case No: B2/2017/2455
Mr Richard Mawrey QC & Mr George Mallet (instructed by Duval Vassiliades Solicitors) for the Appellant
Mr Edwin Johnson QC (instructed by Ashfords LLP) for the Respondent
Hearing date: 10 October 2018
Judgment Approved
The issue on this appeal is whether the landlord of a block of flats is entitled, without breach of covenant, to grant a licence to a lessee to carry out work which would breach an absolute covenant contained in a lease of her flat, where the leases of other flats require him to enforce covenants at the request of a lessee of one of those other flats. DDJ Chambers answered that question “no”; but HHJ Parfitt disagreed with him and answered it “yes”. Covenants in this form are common in residential leases; and so the question raised by this appeal is an important one.
The property in question is 11–13 Randolph Crescent in Maida Vale. It originally consisted of two houses; but they have been converted into nine flats each of which is held under a long lease. Mrs Winfield is the lessee of Flat 13; and Dr Duval is the lessee of flats 11G and 11H. Each lease was granted for a term of 125 years. The reversion to both leases is held by 11–13 Randolph Crescent Ltd, which is a company owned by all the lessees. In 2015 Mrs Winfield approached the landlord asking for permission to carry out improvement works to Flat 13. The landlord was willing to grant consent. But Dr Duval said that the terms of the lease prevented it from doing so.
What is comprised in the lease of Flat 13 includes internal walls, other than non-load-bearing internal dividing walls. As regards walls of that description only half the thickness of the wall is demised. Load-bearing walls are specifically excluded from the demise. Clause 2 of the lease contains a series of lessee's covenants. They are a mix of positive covenants (e.g. to pay the rent, to carry out works required by statute and to keep the demised property in repair) and negative covenants (e.g. not to use the demised property except as a self-contained residential unit in the occupation of one family, and not to contravene the Planning Acts). The fifth schedule to the lease contains a number of detailed regulations about the use of the flat with which the lessee must comply. These include prohibitions of playing musical instruments or singing except at specified times of the day, placing window boxes on any external window sill, and not to park cars in any yard, garden or driveway.
The two relevant lessee's covenants for present purposes are clauses 2.6 and 2.7. The first of these provides:
“Not without the previous written consent of the Landlord to erect any structure pipe partition wire or post upon the Demised Premises nor make or suffer to be made any alteration or improvement in or addition to the Demised Premises.”
A covenant prohibiting the making of improvements without the landlord's consent is subject to an implied proviso that consent is not to be unreasonably withheld: Landlord and Tenant Act 1927 s. 19 (2).
The second of the two covenants provides:
“Not to commit or permit or suffer any waste spoil or destruction in or upon the Demised Premises nor cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the Demised Premises or any sewers drains pipes radiators ventilators wires and cables therein …”
This is what is usually called an absolute covenant, which means that the lease does not contemplate that consent might be given to do that which the covenant forbids.
The works that Mrs Winfield wished to carry out included the removal of about seven metres width of load-bearing wall at basement level. It is common ground that this would have amounted to a breach of clause 2.7 of the lease. The works would also have extended beyond the current demise.
Dr Duval relies on clause 3.19 of the lease. That is a covenant by the landlord in the following terms:
“That every lease of a residential unit in the Building hereafter granted by the Landlord at a premium shall contain … covenants of a similar nature to those contained in Clauses 2 and 3 of this Lease AND at the request of the Tenant and subject to payment by the Tenant of (and provision beforehand of security for) the costs of the Landlord on a complete indemnity basis to enforce any covenants entered into with the Landlord by a tenant of any residential unit in the Building of a similar nature to those contained in clause 2 of this Lease.”
Mr Mawrey QC's argument for Dr Duval is a simple one. Clause 2.7 of the lease contains an absolute prohibition on cutting a wall which encloses the demise of Flat 13. By clause 3.19 the landlord has covenanted to enforce that covenant if the tenant of another flat so requests. If the landlord had the right to license what would otherwise be a breach of clause 2.7 or to waive compliance with clause 2.7, it would have put it out of its power to comply with clause 3.19 as regards that licence or waiver. It is necessarily implicit in a covenant like clause 3.19 that the landlord will not put it out of its power to comply with it when the time comes.
Mr Johnson QC, for the landlord, says that it is not that simple. He emphasises the landlord's right to do as he pleases with his own property. In the normal course of events a landlord is free to consent to what might otherwise be a breach of a tenant's covenant; and in some circumstances he might be in the unfortunate position of having inadvertently waived a breach or being estopped from relying on a breach. It could not have been intended that in such circumstances the landlord himself would be in breach of covenant. Moreover, clause 3.19 does not in terms say that the landlord is precluded from granting a licence for what would otherwise be a breach of covenant. In his written argument Mr Johnson submitted that the covenant has retrospective operation once a breach has taken place. But if the landlord consents in advance to some activity on the part of a lessee that activity will not amount to a breach of covenant, so that there will be nothing to enforce. Thus, by the grant of a licence, the landlord may nullify what would otherwise have been the effect of clause 3.19. In oral argument he accepted that clause 3.19 could apply to a threatened breach of covenant, but even in that situation he argued either that the landlord could authorise the breach at any time; or at least that he could do so before the tenant had made the request for enforcement and provided the security required by clause 3.19. In addition, even if the landlord does authorise what would otherwise be a breach, Mr Johnson submitted that it is only the particular breach that is authorised. The covenant itself remains intact and enforceable for the future.
Mr Johnson made a number of points which went to his client's perception of the relevant merits of each side's case. They were designed, at least in part, to paint Dr Duval as adopting a “dog in the manger” attitude to the work that Mrs Winfield wished to carry out. But that can play no part in the interpretation of the lease. He also submitted that if any single lessee of a flat had what he called a “veto” over work proposed by another lessee that was a recipe for conflict, and no way to manage a residential block of flats. The practicalities of management, and the commercial common sense of one interpretation over another, do have a part to play in contractual interpretation. But the starting point must be the words of the contract itself.
The first express promise that the landlord made in clause 3.19 is that every lease of a residential unit in the building granted at a premium would contain covenants similar to those in clauses 2 and 3. That promise applies only to something that can be described as a “residential unit”; so it might not apply to, say, the demise of what had been common parts by way of extension to an existing residential unit. The promise is that each lease will contain similar covenants. A covenant is not simply a form of words on a printed page: it is a legally binding obligation. Thus the promise was that each lease would contain similar legally binding obligations on each lessee. This was, in my judgment, a promise designed to have practical effect; namely that each lessee would be bound to observe similar legal obligations. As Dankwerts J put it in Levermore v Jobey [1956] 1 WLR 697, 708:
“A lease is not intended to be either a mental exercise or an essay in literature; it is a practical document dealing with a practical situation.”
In the context of the present case, however, it is important to note the two-fold limb of the promise. It is not only a promise that the lease of a residential unit would contain a covenant similar to clause 2.7 (i.e. an absolute covenant not to cut walls etc) but also a covenant similar to clause 3.19 (i.e. a covenant to enforce such covenants). Thus each lessee would have known that the landlord had covenanted (or would covenant) with every other lessee to enforce the obligations contained in the lease.
The second express promise that the landlord made was to enforce the covenants at the tenant's request and expense. That is a contingent obligation: the relevant contingency being the tenant's request and the provision of security. If the contingency arises, then the landlord's obligation is triggered. It was in dispute in our case whether the contingency had...
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