Duval vs 11-13 Randolph Crescent Ltd: Considerations for Landlords of Residential Apartment Blocks


The Supreme Court has recently passed judgement in the case of Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18; a case of significant importance for both landlords and tenants of residential apartment blocks.

Issue

The issue considered in this case was whether a landlord can give consent to what would otherwise be a breach of a tenant covenant, where they are under an obligation of “mutual enforcement” to other tenants within the building.

Background

In Duval, the building consisted of nine flats each let on 125-year leases.  Each lease was drafted on similar terms, and included a “mutual enforceability covenant” whereby the Landlord is required, at the cost and request of a tenant, to enforce the covenants contained in the Lease against a co-tenant.

The Landlord received a request for consent from Tenant A for consent to carry out works to their flat, which included the removal of part of a load bearing wall at basement level. This would be in breach of  an absolute covenant contained within their Lease at clause 2.7 “not to…cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the Demised Premises…”.

The Landlord was minded to grant the consent, subject only to a requirement that Tenant A ensure they had suitable insurance in place.

Another flat owner within the building, Tenant B, issued proceedings for a declaration that the Landlord did not have the power to grant the consent, as the Landlord had covenanted with the other tenants in the building to mutually enforce any absolute covenants on the request (and at the cost of) a co-tenant.

Ruling

The Supreme Court ruled in favour of Tenant B and agreed that in authorising what would otherwise be in breach of covenant the Landlord rendered themselves unable to comply with their obligation of mutual enforcement.

The Court found there was an implied covenant in each Lease that the Landlord could not put out of their power the ability to enforce covenants where requested (and required) to do so, by authorising a tenant to do something that would otherwise be in breach of covenant.

Considerations for Landlords

It is commonplace for modern day residential leases to include mutual enforceability covenants.

Whilst the judgment in Duvall related to a covenant as to alterations, it has more far reaching implications, and can be applied to any other absolute unqualified tenant covenants within a Lease.

In light of this judgment a Landlord would be well advised to consider, on receipt of an application for consent, not only whether they are minded to grant the consent, but also whether it is actually within their power to do so.

If you would like any further information or to discuss any business matter, please contact us.


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