Mount Eden Land Ltd v Bolsover Investments Ltd (Ch D, 20.6.14)

Refusing consent to alterations on the ground that the change of use may give rise to rights of enfranchisement is unreasonable.

The tenants of an office building sought consent to convert the building into 16 or 17 flats. There was a covenant in the lease restricting alterations without the landlord’s consent, which could not be unreasonably withheld. However, there was nothing in the lease that prevented a change of use to residential.

The landlord refused consent to the alterations on several grounds, one of which being that the alterations could give rise to rights of enfranchisement which may result in the landlord being forced to transfer its freehold interest.

Both the Court at first instance and the Appeal Court held that this was an unreasonable ground for refusal. The Court held that, as the tenant had not yet decided how the flats would be let, the concern was speculative and, therefore, this was not a sufficient concern to amount to a reasonable ground for refusal.

 

Barclays Wealth Trustees (Jersey) Ltd & anr v Erimus Housing Ltd [2014] EWCA Civ 303

Welcome confirmation that a Court will be reluctant to infer a periodic tenancy without good reason.

The tenant occupied a property pursuant to a contracted out lease which expired in October 2009. Negotiations for a new lease commenced before expiry of the lease, but terms for the new lease were not agreed until June 2011 and by June 2012 the new lease had still not been completed. The tenant remained in occupation throughout, paying rent, until June 2012 when it served notice to quit on the basis that it was a tenant at will. The landlord argued that the tenant was a yearly periodic tenant and that inadequate notice to terminate the tenancy had been given.
At first instance, the Court found for the landlord, but the Court of Appeal overturned the decision. It held that although the tenant had paid rent and continued in occupation, the negotiations for the new lease had never been abandoned (although they had become slow and protracted) and it would be a step too far to infer a tenancy on the basis of payment of rent alone. Further, the new lease was to be a contracted out lease and this was inconsistent with the landlord’s assertion that a periodic tenancy existed, which, by its nature, is within the act.
This case will be a welcome relief to landlords who want to remove tenants that have remained in occupation after the expiry of the tenancy, but each case will turn on its particular facts as the Court will consider all of the circumstances of the negotiation.

 

H Waites Limited v Hambledon Court Limited [2014] EWCH 651 (Ch)

A useful reminder that when demising premises in a lease the description needs to be clear as the Court will not readily imply terms into a lease.

In this case, the freeholder leased the airspace above garage blocks to a developer who intended to construct a flat on top of each block. The development was opposed by the leaseholders who claimed that the roof space formed part of their demise.

The description of the flats demised in the leases were clear; only the internal shell was demised which included internal walls, but excluded the roof foundations and external and main structural parts of the building. However, the lease was not so detailed as regards the garage; it simply demised the garage. It was, therefore, not clear whether the roof of the garage and the airspace above it had been demised. The Court rejected the freeholder’s argument that the description of the demise of the flat should be applied to the garages and held that as there had been no division of the garage from the parts next to it, the roof and air space had been demised.

If a freeholder considers that there is any potential for further development of an Estate, it must ensure that any interests in the estate which are granted initially, are limited so as to protect any future development. This requires a careful consideration not only of the property being demised, but also any restrictive covenants or rights granted or reserved.

For more information about any of these cases or for advice on a contentious property issue please contact Michael Clark.