5 September 2016

Build me up (Buttercup): A Landlord can add another flat on top of an existing building, even where the leases appear to indicate otherwise

The recent case of Francia Properties Limited v Aristou & Others serves as, amongst other things, a timely reminder of the importance of a good understanding of the law when looking at lease clauses. In this case, the landlord of an eight flat building within a development wanted to put another flat on the roof. Perhaps understandably, this was vehemently opposed by the tenant of the top floor flat.

All the flat leases contained the following clause (the underlining is mine):

"At any time or times hereafter without obtaining the consent of or paying compensation to the Tenant to build or rebuild or alter, permit or suffer to be built or rebuilt or altered any buildings or erections upon the Development (other than the Building) according to such plans and to such height extent or otherwise and in such manner as the Landlord shall reasonably think fit notwithstanding that such buildings as so built, rebuilt or altered may obstruct any light, windows or other openings in or on the Demised Premises".

A layperson's reading of that clause might reasonably assume that the landlord could not therefore build on top of the building in question – it appears to be excluded. However, the County Court ruled otherwise, and a more detailed understanding of the legal principles and history reveals why.

The starting point for the Court was to consider the 'common law' – the long body of established legal practice dating (in some cases) to medieval times. Under the common law, a landlord is entitled to do works to his property without restriction. In this case the works were to the roof, and therefore to the landlord's part of the building (i.e. not to any of the flats).

The next step was to consider the usual purpose for clauses such as this. Clauses allowing development in this manner are designed to give the landlord rights, and ensure that the tenants do not obtain rights to light. The Court did not think it likely that the clause was intended to restrict the landlord's rights (as the tenant argued).

 The Court therefore held, given the common law starting point, and the usual reasoning behind these clauses, that there was no restriction on any works on the building, and that the rights and obligations of the parties were governed by other clauses within the lease, and by general law. The upshot was that, in order to remove the landlord's ordinary rights under common law, the Court stated that much clearer wording would be necessary.  

To rub salt in the wounds of the tenant, the works would increase the shadowing on the tenant's terrace but this was not found to constitute unreasonable interference, nor would it breach the landlord's covenant to the tenant for quiet enjoyment.

So what looks like a clear prohibition turns out to be nothing of the sort, and a tenant loses his top floor flat (and the sunshine on his terrace). This could, of course, have been avoided with more careful drafting. However, perhaps the more important lesson to draw from this is that lease interpretation is not straightforward, and requires a certain amount of background knowledge. Tenants (and landlords) should ensure that they take careful advice before acquiring leasehold interests, as what appears obvious may, on closer inspection, be anything but.

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