Alterations and Additions

Eaton Mansions (Westminster) Limited and Stinger Compania de Inversoin SA concerned a head tenant's claim against its sub-tenant in respect of the sub-tenant's installation of air conditioning units on the roof of a block of flats. What can landlords and tenants learn from the case?

The claimant tenant had a lease of residential flats in a block of flats known as Eaton Mansions. The tenant's lease, like all others in the block, contained a covenant prohibiting alterations in the "construction, height, elevation, external or internal architectural appearance or internal arrangements of the demised premises or any part thereof". 

The claimant sublet two of the flats to the Defendant.

The claimant's sub-tenant placed three air conditioning units on the flat roof of the block of flats at some point around 1980. The claimant had given consent to place some air conditioning units on the roof, but later withdrew its consent and required the sub-tenant to remove the equipment. 

The sub-tenant wished to install new equipment and approached the freeholder about this direct. The freeholder refused consent to the installation of new apparatus on the basis that it was too large and might cause problems if the other leaseholders wanted to install similar equipment in the future. The sub-tenant failed to remove the equipment and, in fact, in 2007/2008 added more units without consent. The litigation concerned the 2007/2008 works.

The claimant applied for summary judgment in respect of its claim that the installation of the equipment was a trespass and that it should be removed.

The sub-tenant argued that:

1. The head tenant had unreasonably refused consent and the reasonableness of its refusal had to be determined by what was in its mind at the time, not by subsequent evidence of the freeholder's view in relation to the equipment;
2. The head tenant could not reasonably rely on the freeholder's opposition unless it could show that placing the apparatus on the roof would be in breach of the covenant in its Head Lease.

What the Court decide?

The Underleases held by the sub-tenant did not confer any right to place anything on the roof, even with the claimant's consent. The sub-tenant therefore had to rely on proprietary estoppel. 

The question was whether proprietary estoppel could be invoked to prevent the claimant from objecting to the equipment.

The claimant's claim for summary judgment succeeded.

It was always clear that the claimant would need the consent of the freeholder; otherwise the claimant would be in breach of covenant itself. The freeholder had always made it clear that it had concerns about the equipment and that any approval would be revocable anyway. It could not be argued, in these circumstances, that the claimant acted unreasonably in withholding consent.

The correct legal test required a focus on what the freeholder's attitude would have been if the claimant had asked for its consent. On the evidence it was clear that had the claimant asked for the freeholder's consent, it would have been by no means a given that consent would have been granted or, if it was granted, in what way and on what terms. 

On the facts the Judge was therefore entitled to conclude that the sub-tenant had no real prospect of successfully defending the claim.

Practical points

It is not uncommon for a tenant or sub-tenant to carry out works without consent, despite the fact that it is required under the terms of the lease.

Where there is a qualified covenant against alterations, i.e. the landlord cannot unreasonably withhold consent, the tenant may get away with taking a more cavalier approach to the question of consent. Obviously this is a risky strategy given that an alteration made without consent is likely to amount to a breach of covenant and could potentially also be rentalised on rent review, as generally only improvements carried out with consent are disregarded on rent review.

Before entering into a lease tenants should consider whether the extent of the proposed demise is sufficient to allow them to do the things they may want/need to do, such as affixing aerials, signage etc or whether specific rights to do these sort of things should be included in the lease.

Naomi Cunningham is a solicitor in the Michelmores Property Litigation Team. For further information on the issues raised in this article, please contact Naomi at naomi.cunningham@michelmores.com