First-tier Tribunal Finds Tenants in Breach of Lease Covenants

OUTCOME: Allowed

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Case Reference : MAN/00CZ/LBC/2024/0008

Property : [ADDRESS], [POSTCODE]

[RESPONDENT]: [APPELLANT]

Respondents (1) : [APPELLANT] & [RESPONDENT]

Respondent (2) : [RESPONDENT] of Application : An application for an order that a breach of covenant or condition in the lease has occurred under section 168(4) of the Commonhold and Leasehold Reform Act 2002.

Tribunal Members : Judge [NAME] Ms J Jacobs MRICS

Date and venue : Paper determination 18 July 2025

Date of decision : 6 August 2025

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DECISION

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Decision

The Tribunal determines that:

1) [NAME] are in breach of the covenants in Clauses 11.3 and 12 of [RESPONDENT] 4 of the Lease; and

2) Respondent 2 is in breach of the covenant in [RESPONDENT] 11.3 of [RESPONDENT] 4 of the Lease.

Introduction

1. This is an application under section 168 of the Commonhold and Leasehold Reform Act 2002 for the determination of breach of covenant. The application states that the Respondents have failed to comply with procedural steps required on the transfer or assignment of the Lease in breach of clauses 11.3 and 12 of [RESPONDENT] 4 of the Lease.

Procedural background

2. The application was made on 27 March 2024.

3. Directions dated 22 January 2025 regarding case management were issued. Following an application by [RESPONDENT], further Directions dated 29 April 2025 were issued which added Respondent 2, the current owner of the flat, as a Respondent and determined that the matter would be dealt with by paper determination. [RESPONDENT] provided a bundle. A solicitor for Respondent 2 provided a short response to the application but with no accompanying bundle. No response was received directly from [NAME].

4. Despite a letter from the Tribunal dated 1 May 2025 to Respondent 2 copied to all parties querying whether the solicitor was acting for all the Respondents, there was no response. We are therefore unclear as to whether the submission from Respondent 2’s solicitor is also on behalf of [NAME]. [RESPONDENT] provided a reply to the solicitor’s submission.

Background

5. [RESPONDENT] owns the freehold title WYK672348(1-3), [ADDRESS] [POSTCODE], which includes Apartment 3 (‘the flat’).

6. By Lease dated 20 July 2007, made between [COMPANY] (1), [ADDRESS] (Millbridge) [RESPONDENT] (2) and [NAME] [RESPONDENT] (3), Title WYK862679, the flat was demised for 99 years beginning on 1 January 2006 upon the payment of a premium, annual ground rent and service and management charges.

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7. The Lease has various [RESPONDENT] which require procedural steps to be carried out by a tenant who transfers or assigns the flat.

8. By letter from [NAME] dated 19 May 2020, [RESPONDENT] received a Notice of Transfer and fee of £60 notifying him that the residue of the Lease term was transferred to [NAME] by means of a transfer dated 24 April 2019. The Notice of Transfer was sent in duplicate with one copy signed by the solicitors, and the duplicate was to be returned with [RESPONDENT]’s signature together with a Certificate of Compliance.

9. [RESPONDENT] says that considerable correspondence was entered into with [NAME]’s solicitor on how to register the flat, although we did not see such correspondence. Apparently, the registration was not effected. As at 5 May 2025, the Official Copy of Register of Title WYK 862679, states that the [NAME] was [RESPONDENT]

10. On 10 August 2023, [NAME] transferred the flat to Respondent 2.

11. On 17 November 2023, [RESPONDENT] sent a rent demand of £400 to [NAME] for the ground rent due on 1 January 2024. A reminder was sent on 2 January 2024 to an email address with which he had previously corresponded with [NAME] at their request.

12. By email dated 4 January 2024, [NAME] informed [RESPONDENT] that they no longer owned the flat and that Respondent 2 was the owner. Respondent 2 owns several of the flats in the block and is the sole director of the [COMPANY], (‘the [COMPANY]’) which has the responsibility of managing the building.

13. On 5 January 2024, [RESPONDENT] asked [NAME] when they had assigned the flat, advised that it was still registered in the name of their predecessor and advised them to seek legal advice.

14. On 8 January 2024, [RESPONDENT] again emailed [NAME] for the date of the assignment and advised that they appeared to be in breach of the Lease.

15. On 14 January 2024, [RESPONDENT] sent a letter with an email copy to [NAME] alleging two breaches of the Lease covenants and invited them to admit to the breaches. If no admission was received, he reserved the right to make an application to the Tribunal to have [NAME] declared to be in breach of the covenants in furtherance of proceedings under section 146 Law of Property Act 1925 (a section 146 notice) to forfeit the Lease.

16. On 7 February 2024, [RESPONDENT] emailed [NAME] referring to the letter of 14 January 2024 and advised that if he did not receive an admission of a breach or repudiation, then he intended to commence legal proceedings. He sought confirmation of a service address for Tribunal proceedings.

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17. No such admission was received and therefore, [RESPONDENT] made the Tribunal application.

18. On 28 March 2024, [RESPONDENT] emailed Respondent 2 to advise that he was aware that he had acquired the flat, that the relevant procedural paperwork required by the Lease covenants had not been completed and asked him for the position, as [NAME] were not responding to correspondence.

19. On 6 May 2024, [RESPONDENT] emailed Respondent 2 to advise that he had commenced proceedings in the Tribunal against [NAME] as a step towards forfeiture under a section 146 Notice and that if Respondent 2 had an interest in the Property, he would likely be offered the chance to be added to the proceedings. As Respondent 2 had not responded to the previous email regarding the matter, [RESPONDENT] did not know whether he had an interest in the Property. He advised him to take legal advice.

20. On 7 May 2024, Respondent 2 emailed [RESPONDENT] saying that his solicitor had asked on what basis a section 146 notice was being issued.

21. On 8 May 2024, [RESPONDENT] emailed Respondent 2 sending him a copy of the Tribunal application saying that it was a preliminary to issuing a section 146 Notice. He advised that he considered that he should add Respondent 2 to the application and asked if he had any objection to this.

22. On 14 May 2024, [RESPONDENT] emailed Respondent 2 to ask again whether he had any objection to being joined in the Tribunal application. In response, on the same date, Respondent 2 emailed [RESPONDENT] to say his solicitor had advised that everything was in order at their end but would double check, so at present he did not require to be added to the proceedings.

23. On 16 May 2024, [RESPONDENT] emailed Respondent 2 to advise that he had made an application to join Respondent 2 as a party and again asked for the date the assignment document was executed.

24. By letter dated 6 August 2024, [RESPONDENT] solicitors, sent to [RESPONDENT] a Notice of Intention dated 28 May 2024 from the [COMPANY], advising that it intended to issue a certificate to the Land Registry to comply with the restriction at entry on the [NAME] of Title WYK 862679 in relation to the assignment dated 24 April 2019 between [NAME] [RESPONDENT] and [NAME]. This was signed by Respondent 2 in his capacity as director of the [COMPANY].

25. [RESPONDENT] says that he did not read the above Notice thoroughly assuming it was for Respondent 2’s registration of title. He objected to the issue of a certificate on the grounds that the breaches of covenant had occurred and that he was seeking forfeiture. He requested a copy of the application for the certificate, which was not forthcoming. He says that it was not apparent why the [COMPANY] would make such an application given that the director knew that from 10 August 2023, he himself was the current owner not [NAME]. Further, the solicitor acts for

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both Respondent 2 and the [COMPANY] and knew that [NAME] had parted with the flat.

[RESPONDENT]

26. [RESPONDENT] 2.1 of the Lease, the tenant covenants to perform and observe the [RESPONDENT] and stipulations set out in [RESPONDENT] 4. The covenants alleged to have been breached are set out below.

[RESPONDENT] 4

[RESPONDENT] 11.3

‘Not at any time during the Term to transfer nor assign the Demised Premises except upon and subject to the condition that the Tenant shall simultaneously with such transfer or assignment covenant directly with the Landlord and the Management Company to observe and perform the conditions hereof and to obtain a like covenant from his transferee [NAME] (subject to the same proviso) on each occasion the Demised Premises are thereafter disposed of and the Tenant will apply to the Chief Land Registrar for a restriction to be entered in the [NAME] of his title that no disposition of the registered estate (other than by charge) by the [NAME] of the registered estate or by the [NAME] of any registered charge is to be registered without written consent signed by the [NAME] for the time being of the estate registered under Title Numbers WYK672348 or if appropriate signed on such proprietors behalf by its secretary or conveyancer.’

[RESPONDENT] 12 ‘At all times during the continuance of the Term to deliver or cause to be delivered to the Landlord a notice of every assignment disposition or devolution of or charge on or transfer of title to the Demised Premises or any part thereof whether by way of mortgage or otherwise within one month after the execution of any deed or signature to any document or after the date of any Probate Letters of Administration or other instrument or an order of court by which such assignment disposition evolution charge or transfer may be effected or evidenced such notice to specify the name address and description of the person or persons to whom or in whose favour the assignment disposition devolution charge or transfer shall be made to take effect and also at the time of delivering every such notice to produce the deed document instrument or order by which such assignment disposition devolution charge or transfer shall purport to be effected or evidenced as aforesaid for the purpose of having a memorandum thereof entered into the registers to be kept by the Landlord for that purpose and to pay to the Landlord a reasonable fee (not being less than £50.00 plus value added tax) for each such registration.’

27. Title WYK862679 (the Lease) has a restriction which states:

‘RESTRICTION: no disposition of the registered estate by the [NAME] of the registered estate is to be registered without a certificate signed by the [NAME] 6 of 10

for the time being of the estate registered under title number WYK 672348 (or his Conveyancer) that the [RESPONDENT] of [RESPONDENT] 11.3 and 12 of [RESPONDENT] of the registered Lease have been complied with.’

[RESPONDENT]

28. [RESPONDENT] submits that no documents have been received by the landlord from [NAME] in relation to Clauses 11.3 and 12 of the 4th [RESPONDENT] and therefore [NAME] have breached the covenants.No Deed of covenant has been presented nor evidence of an application to the Registrar having been made.

29. He asserts that [RESPONDENT] 11.3 requires, inter alia, that the assignor tenant procure that the [NAME] covenant directly with the landlord to observe the conditions of the Lease. This would have to be by way of a Deed and the [RESPONDENT] requires that the covenant is executed simultaneously with the transfer or assignment. No such Deed has been received by the landlord in relation to [RESPONDENT] 11.3 and therefore there was a breach of the covenant by [NAME] on or before 4 January 2024.

30. He asserts that [RESPONDENT] 12 requires, inter alia, that a notice be delivered to the landlord by the assignor within one month of any assignment or transfer of the title and should include a copy of the deed or assignment. He says that no documents have been received by the landlord in relation to [RESPONDENT] 12 and therefore there is a breach.

31. He asserts that [RESPONDENT] 11.3 requires the [NAME] to make an application to the Chief Registrar for the restriction set out in the [RESPONDENT] to be entered in the register against the [NAME]’s [NAME]. Such an application requires the permission of the landlord under the landlord’s residual powers under section 98(4) of the Commonhold and Leasehold Reform Act 2002 (‘the 2002 Act’). No application in favour of Respondent 2 has been received by the landlord and therefore Respondent 2 is in breach of the covenant.

32. Most powers of management, including matters related to assignment are vested in the [COMPANY] of which Respondent 2 is sole director. [RESPONDENT] 11.3 requires the landlord’s permission for any assignment and such permission is to be granted by the [COMPANY] subject to the [RESPONDENT] of section 98(4) of the Commonhold and Leasehold reform Act 2002 which requires 30 days’ notice to be given to the landlord of any intention to provide permission. He says that no such notification has been provided to the landlord of any intention by the [COMPANY] to provide permission. No such notification has been provided to the landlord evidencing the [NAME]’s obligation to register his title with the Chief Registrar under [RESPONDENT] 11.3.

33. The breaches are grounds for forfeiture or re-entry subject to compliance with section 146 Law of Property Act 1925.

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[NAME]

34. The Tribunal has not received any submission directly from [NAME]. For the reasons set out at paragraph 4 above, we do not know if the solicitor’s submission referred to below is also intended to be on behalf of [NAME].

Respondent 2

35. [RESPONDENT] solicitors on behalf of Respondent 2, submit that the purchase from [NAME] to Respondent 2 was completed on 10 August 2023 but they have not yet been able to complete the registration process due to a restriction on the Title requiring a certificate from the freeholder. [NAME] completed their purchase on the 24th of April 2019. They have also not been able to register their purchase due to the same restriction requiring a certificate from the freeholder.

36. The solicitor says that [NAME] were represented by [NAME] when they purchased the Property. They served a notice of assignment on the freeholder and paid a fee but the certificate to comply with the restriction was not forthcoming.

37. When Respondent 2 purchased the Property, it was agreed that [NAME] would deal with both Land Registry applications. With a view to achieving this, on the 6th of August 2024, Notice of Intention dated 28 May 2024 was served on the freeholder advising that the [COMPANY] was to provide a certificate to comply with the terms of a restriction of Title WYK862679 in relation to both transactions. A letter of objection was received from the freeholder on the 20th of August 2024 citing the current ongoing proceedings. A cheque in the sum of £400 in respect to ground rent had been forwarded to the freeholder. It was submitted that there was no ongoing breach of covenant and the application was opposed.

[RESPONDENT]’s reply

38. [RESPONDENT] says that the solicitor’s response does not provide any evidence refuting the breaches of covenants. The solicitor’s Notice to [RESPONDENT] dated 6 August 2024 appears to have been a request to register [NAME] as the proprietors when the solicitor knew that as that date the flat had transferred to Respondent 2. This would have caused [RESPONDENT] to object to the Notice of Intention to apply to the Land Registry for registration of [NAME].

39. [RESPONDENT] has not received any Notice of Intention for approval of the registration of title of Respondent 2. Due to the conflicting information as to ownership he would have raised a query and objected.

40. As the Lease is considered forfeited, he has returned the £400 ground rent. The covenants required satisfying by 10 September 2023 and they were not.

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Decision

41. We considered that existence of the [COMPANY] and the fact that Respondent 2 was both an [NAME] /current tenant of the flat and director of the [COMPANY] complicates matters as to who should be doing what.

42. However, in our view, Clauses 11.3 and 12 of the 4th [RESPONDENT] set out quite clearly what needs to be done and in relation to [RESPONDENT] 12, when it needs to be done, namely within 1 month after the execution of the deed of transfer.

43. Whilst from the evidence it appears that solicitors in both transactions have sent a Notice of Transfer/Assignment to [RESPONDENT], on a normal construction of the Lease, the relevant clauses require more than that. [RESPONDENT] 11.3 requires evidence of the transferor tenant’s covenant simultaneously with the transfer, to observe and perform the conditions in the Lease and to obtain a like covenant from the transferee. In our view, it requires the transferee tenant to apply to the Land Registry for a restriction in the [NAME] in the words set out in the [RESPONDENT].

44. On our interpretation, [RESPONDENT] 12 requires the transferor tenant to provide the landlord, within one month of the date of transfer, a Notice of Transfer/Assignment setting out specific information together with a copy of the transfer document itself, to allow the landlord to keep a memorandum in registers he keeps. The [RESPONDENT] requires the payment of a reasonable fee not being less than £50 plus VAT for such registration.

45. Regarding the transfer of the Property from [NAME] to Respondent 2 on 10 August 2023, in relation to [NAME], we have been provided with no evidence of a deed of covenant or similar to reflect the requirements of [RESPONDENT] 11.3 nor of any documentation sent to [RESPONDENT] within a month as required by [RESPONDENT]

12. We therefore find [NAME] to have breached Clauses 11.3 and 12 of the Lease.

46. In relation to Respondent 2 in his capacity as the [NAME], (as distinct from his capacity as director of the [COMPANY]), we have been provided with no evidence that following the transfer on 10 August 2023 that he applied to the Land Registry for a restriction to be applied on WYK862679 (leasehold title) to prevent the registration of a disposition of the flat without written consent signed by the [NAME] of WYK672348 as required by [RESPONDENT] 11.3 of the Lease.

47. We noted the letter dated 6 August 2024 from the solicitor on behalf of Respondent 2 in the latter’s capacity as a Director of the [COMPANY] to [RESPONDENT] enclosing a Notice of Intention dated 28 May 2024, seeking approval from the [RESPONDENT] for the registration of the Title following the transfer that took place on 24 April 2019 as required by [RESPONDENT] 11.3. However, in our view, this does not assist Respondent 2. Firstly, it relates to the earlier transfer in 2019 which had not been registered at the Land Registry at the time. Whilst it is clear that there needed to be a series of steps taken to regularise that error on the Land Registry title of which the Notice of Intention may have been the first step, in the absence of any other evidence, in our view that does not amount to an application by Respondent 2 to

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apply to the Land Registry for a restriction to be placed on his proprietorship title arising from the transfer on 10 August 2023. We have not been made aware, for example, of whether there was a discussion or agreement between the parties as to the process to be adopted to legally allow the transfer of 10 August 2023 to be registered to the correct name due to the previous error, irrespective of the [RESPONDENT].

48. Even if we are wrong on that point, the Notice of Intention dated 28 May 2024 was issued in Respondent 2’s capacity as the Director of the [COMPANY] acting as the landlord’s agent under the [RESPONDENT] of sections 98 (2), (4), and (7) of the 2002 Act when considering approvals required under the Lease.

49. Under the [RESPONDENT] of section 98 (2) Commonhold and Leasehold Reform Act 2002, functions in relation to approvals to a tenant under the Lease are functions of the [COMPANY] rather than the landlord.

50. Section 98(7) of the 2002 Act provides that approval required to be obtained by virtue of a restriction entered on the register of title kept by the Chief Land registrar, is, so far as relating to a long lease of the whole or any part of the premises, to be treated as an approval under the Lease.

51. Section 98(4) of the 2002 Act provides that the [COMPANY] must not grant approval under section 98(2) without having given to the landlord, in the case of an approval relating to assignment, 30 days’ notice.

52. We have no evidence of Respondent 2, in his capacity as the [NAME] tenant, complying with the requirements of [RESPONDENT] 11.3 in relation to the transfer of 10 August 2023 and we therefore find that he is in breach.

53. [RESPONDENT] asserts that he did not give approval for the two transfers to be registered at the Land Registry as there had been a breach of the covenants. That is not relevant to the very specific matter we must determine, namely whether there was a breach of covenant, although it may be relevant to any future enforcement proceedings. The question of enforcement of a breach of covenant by forfeiture or any other means is a matter for the County Court and not the Tribunal.

Obiter

54. It appears to us that there has been a misunderstanding from at least 2019 as to the requirements of Clauses 11.3 and 12. This is exacerbated by the apparent confusion as to the capacity in which Respondent 2 is acting at any time i.e. tenant or director of the RTM, as different obligations can arise in each capacity from the same set of circumstances e.g. the transfer of the flat.

55. [RESPONDENT] refers to protracted correspondence with solicitors regarding the transfer of 24 April 2019, we have not seen it. In our view, it is a solicitor’s professional responsibility when carrying out property transfers to ensure that any [RESPONDENT] in a lease regarding transfers are complied with and, if in doubt as to the interpretation of the relevant clauses, (or even where there is no doubt but to

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ensure compliance) to seek clarification from the landlord. If the matter of interpretation cannot be resolved between the parties, then there are legal avenues available for the matter to be determined. It is not appropriate to leave the matter unresolved such that there is a lack of clarity as to who is the official and registered tenant of the Lease. The current [NAME] of WYK 862679 refers to a person who transferred the flat in 2019 and since then there has been a further transfer to another person in 2023. This is unacceptable.

56. This matter should have been resolved by the relevant legal representatives at a much earlier stage which would have avoided the need for a Tribunal application. The Respondents have been found to be in breach of covenants due to the actions of their legal representatives whom they entrusted with the conveyancing process rather than by any action/inaction on their parts.

Costs 57. Neither party made an application for costs, and we make no such order.

Appeal

58. If either party is dissatisfied with this decision, they may apply to this Tribunal for permission to appeal to the Upper Tribunal (Lands Chamber). Any such application must be received within 28 days after these written reasons have been sent to the parties and must state the grounds on which they intend to rely in the appeal.

………………………… Judge [NAME]