Property Law and Leasing

191893 Delivery Time :Standard – 5 Days per 5000 words Title: QUESTION: PART A (i) Leslie plc, by deed, granted a ten-year lease of certain premises to Target Ltd from 1st November 2000. The lease included covenants by Target Ltd. not to assign or sub-let the whole or any part of the premises without the landlord’s consent, to keep the premises in repair and to pay the quarterly rent. There was a proviso for re-entry in the event of breach of any covenant. In 2002, Target, with Leslie’s consent, assigned the lease to Ace Co. Ltd. In 2004, Leslie sold and conveyed the freehold reversion of the premises to Rake plc. Rake has discovered that Ace has, without seeking consent, given a monthly sub-tenancy of part of the premises to Simon and that the premises are out of repair. Rake informed Ace of its concern over these matters in a letter accompanying the demand for the quarter’s rent due on 1st November 2006 and stated that it, Rake, was considering its position. Ace sent a cheque in response to the demand, which Rake has not yet cashed. You are a trainee in the firm of solicitors consulted by Rake.

Your principal has asked you to Produce a report of 1,200 words outlining the legal principles and identifying the relevant statutory provisions and cases as to whether: (a)Rake has the benefit and Ace has the burden of the covenants in the lease; (b)either breach of covenant has been waived so as to prevent Rake being able to take forfeiture action in respect of that breach; (c)whether the breaches are irremediable for the purposes of s.146 (1) of the Law of Property Act 1925 Your report should identify whether there are any particularly relevant or recent cases on these issues. Advice will be given to Rake plc on the basis of this report. QUESTION: PART B Explain precisely (in 300 – 350 words) what was your research strategy and how you carried out the research under Question: Part A, giving details of the electronic searches that you made. Outside the word limit, give a bibliography of all books and databases used to carry out the research, and give a list of all cases that you consulted (whether or not actually used), with their references. To decide on who has the burden and the benefit of the covenant it is necessary to analyze the type of covenant that was originally made between Leslie Plc and Target. Covenants against assignment can either be absolute[1] or qualified[2]. An absolute covenant would prevent any assignment or subletting. A qualified covenant entitles the tenant to sublet or assign with the landlords consent[3]. Under the Landlord and Tenant Act 1927 s19 (1) the landlord cannot withhold consent unreasonably[4]. Should he decide to withhold consent he would have to show that consent is being withheld reasonably[5]. Reasonableness is not defined in the legislation but has been defined by case law[6]. In the above it is stated that Leslie had agreed to allow Target to assign the lease. When issuing a lease the landlord can impose obligations on the tenant for repairs[7]. Where the lease is for less than 7 years there is an implied covenant[8] that the landlord will repair the structure[9]. Enforcement of the obligation of the landlord to repair the property is usually only in respect of residential leases[10]. Commercial leases are free to make their own agreement[11] and the obligation of the landlord is only implied where the parties have not made express provision for repairs[12]. Express covenants for repair by the tenants usually contain an exception for fair wear and tear. It is usual for this exception to only cover things that wear out in the course of normal and reasonable use[13]. Where the wear and tear result in further damage to the property the tenant may become responsible for repairing the original wear and tear[14]. If the lease between Leslie Plc and Target had occurred prior to 1995 then the assignment of the tenancy from Target to Ace would not absolve Target from the liability in accordance with the contract[15]. This effectively would have meant that Target would still be bound by the covenants made with Leslie throughout the duration of the lease even though his interest has been assigned[16]. Covenants in leases are deemed to be made on behalf of the covenantor and his successors in title unless a contrary intention is expressed[17]. Leases issued prior to the Landlord and Tenant (Covenants) Act 1995 allowed liability of the original tenant to continue even though the original tenant has no control over the assignee[18]. If the lease had been issued prior to 1995 although the landlord would normally seek redress against the assignee[19] in the first instance there is no requirement that the landlord should proceed in this manner. Effectively the landlord could opt to seek redress from the original lessee instead of the assignee[20]. This was particularly useful where the assignee had become insolvent[21]. As the lease began after 1995 the Landlord and Tenant (Covenants) Act 1995 s5 releases Target from the burden of the covenant and passes the burden to Ace[22]. Under s3 of the LT(C) A 1995 the benefit and burden of all covenants[23] shall be annexed to each and every part of the demised premises and shall pass on assignment and the test of touching and concerning does not apply[24]. Covenants expressed in a personal way are not transferred to the assignee[25]. It is important to look at the privity of the contract and the privity of estate[26] as the differences that apply under each will affect the ability of Rake to enforce the covenant. The difference between having both the privity of contract and the privity of estate is that under a privity of contract all covenants bind[27] whereas under privity of estate[28] then only the covenants which are regarded as typically part of the landlord and tenant relationship will be bound[29], such as covenants to repair. Privity of estate only affects the benefit and burden on the assignee and the landlord in respect of covenants that touch and concern the land[30]. In Spencer’s Case[31] it was stated the covenant must either affect the land as regards the mode of occupation, or it must be such as per se, and not merely from collateral circumstances, affects the value of the land[32]. There would be both privity of contract[33] and privity of estate between Leslie Plc and Target as they were the original lessor and lessee.

The assignment of the lease to Ace would only create a privity of estate between Leslie and Ace as there would be no direct contractual relationship between them. Similarly by selling the property to Rake there would be no privity of contract between Rake and Target or Rake and Ace[34], only a privity of estate. If the assignment of the sub tenancy Simon had been agreed by Rake then there would have been privity of estate between Rake and Simon. As the assignment of the lease to Simon was not consented to by Rake there would be no privity of estate and Rake would not be able to enforce the repair covenant against Simon[35]. It could be argued that the assignment of the sub-tenancy to Simon has waived the right of Rake to claim forfeiture for the breach of the covenant to repair the property, as only restrictive covenants can be enforced against a sub tenant[36]. As Rake has control over the property it could be argued that he should still have the burden of the covenants.

This would mean that Rake could enforce the repair covenant[37]. If Ace carried out the repairs as requested there would be no breach of the repair covenant and Rake could not take forfeiture action for this breach[38]. Unfortunately the action by Ace of subletting without the consent of Rake could be seen as a breach of the covenant if the business run by Simon is separate from Ace’s business[39]. This would allow Rake to take forfeiture action for the breach of the subletting covenant and to force Simon to surrender his share of the property as it had been sublet in breach of the covenant[40]. The effect of this would be to bring the term of the lease to a premature end. It has already been stated in the scenario above that a condition was inserted into the leasing agreement that any breach of the covenant would entitle the covenantor to take forfeiture action[41]. Under s146 of the Law of Property Act 1925 it is possible in some circumstances for the breach to be remedied. If the breach was due to the repair work only and Ace had not sublet to Simon then the breach could be rectified by Ace carrying out the necessary repairs. As the breach was due to the subletting as well the only way in which this could be rectified would be for Ace to terminate the agreement with Simon and resume possession of the property. The subletting of part of the property to Simon could be viewed as a licence as opposed to a lease as Simon does not have full rights of ownership as he would have if a lease had been created[42]. The distinction between a lease and a licence is easier to determine in a residential setting. In a commercial agreement the distinction is made by examining where the control of the premises lies[43]. The effect of this being viewed as a licence would mean that Simon would be able to claim proprietary estoppel if Ace attempted to revoke the licence[44]. Part B My research strategy involved looking at the types of covenants that can be made then analysing from the problem above whether the burden and the benefit of the covenants was able to transfer between the various parties. I looked at the situation from the perspective of if the contract had been created before the 1995 Act and compared it with the changes that have been introduced by the 1995 Act. This was done to show that when advising a client as to whether a covenant is binding on an original covenantor and covenantee it is essential to know when the lease was created. I then looked at privity of contract and estate as the rights over the enforcement of the covenant can be directly affected if there is privity only privity of estate. I considered this both from a pre 1995 standpoint and a post 1995 standpoint. I then addressed the issue of licence or lease as the difference between the 2 affects the position as to the binding nature of covenants. To back up my argument I supported as many points possible by case law and legislation. My main source of electronic research was Westlaw for cases to support my argument and www.opsi.gov.uk for relevant legislation. I also used electronic search engines to get up to date information on any recent changes surrounding the law on covenants. A useful site that looked at a situation very similar to the one outlined above was https://www.propertylawuk.net/ltssublettingandsharingoccupation. html. This particular site highlighted several similar cases some of which have been cited in the report above. Bibliography Bryn Perrins, Understanding Land Law, 3rd Ed, 200, Cavendish Publishing Ltd Garvells, N P, Land Law Text and Materials, 2nd Ed, 1999, Sweet and Maxwell Thomas, M, Statutes on Property Law, 8th Ed. 2001, Blackstone’s Transfer of land: The Law of Positive and Restrictive Covenants (1984) Law Commission No 127 Law Commission Report No 238, Landlord and Tenant: Responsibility for State and Condition of Property (1996) https://www.landregistry.gov.uk https://www.propertylawuk.net www.opsi.gov.uk Table of Cases Addiscombe Garden Estates Ltd. v Crabbe [1958] 1 Q.B. 513 Allied London Investments Ltd v Hambro Life Assurance Ltd (1985) 50 P & CR 207 Amsprop Trading Ltd v Harris Distribution Ltd [1997] 1 W.L.R. 1025 [1997] 2 All E.R. 990 [1997] 2 E.G.L.R. 78 [1997] 47 E.G. 127 [1996] N.P.C. 154 Times, November 13, 1996 Avonridge Property Co Ltd v Mashru [2005] UKHL 70 [2005] 1 W.L.R. 3956 [2006] 1 All E.R. 127 [2006] 1 P. & C.R. 25 [2006] L. & T.R. 4 [2006] 1 E.G.L.R. 15 [2006] 01 E.G. 100 [2005] 49 E.G.C.S. 88 (2006) 103(1) L.S.G. 16 (2006) 150 S.J.L.B. 28 [2005] N.P.C. 138 Times, December 5, 2005 Baker v Merckel [1960] 1 QB 657 Beegas Nominees Ltd v BHP Petroleum Ltd [1997] C.L.Y. 3093 1997 Clinton Cards (Essex) Ltd v Sun Alliance & London Assurance Co Ltd [2002] EWHC 1576 [2003] L. & T.R. 2 [2002] 3 E.G.L.R. 19 [2002] 29 E.G.C.S. 150 Congleton Corporation v Pattison (1808) 10 East 130 Crestfort Limited v Tesco Stores Limited [2005] EWHC 805 (Ch); [2005] 37 EG 148. Dellneed Ltd v Chin [1987] 1 E.G.L.R. 75 Edlington Properties Ltd v JH Fenner & Co Ltd [2005] EWHC 2158 [2006] 1 All E.R. 98 Hall v Ewin (1888) 37 Ch.D. 74; Tulk v Moxhay (1848) 2 Ph 774 Harris v Williams-Wynne [2005] EWHC 151 Haskell v Marlow [1928] 2 KB 45 Homebase Ltd v Allied Dunbar Assurance plc [2002] EWCA Civ 666; [2002] L&TR 27; [2002] 27 EG 144; [2003] 1 P&CR 6 International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513 Janet Reger International Ltd v Tiree Ltd [2006] EWHC 1743 [2006] 30 E.G.C.S. 102 Latimer v Carney [2006] EWCA Civ 1417 [2006] 45 E.G.C.S. 191 (2006) 103(44) L.S.G. 31 [2006] N.P.C. 117 Legal & General Assurance Society Ltd v Expeditors International (UK) Ltd [2006] EWHC 1008 Lynnthorpe Enterprises Ltd v Sidney Smith (Chelsea) Ltd [1990] 08 E.G. 93 [1989] E.G.C.S. 63 Mahon v Sims [2005] 3 E.G.L.R. 67 [2005] 39 E.G. 138 Times, June 16, 2005 MEPC Plc v Scottish Amicable Life Assurance Society [1996] B.P.I.R. 447 Oceanic Village Ltd v United Attractions Ltd [2000] Ch 234 Pacific Wash-a-Matic v RO Booth Holdings [1978] 5 W.W.R. 525 Plimmer v Wellington Corporation (1884) 9 App. Cas. 699 (M&B(L) 589; G 641) PW & Co v Milton Gate Investments Ltd [2003] EWHC 1994 R v Tottenham and District Rent Tribunal Ex p. Northfield (Highgate) [1957] 1 Q.B. 103 [1956] 3 W.L.R. 462 [1956] 2 All E.R. 863 (1956) 120 J.P. 472 54 L.G.R. 421 (1956) 100 S.J. 552 R A Securities Ltd v Mercantile Credit Co Ltd [1995] 3 All ER 581 Regis Property Co Ltd v Dudley [1959] AC 370 Scottish & Newcastle Plc v Raguz (No.2) [2004] EWHC 1835 Shell-Mex & B.P. Ltd. v Manchester Garages Ltd. [1971] 1 W.L.R. 612 Smith v Spaul [2002] EWCA Civ 1830 [2003] Q.B. 983 [2003] 2 W.L.R. 495 [2003] 1 All E.R. 509 [2003] H.L.R. 38 [2003] 2 P. & C.R. 21 [2003] L. & T.R. 17 [2003] 1 E.G.L.R. 70 [2003] 17 E.G. 148 [2003] 3 E.G.C.S. 125 (2003) 100(9) L.S.G. 28 (2003) 147 S.J.L.B. 27 [2002] N.P.C. 164 [2003] 1 P. & C.R. DG19 Times, December 28, 2002 Spencer’s Case (1585) 5 Co.Rep. 16a; 77 E.R. 72 (M&B(L) 503) Street v Mountford [1985] A.C. 809 (M&B(L) 417; G 386) Thames Manufacturing Co Ltd v Perrots (Nichol & Peyton) Ltd (1984) 50 P & CR 1 Unity Joint Stock Banking Association v King (1858) 25 Beav. 72; 53 E.R..563 Vision Golf Ltd v Weightmans [2006] EWHC 1766 Wadsworth v Nagle [2005] EWHC 26 Walker’s Case (1587) 3 Co.Rep. 22a; 67 E.R. 676 Warnford Investments Ltd v Duckworth [1979] Ch 127 Waycourt Ltd v Viscount Chelsea [2006] EWCA Civ 511 Westbury Estates Ltd v Royal Bank of Scotland Plc 2006 S.L.T. 1143 2006 G.W.D. 38-757 Table of Statutes Landlord and Tenant (Covenants) Act 1995 Landlord and Tenant Act 1927 Landlord and Tenant Act 1985 Landlord and Tenant Act 1988 Law of Property Act 1925 Law of Property Act 1926 1

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Footnotes

[1] Harris v Williams-Wynne [2005] EWHC 151

[2] Mahon v Sims [2005] 3 E.G.L.R. 67 [2005] 39 E.G. 138 Times, June 16, 2005

[3] Clinton Cards (Essex) Ltd v Sun Alliance & London Assurance Co Ltd [2002] EWHC 1576 [2003] L. & T.R. 2 [2002] 3 E.G.L.R. 19 [2002] 29 E.G.C.S. 150

[4] Mahon v Sims [2005] 3 E.G.L.R. 67 [2005] 39 E.G. 138 Times, June 16, 2005

[5] Landlord and Tenant Act 1988 s1

[6] International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513

[7] Westbury Estates Ltd v Royal Bank of Scotland Plc 2006 S.L.T. 1143 2006 G.W.D. 38-757; Latimer v Carney [2006] EWCA Civ 1417 [2006] 45 E.G.C.S. 191 (2006) 103(44) L.S.G. 31 [2006] N.P.C. 117

[8] Janet Reger International Ltd v Tiree Ltd [2006] EWHC 1743 [2006] 30 E.G.C.S. 102

[9] Landlord and Tenant Act 1985 s11 [10] Wadsworth v Nagle [2005] EWHC 26 [11] Legal & General Assurance Society Ltd v Expeditors International (UK) Ltd [2006] EWHC 1008 [12] Law Commission Report No238, Landlord and Tenant: Responsibility for State and Condition of Property (1996) [13] Haskell v Marlow [1928] 2 KB 45 [14] Regis Property Co Ltd v Dudley [1959] AC 370 [15] Baker v Merckel [1960] 1 QB 657 [16] Warnford Investments Ltd v Duckworth [1979] Ch 127; Walker’s Case (1587) 3 Co.Rep. 22a; 67 E.R. 676 [17] Law of Property Act 1926 s79. [18] Thames Manufacturing Co Ltd v Perrots (Nichol & Peyton) Ltd (1984) 50 P & CR 1; Allied London Investments Ltd v Hambro Life Assurance Ltd (1985) 50 P & CR 207 [19] Scottish & Newcastle Plc v Raguz (No.2) [2004] EWHC 1835 [20] Scottish & Newcastle Plc v Raguz (No.3) [2006] EWHC 821 [2006] 4 All E.R. 524 [21] R A Securities Ltd v Mercantile Credit Co Ltd [1995] 3 All ER 581 [22] Avonridge Property Co Ltd v Mashru [2005] UKHL 70 [2005] 1 W.L.R. 3956 [2006] 1 All E.R. 127 [2006] 1 P. & C.R. 25 [2006] L. & T.R. 4 [2006] 1 E.G.L.R. 15 [2006] 01 E.G. 100 [2005] 49 E.G.C.S. 88 (2006) 103(1) L.S.G. 16 (2006) 150 S.J.L.B. 28 [2005] N.P.C. 138 Times, December 5, 2005 [23] Edlington Properties Ltd v JH Fenner & Co Ltd [2005] EWHC 2158 [2006] 1 All E.R. 98 [24] Oceanic Village Ltd v United Attractions Ltd [2000] Ch 234 [25] Landlord and Tenant (Covenants) Act 1995 s3 (6) (a) [26] MEPC Plc v Scottish Amicable Life Assurance Society [1996] B.P.I.R. 447 [27] R v Tottenham and District Rent Tribunal Ex p. Northfield (Highgate) [1957] 1 Q.B. 103 [1956] 3 W.L.R. 462 [1956] 2 All E.R. 863 (1956) 120 J.P. 472 54 L.G.R. 421 (1956) 100 S.J. 552 [28] Pacific Wash-a-Matic v RO Booth Holdings [1978] 5 W.W.R. 525 [29] Lynnthorpe Enterprises Ltd v Sidney Smith (Chelsea) Ltd [1990] 08 E.G. 93 [1989] E.G.C.S. 63 [30] Spencer’s Case (1585) 5 Co.Rep. 16a; 77 E.R. 72 (M&B(L) 503) [31] (1585) 5 Co.Rep. 16a; 77 E.R. 72 (M&B(L) 503) [32] Congleton Corporation v Pattison (1808) 10 East 130 [33] Beegas Nominees Ltd v BHP Petroleum Ltd [1997] C.L.Y. 3093 1997 [34] Smith v Spaul [2002] EWCA Civ 1830 [2003] Q.B. 983 [2003] 2 W.L.R. 495 [2003] 1 All E.R. 509 [2003] H.L.R. 38 [2003] 2 P. & C.R. 21 [2003] L. & T.R. 17 [2003] 1 E.G.L.R. 70 [2003] 17 E.G. 148 [2003] 3 E.G.C.S. 125 (2003) 100(9) L.S.G. 28 (2003) 147 S.J.L.B. 27 [2002] N.P.C. 164 [2003] 1 P. & C.R. DG19 Times, December 28, 2002 [35] PW & Co v Milton Gate Investments Ltd [2003] EWHC 1994; Amsprop Trading Ltd v Harris Distribution Ltd [1997] 1 W.L.R. 1025 [1997] 2 All E.R. 990 [1997] 2 E.G.L.R. 78 [1997] 47 E.G. 127 [1996] N.P.C. 154 Times, November 13, 1996 [36] Hall v Ewin (1888) 37 Ch.D. 74; Tulk v Moxhay (1848) 2 Ph 774 [37] Crestfort Limited v Tesco Stores Limited [2005] EWHC 805 (Ch); [2005] 37 EG 148. [38] Waycourt Ltd v Viscount Chelsea [2006] EWCA Civ 511 [39] Crestfort Limited v Tesco Stores Limited [2005] EWHC 805 (Ch); [2005] 37 EG 148. [40] Homebase Ltd v Allied Dunbar Assurance plc [2002] EWCA Civ 666; [2002] L&TR 27; [2002] 27 EG 144; [2003] 1 P&CR 6 [41] Vision Golf Ltd v Weightmans [2006] EWHC 1766 [42] Street v Mountford [1985] A.C. 809 (M&B(L) 417; G 386) [43] Shell-Mex & B.P. Ltd. v Manchester Garages Ltd. [1971] 1 W.L.R. 612; Addiscombe Garden Estates Ltd. v Crabbe [1958] 1 Q.B. 513; Dellneed Ltd v Chin [1987] 1 E.G.L.R. 75 [44] Unity Joint Stock Banking Association v King (1858) 25 Beav. 72; 53 E.R..563; Plimmer v Wellington Corporation (1884) 9 App. Cas. 699 (M&B(L) 589; G 641)

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