Leeward Securities Ltd v Lilyheath Properties Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE OLIVER,LORD JUSTICE O'CONNOR |
| Judgment Date | 22 November 1983 |
| Judgment citation (vLex) | [1983] EWCA Civ J1122-3 |
| Date | 22 November 1983 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 83/0489 |
[1983] EWCA Civ J1122-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF HIS HONOUR JUDGE MONIER WILLIAMS
WEST LONDON COUNTY COURT
Royal Courts of Justice
Lord Justice Oliver
and
Lord Justice O'connor
83/0489
MR DAVID NEUBERGER, instructed by Messrs Jaques & Lewis, appeared for the Appellants (Plaintiffs).
MR ROGER ELLIS, instructed by Messrs Michael Freeman & Co., appeared for the Respondent (First Defendant).
No appearance for the Second Defendant.
This is the plaintiffs' appeal from an order of His Honour Judge Monier-Williams in the Vest London County Court on 21st June 1983, dismissing the plaintiffs' claim for possession of some residential premises at No. 54 Stanhope Gardens, SW7, and for damages for breach of covenant, The ground upon which possession was sought was that the plaintiffs had forfeited the first defendants' lease because of their breach of covenant in the lease against sub-letting without the landlords' consent, they having sub-let, admittedly without the landlords' consent, a part of the premises to the second defendant, Miss Wasserman.
The lease with which the appeal is concerned was dated 7th January 1949 and was made between the Earl of Harrington of the one part and one Kitty Martelli of the other part. By it the Earl demised the whole of the premises to the tenant for a term of 38 years from 24th June 1948, so that the lease is due to expire by effluxion of time of 24th June 1986. The lease contained a user covenant, which is clause 2 (xv), which restricted the permitted use of the premises to one or other of two modes of enjoyment, that is, either as a single private dwelling-house or as four furnished service suites with a common dining room on the ground floor, the remainder of the ground floor and the basement to be used as a private residence for the lessee.
For the major part of the term the lease was freely assignable but by clause 2 (xviii) the lessee covenanted during the last seven years of the term (that is, from 24th June 1979 onwards) not to assign, transfer or part with possession of the demised premises or any part thereof (otherwise than by Will) nor to part with or share the possession or occupation thereof or any part thereof without the previous consent in writing of the lessor. There is no dispute that, as a matter of construction, the requirement of the lessor's written consent applies not merely to the latter part of that clause but to the whole of it. The effect of that is, of course, that by virtue of the Landlord and Tenant Act 1927 there is read into the covenant a proviso that the lessor's consent shall not be unreasonably withheld.
In 1950 there was a consensual variation of the user covenant by a licence which permitted the lessee to incorporate the common dining room into her flat, so that thenceforth the premises consisted of a sort of maisonette on the ground floor and basement and the four furnished service suites above. At some time between then and September 1961 the reversion had become vested in a Mr. Weatherby and a Mr. Foster and the residue of the term had become vested in Lady Binney. On 18th September 1961 those parties entered into a licence which authorised Lady Binney to convert the entire premises into six self-contained residential flats. The work of conversion was in fact completed in April 1962.
Now the licence did not simply authorise the alteration. It also imposed certain restrictions on alienation. Clause 5 (d) of the licence was in these terms: "Without prejudice to sub-clause (e) of this clause not at any time to underlet or permit to be underlet the demised premises or any of the said flats otherwise than in accordance with the provisions of the First Schedule hereto". Then sub-clause (e) was in these terms: "Not at any time to assign or transfer any of the said flats separately from the remainder of the said premises for the residue of the term granted by the lease or assign or transfer any part being less than the whole of the said premises for the residue of the said term"—and then there were provisions which I need not read about Letters of Administration and so on. Sub-clause (f) was in these terms: "Not to permit any of the said flats to be occupied otherwise than as the residence of one family only and not to permit any lodgers or paying guests to reside therein nor permit any part of the same to be sublet furnished or unfurnished or the said flats to be sublet furnished for a period of less than two months".
I turn now to the schedule which was referred to and that contained a number of provisions relating to the terms of an underletting of any of the flats or indeed the premises as a whole. Clause 2 of the Schedule provided as follows: "Each and every underletting of the whole of the demised premises shall be by way of an underlease and counterpart containing covenants on the part of the underlessee similar in all respects to those on the part of the lessee contained in the lease as varied by this licence and the rent to be reserved by such underlease shall not be less than £300 per annum exclusive of rates and other outgoings. 3. Each and every underletting of the said flats or any of them (other than a furnished underletting for a term not exceeding three years) shall be by way of underlease and counterpart. 4. The rent reserved by each such underlease (including an underletting for a term not exceeding three years) shall be not less than £50 per annum for each of the said flats included in such underlease in each case exclusive of rates and other outgoings". Then the final clause, clause 5, provided in sub-clause (iii) as follows: "In the case of any such under-lease either (a) intended to run during the last seven years of the said term granted by the lease or during any part of the last seven years or (b) granted at any time during such last seven years it shall be obligatory that each such underlease shall contain an express covenant by the under-lessee not to assign transfer underlet or part with possession of the premises demised to him either during the last seven years of the term thereby granted or during the term thereby granted (as the case may be) without the written consent of the lessor (meaning the lessor under the lease) having been first obtained".
The next relevant event was that the plaintiffs acquired the reversion in 1979. At some time, it seems, probably before then, the premises had become vested in the first defendants, Lilyheath, for the residue of the term of the lease. The top flat of the premises was either then or subsequently became vacant and Lilyheath became desirous of making it available to Miss Wasserman, who was at that time the tenant of the upper floor in some neighbouring premises, No. 40 Stanhope Gardens. That property was owned by an associated company of Lilyheath which was desirous of selling off the flats but which, since Miss Wasserman was a tenant protected by the Rent Acts, was faced with the necessity of providing her with suitable alternative accommodation elsewhere. That function, they thought, was admirably fulfilled by the top flat at No. 54 and although she would equally become a protected tenant of that flat, Lilyheath appears to have concluded—whether rightly or wrongly was not investigated at the trial—that she would in fact be willing to leave before the expiration of the lease. As I say, that was not investigated, and the learned judge rightly attached no importance to it. So the effect of an underletting to Miss Wasserman was—as the learned judge expressly accepted—that the plaintiffs ran the risk of being saddled with a statutory tenant of the top flat when the lease expired in 1986. Perhaps not surprisingly, they would have been reluctant in those circumstances to give their consent to the subletting, but in fact they were not directly asked for such consent until after the event occurred, because on 23rd December 1982 Lilyheath granted Miss Wasserman a sublease of the top flat in No. 54 for two years from 1st January 1983, taking from her, as was required by the Schedule to which I have referred, an absolute covenant against assigning, sub-letting, charging, sharing or parting with possession.
Although the plaintiffs had not formally been asked for consent in relation to this property, there had been in fact some correspondence between the parties with regard to another property owned by the plaintiffs—No. 56—from which it had clearly emerged that they were not in any circumstances prepared to give their consent to a sub-letting to a tenant who might be entitled to claim the protection of the Rent Act, since this would be damaging to their reversion, though they would have been prepared to give consent to lettings to limited companies, and possibly (although this may be in doubt) to protected short-hold tenants or to holiday lettings.
A day or two before the sub-letting to Miss Wasserman Lilyheath's solicitors wrote to the plaintiffs' solicitors announcing that they intended to sub-let to her and stating that they were satisfied—as no doubt was the case—that she was in all respects a good and respectable tenant. They then proceeded with the sub-lease.
On 6th January 1983 the plaintiffs wrote formally refusing consent to any sub-letting of No. 54 which would result in a protected tenancy under the Rent Act. Hence these proceedings. Happily, Miss Wasserman is not in peril of being homeless, because Lilyheath are willing and have agreed to provide her with accommodation elsewhere if this appeal should succeed.
It is not in dispute that the sub-letting was in...
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