The recent case of Dr Julia Duval v 11-13 Randolph Crescent Limited has confirmed that there is a rule of law that when a party enters into an obligation, they cannot then do something that makes it impossible for them to perform the obligation. This decision is important, not just in a property context, but in all contractual arrangements.
The case will have its widest application in residential leases, for example where tenants have taken up their carpets and replaced them with wooden floors, with the actual or tacit consent of the landlord. In those cases, landlords might be sued by neighbouring tenants for breach of their obligation to enforce covenants in their neighbours leases and those cases can date back 12 years.
In a commercial context, there are some covenants, for example as to change of use, where tenants may have agreed to an absolute obligation not to change use of the property from a high class retail outlet to a discount retailer. With retail facing such challenging times, some landlords might agree to waive that obligation, to allow a discount retailer in to a shopping centre. Other tenants of the centre might complain if they have previously made similar requests which have been turned down and their leases contain obligations on the landlord to ensure leases of the centre are in similar terms and to enforce breaches by other tenants. This case might mean that disgruntled tenants bring claims against landlords who are simply seeking to keep their centres busy and trading. These commercial cases are likely to have bigger damages claims.
Facts
The property in question originally consisted of two houses; but they have been converted into nine flats each of which is held under a long lease. In 2015, Mrs Winfield, a tenant of one of the flats, approached the landlord (11-13 Randolph Crescent Limited) asking for permission to carry out improvement works to her flat. The landlord was willing to grant consent. However, Dr Duval, a tenant of two of the other flats, said that the terms of the lease prevented the landlord from doing so.
The issue on this appeal was whether the landlord of a block of flats was entitled, without breach of covenant, to grant a licence to Mrs Winfield to carry out work which would otherwise breach an absolute covenant contained in the lease of her flat, where the leases of other flats require it to enforce covenants at the request of any tenant.
The Court considered a long line of authority in which it has consistently held that where a person undertakes a contingent or conditional obligation, he is under an obligation not to prevent the contingency from occurring; or from putting it out of his power to comply with the obligation if and when the contingency arises. This case law emanates from the 1800s when fiancés were sued by their betrothed for marrying someone else. The Court allowed the appeal, so that whilst Mrs Winfield has been permitted to carry out the alterations, Dr Duval has a valid claim against the landlord. Dr Duval will now have to apply to the County Court to determine what remedies she is entitled to, such as damages.
Conclusion
This decision is likely to lead to landlords taking a more cautious approach in two respects:
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Where landlords have covenanted to enforce against other tenants, they are less likely to permit tenants to do things which are strictly forbidden by the lease;
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When negotiating leases, landlords are more likely to resist clauses which require them to enforce covenants against other tenants. This type of clause has often been seen as acceptable so long as the complaining tenant indemnifies the landlord. However in light of this case, landlords might reconsider.
