Tag Archives: Landlord and Tenant

Covenant for indemnity did not extend to own legal or surveyor’s fees

Where the only relevant tenant’s covenant (clause 4.1) is an obligation “to indemnify the Lessor against all actions proceedings costs claims and demands in respect of any breach non-observance or non-performance” of the tenant’s obligations under the lease and a tenant fails to pay a £50 instalment of ground rent is the landlord entitled to charge a further £50 for a letter demanding payment of the arrears?

In Fairhold Freeholds No.2 Ltd v Moody [2016] the Upper Tribunal (Lands Chamber) said “no”:

“The essence of a contract or covenant of indemnity is that it is a promise by A to protect B from B’s liability to C. For a liability to arise under a covenant of indemnity the party to be indemnified must have come under an obligation to a third party, to meet a claim or demand or to answer some action or proceedings or incur some costs. The question in any case where it is sought to rely on such a covenant is whether the lessor has come under an obligation to make a payment to someone else “in respect of’ some breach of obligation owed to the lessor by the lessee: has A’s breach given rise to B’s liability to C? If the lessor has come under such an obligation the covenant requires the lessee to indemnify the lessor against the cost it has incurred in meeting that obligation.

…………..The “costs” in question are of the same type i.e. the costs of a third party as a result of the lessee’s breach, for which the third party is entitled to look to the lessor for reimbursement. A covenant of indemnity is not the same as a covenant to reimburse the lessor’s own costs incurred in taking steps to enforce the lessee’s obligations……..

I am therefore satisfied that clause 4.1 does not enable the appellant to levy a £50 administration charge or to recoup the costs of its own solicitors in preparing to enforce the respondent’s obligation to pay the ground rent. To the extent that the appellant was under any obligation to make payments to its agent or solicitor as a result of those steps being taken such obligations were not the result of the respondent’s failure to pay the ground rent, but of the appellant’s own instructions.”

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Very short term lettings breached “private residence” covenant

A long lease contains a covenant “not to use the leased property (or permit it to be used) for any purpose whatsoever other than as a private residence.”

If the long leaseholder advertises the property (a flat) for short term lets and grants a sequence of such lettings, is the leaseholder in breach of the covenant?

In Nemcova v Fairfield Rents Ltd [2016] the United Kingdom Upper Tribunal (Lands Chamber) said to avoid breaching the covenant, there must be a connection between the occupier and the residence such that the occupier would think of it as his or her residence albeit not for ever. “The occupier for the time being must be using it as his or her private residence.”

If the occupier is in the property for a matter of days (rather than weeks or months or years) that is a material pointer to the fact that the occupier is not using the property as a private residence.

To be used as the occupier’s private residence, there must be a degree of permanence extending beyond “being there for a weekend or a few nights in the week.”

Where a person occupies for a matter of days and then leaves the property it cannot be said that whilst occupying they were using the property as their private residence.

The occupation there would so transient that the occupier would not consider the property they were staying in as being their private residence even for the time being.

Each case is depends on it’s facts, relying upon the interpretation of the particular covenant against it’s factual background.

Based on the context in which this lease was granted, and the nature of the proposed relationship between the long lessor and long lessee and taking account the obligations entered into, the appellant had inevitably breached the private residence covenant by granting very short term lettings (days and weeks rather than months).

The tribunal said it was not possible to give a definitive answer to the question posed at the beginning of this piece save to say that ‘It all depends’.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Landlord Development permitted despite conflict with RTM Company’s Functions

Can a landlord develop an additional flat on an apartment block roof where the management of that roof has been transferred to a “right to manage company” (“RTM Company”)?

In a recent county court case the court found that the proposed development would conflict with the RTM Company’s management functions under Part II, Chapter I of the Commonhold and Leasehold Reform Act 2002 but said that the proposed development was permissible so long as the landlord took all reasonable steps to minimise that disturbance both during and after the development.

The RTM Company has been allowed to appeal to the Court of Appeal.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Mortgages prevented lease surrenders which were basis of guarantor release

The Co-Operative Bank Plc v Hayes Freehold Ltd & Ors [2016] was a preliminary hearing in respect of a striking out/summary dismissal application. Here a head lease was granted out of a freehold which was now mortgaged to The Coop Bank. The mortgage prohibited the mortgagor accepting a surrender of a lease without the Coop Bank’s consent.

An underlease had been granted out of the head lease. The underlease was also mortgaged to The Coop Bank so it could not be surrendered without the Bank having released it from that mortgage.

There was a composite deal in which both the head lease and the underlease were purportedly surrendered without the consent of The Coop Bank.

Clause 6 of the surrender of the underlease purportedly released the undertenant and it’s guarantor from further compliance with the underlease.

The High Court ruled that both surrenders were ineffective as the Bank’s consent had not been obtained.

The court also said that the fundamental assumption behind Clause 6 was that the surrender package would be effective. That assumption being disappointed the underlease guarantor remained bound by the guarantee in the underlease.

The Coop Bank therefore had an arguable case in support of it’s interests that must go to full hearing.

The blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Lease renewals: landlord could restore redevelopment ground opposition

Landlords wishing to get back 1954 Act protected business premises on redevelopment grounds have been handed a boost by Waterstones Booksellers Ltd v Notting Hill Gate KCS Ltd [2016].

Here the landlord opposed the tenant’s application for a new lease on redevelopment grounds.

However, due to delays, the landlord withdrew its opposition being of the view that it might not be able to satisfy the ground (f) redevelopment ground before the hearing.

12 months later the landlord applied to the court to re-oppose the lease renewal.

The County Court upheld this.

The Civil Procedure Rules sometimes allow changes to statements of case and the retraction of admissions.

Relevant factors included:

– the landlord’s good faith;
– the way circumstances had changed for the landlord;
– no trial date had been set for the court proceedings and they had hardly progressed;
– the tenant was no worse off than it was originally and the landlord still had to make out the development ground; and
– the landlord would suffer relatively more prejudice than the tenant if it was not allowed to amend it’s statement of case especially as the landlord had guaranteed the tenant possession till January 2017.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Flat Landlord not responsible for Tenant fall in Common Parts

Where a lease is a lease of a dwelling-house which forms part only of a building, then, under section 11 (1A) of the Landlord and Tenant Act 1985 there is implied into the tenancy agreement a compulsory contractual covenant by the lessor to keep in repair the structure and exterior of the dwelling-house and the structure and exterior of any part of the building in which the lessor has an estate or interest (including drains, gutters and external pipes).

In Edwards v Kumarasamy [2015] Mr Kumarasamy’s assured shorthold tenant of his Flat 10, Mr Edwards, had tripped on an external paved area forming part of the apartment block’s common parts. Although he did not own them, Mr Kumarasamyh had a legal easement to use the front hall, the car parking space and Bin Store and other facilities provided by the head landlord.

The Court of Appeal found that this gave him an “estate or interest” in the paved area where Mr Edwards sustained his accident.

Was that enough to bring the extended covenant into play?

The Court of Appeal said Mr Kumarasamy’s legal easement over the front hall meant that the front hall was a part of a building in which he had an estate or interest.

In Brown v Liverpool Corporation [1983] the Court of Appeal held that steps leading to the front door of a self contained dwelling were part of the exterior of the dwelling.

In the current case, the paved area which led from the front door of the apartment block to the car park was not part of the exterior of Flat 10. However, the paved area was both short and also part of the essential means of access to the front hall in which Mr Kumarasamy did have an estate or interest because of his easement to use it. So the court ruled that the paved area could properly be described as the exterior of the front hall.

Mr Kumarasamy said Mr Edwards should have given him notice of the uneven paving stone and a reasonable opportunity to fix it but the court said such a qualification could not be implied here because the defect was outside the property actually let to Mr Edwards.

So the extended Landlord’s covenant applied to the paved area and Mr Kumarasamy was liable to Mr Edwards under it for the defect.

The Supreme Court has, in Edwards v Kumarasamy [2016] , overturned the Court of Appeal decision:

“….. that decision was wrong. The fact that a piece of property is a necessary means of access to a building cannot be sufficient for it to constitute part of the exterior of that building. Steps separated from the outside of a building by a two metre path cannot, as a matter of ordinary English, be said to be part of the exterior of that building.”

So it was strictly unnecessary to consider the other issues raised by the appeal.

However the Supreme Court agreed with the Court of Appeal that Mr Kumarasamy had an “estate or interest” in the paved area where Mr Edwards sustained his accident. But said that the repairing covenant implied by section 11 was to be interpreted and applied in precisely the same way as a landlord’s contractual repairing covenant. The rule in relation to such covenants was that, until he has notice of disrepair a landlord should not normally be liable for disrepair of property.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Proportionality assessment did not apply to private possession claim

In the Supreme Court case of McDonald v McDonald and others [2016] Fiona McDonald, was aged 45 and suffered from a personality disorder. In May 2005 her parents bought 25 Broadway Close, Witney (“the property”), with the aid of a mortgage from Capital Home Loans Ltd (“CHL”)

Her respondents granted her a series of assured shorthold tenancies of the property, culminating in one granted in July 2008 for a term of one year. Miss McDonald continued to live at the property.

The parents got into arrears with CHL and do did Miss McDonald’s rent. CHL appointed Receivers of the property. The Receivers subsequently served a notice, in the name of Miss McDonald’s parents, on Miss McDonald indicating they would be re-possessing the property. When that notice expired, they issued possession proceedings in the name of the parents.

Miss McDonald said that the court should have taken into account the proportionality of making an order for possession, for the purposes of Article 8 of the European Convention on Human Rights (“the ECHR), and, that that would have entitled the court to withhold making an order for possession despite being apparently mandated to do so by section 21(4) of the Housing Act 1988 (“the 1988 Act”) and section 89(1) of the Housing Action 1980 (“the 1980 Act”), which restricts how long a court can postpone an order for possession taking effect.

The Supreme Court faced three issues:

1. whether section 6 of the Human Rights Act 1998 (“the HRA”) and article 8 of the ECHR required a court to consider the proportionality of evicting the occupier when entertaining a claim for possession by a private sector owner against a residential occupier;

2. if the answer to 1. was yes, whether the relevant legislation, in particular section 21(4) of the 1988 Act, can be read so as to comply with that conclusion; and

3. whether, if the answer to 1 and 2 was yes, the trial judge would have been entitled to dismiss the claim for possession in this case, as he said he would have done, on the grounds that the claim for possession was disproportionate.

The Supreme Court said where the party seeking possession is a public authority within the meaning of section 6 of the HRA the occupier can raise the question of the proportionality of making an order for possession. However in the case of Manchester City Council v Pinnock [2011], the Supreme Court made it clear that it’s judgment had no application to cases where the person seeking possession was a private landowner.

The Supreme Court’s preliminary view was that it is unarguable for a tenant to say article 8 overrides the contractual relationship between the parties, at least where the legislative provisions of a democratically elected domestic legislature has balanced the competing interests of private sector landlords and residential tenants. Otherwise, the ECHR would be directly enforceable between private citizens so as to alter their contractual rights and obligations.

As to 2. above, had the court been persuaded that Miss McDonald was right on issue 1., a declaration of incompatibility under section 4 of the HRA would have been the only remedy.

As to 3, the judge had not considered whether, if the claim for possession had been disproportionate, there might have been other solutions to the problem than dismissing the claim.

Where (rarely) a court was required to assess the proportionality of making a possession order, it’s powers to suspend or postpone the effect of that order are much restricted by section 89(1) of the 1980 Act.

Very few cases justified a refusal, as opposed to a postponement, of a possession order and could only be cases where the gravity of the interference in the occupier’s right to respect for their home heavily outweighed the landlord’s interest in regaining possession.

Here, it seemed likely that on a proportionality assessment the most Miss McDonald could hope for would have been an order for possession in six weeks’ time – the maximum permitted by section 89(1) of the 1980 Act.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Landlords should have given tenant new address for service

Many cases concern the validity of notices served by tenants where they seek to exercise a contractual break clause.

Leases frequently incorporate the regulations as to service of notices contained in section 196 of the Law of Property Act 1925.

Section 196 provides:

…(3) Any notice required or authorised by this Act to be served shall be sufficiently served if it is left at the last-known place of abode or business in the United Kingdom of the lessee, lessor, mortgagee, mortgagor, or other person to be served…

(4) Any notice required or authorised by this Act to be served shall also be sufficiently served, if it is sent by post in a registered letter addressed to the lessee, lessor, mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business…”

The principal purposes of a service provision are:

– to set out a practicable method by which a party serving a notice can be reasonably sure how he should do so, and

– that the party to be served can be reasonably sure he will receive it.

The address given by a party as his own address serves both these purposes- it gives clarity to the party serving.

In giving that address, the party to be served has made his own decision as to the likelihood of documents sent to that address actually coming to his attention.

If circumstances change, he has the capacity to inform the other party of any new address.

If he does not do so, it is not unreasonable that any risk that the documents do not actually reach him falls on him.

He cannot be heard to object that an address might not be considered to be a “place of abode or business”.

Terms like that are to be construed in the context against which they are used. “Abode” may include premises at which an individual carries on business but does not reside, so it is not necessarily resticted to residential premises.

Where the intended recipient is a company, it cannot mean a residential address.

There is no reason why that term should not extend to an address nominated by a person.

If a party nominates a residential property to receive a notice, it is then a matter for him and not his contractual counterparty whether he in fact lives there.

If a party nominates non-residential property, it is equally a matter for him what connection he has with it, and whether it relates to any business of his or not.

Nor can he be heard to object that he in fact carries on little or no business there. If he chooses to describe it as his address, the nature or quality of his business activity is a matter for him and not the other party.

He may for instance elect to nominate a particular address not because he himself lives or goes there for business purposes, but because he has confidence that those who do will pass on any communication they receive.

In the High Court case of Levett-Dunn & Ors v NHS Property Services Ltd [2016] the leases named three people and a professional pension trustee company “all of 75 Tyburn Rd Erdington Birmingham B24 8NB” to be the Landlord. The Tenant served break notices on them individually at that address. To be valid the notice would have had to be “given” before 11 January 2013, ie six months before the break date. The notices were expected but did not come to the Landlords’ attention until after 10 January 2013. The Landlords sought declarations that the notices were not properly served on them so that the relevant leases still existed.

The leases incorporated the regulations as to service of notices contained in section 196 of the Law of Property Act 1925 and said service on any one of the parties comprising the Landlord should be deemed to be service on all of them.

By the date of the break notice Simon Levett-Dunn had ceased being a Landlord and had transferred the freehold to the complainant Landlords in this case but had continued with a new company at 75 Tyburn Road.

Of the three continuing Landlords Frederick Levett-Dunn had not operated from 75 Tyburn Road since 1999. Mr Evans did not run a business from that property and the professional trustee company had never run a business from that property. At the date of the leases in 2010 Simon Levett-Dunn was the only one of the persons comprising the Landlord with any ongoing business connection with the premises at 75 Tyburn Road. If Frederick Levett-Dunn and Mr. Evans were prepared to continue to give 75 Tyburn Road as their address after they ceased to attend there, they must have assumed or been content that Simon Levett-Dunn would pass them anything addressed to them.

Had they wanted the notices to be served at another address they should have informed the tenant. So the break notices were validly served on them.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Tenant assigning to Guarantor void and no release

Were it possible, on an assignment of a typical post 1995 lease by a tenant (“T1”) to its guarantor (“G1”):

1. T1 would be released from the tenant covenants of the tenancy, with effect from the assignment: section 5(2)(a) of the Landlord and Tenant (Covenants) Act 1995 (“the 1995 Act”) .

2. G1 would be released from the tenant covenants of the tenancy, with effect from the release of T1: section 24(2).

3. It would be the effect of section 24(2) that “as from the release of [T1]”, ie on the assignment to the assignee (“T2”) (formerly G1), G1 would be released from its liabilities as guarantor under the lease.

4. However, as from the assignment to T2 (formerly G1), T2 would become bound by the tenant covenants of the lease: section 3(2)(a).

So the assignment would release G1 from the tenant covenants of the tenancy but, at the same instant, would bind G1 (but now as T2) with the tenant covenants of the tenancy.

This would mean in practice there would be no release at all for G1 from its liabilities under tenant covenants. For the liabilities under the tenant covenants would simply be taken up again by the guarantor, but this time as an assignee (and not as a guarantor).

Moreover where the guarantor is also primarily liable in respect of the tenant covenants, the liability re-assumed by G1 as T2 might be the very same. The objective effect of the assignment would be that G1 re-assumed precisely the same liability in respect of the tenant covenants as a result of becoming T2 under the assignment.

In the case of EMI Group Ltd v O & H Q1 Ltd [2016], where these facts applied, the High Court said that “frustrated” the operation of section 24(2)(b) and meant the assignment was rendered void by section 25(1)(a), an anti-avoidance provision which was to be interpreted “generously”. The guarantor was therefore absolutely precluded from becoming the assignee, on an assignment by the tenant whose tenant covenants he was guaranteeing.

The consequences of section 25(1)(a) were that the assignment was void and would not take effect to vest the lease in the Claimant, as an assignee, and that the Claimant remained bound as Guarantor of the Original Tenant’s obligations under the lease and had not been released from its obligations under the Guarantee by the operation of the 1995 Act.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Inaccessibility of Landlord did not dispense with consent requirement

A tenant’s covenant not to carry out alterations without the landlord’s consent is not a covenant by the landlord to give consent, or to be available to receive requests for consent.

If the landlord cannot be found, so that consent cannot be requested, the tenant may not carry out the alterations without being in breach of covenant.

In relation to residential tenancies, section 47(1) of the Landlord and Tenant Act 1987 (“the 1987 Act”) requires that a landlord’s name and address be included in every demand for rent and other sums payable by a tenant to his or her landlord.

Section 48(1) of the 1987 Act also requires tenants to be supplied with an address in England and Wales at which they may communicate with their landlord, including in connection with proceedings.

Where a landlord fails to comply with either section 47(1) or 48(1), sections 47(2) and 48(2) say any rent, service charges or administration charges otherwise due from the tenant to the landlord are treated as not being due until the particular requirement is complied with.

In the Upper Tribunal (Lands Chamber) case of Raja v Aviram [2016] no rent or service charge was demanded by Mr Raja and he supplied no address to Mr Aviram.

The Tribunal said no statute said that a failure by a landlord to provide a name and address meant that a tenant could carry out alterations or take other prohibited steps without the requirement to obtain the landlord’s consent.

Here, Mr Raja could have obtained the name and address of his landlord by searching the Land Register, which he did at one point.

Even if he did not have that address by the time the works were carried out, there was simply no basis on which he was excused the obligation of seeking consent just because his reasonable efforts to locate his landlord had been unsuccessful.

A breach of covenant had been committed by the creation of at least one new hole in the wall of the building for a replacement boiler without the consent of Mr Raja.

This was still the case even though Mr Raja would have consented when satisfied that the work was to be carried out competently.

A modest breach of covenant had been committed. Given the circumstances of that breach it was extremely unlikely that this valuable lease could be forfeited without relief against forfeiture being granted. Though Mr Raja might have been entitled to nominal damages if he had gone to court.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.