Property Law

Covenants in leases | Land Law – SQE1 & SQE2 Exam

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Covenants in leases
Demise (lease) valid if:
1. Essential characteristics of lease (see previous chapter)
2. Complies with necessary formalities
3. No uncertainty as to
a. Identity of landlord
b. Identity of tenant
c. Property to be demised
d. Term of demise (date of commencement and expiration)
e. Consideration
• Express covenants + implied covenants possible within lease
Landlord’s express covenants
Quiet enjoyment
• Covenant not to interfere with tenant’s possession or enjoyment of
property during lease
• Covers:
o Landlord
o People claiming under landlord
• Does not cover people claiming by title paramount (e.g. through superior
landlord)
Examples of breaches
• Erection of scaffolding hindering access (Owen v Gadd)
• Persistent intimidation to induce him to leave (Kenny v Preen)
o Protection of Eviction Act 1977 – harassment and unlawful
eviction of residential tenants = criminal offences + statutory
damages (Housing Act 1988 ss 27 + 28)
• Failing to adequately soundproof a flat ≠ breach (Southwark LBC v Mills)
Other possible express covenants by landlord
• To insure
• To repair
• To enforce covenants in other leases of the same building (as tenants
cannot enforce against other tenants, e.g. if fail to pay service charge)
© Liam Porritt 2020 2
Tenant’s express covenants
• General rule: tenant can do all things that an owner of an estate can do,
unless the lease prohibits such actions
To pay rent
• Often leases stipulate that insurance premiums and service charges are
treated as rent = landlord can use particular remedies for rent recovery to
recover these payments too
• Unless contrary agreement (requiring payment in advance), payment
required in arrears
• In general, frustration of a lease where premises cannot be used is
unlikely, but possible (National Carriers Ltd v Panalpina (Northern) Ltd)
o 10-year lease for warehouse not frustrated by closure of only
access for 20 months
o Longer closure (number of years) could have been frustration
o Land physically destroyed (falling into sea), probably = frustration
• No implied right of landlord to call for review of rent during term of rent,
so must be express provision if rent to be increased during lease
Repair
• Usually express clauses allocating responsibility for repairs
• Short residential leases = express clauses subject to Landlord and Tenant
Act 1985, s 11(4) ~ covenant for repair of certain elements is of no effect
(see below)
• General repairing covenant = tenant must keep premises in condition in
which they would be kept by reasonably minded owner (Proudfoot v
Hart), having regard to:
a) Character and type of premises at beginning of lease
(neighbourhood has no impact)
b) Age of premises
c) Express words of covenant
• NOTE: if things are broken when the tenant moves in, and the wording is:
‘to keep in good repair’, they are under an obligation to repair the damage
(Proudfoot)
• Covenant to repair ≠ where there is no actual damage to fabric of
property (e.g. condensation) (Quick v Taff Ely BC)
• Covenant to repair ≠ necessary to renew whole or substantially the whole
of the property
o Lurcott v Wakely – ‘Repair is restoration by renewal or
replacement of subsidiary parts. Renewal, as distinguished from
repair, is reconstruction of the entirety.’ = 200-year-old front wall
taken down to ground floor and rebuilt = repair
© Liam Porritt 2020 3
o Lister v Lane – house built on timber platform resting on boggy soil
= wall bulged + house condemned for demolition ~ tenant not
liable under covenant to repair
o Ravenseft Properties Ltd v Davstone (Holdings) Ltd ~ concrete
cladding fell off new building; expansion joints not in original
design had to be inserted = repair as no change to character of
building + small relative cost
o Brew Brothers Ltd v Snax (Ross) Ltd – Flank wall tilted over next
door’s property due to defective drains covered by repairing
covenants; repair = £8,000; whole value of building = £7,500-
£9,000 ≠ repair
• Fair wear and tear / consequential damage – tenant not generally liable
unless express clause to that effect
• However, (even if express clause excluding fair wear and tear), tenant
must do such repairs as may be required to prevent further consequential
damage flowing originally from fair wear and tear (Regis Property Co Ltd v
Dudley)
o In spite of express exclusion of liability for wear and tear, tenant
liable for damage caused by rain coming through skylight (which
was damaged due to wear and tear)
Alienation
• Assignment – parting with whole of tenant’s term of years, w/ assignee
taking over lease
o Assignor only remains liable for personal covenants
• Sub-letting – sub-lease for shorter than own lease = new estate, w/
intermediate landlord ~ purported subletting for whole of residue of
term operates as assignment
• Restrictions are not implied + are construed in tenant’s favour:
o Covenant against assignment does not prohibit sub-letting of
whole or part (Church v Brown)
o Covenant against sub-letting the whole does not prohibit subletting of part (reverse not true) (Wilson v Rosenthal)
o If covenant against subletting the whole, this will be breached if
aggregate of individual sub-lettings amounts to disposal of the
whole
© Liam Porritt 2020 4
Qualification of covenant re: alienation
1) Ignore requirement of consent for building leases
• Requirements of consent can be disregarded where:
o Lease a building lease (i.e. including erection or substantial
improvement of property)
o Lease > 40 years
o Term remaining > 7 years
o Written notice given to landlord within 6 months of transaction
(LTA 1927, s 19(1)(b))
2) Where requirement of consent, consent must be requested
• If covenant qualified by requirement of consent from landlord + tenant
assigns without consent = breach of covenant (even if landlord could not
reasonably have withheld consent) (Eastern Telegraph Co Ltd v Dent)
3) Where requirement of consent + consent requested, it must not be unreasonably
withheld (except in commercial leases where provisions to the contrary re:
assignment)
• If covenant qualified by requirement of landlord’s consent to assignment/
sub-letting
o Landlord and Tenant Act (LTA) 1927, s 19(1)(a) = consent shall
not be unreasonably withheld (no contracting out of this
provision)
§ LTA 1988 – landlord must reply to tenant’s request for
consent
• Within reasonable time
• With written reasons for refusal
o LPA 1925, s 144 – landlord has no right to demand payment of
‘fine’ for his consent
§ He can however claim reasonable legal and other expenses
incurred in connection with giving his consent (LTA 1927, s
19(1)(a))
• ‘Reasonableness’ = court to decide (LTA 1927, s 19(1)), w/ BoP on
landlord (LTA 1988, s 1(6)(c))
• International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd –
a) Reasonable refusal must relate to:
i. Character of proposed assignee; or
ii. Proposed use of premises by assignee
b) Landlord’s refusal must not be designed to achieve a collateral
purpose unconnected with the lease (Bickel v Duke of Westminster)
c) If conclusions of landlord might be reached by a reasonable person
in the circumstances = sufficient, without need for proving
conclusions justified
© Liam Porritt 2020 5
d) May be reasonable to refuse on grounds of purpose of assignee,
even if this purpose is not excluded by the lease
e) Where large disproportion between benefit to landlord +
detriment to tenant, may = unreasonable
f) In each case = question of fact, subject to the above propositions
• Discrimination – withholding consent on grounds of colour, race, ethnic
or national origin, disability, religion or belief, sex or sexual orientation =
unlawful, unless small premises shared with landlord or near relative
(Race Relations Act 1976, Sex Discrimination Act 1975, Disability
Discrimination Act 1995, Equality Act 2010)
Examples – reasonable refusal
• Unsatisfactory tenant’s reference
• Proposed use of property would damage landlord’s own commercial
interests through rival business
• Sub-letting at substantial premium + at rent well below open market
value
• Existing tenant already in breach of covenant
Examples – unreasonable refusal
• Proposed assignee = diplomat protected by diplomatic immunity
• Landlord’s intention to bring tenancy to an end, so landlord would refuse
consent to any assignee
• Proposed assignee already tenant in another of landlord’s properties,
which would be difficult to re-let
3.1) Result of unreasonably withholding consent by landlord
• If consent unreasonably withheld, the tenant may:
o Assign regardless (problematic if ultimately withholding of
consent deemed reasonable)
o Apply to court of declaration that landlord is acting unreasonably
o Sue the landlord for damages under LTA 1988
§ E.g. Midland Bank plc v Chart Enterprises – delay of 2 ½
months unreasonable in absence of suspicious
circumstances requiring investigation
2.1 + 3.2) Result of breach (i.e. not requesting consent / ignoring reasonable
withholding of consent)
• Assignment / sub-letting = valid to pass / create legal estate (Old
Grovebury Manor Famr Ltd v W Seymour Plant and Hire Ltd (No 2)), but
may give rise to right to forfeiture / claim in damages
o In legal lease, no implied right of forfeiture in event of breach =
must be express forfeiture clause for this remedy
© Liam Porritt 2020 6
4) Where requirement of consent, conditions may be established for where consent
may be withheld in commercial leases
• Landlord and Tenant (Covenants) Act 1995, s22 ~ in commercial leases
granted after 1995, tenant and landlord can agree:
a) Circumstances in which consent to assignment (not sub-letting)
may be withheld; and/or
b) Conditions, subject to which consent to an assignment may be
made, which will automatically be deemed reasonable (however, if
landlord has discretion, this must be exercised reasonably or be
subject to independent review)
• Practical effect of s 22 (b) = landlord can make it a condition of consent to
assignment that assignor enters an ‘authorised guarantee agreement’ in
which assignor guarantees performance of obligations by assignee
Covenant to give notice of assignment, sub-letting, mortgage or charge
• If assignment, notice given by incoming assignee
• Without this clause, no implied obligation to inform landlord of dealings
with lease
Alternations
• Customary to impose restriction on all external / structural alterations
• Internal / non-structural alterations usually permitted with consent
o Such consent not to be unreasonably withheld in case of
improvements = automatically implied into qualified covenant
(LTA 1927, s 19(2))
Use
• In absence of express restrictions, tenant can use for any lawful purpose
• Customary to restrict use to residential or office or light industrial use etc.
• Qualified covenants – no provision that landlord to act reasonably in
refusing consent; but must not charge fine (LTA 1927, s 19(3))
© Liam Porritt 2020 7
Implied Obligations of a Landlord and Tenant under a lease
• Limited in scope – e.g. in legal lease, no implied right of forfeiture in event
of breach = must be express forfeiture clause for this remedy
Landlord’s implied covenants
• Quiet enjoyment – implied in absence of express (Markham v Paget)
• Not to derogate from his/her grant – cannot take away with one hand
what they have given with the other
o E.g. landlord must not let adjoining premises for use which may
adversely affect purposes for which premises have been let (Aldin
v Latimer Clark)
• Repair –
o Furnished lettings – implied undertaking that fit for human
habitation at commencement of tenancy (Smith v Marrable)
o Houses let at a low rent – statutory obligation in relation to
residential dwellings (rent < £80/year in London, £52 elsewhere)
= house fit for human habitation at commencement of tenancy and
kept in this condition throughout
o Short (< 7 years) residential leases, regardless of rent (LTA
1985, s 11) – obligation to repair
§ S 13 – short lease
• s 13(1) – lease granted on or after 24th October 1961
• s 13(2)(b) – lease determinable by lessor before 7
years from commencement = short
• s 13(2)(c) – lease conferring option for lessee to
renew for term which totals > 7 years ≠ short
§ S 11(1) –
• (a) Repair structure and exterior
o Douglass-Scott v Scorgie – roof part of roof
flat = part of its exterior
o Edwards v Kumarasamy – tenant tripped on
paving stone outside property where
landlord had easement ≠ exterior
o Irvine v Moran
§ Structure: elements giving dwelling its
essential appearance, stability and
shape + windows + internal plaster
(Grand v Gill, overturning Irvine)
§ External garage ≠ structure and
exterior
§ Covenant to paint exterior of house
not enforceable against tenant, as this
© Liam Porritt 2020 8
is landlord’s obligation under s
11(1)(a)
o Hopwood v Cannock Chase District Council –
paved area to rear of property ≠ exterior as
not essential means of access to house
o Edwards v Kumarasamy – asserts that Brown
v Liverpool Corp (where paving of essential
access = exterior) incorrectly decided and
that exterior of house is to be given its
natural meaning (i.e. part of house)
• (b) Keep in repair and proper working order
installations for supply of water, gas, electricity +
sanitation
• (c) Keep in repair and proper working order space
heating and heating water
§ S 11(2) exceptions
• (a) – no obligation to repair where lessee liable due
to failure to use premises in tenant-like way (or
would be liable but for express covenant on his part)
• (b) – no obligation to rebuild where fire, flood,
tempest etc.
• (c) – no obligation re: anything lessee entitled to
remove
§ S 11(3) – standard of repair accounts for age, character,
prospective life and locality of property
o Notice – landlord must have notice / knowledge of defect before
liable to repair (O’Brien v Robinson)
§ Notice not necessary where land in landlord’s direct control
§ Landlord liable to repair if knowledge of disrepair through
other means (Dinefwr Borough Council v Jones)
o Consequential damage – damage consequential to original damage
falls to party liable for original damage (McGreal v Wake)
§ Can be rebutted if the tenant does not give notice within a
reasonable time of damage that causes later damage = this
will render the tenant liable for all consequential damage
for not acting in a tenant-like manner (Warren v Keen)
Extent of Landlord’s implied covenants
• Where premises consist of dwelling forming part of building, L’s implied
covenants extend to other parts of the building in which L has an interest
/ over which he has control (s 11(1A) LTA 1985, as per HA 1988)
© Liam Porritt 2020 9
Tenant’s implied covenants
• To pay rent
• To pay rates and taxes
• To use the property in a tenant-like manner
o I.e. do little jobs that a reasonable tenant would do (Denning LJ,
Warren v Keen)
§ If going away for winter, turn off the water and empty the
boiler
§ Clean the chimneys + windows
§ Mend light when fuses
§ Unstop the sink when blocked by his waste
o Not damage the house willfully or negligently; ditto ensure the
same of family and guests
o Do repairs caused by lack of acting in tenant-like manner or by his
own negligence
o However, no implied duty to repair disrepair due to reasonable
wear and tear
• Not to commit waste – waste = act or omission that alters the state of the
land:
o Ameliorating waste – change improves land
o Voluntary waste – undesirable act to effect change (e.g. knocking
down wall)
o Permissive waste – leaving undone something that ought to be
done
• Extent of liability depends on type of lease (e.g. weekly tenant liable for
voluntary waste, not permissive waste)
• To allow the landlord to enter and view – implied or express obligation on
L to repair, L must be allowed to enter + view property
© Liam Porritt 2020 10
Landlord’s remedies
Remedies for non-payment of rent
1. Action for debt – tenant sued for up to 6 years’ arrears (Limitation Act
1980, s 19)
Ø See also restrictions on recovery under LT(C)A 1995, s 17 – next
chapter of notes
2. Distress and Commercial Rent Arrears Recovery
Ø Distress:
§ Take possession of goods to the value of the rent owed
§ HRA 1998 – possible breach of Art 6, Art 8, Art 1 (Protocol
1)
§ Abolished 2014
Ø Commercial Rent Arrears Recovery
§ Only available where:
o ≥ 7 days’ rent arrears
o Non-mixed-use + non-residential premises only
§ Notice giving 7 clear days’ notice to seize goods
§ Tenant can apply for execution to be delayed / set aside
§ If concerns re: disposal of goods by tenant, landlord can
apply for reduced notice period
3. Forfeiture – bringing lease to premature end because of tenant’s breach
(forfeiture clause) – see Ch 14 notes
Remedies for other breaches
1. Injunction – e.g. to prevent unauthorised sublease (Hemingway Securities
Ltd v Dunraven Ltd)
2. Specific performance
Ø Very rare for repairing covenant – usually damages (Jeune v
Queen’s Cross Properties Ltd)
Ø However, very occasionally may be awarded, e.g. Rainbow Estates
Ltd v Tokenhold – lease w/out forfeiture clause or clause allowing
landlord to enter to carry out repairs if tenant in breach of
repairing covenant = specific performance of repairing covenant
against tenant
3. Damages – ordinary contract rules, except where repairing covenant,
where LTA 1927, s 18 governs how damages calculated
Ø Damages not to exceed amount by which value of reversion has
fallen due to breach
Ø No damages for breach at termination of lease where structure to
be altered / building pulled down, such as to render repairs
valueless
4. Forfeiture – ch 14
© Liam Porritt 2020 11
Leasehold Property (Repairs) Act 1938
• Where Act applies, landlord seeking damages / forfeiture for breach of
repairing covenant must serve notice informing them of rights under the
Act – see ch 14
Tenant’s remedies for landlord’s breaches of covenant
1. Injunction – restrain a breach of restrictive covenant (prohibitory
injunction) or exceptionally compel performance (mandatory injunction)
2. Specific performance – LTA 1985, s 17 – court can order s.p. of L’s
repairing covenant (where dwelling) + here ignores equitable rules
(delay, clean hands etc.)
3. Damages
Ø Normal contractual rules
Ø For L’s disrepair, T can claim for
i. Reduction in value of lease
ii. Distress / inconvenience + personal injury (‘general
damages’)
iii. Particular losses, e.g. cost of living elsewhere / damage to
goods (‘special damages’)
4. Repudiation – lease can be brought to end by repudiatory breach (Hussein
v Mehlman)
5. Set-off – L’s breach of repair covenant, T has common-law right to carry
out repairs + deduct monies paid from rent payable (Lee-Parker v Izzet)
Ø May be excluded in lease, if exclusion clear and explicit (Electricity
Supply Nominees v IAF)
Ø Only applies to repairs to demised property (i.e. land within
tenant’s control)
Ø Tenant must give landlord prior notice of default on repair
covenant
Set-off may also be used in equity by tenant – where L claiming for rent
arrears, set-off may be used in relation to outstanding repairs (not
completed by L or T)

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