Supreme Court decision impacts landlord’s consent

Some covenants will be what are known as absolute covenants – this means that the lease does not provide that a party can grant consent.

Recently, in Duval v 11-13 Randolph Crescent Ltd. [2020] UKSC 18, the Supreme Court held that a landlord is not entitled to permit a tenant in a block of flats to carry out works to the property where this would breach an absolute covenant in the tenant’s lease.

This case involved a tenant (Tenant A) who wished to extend the basement of her flat. The proposed extension involved the removal of a load bearing wall. Tenant A applied to the landlord for consent to the works, which was granted. However, another tenant in the same block (Tenant B) argued that the landlord was not entitled to sanction the breach of an absolute covenant.

There were two important clauses contained in the leases, both of which are common to leasehold flats:

• Clause 2.7 of the lease was an absolute covenant against structural alterations: “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…”
• Clause 3.19 of the lease was a mutual enforcement covenant: “…at the request of the Tenant…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.”

The Supreme Court held that the landlord could not consent to structural works proposed by Tenant A because (i) the works would breach an absolute covenant against the “cutting and maiming” of walls and (ii) the building leases contained a provision which enabled tenants to require their landlord to take enforcement action for a breach of covenant.

This determination will have a marked impact on how landlords approach the grant of licenses to tenants in the future.

Where a landlord has already granted a licence which permits a tenant to breach an absolute covenant, this is still legally effective between the parties. If another tenant in the block disputes the validity of the licence, they may have a claim in damages against the landlord. However, it is unlikely that a tenant would be awarded substantial damages where there is no valid reason for the objection.

If a licence has not yet been granted, the court may agree to grant an injunction. However, an injunction is a discretionary remedy and a court would not grant an injunction where a tenant’s objections were deemed to be groundless.

This case demonstrates how careful landlords must be if they are asked to consent to something which is prohibited under the terms of the lease, and is likely to influence the negotiation and drafting of flat leases in the future.