The Upper Tribunal (UT) affirmed that a covenant prohibiting the removal of the landlord’s fixtures is not negated by the replacement of such fixtures.
Facts:
Mr. Maguire and Ms. Allen are the freeholders of 25 Ronald Park Avenue, a Victorian House that was converted into two flats. Ms. Phanphet and Mr. Phelan hold a long lease of number 25A, the first-floor flat. Mr. Maguire and Ms. Allen also hold a long lease of the ground-floor flat, so they are both the respondents’ neighbours and landlords.
The lease for 25A contains covenants governing structural alterations, the removal of fixtures, the impact on building insurance, and rules against nuisance and unreasonable noise. Mr. Maguire and Ms. Allen had bought the flat in September 2022 and subsequently undertook a comprehensive refurbishment of 25A, including revamping the plumbing, heating, and wiring, and the replacement of all fixtures, including radiators, the kitchen, and the bathroom. The refurbishment caused some physical damage to the downstairs flat, 25, including a contractor putting his foot through the appellants’ kitchen ceiling.
Mr. Maguire and Ms. Allen applied to the First-tier Tribunal (FTT) under Section 168 of the Commonhold and Leasehold Reform Act (CLRA) 2002 to determine whether the tenants had breached the lease covenants in August 2023. The FTT found only one breach, specifically the removal of part of an internal, non-structural wall, leading to the appellants’ appeal to the UT on the other three issues.
Decision:
The UT held that lease covenants prohibiting the removal of landlord’s fixtures without consent are breached by actual removal, even where fixtures are replaced, rejecting the proposition that replacement negates the breach. The UT found that the FTT had misconstrued Clause 2(c) of the lease. Since the FTT’s legal interpretation was incorrect, the UT substituted a finding of breach based on the respondents’ own admission (via their solicitor’s letter) that they had removed and replaced fixtures, including internal doors, skirting boards, the entire kitchen, and the entire bathroom.
The UT agreed with the appellants’ legal interpretation that the covenant is breached if the action “may” render the policy void or increase premiums, although the appellants did not need to prove an actual breach of the policy. However, the appellants’ concern about the works (e.g., electrical work and wall removal) was based on speculation. To prove a breach, the appellants needed evidence from the insurer itself or an expert witness to show that the works were of a nature that could compromise the policy.
The UT, however, disagreed with the FTT’s construction, ruling that unreasonable noise from builders is covered by the covenant, although the appellants failed to discharge the burden of proof.
Implications:
This case clearly establishes that a covenant prohibiting the removal of a landlord’s fixtures is breached by removal alone. The leaseholder cannot argue that the covenant is not broken because they replaced the fixture with a new one, or even one which is potentially better. This means that leaseholders must obtain prior written consent for any removal, even if they intend to upgrade the items.
The ruling expands the scope of the “unreasonable noise” covenant, confirming that the phrase “or otherwise” includes noise from builders and construction, and not just domestic activities such as playing instruments or a stereo sound system. Leaseholders undertaking work must ensure their contractors’ noise levels are reasonable to avoid breaching the lease. However, the party relying on the breach must also prove that it has taken place.
It further confirms that extensive internal refurbishment works in of themselves do not breach a covenant restricting the use of the property solely to a “private dwelling”. The “use” covenant focuses on the purpose of the occupation (e.g., residential vs. commercial), and not the disturbance caused by repair or renovation.
For covenants breached by an action that “may” compromise the insurance, the landlord must provide expert evidence from the insurer or a surveyor. Mere speculation, genuine concern, or a small premium increase is insufficient to prove the breach.
The landlord successfully established breaches of covenant regarding the removal of fixtures. This allows them to serve a formal notice under Section 146 of the Law of Property Act (LPA) 1925 and pursue forfeiture, which is a powerful negotiating tool, even if the ultimate relief granted by the Court is only a small sum in damages.
