Archive for the ‘Covenants’ Category

Co-existence of the covenant for quiet enjoyment and landlord’s repairing covenant

April 3, 2012

Whether the steps taken by a landlord to perform his repairing covenant amount to a breach of the covenant for quiet enjoyment depends on whether all reasonable steps have been taken to minimise the potential risks. It is not necessary to show that all possible steps have been taken.

In Goldmile Properties Ltd v Lechouritis ([2003] EWCA Civ 49, CA (Eng)) L was the tenant of restaurant premises on the ground and basement floors of a seven storey building. The lease contained a covenant for quiet enjoyment and a covenant by the landlord to keep the structure and exterior of the property in repair. The landlord’s contractors erected scaffolding outside the building to do work necessary for compliance with the repairing covenant. This made the tenant’s restaurant feel dingy inside and made it appear closed to passers by. The tenant claimed that this amounted to a breach of the covenant for quiet enjoyment but this failed. It was necessary to make the two covenants compatible with each other; this was to be done by holding that the parties must have contemplated the possibility of some kind of interference when repairing works were being carried out. The covenant for quiet enjoyment was subject to this understanding. The question then became whether the landlord had taken all reasonable steps to minimise the risk to the tenant of interference caused by repair works. On the facts, the landlords satisfied this test.

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Quiet enjoyment: landlord’s liability for acts of those claiming under him

April 2, 2012

A landlord can be in breach of the covenant for quiet enjoyment because of the actions authorised by him or those claiming under him.

In Sanderson v Berwick-Upon-Tweed ((1883 – 84) L.R. 13 Q.B.D. 547, CA (Eng) D let a farm to S and another farm, lying above S’s farm, to C. D granted C a right to use the drainage system that ran under S’s farm. C twice caused damage to S’s farm. First through an excessive use of the drains and secondly though a normal use of the drains. On the second occasion the damage was caused because of defects in the drainage system. S brought proceedings in respect of the damage caused on both occasions relying on the covenant for quiet enjoyment.

S succeeded in respect only of the damage caused on the second occasion. D was liable here because C claimed under him and had acted in a way authorised by the easement granted by D.

‘[I]t appears to us to be in every case a question of fact whether the quiet enjoyment of the land has or has not been interrupted; and where the ordinary and lawful enjoyment of the demised land is substantially interfered with by the acts of the lessor, or those lawfully claiming under him, the covenant appears to us to be broken, although neither the title to the land nor the possession of the land may be otherwise affected.’ (per Fry L.J. at 551).

Quiet enjoyment: elements of the covenant: it is prospective

March 28, 2012

The covenant for quiet enjoyment is a covenant that the tenant’s lawful possession of the premises will not be substantially interfered with by the acts of the lessor or those claiming under him. It is prospective: it only relates to things done after the lease was granted. The interference need not be direct or physical (noise can give rise to a breach).

In Southwark LBC v Tanner ([2001] 1 AC 1, HL) the House of Lords confirmed the English Court of Appeal decision in Southwark LBC v Mills. T was the tenant in a block of flats owned by the Council. Because of inadequate sound insulation, the tenants could hear any noise made in other flats. This made life very unpleasant and T brought an action against the Council in nuisance and for breach of an express covenant for quiet enjoyment. The claims failed. There was no breach of the covenant for quiet enjoyment because the essential problem was a lack of sound insulation. But the covenant cannot impose a new positive obligation. The problem pre-dated the lease and the covenant is prospective. The landlords were making use of the remaining flats for the purpose that must have been in T’s contemplation at the time of the lease (as residential flats).

The claim in nuisance failed. There was no suggestion that the other tenants were committing a nuisance. In that case neither could the landlords be said to be authorising those claiming under them to commit a nuisance.

Lord Hoffman said:

‘The covenant for quiet enjoyment is therefore a covenant that the tenant’s lawful possession of the land will not be substantially interfered with by the acts of the lessor or those lawfully claiming under him.” (at 10).

For there to be a breach of the covenant, there must be substantial interference with the tenant’s possession, her ability to use the property in an ordinary lawful way. The covenant is not a warranty that the land is fit to be used for some special purpose (at 10). The covenant is prospective; the action complained of must occur after the grant (at 11). The tenant takes the property subject to the uses of the retained parts which the parties must have contemplated (at 11).

Lord Millett pointed out that the covenant had originally been concerned with the tenant’s title or possession but had later been extended to cover substantial interference with the ordinary and lawful enjoyment of the land  (at 22). Interference need not be direct or physical and noise could give rise to a breach (at 22 – 23). The covenant extends to rights appurtenant to the demised premises such as a right to light (at 24).

Covenant for quiet enjoyment cannot be invoked to impose (on its own) a repairing obligation

March 27, 2012

The covenant for quiet enjoyment does not impose a positive obligation to repair (though breach of such an obligation could also amount to a breach of the covenant for quiet enjoyment).

In Duke of Westminster v Guild ([1985] Q.B. 688, CA (Eng)) T had the benefit of a drainage easement over mews owned by L. The relevant drain, which served T’s property alone, was blocked. The lease provided that L could repair the drain and charge the cost to T. Under the law of easements, T could enter the mews and do the work at its own cost. It took the latter course but then sought to set the cost off against the rent. The English Court of Appeal held that T had no right to do this. There was no implied covenant or duty of care that required L to repair the drain. In the absence of such a positive obligation, failure to repair did not amount to a breach of the covenant for quiet enjoyment.

Slade LJ said:

‘The express covenant for quiet enjoyment and implied covenant against derogation from grant cannot in our opinion be invoked so as to impose on [L] positive obligations to perform acts of repair which they would not otherwise be under any obligation to perform.’ (at 703)

Relationship between privity of contract and privity of estate

March 21, 2012

In City of London Corporation v Fell ([1993] 1 A.C. 458) the original tenant of leasehold property had assigned the lease. The assignee stayed in possession at the end of the term and the lease was continued by virtue of section 24 of the Landlord and Tenant Act 1954. The assignee went into liquidation during this continuation and the landlord sought to recover rent arrears from the original tenant relying on the contractual commitments given. Was the original tenant liable for rent arrears that had accrued during the continuation? The House of Lords held not. The original tenant had not contracted to make any payments once the contractual term had ended (there was no express covenant to pay the rent during any statutory continuation) and the statute did not extend the original tenant’s liability in this way.

Lord Templeman’s judgment is notable for its explanation and affirmation of some of the basic principles concerning privity of estate. For example:

‘The effect of common law and statute on a lease is to create rights and obligations which are independent of the parallel rights and obligations of the original human covenantor’. (at 465).

A little later:

‘Upon assignment of a lease, the provisions of the covenants by the original tenant continue to attach to the term because those provisions touch and concern the land and not because there continues to exist an original tenant who has ceased to own any interest in the demised land but remains liable in contract to fulfil the promises he made under covenant.’ (at 465 – 466).

Incorporated owners must do everything reasonably necessary to enforce the DMC

March 2, 2012

In Bealieu Peninsula (IO) v Perfect China International Ltd ([2012] HKEC 294) PC owned house 31 in a development. For about a year, PC complained to the management of the incorporated owners about extensive alterations and additions being made by the neighbour at number 30. These were visible from number 31. The management tried (in vain) to gain access to number 30 to inspect the works, organised meetings between the neighbours and procured the involvement of the Government’s Buildings Department. The parties accepted that the DMC and section 18(1)(c) of the Building Management Ordinance required the incorporated owners to do everything reasonably necessary to enforce the DMC obligations. The Lands Tribunal had no hesitation in deciding that this duty had not been discharged by the actions taken and ordered the incorporated owners to do everything reasonably necessary; this included bringing proceedings against the owner of number 30 in respect of the works done in breach of covenant.

The management could not pass this burden onto the Buildings Department. The incorporated owners had their own duty to perform.

Furnished dwelling: implied fit for habitation covenant

February 28, 2012

An implied term that the property is reasonably fit for habitation is implied into a lease of a furnished house.

In Smith v Marrable ((1843) 11 M & W 5, 152 ER 693) S let a furnished house to M for 6 weeks. The house was infested with bugs and M left after a week (paying one week’s rent). The court found that M had been within his rights to repudiate the lease. There had been a clear breach of the term implied into a lease of furnished residential accommodation that it was reasonably fit for habitation.

Repairing covenant: no exclusion for damage caused by an inherent defect

February 27, 2012

Any damage to property falls within a repairing covenant provided it is on the right side of the repair / renewal divide; that is provided that it does not involve giving back something substantially different from what had been demised. There is no exclusion for damage caused by an inherent design defect. Further, it may be that curing the design defect is the only acceptable way of repairing the property and, again subject to the question of degree, this curing of the inherent defect will fall within the repairing covenant.

In Ravenseft Properties Ltd v Davstone (Holdings) Ltd ([1980] QB 12) there was a design defect in a building. Because of a failure to use expansion joints, parts of the stone cladding on a concrete structure began to bow away from the structure. The defective sections of cladding were replaced (this time with expansion joints included). The question was whether this work fell within the scope of the tenant’s repairing covenant. The tenant contended that it did not and that there was a doctrine to the effect that remedying damage due to an inherent design defect did not amount to repair.

The tenant failed. There is no doctrine of inherent defect. If the works required amount to repair, rather than renewal of substantially the whole, then they fall within the repairing covenant. The ratio of the cost of the work to the cost or value of the entire property can be an indicator of whether the work is repair or not. Or it might be right to look at whether the part being remedied was a small part of the whole or much more. Applying either of these approaches led to the conclusion that the works involved were repairs. Including expansion joints (curing the ‘inherent defect’) could be a necessary part of the repair. This was so in the present case.

‘Tenantable repair”

February 21, 2012

The English Court of Appeal considered the meaning of a covenant to keep property in ‘tenantable repair’ in Proudfoot v Hart ((1890) L.R. 25 Q.B.D. 42, CA (Eng)). While the courts generally seem not to give much weight to qualifying words such as ‘tenantable’, the approach taken was to consider whether a likely prospective tenant of the property would be put off by any deterioration of its fabric (including the state of decoration). This seems to be a dimension that is added by the word ‘tenantable’. Lopes LJ offered this definition of the phrase:

‘[“Good tenantable repair”] appears to me to mean such repair as, having regard to the age, character, and locality of the house, would make it reasonable fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it.’ (at 55).

As Anstruther Gough Calthorpe v McOscar later explained, this definition needs to be carefully understood. It does not mean that the standard of repair required by the covenant (as originally intended by the parties) is reduced if the character of the area later declines. Perhaps one could say that ‘tenantable’ adds to, rather than subtracts from, the basic covenant to repair.

Implied repairing covenants

February 20, 2012

In Liverpool City Council v Irwin, [1976] 2 W.L.R. 562, (HL)) I was the tenant of a maisonette on the ninth and tenth floors of a multi-storey building. The staircases were unlit, the lifts were often out of order and the rubbish chute was often blocked. These common parts were in the ownership and control of the City Council (the Landlord). The lease contained only obligations on the part of the tenant. The House of Lords held that there was an implied obligation on the landlord to take reasonable care to keep those common parts in reasonable repair and usability. The implication was justified by the nature of the contract, the actions of the parties and the circumstances. The maisonette could not be occupied unless these common parts were in order. The test was one of necessity. The House of Lords was careful to reject the idea that the courts were free to imply an obligation merely because it would be reasonable to do so.