Mutual enforceability clauses

The Supreme Court decision in Duval v 11-13 Randolph Crescent

The much anticipated decision of the Supreme Court relating to landlord consents where there is a mutual enforceability clause has been handed down.
The decision in Duval v 11-13 Randolph Crescent, which confirms the outcome in the Court of Appeal, is controversial because it effectively restricts landlords ability to manage their own blocks as they see fit and also hands more power to lessees.

The case: Duval v 11-13 Randolph Crescent

The case concerned a 9 flat block in Maida Vale, London. A lessee of a 125 year lease, Mrs Winfield, sought permission from her Landlord to do some alterations, they included the removal of a load bearing wall at basement level. The alterations were prohibited by her lease which contained an absolute covenant not to carry out such works. The landlord was minded to give permission but another tenant, Dr Duval, objected.

The leases at Randolph Gardens had a mutual enforceability clause which is fairly common in a residential flat lease. It is where the landlord covenants with each tenant that all other leases would contain covenants of a similar nature to those the tenant was giving and that at the request of a tenant (and subject to costs being paid) the landlord will enforce covenants given by the other flats owners.

Dr Duval, who owned two neighbouring flats, argued that the landlord would be in breach of its obligation under this mutual enforceability clause to all other tenants in the block if it granted permission to Mrs Winfield.

What was the decision?

The Supreme Court confirmed that Dr Duval was correct. The grant of the licence to carry out work which, but for licence, would breach a covenant in their lease, would constitute a breach of the landlord’s covenant to other lessees. The decision would apply not only to absolute covenants (as was the position in this case) but also to qualified covenants which are not strictly complied with.

What does the Supreme Court decision in the Duval case mean in practice?

Mutual enforceability clauses are not in all leases but they are fairly common in residential flat blocks. It is unrealistic to conclude that a landlord should now seek the consent of all other lessees before agreeing to works of this nature but this is what would be required to avoid being in breach.

The case is a helpful reminder of two things landlords should remember when dealing with consents:

  • If asked for consent to do something which a lessee would otherwise not be allowed to do, consider whether or not it will adversely impact other tenants and seek an indemnity provision incase action were to be taken by a disgruntled lessee at a later date;

  • if a landlord is asked to enforce tenant covenants it is obliged to do so and should not ignore the request.

Remedies sought by tenants could be injunctions or damages. It will depend on the facts of the individual case and the extent of the negative impact on the other lessees but in most cases damages are likely to be nominal. Therefore the practical implications of this case may prove far less concerning than the decision itself.

Retrospective Effect

The Supreme Court decision is a declaration of what the law is and always has been. Therefore any tenant that has been aggrieved by their landlord giving consent to another tenant for works they were not permitted to do in the last 12 years could potentially have a claim for damages against their landlord.

This case will also be of concern to purchasers of properties where works have been done in the past which are in breach of such covenant. Retrospective consent or indemnity insurance may be options to resolve the issue.

To read the full judgment visit the Supreme Court website.

CONTACT AMY

If you would like more information or advice relating to this article or a Property Litigation matter, please do not hesitate to contact Amy Sevier on 01727 798033.

© SA LAW 2020

Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.