Round up of recent property case law
July 17, 2012
Restrictive covenants – use them or lose them - Re Brainshaugh House  UKUT 112 (LC)
Law: If, as a result of a change in the character of a property, neighbourhood or other material circumstances a restrictive covenant no longer serves its original purpose, the covenant will be deemed to be obsolete and can be discharged or modified.
- Brainshaugh House formed part of Sir Anthony Milburn’s estate until its sale in 2002. The transfer included a number of restrictive covenants for the benefit of Sir Anthony, his family and/or descendents meaning that the new owner was prevented from redeveloping the house.
- Sir Anthony subsequently sold the majority of the remainder of the estate in 2008 to an unrelated third party, and the owner of the House applied to the Upper Tribunal (Lands Chamber) to discharge or modify the restrictive covenants in order for them to redevelop and refurbish the House. Sir Anthony, his family and/or descendents were no longer entitled to benefit from the covenants.
- The Tribunal found that the 2008 sale constituted a material change of circumstances and the original purpose of the covenants (to benefit the estate whilst owned by Sir Anthony, his family and/or descendents) could no longer be served.
- As a result, all bar one of the covenants were discharged, with the remaining covenant being modified.
Lease Renewals - Landlord successfully opposed a tenant’s right to a lease renewal on the basis that the Landlord had a reasonable prospect of being able to achieve its intention to re-occupy the premises – Humber Oil Terminals Trustees Ltd v Associated British Ports  EWCA Civ 596
Unless a landlord and tenant have agreed to exclude a lease which is for business purposes from security of tenure, the tenant has a right to apply for a renewal of the lease. The landlord can only oppose the new lease on certain prescribed grounds. In this case, the landlord was the owner of an oil terminal and sought to refuse the tenant’s application for renewal of the lease on the ground that it intended to occupy the premises itself for business purposes, which is a prescribed ground of opposition. To be successful the landlord must show that it has (1) a firm and settled intention to occupy for business purposes (a subjective test) and (2) a reasonable prospect of achieving its intention (an objective test).
The tenant argued that the landlord was reliant (1) on the infrastructure installed by the tenant and (2) the tenant’s expertise in operating the oil terminal. The tenant intended to remove the infrastructure (as it was permitted to do under the lease) and not to otherwise co-operate with the landlord. Accordingly, the tenant suggested that the landlord did not satisfy the second limb of the test.
The tenant’s argument was dismissed. The Court had to assess the objective element of the landlord’s intention by assuming that the landlord was in possession of the oil terminal. Commercially speaking, the Court found that it was likely that the tenant would enter into an agreement with the landlord allowing it to continue using the terminal. As a result, the landlord was permitted to refuse the tenant’s application to renew the lease.
Insurance – What constitutes an insurance rent demand? - Patel & others v MRD Property Developments Ltd  EWCA Civ 727
Law: Providing a copy of an insurance renewal notice to one co-tenant is sufficient to constitute a valid insurance rent demand by a landlord
- When three co-tenants fell into arrears, the landlord sought to forfeit the lease by peaceably re-entering the premises. Under the lease, the landlord was only entitled to forfeit the lease after having served a rent demand on the tenant.
- A dispute arose as to the amount of the outstanding sum. The tenants argued that the landlord had not demanded the insurance rent and accordingly they sought relief from forfeiture.
- The lease provided that insurance rent was due within 14 days of written demand from the landlord.
- Whilst the tenants accepted that the landlord had provided one of the tenants with a copy of the insurance renewal demand from the insurance company (“Insurance Renewal”), they argued that this was not a sufficient to constitute a demand.
The court held that a reasonable person in the position of the parties would take the receipt of the Insurance Renewal to be both a sufficient written memo of the amount due and a request for payment by the landlord.
Break Clauses - The right to exercise a break clause in a lease was not exercisable by a successor tenant despite the clause containing no express wording to that effect – Gemini Press Ltd v Cheryl Lindsay Parsons  EWHC 1608 (QB),
Where a break right (or any other right conferred to a tenant) is stated as being a personal right or is expressly stated as being limited to a particular tenant, a future tenant will not be entitled to that break right. This is commonly understood. However, in this case there was no wording to that effect (i.e. that the right was personal or limited to the original tenant), yet the future tenant could not exercise the right.
The new tenant argued that the clause did not contain words such as “only” or “personal”, and the definition of “assignee” included successors in title. Nonetheless, the High Court found that the right was personal to the original tenant. It did so on the basis that the agreement used the words “tenant” and “assignee” throughout the relevant document, yet in the break clause only referred to the original tenant by name. Accordingly the Court found that the intention was to limit the break clause to the original tenant and could not be assigned.