UNIT 10 LEVEL 6 – LANDLORD AND TENANT
Suggested Answers
SECTION A
Question 1
The scope and effect of the implied covenants of quiet enjoyment and nonderogation from grant must be considered before an assessment as to their effectiveness in protecting tenants’ enjoyment and use of a property can be made.
The implied covenant of quiet enjoyment is wide in its application. Failing its incorporation into an agreement as an express term, it will be implied into all
“contracts for lettings”. a term of art which, in the case of Markham v Paget
(1908), was seen to include equitable as well as legal leases.
The covenant of quiet enjoyment amounts to three separate undertakings on the part of the landlord. The first two amount to a qualified undertaking on the part of the landlord as to title and to put the tenant in possession. These undertakings protect a tenant’s enjoyment and use of the property in that they ensure a course of redress if possession is not granted. Once the tenant has gained possession, however, the undertakings are of limited significance. The undertaking as to title only guarantees that a landlord has sufficient title to put the tenant into possession and it does not necessarily follow that such an interest will be maintained throughout the term. The undertaking to grant possession is satisfied once possession is granted and will no longer be actionable once the tenancy has commenced.
The third aspect of the covenant of quiet enjoyment is that the landlord undertakes to ensure that the tenant will enjoy the property free from physical interruption. To be actionable any disturbance suffered by a tenant must be
“substantial”. In Browne v Flower (1911) substantial disturbance was regarded as disturbance “so substantial or intolerable as to justify the tenant in leaving the demised premises”. Many of the older authorities limit the principle to disturbances that have a physical origin. Nevertheless, more recent authorities, appear to adopt a broader, common sense approach and are in keeping with the view expressed by Lord Denning in McCall v Abelesz (1976) that the issue is whether there has been some interference “with the tenant’s freedom of action in exercising his rights as a tenant”.
This aspect of the covenant of quiet enjoyment protects a tenant’s enjoyment and use of a property but it does have limitations. Disturbances of a temporary nature have not been regarded as actionable and the covenant does not extend to matters of privacy. For example, in Browne v Flower (1911) there was no breach despite the erection of a staircase overlooking the dwelling. Further the covenant only extends to the landlord and those that derive title from him.
The implied covenant of non-derogation from grant protects a tenant’s use of property in that the landlord undertakes not to do anything inconsistent with the purpose of the letting. For example in Aldin v Latimer Clark, Muirhead & Co.
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(1894) a landlord was found to be in breach when he obstructed the airflow over land he had let as a timber yard.
By its nature this covenant is far from universal in scope. It will only apply where a purpose for a letting can be found and only in circumstances where the landlord maintains control of the adjoining land. Further in Kelly v Battershell
(1949) it was held that the covenant does not extend to comfort.
In summary the implied covenants of quiet enjoyment and non-derogation from grant go some way to protect a tenant’s enjoyment and use of property.
Nevertheless, as has been demonstrated, both limited to some degree in their extent and application and a case can be made that sometimes such limitations stand at odds with modern expectations.
Question 2
(a)
The common law definition of repair must be outlined before the significance of the definition can be discussed. It should then be possible to determine whether the common law permits the letting of a tumbledown house.
To use the words of Buckley L.J in Lurcott v Wakeley & Wheeler (1911) the courts regard repair as “making good damage” by replacement of “subsisting parts”. Although the language used in not always consistent, the common law draws a distinction between repairs, on the one hand, and renewals on the other.
The latter are regarded as more extensive and outside the scope of a standard reparing covenant.
McDougall v Easington District Council (1989) is a good starting point as it sets out three practical tests the courts may adopt to draw the distinction between repairs and renewals. It should be noted that the courts are free to use one or all of the tests “as the circumstances of the case demand”. The first test looks to see whether the alteration affects the whole or part of the structure . If the work affects the whole, it is more likely that it will be classified as a renewal. For example in Lurcott v Wakeley & Wheeler (1911), the rebuilding of a wall, which required the digging of footings, the laying of concrete foundations and the installation of a damp course, was seen to be a renewal. The second test examines whether the work will result in a change in character of the property. If the character of the property changes, works will amount to renewals. The third test compares the cost of works with the overall value of the premises. The higher the proportional cost the more likely the works will be regarded as a renewal.
The significance of the common law definition of repair is hard to overstate. Not only does it underlie the interpretation of express covenants to repair in the case of non-residential lettings but it is also forms the basis of the statutory obligations imposed on residential landlords by the Landlord and Tenant Act
1985.
While the common law definition of repair is important, it does not prevent a landlord from letting a tumbledown house. It is the case that the overtly contractual approach of the common law tends to place the focuss on the extent of the parties obligations rather than the condition of the premises. For example, the practical application of the change in character test as set out in McDougall v
Easington District Council (1989) means that if disrepair stems from an inherent defect there will be no obligation to repair even though the property may be
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barely habitable or fit for purpose. This is illustrated by the decisions in Quick v
Taff Ely Borough Council (1986) and Post Office v Aquarius Properties Ltd.
(1987).
(b)
There are two main statutory obligations to repair, both of which are to be found in the Landlord and Tenant Act 1985. The scope and effect of each of these obligations will be outlined and an attempt made to determine the extent to which they prevent the letting of a “tumbledown house”. It should be noted that both of these obligations apply to residential tenancies. In the case of commercial premises there is no obligation on either party to repair and it will always turn on the contract.
S.8 of the Landlord and Tenant Act 1985 requires a landlord to maintain a dwelling as fit for human habitation for the duration of the tenancy. It is a modern enactment of a provision that dates back to the 19 th Century. The Law
Commission takes the view that the provision has “much to recommend it”, not least the fact that it is modelled on well understood common law principles.
Importantly, the state of the premises is central to its considerations. It would certainly prevent the letting of an tumbledown house. Unfortunately, however, the provision is too limited in its scope to be of any modern practical significance.
The 19 th Century rental limits have not been kept in line with inflation and as it currently stands, the provision only applies to houses let at very low rents.
S.11 of the Landlord and Tenant Act 1985 requires a landlord to “keep in repair” the exterior structure of premises and the installations which supply services such as water, gas and space heating. It is much wider in scope than s.8 as it applies to dwelling houses let for a term of less than seven years. Further, contracting out of the section is only possible with the leave of a court and is rare in practice. The fact that the landlord must “keep” the premises in repair ensure the obligations apply for the duration of the tenancy.
The provisions of s.11 go some way to ensure that residential premises remain fit throughout the term. Unlike s.8, the section has a wide application and it covers the vast majority of residential lettings. The requirements of the section are tightly defined, cover important safety considerations and ensure the focus of a court’s investigation is on the state of repair rather than the nature of any clause or agreement between the parties. Nevertheless, s.11 relies on the common law definition of repair. As a result there will be no obligation to carry out work that goes beyond repair even if the property is unfit for habitation.
Question 3
The practical difficulties posed by granting freehold title to the owners of flats will be outlined before the collective enfranchisement provisions of the Leasehold
Reform (Housing and Urban Development) Act 1993 (the Act) are explained. It will then be possible to determine the extent to which the Act successfully overcomes the problems associated with the freehold ownership of flats.
The central problems in relation to granting freeholder ownership to flat owners stems from the fact that, in English Law, it is not possible to ensure that positive covenants or obligations will bind all successors in title. In effect, this means that while it is possible to impose obligations in relation to the repair of the block on the original freeholders, there is no watertight method to ensure future
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owners will be required to honour those obligations. As a result the maintenance of the common parts and indeed, the block itself, would be in constant jeopardy.
The provisions of the Leasehold Reform (Housing and Urban Development) Act
1993 seek to overcome the difficulties involved in the freehold ownership by the process of collective enfranchisement. As originally enacted, the freehold is acquired, not by the flat holders themselves but by a nominee purchaser, typically a Registered Company in which each flat owner has an interest. The
Company will be a Registered Company, usually limited by guarantee, and each flat owner will hold a membership certificate or equivalent. Sections 121 to 124 of the Commonhold and Leasehold Reform Act 2002 envisage standardising the process and replacing the nominee purchaser with a Right To Enfranchise
Company, a new form of company modelled on the Right To Manage companies.
In principal, the scheme offers a solution to the problems inherent in freehold ownership. Nevertheless, to use a much overworked phrase, the devil is in the detail. At the very least, it is fair to say that the scheme can be cumbersome in its operation. For example, enfranchisement is only available to tenants who meet the qualifying requirements, and these are not easily understood to those outside the legal profession. For the Act to apply the main building must fall with the definition of premises and this can only be determined by reference to ss.3 &
101 of the Act and relevant case law. Further, as originally enacted, the scheme was narrow in its scope. It only applied to tenants who could satisfy a residency requirement. The fact that the legislators reduced and eventually removed the requirement in the Commonhold and Leasehold Reform Act, appear to be a tacit acknowledgement that the scheme was too limited from the start.
Qualifying conditions apart, the procedural obstacles that qualifying tenant’s need to overcome can be problematic. This is compounded by the fact that the
Act requires collective action on the part of the tenants. It will be for the tenants to establish the nominee purchaser, they will have to conduct any preliminary investigations and it is they who will have to serve the initial notice. The information required by the initial notice is comprehensive and requires details of the qualifying tenants, an outline of the affected leasehold interests. Further the tenants will have to determine and propose the purchase price and by virtue of
S.3 the tenants will have to bear the landlord’s costs. Taken together these factors may force tenants to think twice before starting the process.
Thus the Leasehold Reform (Housing and Urban Development) Act 1993 provides an effective way to overcome the practical difficulties posed by granting long leaseholders of flats the right to enfranchise. Nevertheless the Act can be cumbersome in its operation and far too complicated for the uninitiated to understand. It is unlikely that tenants will be able to use the provisions without the need of legal advice.
Question 4
The scope and provisions of the Protection from Eviction Act 1977 will be examined in order to determine the extent to which the Act successfully protects occupiers of residential property.
The Protection from Eviction Act 1977 (“the Act”) applies to “residential occupiers” as defined in s.1. This is a broad term. The principal requirement is that the occupier is “occupying the premises as a residence”, a term of art first introduced by the Rent Act 1977. An occupier may have more than one residence, for example a cottage in the country and a weekend flat in London as
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in Langford Property Co, Ltd v Tureman (1949), and the premises do not need to occupied as the “only or principal home”. Further, the Act will apply so long as occupation is “under a contract or by virtue of any enactment or rule of law”.
Thus the Act applies to licensees as well as to tenants and, on account of requirements of s.3, it will also protect occupiers unlawfully holding on after their term.
The Protection from Eviction Act 1977 limits the way in which a landlord may gain possession. For example, s.2 seriously curtails the use of the self help remedy of peaceable re-entry. The remedy may not be used to enforce rights of re-entry or forfeiture if “any person is lawfully residing in the premises”. The term “any person” is wide in scope, it is not limited to the immediate tenant or licensee and may include, for example, any lawful sub tenants. Further, s.3 of the Act makes it unlawful to obtain possession of premises other than by court order. The Act also sets outs specific requirements for notices to quit. To be valid a notice to quit must be given in writing, by virtue of s.5(1)(a), while s.5(1)(b) provides that a minimum period of four weeks’ notice must be given.
In relation to criminal liability, the Protection from Eviction Act 1977 defines three offences. The first of these is the offence of unlawful deprivation of occupation, set out in s.1(2). The offence may be committed “by any person”. In
R v Yuthiwattana it was established that the acts complained of must “have the character of an eviction.” Thus, a refusal by the landlord to replace a lost key, which prevented the tenant from gaining access for a day, did not amount to a deprivation. While any deprivation must be unlawful, this is not hard to make out as ss.2 & 3, makes any attempt to gain possession without a court order unlawful. It is a defence for the defendant to show that he believed that the occupier had “ceased to reside in the premises” but there must have been reasonable grounds for holding such a belief. The burden will rest on the defendant to show he did actually hold such a belief.
The other two offences, set out in ss.1(3) & 1(3A), are both offences covering
“harassment”. Harassment is defined broadly, that is as “acts likely to interfere with the occupier’s peace or comfort”. It specifically includes the withdrawal of services, such as gas and electricity. The main differences between the two offences are in relation to the person who may commit them, and the degree of intention required. Under s.1(3), any person may be liable but only if it can be shown the acts were committed with the specific intent to evict. Under s.1(3A) a landlord will be liable if he has “reasonable cause to believe” his acts may cause the occupier to leave. The penalties for all three offences include a term of up to two years in prison, a fine or both.
In circumstances where a tenant gives up occupation as a result of harassment they may claim damages under the statutory tort of unlawful eviction contained in ss.27 and 28 of the Housing Act 1988. Damages are awarded on the basis of the difference in value between the landlord’s interest if the tenant remained in occupation and the value of the landlord's interest without the tenant in occupation. Damages under these sections can prove substantial and may be punitive in nature.
Thus the Protection from Eviction Act 1977 limits the way in which a landlord may gain possession but it does not impede a landlord’s right to possession It removes the often criticised remedy of self-help from the landlords armoury and provides a baseline protection for occupiers of residential accommodation in relation to notices to quit. By setting out the criminal offences of deprivation of occupation and harassment, it goes some way to act as a deterrent to landlords although convictions under these sections are rare.
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SECTION B
Question 1
(a)
As Lona’s tenants are residential tenants it is necessary to consider the Rent Act
1977 (Rent Act) and the Housing Act 1988 (Housing Act) in order to determine the type of tenancy each of her tenants’ hold.
It should be noted that no formal lease has been signed with any of the parties.
On the basis that the rent is paid monthly, there is no express agreement to the contrary, it is reasonable to conclude that the tenants will occupy by virtue of a monthly periodic tenancy.
The Rent Act applies to tenancies granted before 15 January 1989. During the initial contractual period any tenancy under the Rent Act will take effect as a
“protected tenancy” so long as the qualifying requirements of a Protected
Tenancy in s.1 are satisfied. After the expiry of the contractual term a tenancy will take effect as a Statutory tenancy by virtue of s.2 so long as the tenant continues to occupy the premises as a residence.
On the facts it appears that his tenancy does meet the requirements of S.1 in that the premises amount to a “dwelling house” within the meaning of the Act and the flat was “let as a separate dwelling”. It seems likely that the contractual period has expired but Arun does meet the residence requirement for a Statutory tenancy under s.2 even though he has been resident elsewhere at weekends. It was established in Langford Property Company v Goldrich (1949) that a tenant is able to occupy two homes as a residence at the same time.
Briti and Chayla’s tenancies were both granted after 1989 so their tenancies will be regulated by the Housing Act. The Housing Act applies to tenancies granted on or after the 15 January 1989. To qualify under the Act the tenancy must meet the requirements of an Assured Tenancy under s.1. On the facts, it appears that both tenancies do meet these requirements; both premises can be regarded as
“dwelling houses” within the meaning of the Act, the premises were let as separate dwellings and it appears that the tenants continue to occupy the premises as their “only or principal home”. Further, neither of the tenancies fall within the exceptions set out in s.43 of the Act.
Although both tenancies were created by implication, that is without notice being served on the tenant, the fact that the leases commenced at different times means that Briti and Chayla will hold different types of tenancy. This is the result of amendments made to the Housing Act in 1996.
As Briti’s tenancy was granted in 1995 it will be subject to the Housing Act as originally enacted. As the notice requirements for a Assured Shorthold Tenancy were not met, Briti will hold by virtue of an Assured Tenancy. As Chayla’s tenancy was created in 2009 it will be subject to the provisions of s.19A, inserted by s.96 of the Housing Act 1996. In this case, the absence of notice means that the agreement will take effect as an Assured Shorthold Tenancy.
Thus all three tenants occupy by virtue of a monthly periodic tenancy. For the reasons given Arun holds a Statutory Tenancy under the Rent Act, Briti holds an
Assured Tenancy under the Housing Act and Chayla holds an Assured Shorthold
Tenancy under the Housing Act.
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(b)
Arun, Briti and Chayla all occupy as residential tenants, and as a result will fall under the protection afforded to “residential occupiers” under the Protection of
Eviction Act 1977. S.3 provides that a landlord may only recover possession of residential premises by court order so Lona will have to apply to the courts for possession in each case. The procedures Lona needs to adopt will be set out in turn and her chances of success will be assessed.
In relation to Arun, it appears that the contractual tenancy has already been terminated so there is no need for Lona to serve notice to quit and she may start proceedings. Possession will only be granted if she is able to establish one of the
Cases for Possession set out in Schedule 15 of the Rent Act.
Lona’s claim should rely on the fact that Arun is in arrears with the rent, The relevant ground for possession is Case 1 in Schedule 15. Unfortunately this is a discretionary ground so, by virtue of s.98(1)(b), the court will only make a possession order “if it considers it reasonable to make such an order”. The fact that Arun is three months in arrears suggests that Lona may have a reasonable chance of making out this ground. Nevertheless if Arun is able to clear the outstanding rent or if there is a “realistic prospect” of Arun being able to clear the arrears within a reasonable time this will reduce her chances of success considerably.
In relation to Lona’s desire to use the flat as a base for her shopping trips, Case
9 allows a landlord to gain possession if the premises are “reasonably required for occupation by the landlord” while Case 11 allows a returning occupier to regain possession where the premises are required as a residence.
Unfortunately, Lona is unlikely to establish either of these grounds. There is no suggestion from the facts that Lona intends to occupy the premises as a residence. In relation to Case 9, which is a discretionary ground, possession will not be granted if “greater hardship would be caused by granting the order”.
While the burden is on Arun to establish this, on the facts, the granting of an order would appear to cause greater hardship to Arun, especially when the considerations in the case of Harte v. Frampton (1948) are taken into account. In relation to Case 11, not only does it appear that the initial notice requirements were not met it seems that Lona did not initially occupy the premises as a residence anyway.
In relation to Briti, Lona must first serve notice and then seek an order for possession on one of the grounds listed in Schedule 2 of the Housing Act. The notice must comply with s.8(2). It must set out Lona’s intention to bring proceedings and list the grounds on which she intends to rely. The exact wording of the ground, as set out in the Act, must be used in the notice and the earliest and the last day of possible proceedings must also be clearly stated. As Briti has a monthly periodic tenancy, the notice should be given one month before Lona intends to commence proceedings.
In relation to the available grounds Lona should rely on the fact that Briti is in arrears with the rent. Lona may be able to rely on two different grounds but her chances of success under both grounds are not high .
The first ground is ground 8 which is a mandatory ground for possession. If Lona can establish a mandatory ground the court “must grant an order for possession” by virtue of s.7(3). In cases where possession may cause “exceptional hardship” possession can be suspended for up to six weeks under s.89 Housing Act. To
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establish ground 8, at least two months rent must be in arrears, both at the time of the service of the s.8 notice and the date of the hearing. In view of the fact that the s.8 notice has yet to be served and taking into account the time it will take to list a hearing, Lona will be most unlikely to make out this ground if Briti does clear the arrears as she intends.
The second ground is ground 10. This is a discretionary ground and, by virtue of s.7(4), the court will only make an order for possession if it considers it
“reasonable to do so”. To establish this ground, Lona is only required to show that there was some rent outstanding when the s.8 notice was served. As it is a discretionary ground, however, the court would be unlikely to grant possession if
Briti pays the outstanding rent.
Thus Lona is only likely to obtain possession from Briti if the rent remains unpaid. Lona should be advised that if she fails to establish either of these grounds any action will lapse and she will have to bear the costs of proceedings.
In relation to Chayla, Lona should serve notice under s.21 of the Housing Act. As
Chayla occupies by virtue of an Assured Shorthold tenancy Lona can terminate the tenancy by serving two months notice in writing. This is a mandatory ground for possession and once the notice period has expired Lona will be able to apply for an order for possession. Care must be taken over the drafting of the notice and it is suggested Lona use a standard formulation. While there is some suggestion from the facts as to illegal user by Chayla, vague rumours from fellow tenants are unlikely to provided sufficient evidence to establish a breach or a ground for possession on this basis alone. The s.21 procedure is far quicker, requires no proof and there will be no need for a hearing.
Question 2
To advise Tara the two properties will be considered in turn.
In relation to the shop, as the covenant preventing assignment is a qualified covenant, it will be subject to the provisions of s.19(1) of the Landlord and
Tenant Act 1927 (Landlord and Tenant Act). This implies the proviso that Lazarus
Ltd. (Lazarus) will not “unreasonably withhold” its consent. Reasonableness is assessed by reference to case law, in particular the six guidelines set out in the case of International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd
(1986). S.1(6) of the Landlord and Tenant Act 1988 ensures that the burden of proof will rest on the Lazarus, that is it will be for Lazarus to show that consent was reasonably withheld.
In relation to reasonableness, Lazarus is entitled to consider its own interests above those of its tenant and it is reasonable for a landlord to refuse consent on the basis of a proposed user even if that user is not expressly provided for in the lease, as can be seen from the case of Moss Bross v CSC (1913).
In relation to Lazarus request for a premium for their granting of consent, s.144 of the Law of Property Act 1925 provides that no fine or similar sum may be made payable to a landlord for the granting of consent unless it is expressly provided for in the lease. For this reason Tara has a reasonable chance of demonstrating that Lazarus’ refusal to grant consent is unreasonable.
On a tactical note, Tara should make a written request for consent as s.1 of the
Landlord and Tenant Act 1988 imposes a duty on landlords to reply to any written requests within a reasonable time. Any response will be useful as a basis
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for future action and any failure to respond by Lazarus’ may leave it open to an action in damages for breach of statutory duty.
In relation to the factory, as the tenancy is governed by the Landlord & Tenant
Act 1954, the tenancy will continue by virtue of s.24 and Melvin Associates Ltd.
(Melvin) will only be able to terminate in accordance with the provisions of the
Act. Tara has a statutory right to request a renewal of the holding and Melvin may only oppose her request if they can make out one of seven grounds of opposition listed in s.30(1) of the Act. To this end Tara could make a request for a new tenancy under s.26 of the Act.
In view of Melvin’s intentions, however, it appears that it will oppose renewal on the basis of ground (f) that is that the landlord intends to demolish and reconstruct. To rely on this ground Melvin will have to demonstrate that they have firm plans (Gatwick Parking Service v Sargent (2000)) and it may be open for Tara to argue that the plans are only provisional. Nevertheless, from the available facts this is not a particularly strong argument. Further, in view of the nature of the plans it seems unlikely that the work can be completed without the need for possession. For these reasons Tara has, at best, an outside chance of enforcing a renewal.
In relation to the conveyor belt s. 3(1)(a) of the Landlord and Tenant Act 1927 allows a tenant to claim compensation for improvements made to the tenancy so long as the improvements add to the letting value of the premises after termination. Unfortunately, by virtue of s.3(5) “a tenant shall not be entitled to claim compensation “ unless he “has served notice of the proposal to make the improvement under this section”. From the facts it appears that a notice was not served in accordance with this section so any claim to compensation for the conveyor belt will fail. …
Question 3
To advise Lylith as to the procedures she should adopt and her chances of success in forfeiting the three leases each lease will be considered in turn.
It should be noted that all three leases reserve a right of forfeiture as they contain a “proviso for re-entry on breach”. Further it is submitted that Lylith should seek to enforce any rights she has by court order rather than peaceable re-entry in order to preclude any potential litigation in relation to the Criminal
Law Act 1977.
Tannis is in arrears with her rent. Lylith should first serve a formal demand for the rent due. This should be served on the day that the rent usually falls due. A formal demand is not required in all circumstances, for example, the right to a formal demand may be waived by a tenant in a lease, but it is unclear whether
Tannis has waived her right in this instance. The other main exception, contained in s.210 of the Common Law Procedure Act 1852, has no application here as less than six months rent is outstanding.
Lylith should be advised that even if the court grants a forfeiture order, Tannis may be entitled to relief from forfeiture. If such relief is granted the tenancy will continue and the lease will not be forfeited. Tannis will be entitled to “automatic” relief if she pays the outstanding rent and costs of the action into court at any time before the five days preceding the hearing (s.138(2) County Courts Act
1985 (CCA)). Further, Tannis may also claim relief at the time of the hearing or any time within six months of Lylith recovering possession by virtue of s.138(9A)
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CCA. Thus Lylith is only likely to succeed in a forfeiture action if the rent remains unpaid.
In relation to Maya and Roland, Lylith will have to follow the procedure for breach of other obligation. Lylith must first serve a notice under S.146 of the Law of Property Act 1925 (LPA). The notice must set out the breach, require the tenant to remedy the breach if it is capable of remedy, and provide the tenant a reasonable time for compliance. The notice should also set out any compensation that Lylith requires. The issue is whether the breaches are “capable of remedy”.
If a Landlord fails to give the tenant a chance of fixing a redeemable breach any notice will be ineffective and the forfeiture action will lapse as happened in Savva and Another v Houssein (1996) where a landlord wrongly took the view that an alteration covenant was not capable of remedy.
In relation to Roland, the main issue is whether the breach is capable of remedy.
Roland has unlawfully assigned the tenancy to a third party. The decision by the
Court of Appeal in Scala House and District Property Company v Forbes (1974) established that covenants against alienation are never capable of remedy, while other breaches turn on their individual facts. In some later cases, notably Akici v
Butlin Ltd (2005), the Court of Appeal has questioned whether the decision in
Scala House is absolute but so far such comments remain obiter while Scala
House remains good law. In this light, Lylith should serve a S.146 Notice on
Roland incorporating the details already discussed. The Notice should specify that the breach is not capable of remedy and, on the basis of the decision in the Scala
House case whose facts are similar, a reasonable time for the notice to take effect would be 14 days .
In relation to Maya, there appears to be a clear breach of the obligation that “the tenant shall not alter the premises in any way” as Maya has removed an internal wall between the two units she lets. While, historically, the courts have been reluctant to regard breach of negative covenants as capable of remedy Scala
House and District Property Company v Forbes (1974), established that there is no rule of law in this regard. In the words of Staughton LJ a breach is remediable if “the mischief caused by the breach can be removed ”. In this case the injury to
Lylith could be alleviated by either reinstatement or monetary compensation or both. This suggests that Maya’s breach is capable of remedy for the purposes of s.146. For these reasons Lylith should serve a S.146 Notice on Maya but the notice should specify that the breach is capable of remedy and it should allow
Maya a reasonable time to fix the breach. While, according to Bhajwanui v
Kingsley Investment Trust (1992) , there are “no hard and fast rules” as to how long a tenant should be given to remedy a breach, it is suggested that three months would meet the requirement of reasonableness in the present case.
In any action Maya might seek to establish waiver. To do this Maya would have to demonstrate not only that Lylith had knowledge of the breach but also that
Lylith performed some positive act which demonstrated she regarded the tenancy as continuing. Unfortunately for Lylith knowledge may be imputed and the fact that her agent, Axton, was aware of the alteration means that following the reasoning of Metropolitan Properties v Cordery (1979), Lylith will be regarded as having had notice of Maya’s breach. Further, the acceptance of rent by Axton from Maya is sufficient to amount to a positive act for the purposes of waiver, particularly when it is considered that since Central Estates (Belgravia) Ltd v
Woolgar (No.2) (1972)”waiver is judged objectively without regard to the motive or intention of the landlord, or to the actual understanding or belief of the tenant”.
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On the face of it then, Maya has a reasonable chance of establishing waiver. The effect of waiver will vary depending on the type of breach. In the case of once and for all breaches, the right to forfeit will be lost, but if it is a continuing breach
Lylith will acquire the right to forfeit the next day. For this reason, if Maya does successfully plead waiver, Lylith’s best tactical option is to seek to maintain that the breach is continuing.
Maya may also be entitled to seek relief. In view of the nature of the breach there will be no automatic right to relief and any court will be obliged to take into account the factors set out in s.146(2) of the LPA . These include “all relevant circumstances” and the “conduct of the parties”. It should also be noted that the court has discretion to grant relief on terms. It is suggested that if the claim against Maya is based on breach of the alteration covenant the court may well grant relief on terms subject to the costs, or the undertaking of reinstatement.
In summary Lylith should serve a formal demand on Tannis and initiate proceedings for forfeiture for non-payment of rent. While Tannis will be entitled to relief, Lylith should be able to ensure the rent and any costs are paid. In relation to Roland and Maya, Lylith should serve S.146 notices as specified. She is likely to be successful in her action against Roland while proceedings against
Maya should at the very least ensure reinstatement of the premises.
Question 4
The requirements of a lease will first be set out before an attempt is made to determine whether each of the parties occupy by virtue of a lease or a licence. It will then be possible to advise Lawfords as to how it may terminate the agreements.
Lawfords should be advised that if the parties hold as tenants, as opposed to licensees, they will stand in a stronger position and may be entitled to some form of security of tenure. If any of the agreements are to amount to a leases they must first meet three common law requirements. The term of each agreement must be of a fixed and ascertainable duration, the tenant must be entitled to exclusive possession and the term must be at least one day shorter than the grantor’s estate. The first of these requirements is illustrated by the case of Lace v Chantler (1947) where an agreement granted “for the duration of the war” failed to amount to a valid lease. Exclusive possession has long been regarded as the “touchstone” of a tenancy, to use the words of Lord Templeman in Street v
Mountford (1985). Although the concept “lacks precise definition” it is concerned with the degree of control the occupier exercises over the premises. If exclusive possession has been granted, the courts will usually regard the agreement as a lease but there are three exceptions, which stem from the case of Facchini v
Bryson (1952). These exceptions extend to agreements where there was no intention to create legal relations, situations where the tenant has no power to grant a tenancy and cases where the agreement to occupy arises from some other legal relationship.
In relation to the outbuildings let to Epoc Ltd. (Epoc), it appears that Lawfords have granted a fixed term six month tenancy. In some cases business tenants may acquire a statutory right to renew under the provisions of the Landlord and
Tenant Act 1954. In this case, however, Epoc will not acquire such right as the tenancy is excluded from the Act under S.43(3) on the basis that it is a short tenancy .
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It is unclear whether a formal lease was signed. In relation to any promises made during negotiations, Lawfords should investigate whether such promises were made in contractual documents which both parties signed. If any such documents satisfy the requirements of s.2 Law of Property (Miscellaneous
Provisions) Act 1989, it may allow Epoc to claim they hold on the basis of an equitable lease. In such a case it is possible that the terms of that tenancy may include a right to renew. While this is an outside possibility and probably too expensive an option for Epoc to pursue, the relevant documents should be reexamined.
In relation to the Charity’s claim, there are a number of grounds on which
Lawfords can counter. Firstly, it is not immediately apparent that the agreement was of a fixed and ascertainable maximum duration so the claim of a tenancy might be refuted on the basis of the principle set out in Lace v Chantler (1947).
Secondly there is the issue as to whether the Charity was in fact granted exclusive possession, as Lawfords sought to reserve its rights of possession. In cases such as the present, where the premises are not residential and the parties are of equal bargaining strength, the courts are prepared to give effect to such reservations. For example in the Manchester Garages case a clause very similar to that used by Lawfords was sufficient to exclude the occupier’s right to exclusive possession.
In the unlikely event that Lawfords failed to prevail on the grounds already set out, the motives behind the letting might allow Lawfords to claim that the
Charity’s occupation was the result of an “act of generosity”, so that in effect there was no intention to create legal relations, a general exception recognised in in Facchini v Bryson (1952). Nevertheless, it must be borne in mind that there are counter arguments to refute such a claim, not least that Lawfords received some value from the agreement in relation to the costs of refurbishment of the garden and the discount passed onto to its subcontractors in the tea shop.
On the face of it, it is certainly open to Mark to allege he was granted a tenancy.
He appears to have been granted exclusive use of the apartment and the monthly ”contribution” could amount to rent for the purposes of a Housing Act tenancy. Lawfords main option is to refute the claim on the basis that Mark was allowed to occupy “for the better performance of his duties”. This falls under one of the exceptions in Facchini v Bryson (1952) and is best illustrated by the case of Norris v Checksfield (1991) where the landlord evicted a prospective employee after he failed to obtain a valid driving licence. If Lawfords are to be successful they will have to demonstrate that Mark’s occupation was for the better performance of Marks duties and did not merely make his employment more convenient. The fact that Mark may be self-employed might be taken into account although it was disregarded in the case of Norris v Checksfield .
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