Property & Real Estate Barristers
Beware of Absolute Covenants – Supreme Court gives decision in Duval v 11-13 Randolph Crescent Ltd
6th May 2020
By Nicola Muir – 6th May 2020
The Supreme Court gave judgment today in the case of Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18 dismissing the landlord’s appeal. The Supreme Court found that a landlord is not entitled to grant a licence for alterations for works which would otherwise breach an absolute covenant where there is a mutual enforceability covenant.
Duval v 11-13 Randolph Crescent Ltd
11-13 Randolph Crescent is a block containing 9 flats each subject to a 125 year lease commencing in 1981. Mrs Winfield, the lessee of Flat 13RC, wished to remove a substantial part of a load bearing wall in the basement of her flat. She accepted that this would be in breach of Clause 2.7 of her lease so she approached her landlord for a licence. Having studied the engineering and architectural reports provided by Mrs Winfield, the landlord was minded to grant that licence. However, before it did so Dr Duval, the tenant of the flat above, issued proceedings for a declaration that the landlord did not possess the power to grant the licence because, provided the tenant agreed to indemnify the landlord for the cost of doings, the landlord had promised to enforce the covenants in the lease at the tenant’s request,
The lease in question contained two covenants in respect of alterations.
Clause 2.6
“Not without the previous written consent of the Landlord to erect any structure pipe partition wire or post upon the Demised Premises nor make or suffer to be made any alteration or improvement in or addition to the Demised Premises” – the qualified covenant; and
Clause 2.7
“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 or any sewers drains pipes radiators ventilators wires and cables therein….” – the absolute covenant.
Dr Duval’s case was that, as the landlord had undertaken via the mutual enforceability covenant to enforce the covenants of the lease, it could not do the opposite, namely, licence the breach of an absolute covenant. Such a licence would render the mutual enforceability covenant ineffective. She claimed that there was an implied term that the landlord would not put it out of its power to enforce Clause 2.7 of the lease by licencing what would otherwise be a breach of it. The Supreme Court, like the Court of Appeal before it, agreed.
The case may have wide implications. Mutual enforceability covenants are standard in modern leases and usually relate to all the tenant’s covenants many of which will be absolute covenants. As a result of Duval, the landlord cannot grant a licence which allows something which would otherwise be a breach of covenant.