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Insights // 25 June 2021

Mutual Enforceability Covenants and Traps to Be Aware of

Partner Katja Wigham, head of our Commercial Property team, discusses the implications of absolute covenants for landlords and tenants.

Under Section 19(2) of the Landlord and Tenant Act 1927, a qualified covenant (a promise to not do something without the landlord’s consent) in respect of alterations will be converted to a fully qualified covenant so that the Landlord’s consent cannot be unreasonably withheld.  Alterations are approached from the point of view of the tenant and include any improvement which increases the amenity of the premises for the tenant, as per the case of Lambert -v- Woolworth and Co Limited. 

However, if a lease contains an absolute covenant against alterations, this would be an absolute prohibition against carrying out alterations regardless of whether they are an improvement and the landlord will therefore retain full control. An absolute covenant does not however mean a tenant cannot ask for consent to carry out works, but the landlord is entitled to refuse or impose conditions.

In the 2020 case of Duval -v- Randolph Crescent Ltd, the courts were asked to establish whether the landlord, Randolph Crescent Ltd, did in fact have the power to authorise the tenant to undertake works which essentially amounted to a breach of covenant (an absolute covenant). Randolph Crescent consisted of a block of nine flats whereby each of the flats were let on long residential leases to tenants on identical terms.

Each lease contained the following covenants: -

  1. A qualified covenant preventing the tenant from making any alterations or improvements without the written consent of the landlord;
  2. An absolute covenant preventing the tenant from cutting any roof, walls, ceilings or surface media; and
  3. An obligation on the part of the landlord, Randolph Crescent Ltd, that it will enforce the covenants in the lease on any request by any tenant of any residential unit in the building (mutual enforceability covenant).

One of the tenants sought a licence from the landlord to remove part of a supporting wall as this would clearly breach the absolute covenant in respect of “cutting any walls” if carried out without consent. Randolph Crescent granted a Licence to the tenant on the condition that the tenant would put sufficient insurance in place. However, one of the other tenants in the block, Dr Duval, sought a declaration that in view of the mutual enforceability covenant in the Lease, Randolph Crescent did not, in fact, have the power to waive the absolute covenant in the lease without the prior consent of all the lessees in the block. They should first have approached the other tenants in the block to confirm their approval to the works.

Dr Duval took the case to court and was successful in the first instance and on appeal by Randolph Crescent. The Court stated that by considering the construction of the leases in context, Randolph Crescent could not expressly grant any licence in respect of the absolute covenant, because to do so would deprive the mutual enforceability covenant of any practical effect. Therefore, the Court held that it was not within Randolph Crescent’s power to licence the works and it was appropriate that the works required the consent of all other lessees within the block.

It is therefore important to be aware of any absolute covenants where a mutual enforceability covenant is present, in both residential and commercial leases, to ensure that all of the relevant parties are involved in negotiations at the time consent is sought. To do otherwise, a landlord could essentially end up in breach of its own covenant with its tenants.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Katja Wigham

Katja Wigham

Partner, Commercial Property Law

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