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Absolute Prohibition? Absolute Nightmare!

Jocelyn Mcleod, at Cripps Pemberton Greenish, comments

The long awaited Supreme Court decision in the Duval v 11-13 Randolph Crescent Ltd case (“Duval”) is finally here and there can be no doubt that it has heavy implications for both landlords of blocks of flats and the leasehold owners of those flats. The Supreme Court upheld the Court of Appeal’s decision that, where leases in a block of flats are on substantially the same terms and those leases contain a mutual enforceability covenant, a landlord will be in breach of that covenant if it grants consent to a tenant to carry out works where there is an absolute covenant prohibiting those works in its lease.

The building was a block of nine flats each subject to a long lease, with the leaseholders all owning a share of the freehold company.  Mrs Winfield, the lessee of one of the flats, wanted to remove part of a load bearing wall located in the basement (“the Works”). Clause 2.7 of her lease prohibited her from cutting, maiming or injuring any roof wall or ceiling within or enclosing her flat. This was an absolute covenant as the clause did not allow for the landlord to grant permission for her to do the Works, as a qualified covenant would have. Nonetheless, Mrs Winfield approached the landlord and asked for consent to carry out the Works and after some consideration, the landlord was minded to grant her a licence to alter in respect of the Works. However, before it was able to do so, Dr Duval, who was the tenant above Mrs Winfield, objected and issued proceedings for a declaration that the landlord did not possess the power to grant consent for the Works and in doing so, allowed Mrs Winfield to breach clause 2.7.

Clause 3.19 of the leases in the building provided that the landlord would enforce the covenants given by other flat owners, upon the request of a tenant and subject to the tenant indemnifying it for its costs.  Therefore, Dr Duval’s argument was that the landlord would be in breach of clause 3.19 if it granted Mrs Winfield permission to carry out the Works.

Decision and Consequences
The Supreme Court held that, although clause 3.19 didn’t expressly state that the landlord was prevented from granting consent for Mrs Winfield to carry out the works, this was implied into the clause. Therefore, the landlord had no power to waive clause 2.7 without the prior consent of all of the lessees of the flats in the building.

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