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15-05-2020

Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18

The Supreme Court has found that the landlord of a block of nine flats, Randolph Crescent Ltd, breached its covenant to eight of the tenants in the block (one being Duval), when it granted consent to alter to a ninth tenant.

Each lease in the block contained an absolute (i.e. unqualified) bar on “…cutting or maiming…any roof wall or ceiling within or enclosing the demised premises.”.  The leases also allowed tenants to require the landlord to enforce tenant covenants in leases of other flats subject to certain conditions such as agreeing to pay the landlord’s costs of such action.

One tenant wished to make internal alterations to her premises which involved removing an internal wall.  Such action would be a breach of the alterations covenant and the tenant therefore applied to the landlord for consent, which was granted. 

Duval took issue with this, claiming that by granting consent the landlord had breached its covenant to enforce the absolute covenant against alterations. 

The landlord argued that the obligation to enforce had not been triggered.  It considered that the enforcement covenant allowed it to consent to the works up to the moment that a tenant asked it to take enforcement action and provided the necessary security.  It further said that the enforcement covenant only obliged it to enforce so long as it was legally possible for it to take legal action.  As it had granted consent it was not able to take legal action and, as such, was not obliged to enforce.

The Court of Appeal agreed with Duval and the Supreme Court dismissed the landlord’s further appeal.  Having considered the nature of the properties, the wording of the lease and the authorities on conditional obligations and implied terms, the Supreme Court found that implied into the covenant to enforce was the obligation on the landlord’s part not to put its ability to enforce out of its power.  By granting the consent that landlord had done just that, and had therefore breached the covenant.  As such, the breach occurred regardless of whether any tenant of the building actually required the enforcement covenant to be complied with or gave security for costs.

Key points

• the decision turned on the facts of the case, however enforcement covenants such as in this case are not uncommon in leases of blocks of flats but also can be seen in some commercial leases, e.g. for shopping centres. As such the decision may have wider implications
• further, whilst the case involved a prohibition against alterations the decision is relevant to all sort of absolute covenants., for example those prohibiting the keeping of pets
• landlords do in theory have the power to licence what would otherwise be a breach of a lease even where other leases have an enforcement covenant. By licensing a breach, however, the landlord may be in breach of its obligation to other tenants
• landlords may be concerned about consent already granted as these may now be open to challenge