Landlords who have to consider whether to grant consent to works despite there being an absolute prohibition against alterations in a tenant's lease, must take care in future.
The Court of Appeal has held that a landlord of a block of flats was not entitled to grant a licence to a lessee to carry out work which would breach an absolute covenant against alterations, where the lessees of other flats could require the landlord to enforce covenants upon request.
In Duval v 11-13 Randolph Crescent Ltd  EWCA Civ 2298, 11-13 Randolph Crescent was converted into nine flats, each of which was held under a long lease. The landlord was 11-13 Randolph Crescent Ltd, a company owned by all the tenants.
The leases of the flats contained:
An absolute covenant by the tenant against cutting into any walls or ceilings.
A landlord covenant that any lease granted of a residential unit at the building would contain similar covenants and that at the request of a flat tenant (and subject to security for costs), the landlord would enforce the covenants given by another flat tenant.
Mrs Winfield was the lessee of Flat 13, and Dr Duval the lessee of Flats 11G and 11H. In 2015, Mrs Winfield approached the landlord asking for permission to carry out improvement works to Flat 13. The landlord was willing to grant consent but Dr Duval said that the terms of the lease prevented it from doing so.
Dr Duval argued that the landlord had covenanted to enforce the absolute prohibition against certain works if requested to do so by another flat tenant. If the landlord could licence or waive compliance with what would otherwise be a breach of the alterations covenant, it would no longer be possible to comply with the landlord's enforcement covenant. It was therefore implicit in the enforcement covenant that the landlord would not put it out of its power to comply with it when the time came.
In contrast, the landlord submitted that in the normal course of events a landlord is free to consent to what might otherwise be a breach of a tenant's covenant, and in some circumstances he might be in the unfortunate position of having inadvertently waived a breach or being estopped from relying on a breach. It could not have been intended that in such circumstances the landlord himself would be in breach of covenant.
Lord Justice Lewison delivering the judgment held that the landlord could be compelled to enforce the covenant against alterations and it was implied that the landlord will not put it outside of his power to comply with the enforcement covenant by granting a licence for prohibited works because it would not give practical or commercial coherence to the contract.
The impact of this decision will be wide reaching and appears to give tenants the ability to veto a landlord's decision to grant a licence to do something otherwise prohibited by the lease.
Lord Justice Lewison went some way to answering concerns over such a veto being exercised capriciously in residential blocks by warring neighbours, by confirming that landlords will retain their ability to licence what would otherwise be a breach of covenant; it was just that doing so would potentially expose them to a claim.
The case will be welcomed by tenants as an authority which goes some way to improving their often weaker bargaining position. Landlords concerned that their freedom to grant consents is to be fettered will, however, be keen to stress that good reason must still be given by objecting tenants if any claim against them is to succeed.
Emma Gosling is senior associate at Forsters LLP