Duval v Randolph Crescent Ltd – Licence to alter contrary to absolute covenant – Landlord precluded

On 6 May 2020, in Duval V Randolph Crescent Ltd, the Supreme Court handed down their judgment in what will become a leading landlord and tenant case.

The question at issue was whether a landlord of a block of flats is entitled, to grant a licence to a lessee to carry out work which would breach an absolute covenant contained in that lessee’s lease, where the leases of other flats on similar terms require the landlord to enforce covenants at the request of a lessee of one of those other flats.

The Supreme Court upheld the Court of Appeal decision, that the landlord could not put itself in a position, by consenting to the proposed works, where it would later be unable to comply with a request from another leaseholder to enforce the covenant.

The court came to the decision after close review of the lease terms, which included finding that the intended works for which consent was sought were indeed absolutely precluded, that the other leases contained the same covenant and that if so requested by one of the other lessees the landlord was required to enforce the covenant against the 1st lessee.

Hitherto, it has not been uncommon for landlords to grant licences for alterations which in effect waive the prohibition against them in the lease (often for a significant fee): going forward, landlords will need to be mindful of this case.  Ramifications may include modification of new lease terms to get round this and changes in practice as a result of this decision could devalue lessees’ flats.

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