Duval v 11-13 Randolph Crescent Ltd and the contingent obligation principle; or ‘What do promises to marry have to do with leasehold covenants?’

In Duval v 11-13 Randolph Crescent Ltd [2018] EWCA Civ 2298 the Court of Appeal applied what might be called ‘the contingent obligation principle’ to solve a problem that had arisen between the landlord (11-13 Randolph Crescent Ltd) of two houses that had been converted into 18 flats and two of the lessees, Dr Julia Duval of flats 11G and 11H, and Mrs Winfield of Flat 13.

The principle was summarised by Lewison LJ (with whose judgment Newey LJ and Sir Stephen Richards agreed) at para. [20]:

“There is a long line of authority in which the courts have consistently held that where an obligor undertakes a contingent or conditional obligation, he is under an obligation not to prevent the contingency from occurring; or from putting it out of his power to comply with the obligation if and when the contingency arises.”

The principle seems to have developed in the slightly more exciting field of breach of promise actions such as Short v Stone (1846) 8 QB 358, in which Mrs Short sued Mr Stone when, having promised to marry her within a reasonable time of her request, he then went on to marry another woman. (She was successful, and obtained the declaratory relief she sought, hopefully satisfying her wounded pride).

In the rather more prosaic world of leasehold covenants the lessees in the Randolph Crescent case had each covenanted:

“Not without the previous written consent of the Landlord to erect any structure pipe partition wire or post upon the Demised Premises nor make or suffer to be made any alteration or improvement in or addition to the Demised Premises.” (cl. 2.6)

and

“Not to commit or permit or suffer any waste spoil or destruction in or upon the Demised Premises nor cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the Demised Premises or any sewers drains pipes radiators ventilators wires and cables therein…” (cl. 2.7)

The former covenant is of course subject to an implied proviso that the landlord’s consent shall not be unreasonably withheld; the latter however is an absolute covenant.

Mrs Winfield wished to extend the basement to her flat which involved removing some of the load bearing wall, a breach of clause 2.7. The landlord was willing to consent but Dr Duval was unhappy about the idea and relied on clause 3.19 of her lease to insist that the landlord take action. That clause reads:

“That every lease of a residential unit in the Building hereafter granted by the Landlord shall contain … covenants of a similar nature to those contained in Clauses 2 and 3 of this Lease AND at the request of the Tenant and subject to payment by the Tenant of (and provision beforehand of security for) the costs of the Landlord on a complete indemnity basis to enforce any covenants entered into with the Landlord by a tenant of any residential unit in the Building of a similar nature to those contained in clause 2 of this Lease.”

Many leasehold properties of course contain a scheme permitting lessees to enforce covenants directly against each other. This property did not, but instead each lease included a provision that permitted the tenant, on providing an indemnity, to insist that the landlord enforce the covenants against other lessees.

The landlord argues that it was free to do as it pleased with its own property and could consent to what would otherwise be a breach of covenant. It was pointed out that clause 3.19 did not say in terms that the landlord was precluded from granting a licence for what otherwise would be a breach of covenant. Moreover, if the landlord consented to something, it would not be a breach of covenant.

The tenant argued that if the landlord permitted what would otherwise by a breach of clause 2.7 (the absolute covenant) it would have put it out of its power to comply with clause 3.19.

It was the tenant’s argument that found favour with the Court of Appeal and they reached that conclusion by applying what I have called the contingent obligation principle: by giving consent to Mrs Winfield’s request to cut into the wall of Flat 13, the landlord was putting it out of its power to comply with clause 3.19, and insist on the strict performance of the absolute covenant contained at clause 2.7. The appeal was allowed.

This decision demonstrates the flexibility and reach of the common law: a precedent reached on a wholly different type of contract nearly 175 years ago can have application to and answer a contemporary dispute between a lessee and her landlord.