Supreme Court Hearing - Julia Duval v 11-13 Randolph Crescent Ltd

Of major importance affecting landlords and tenants particularly with long residential leases.

Julia Duval (Respondent) v 11-13 Randolph Crescent Ltd (Appellant) UKSC 2018/0211

Today the Supreme Court will hear a case that could have widespread implications in the way in which blocks of residential flats are managed.

The facts

11-13 Randolph Crescent in Maida Vale consists of 2 houses which have been converted into 9 flats, each held under leases granted for a term of 125 years.

Mrs Winfield (W), one of the tenants wished to carry out structural alterations to her basement flat which involved removing a 7-metre width of the load-bearing wall.

All leases in the building were in a standard form and included two covenants that are commonly found in buildings of this type: (1) the landlord covenants that all the leases in the building will contain covenants in similar form and (2) the landlord will enforce one tenant's covenants at the request and expense of another tenant.

The leases provided, at clause 2.7, an absolute prohibition on cutting into any wall or ceiling and at clause 3.19, the enforcement covenant requiring, subject to the tenant paying the landlord’s costs, the landlord to enforce the covenants against other tenants.

W approached the Landlord, the freehold company Randolph Crescent Limited (R), who was willing to grant consent and permitted W to make the alterations.

Another tenant, Dr Duval (D), objected. She argued that by granting permission to alter, R would be in breach pursuant to clause 3.19. How could R enforce a breach of covenant by W at D's request, if R had already given permission to W in the first place?

Decisions so Far

D succeeded at the first instance hearing.   R was successful on appeal and then the Court of Appeal found in favour of D.  The Court of Appeal said that giving W a licence to do an act that would otherwise be in breach of W’s lease, would defeat the whole purpose of the covenant. The covenant was a legally binding obligation and not just words on a page. The leases provided that W and D were given the right to insist R should enforce the covenants in the lease, regardless of whether R wanted to enforce them or not.

It has been said that this decision is likely to have repercussions for the residential property market and, potentially, on the value of residential flats. If a buyer knows it will not be able to carry out structural works, it may not be willing to pay the same for a property.

Today, Lady Hale, Lord Carnwath, Lady Black, Lord Kitchin and Lord Sales will decide if the decision in the Court of Appeal was correct.

Brabners will report again when the judgment is handed down.

For further information, please contact Helena Davies or Usha Sharma.