First-tier Tribunal Rules Tenant Breached Lease Clauses

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case reference : LON/00AW/LBC/2023/0068 & LON/00AW/LAC/2023/0021 Property : [ADDRESS] [POSTCODE] Applicant : [redacted] : Ms [COUNSEL], counsel Respondent : [redacted] (2) [COUNSEL] [NAME] : [NAME] [COUNSEL], counsel Type of application : (i) Breach of lease -s.168(4) of the Commonhold and Leasehold Reform Act 2002 (ii) Determination of a variable administration charge – Schedule 11 of the Commonhold and Leasehold Reform Act 2002 Tribunal members : Judge [NAME] Venue : 10 [ADDRESS] [POSTCODE] Date of hearing Date of decision : 15 April 2024 12 June 2023

DECISION

2 Decisions of the tribunal (1) The tribunal finds the applicant has failed to prove the respondents have

breached clause 2(14)(b) of the lease. (2) The tribunal finds the applicant has proved the respondents have

breached clauses 2(11) and 2(15) of the lease. (3) The tribunal finds the respondents are not liable to pay the £570 fee for

consideration of the retrospective application for consent to sub-let. _____________________________________________________ The applications 1. The applicant asks the tribunal to determine:

Under s.168(4) of the Commonhold and Leasehold Reform Act

2002 (‘the Act’)

(i) Whether the respondent lessees have breached the terms of the

lease dated 4 April 2003 made between (1) [COMPANY] (2) [NAME] [NAME];

(ii) Whether the respondents have permitted or used the property

other than for private residential use;

(iii) Whether the respondents have permitted the property to be used

for purposes that may become a nuisance.

Under Schedule 11 0f the 2002 Act

(iv) Whether the respondents are liable to pay the £570 for the [COMPANY]’s consideration of granting consent to sublet the subject

flat to [NAME] [NAME]. The background 2. The subject property at [ADDRESS] [POSTCODE]

(‘the property’) comprises a two-bedroom residential flat in a

purpose built block of 13 flats. The applicant is a right to manage

company which exercises the landlord’s management functions

under the lease. 3. The applicant asserted the respondents had sublet the Premises on an

Assured Shorthold Tenancy dated 8 September 2022 to [NAME] [NAME]

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[NAME] for a period of three years with effect from 14 September 2022.

Subsequently, the applicant identified various alleged breaches of the

lease that arose from this subletting. The issues The applicant’s case 4. In its particularised statement of the breaches, the applicant alleged that

the respondents had breached the following clauses of the lease:

Clause 2(11) - which provides that the Tenant must not without

the previous written consent of the Landlord use the flat or any

part thereof for any other purpose than that of a self-contained

tenement as one flat for private residential purposes in single

occupation only and must not exercise or carry on (or permit to

be exercised or carried on) any trade, profession or business, and

must not let apartments or rooms or take in any boarders or

paying guests.

Clause 2(14)(b) - requires the Tenant not to assign, underlet or

part with possession of the flat without the previous written

consent of the Landlord.

Clause 2(15) requires the Tenant not to use or permit the flat to

be used for any purpose that may be, become or cause a nuisance,

damage, annoyance or inconvenience to the Landlord or the

owners or occupiers of the other flats at the property. 5. The applicant asserted the respondents had breached the above clauses

of the Lease in the following ways:-

(a) In breach of clause 2(11) of the Lease, the respondents’

subtenants have used the Premises without the prior

written consent of the Landlord for purposes other than

that of a self-contained tenement as one flat for private

residential purposes in single occupation. The

respondents have allowed their subtenants to exercise or

carry on a trade, profession or business, by letting the

Premises or rooms or, alternatively, by allowing their

subtenant to take in boarders and paying guests.

(b) In breach of clause 2(14)(b) of the Lease, the respondents

have allowed their subtenants to underlet the Premises

without the prior written consent of the Landlord.

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(c ) In breach of clause 2(15) of the Lease, the respondents

permitted their subtenants to use the Premises for

purposes that have caused nuisance, damage, annoyance

and inconvenience to the Landlord and the owners and

occupiers of the other flats in the building. 6. The applicant asserted the respondents had permitted [NAME] [APPELLANT] to

use the Premises for short term holiday lets ([NAME]) and that the

numerous groups of international guests’ arrival and departures

often occurred at unsocial hours and caused a nuisance and annoyance

to the other leaseholders in the Building and caused damage to the

common parts. 7. The applicant relied upon the paragraph 11.199 of Volume 1 of Woodfall

in submitting the word ‘permit’ in the lease had been broken by the

respondents by their failure to take legal proceedings against [NAME]

[APPELLANT]. A passage relied upon stated:

But a tenant permits a breach of covenant if he abstains from

taking legal proceedings against his under-tenant, when

there could be no good defence to any such proceedings, it

depends in the circumstances of each case whether a covenanter

may reasonably be expected to take legal proceedings to order

a stop of breach of covenant on the part of his sub-tenant. 8. The applicant also asserted the respondents were liable to pay the £570

fee charged in respect of the fee for the [COMPANY]’s consideration

of whether to give consent to the sublet to [NAME] [NAME]. This

was said to be payable regardless of whether or not consent was granted. The respondents’ case Alleged breach of clause 2(11) 9. The respondents accepted they had sublet the property to [NAME] [NAME]

under an Assured Tenancy Agreement dated 8 September 2022 for a

period of three years with effect from 14 September 2022. 10. The respondent asserted the applicant must establish not simply that [NAME]

[APPELLANT] let the Premises on short-term lets for income, but that the

Respondents permitted that, as per the wording of clause 2(11). It is not

enough to simply state that the Premises have been occupied by people

on short-term lets. 11. The applicant has failed to particularise how the Respondents are said to

have permitted any such occupation, or when such breach occurred (the

date is important because of the alleged waiver of the right to forfeit in

any event). The respondents did not, in fact, permit any such occupation.

5 Alleged breach of clause 2(14)(b) 12. The respondents submitted the applicant’s reliance upon the allegation

that ‘The respondents have allowed their subtenants to underlet the

Premises without the prior written consent of the Landlord’ is

presumably supposed to state that the fact relied upon is that the

respondents have allowed their tenant (i.e. not subtenants) to let. There

are no subsub-tenants of the Premises. 13. If that is right, then the allegation is wrong because clause 2(14)(b) is a

qualified covenant by the respondent not to sub-let. It is not breached by

the acts of any sub-tenant (i.e. any breach would be by the respondents

letting to [NAME] [NAME], not by anything that [NAME] [NAME] subsequently

did). 14. Further, if, which is unclear, the applicant is claiming that the

respondents breached clause 2(14)(b) of the Lease by granting a tenancy

to [NAME] [APPELLANT], then the Applicant has waived any such breach. By a

letter dated 27 September 2022 from [NAME]

(‘[NAME]’) acting for and on behalf of the Applicant and the Landlord to

the respondents titled ‘Application for Payment,’ [NAME] demanded the

sum £570 from the respondents for ‘INV LR-0024 Sublet Registration’.

The sum demanded under the Demand was demanded in exchange for

the respondents being permitted by the Landlord and the applicant to let

the Premises to [NAME] [APPELLANT]. The respondents paid the sum. 15. In any event, even if the respondents breached clause 2(14)(b) of the

Lease and there was no collateral agreement/estoppel or waiver of

breach as above, the applicant and the Landlord have waived the right to

forfeit as the attempts by the respondents to assign the term of years

under the Lease, constituted a waiver by the applicant and the Landlord,

of the right to forfeit upon any breach of clause 2(14)(b) as alleged. Those

negotiations were consistent, and only consistent, with the applicant and

the Landlord having elected to treat the Lease as continuing after,

apparently, the discovery of the fact complained of on, at the latest, 27

September 2022 as per the Demand above. Those negotiations also

constituted the communication by the applicant and the Landlord of

their decision to treat the Lease as continuing. Otherwise, there would

have been nothing to discuss the assignment of. Allegation of breach of clause 2(15) 16. The respondents asserted the applicant and the Landlord appear to

proceed on the basis that it is enough to establish ‘That the occupiers

of the Premises have caused nuisance, damage, annoyance or

inconvenience …to the Landlord and the owners or occupiers of the

other flats in the building.’ However, that assertion is incorrect as the

lease provides the applicant and the Landlord have to establish that the

respondents have a) permitted b) the Premises:-

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To be used for any purpose which in the reasonable judgment of

the Landlord…..may be or tend or grow to be a nuisance damage

annoyance or inconvenience to the…Landlord or the owner or

occupier of any part of the Building. 17. The respondents initially contended the £570 fee for consent to the

subletting to [NAME] [APPELLANT] had been paid by them to the applicant. Since

the hearing, the respondent has considered (with the express permission

of the tribunal) and subsequently accepted, (email dated 25 April 2024),

that the sum of £570 was paid in respect of the consent to sublet to a

previous subtenant, Ms [RESPONDENT] and not the current subtenant [RESPONDENT]

[NAME] as detailed in the applicant’s witness

statement provided by [APPELLANT] [NAME] dated 22 April 2024.

Consequently, the tribunal finds the respondents’ assertions of a

waiver of the right to forfeit the lease cannot be relied upon. The hearing 18. An oral hearing was held at which the tribunal considered all of the oral

and documentary evidence relied upon by the parties. 19. Since the hearing, the respondent has considered(at the express request

of the tribunal) and subsequently accepted (email dated 25 April 2024),

that the sum of £570 was paid in respect of the previous consent to

sublet to a previous subtenant, Ms [NAME] and not the current

subtenant [NAME] [NAME] [NAME] as detailed in the witness

statement of [NAME] [NAME] dated 22 April 2024. Consequently, the

tribunal finds the respondents’ assertions of a waiver of the right to

forfeit the lease cannot be relied upon. The tribunal’s decision 20. The tribunal finds the applicant has failed to prove a breach of clause

2(14)(b). However, the tribunal finds the applicant has proved the

respondents breached clauses 2(11) and 2(15) of the lease. 21. The tribunal finds the applicant failed to notify the landlord of the

respondents subletting of the property to [NAME] [NAME] pursuant to the

provisions of s. 98(4) of the 2002 Act and took it upon itself to refuse

retrospective consent on 5 December 2022. The tribunal finds in the

circumstances the fee of £570 is not reasonable nor payable by the

respondents. Reasons for the tribunal’s decision 22. In reaching its decision, the tribunal considered the judgment in Arnold

v Britton [2015] UKSC 36 and the principles to be applied when

consideration the interpretation of the words of the lease.

7 23. The tribunal finds the applicant’s particularised alleged breach of clause

2(14)(b) of the lease, do not seek to rely upon the subletting by the

respondents to [NAME] [NAME] but the subletting by him, to other short let

occupiers. However clause 2(14)(b) of the lease states the Tenant

covenants:-

Not to assign underlet or part with possess of the said flat

without the previous consent in writing of the Landlord (the

tenant paying all costs and expenses of or in connection with the

obtaining of such consent) ….. 24. The tribunal finds the applicant has proved the respondents have

breached clause 2(11) which states:-

Not at any time during the said term without the previous

consent in writing of the landlord to use the said flat or any part

thereof not permit the same to be used by any other person for

any other purpose than that of a self-contained tenement for

occupation as one flat for private residential purpose in single

occupation only and not to exercise or carry on or permit to be

exercised or carried on upon the said flat any trade profession

or business nor to advertise the Building as the business address

of the Tenant and not to let apartments or rooms or take in any

boarders or paying guests. 25. The tribunal finds the respondents were initially unaware of [NAME]

[NAME] intention to use the premises for holiday lets. However, the

tribunal finds the respondents knew no later than 9 October 2022

their subtenant [NAME] [NAME], was using the premises for short-term

holiday lets and the complaints being made about the use of the premises

in this manner. 26. The tribunal finds the respondents permitted [NAME] [NAME] to carry out

a business at the premises and allowed him to take in paying guests

rather than occupying the property himself in accordance with clause

6.4.1 of the AST which states:

To use the Property only as a private dwelling house for the occupation

of the Tenant /Tenants nominated occupant as listed on this tenancy

agreement only and not to use the Property or any part for any illegal

or immoral purpose nor for any sale by auction nor any public meeting

for religious political or other purposes and not to carry out any

profession trade or business or register a business at the Property. 27. The tribunal accepts the evidence of the use of the premises as holiday

lets, the nuisance and damage caused in the unchallenged factual

evidence provided in the two witness statements of [APPELLANT], director

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of the applicant [COMPANY], dated 14 December 2023 and 22 March

2024. 28. The tribunal does not accept the respondents’ submission that the

applicant has failed to establish the respondents permitted the use of the

premises as a holiday let. The tribunal finds the respondents took no

steps to apply for an injunction and failed to initiate possession

proceedings where it was likely to be established that [NAME] [NAME] did

not occupy the premises and had used them for the business of holiday

lets. Therefore the tribunal finds the respondents are in breach of clause

2(11) of the lease. 29. Clause 2(15) of the lease states the Tenant is:-

Not to use or permit to be used the said flat or any part thereof

for any illegal or immoral purpose or for any purpose which in

the reasonable judgment of the Landlord or of the superior

Lessors may or tend or grow to be a nuisance damage

annoyance or inconvenience to the Superior Lessors or to the

landlord or the owner or occupier of any part of the Building…… 30. The tribunal finds the acts alleged to amount to a ‘….nuisance,

damage, annoyance or inconvenience’ were set out in the First and

Second witness statements of [NAME]. These were said to be caused

by the persons arriving on different holiday lettings, do collectively

amount to a nuisance and annoyance and did cause damage to the

common parts of the Building. The tribunal finds the respondents knew

of the short term holiday lettings and the nuisance annoyance and

damage that occurred and permitted to take place as they failed to take

any steps at all to put an end to it. 31. The respondent wished the tribunal to determine whether or not the

applicant should pay the costs of two applications (service charges and

administration fees) that were subsequently withdrawn under rule 22 of

the Tribunal Procedure (First-tier Tribunal) ([NAME]) rules

2013. The applicant objected to such a determination being made. 32. The tribunal declined to make a decision on rule 13 costs as the

respondent had failed to make a proper written application for costs; had

failed to provide a Schedule of Costs for applications that did not

form part of the current application. 33. In conclusion, the tribunal finds the applicant has proved the respondent

has breached clause 2(11) and 2(15) of the lease. The administration fee

of £570 is not payable by the respondents.

9 Name: Judge Tagliavini Date: 12 June 2024

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).