Remedying a lease defect within a lease extension

Leases can often be far from perfect. At PM Legal, we come across leases every day which are defective in one way or another. Sometimes these defects are remedied fairly easily whereas others may be rather more difficult to resolve.

The issue of a lease defect was addressed by the Upper Tribunal in Park v Morgan and Morgan, a case involving lease extensions. In this case the Tribunal considered  whether, when a defective lease was extended, the defect could be remedied in the new lease.

 

Background

The case concerned a converted house consisting of two flats. The upper floor flat was owned by Mr and Mrs Morgan. The ground floor flat had never had a lease granted over it and therefore was owned by the freeholder, Mr Park.

The house had a front and rear garden and a driveway running up the side of it, providing access to the back garden and to two detached garages.

The positioning of the garages made it incredibly difficult for a vehicle to gain access to one of the two garages.

The driveway and garages fell within the freehold title owned by Mr Park.

The second of the two garages could be accessed from the driveway and this garage fell within the lease of the flat belonging to Mr and Mrs Morgan.

A problem was identified by Mr and Mrs Morgan in respect of the right of way that existed over the driveway, because the right of way leading up to the garages was by foot only. This meant that Mr and Mrs Morgan were unable to drive a vehicle up the driveway and as such unable to park a vehicle in their case.

When it came to Mr and Mrs Morgan seeking a lease extension, they requested, under section 57(6)(a), for the extended lease granted over their flat to remedy this perceived defect.

The First Tier Tribunal held that the restrictive right of way over the driveway was a defect within the meaning of section 57(6)(a) and consequently Mr and Mrs Morgan were entitled to have this defect remedied. The remedy was to allow vehicular access over the driveway and to the garage.

The decision was appealed by Mr Park on the basis that he would be prejudiced, as the owner of the ground floor flat, if the lease to the second floor flat was remedied in the terms set out by the FTT, and on the basis that the FTT had failed to reference the reasons why the original lease had been drafted in that form within their decision.

Permission to appeal was initially refused but the refusal failed again to mention the issue in respect of “almost impossible vehicle access”.

Mr Park sought to appeal again but this time the appeal was based on his assertion that it was agreed under the lease in 1983 that access to the garage would be on foot only, and therefore the restrictive right of way was not a defect that required remedy.

Permission to appeal on this basis was refused. However, following correspondence from Mr Park, the Tribunal took the view that the original application for permission to appeal made by Mr Park had in fact set out the problems in respect of access to the garage and that it was this problem of access that had formed the basis of the restrictive right of way. The Tribunal took the view that they had not in fact dealt with this issue within its original decision. Following some procedural wranglings, permission to appeal was allowed.

 

The appeal

Section 57(6)(a) of the Leasehold Reform, Housing and Urban Development Act 1993 allows for the modification of the terms of an existing lease, where “it is necessary to do so in order to remedy a defect”.

On appeal, the Tribunal referred to the Lands Tribunal decision in Gordon v Church Commissioners for England, where the Lands Tribunal confirmed that any variation must be necessary to correct a defect and that it was not sufficient for the variation to be “convenient or consistent with current practice”.

The Tribunal in this case initially took the view that the clause setting out the restrictive right of way was not ambiguous, inconsistent or difficult to interpret. The Tribunal commented that “there is no reason to propose the clause contains any mistake or defect which would enable section 57(6) to be relied on”.

The Tribunal concluded that the right of way was deliberately drafted in a restrictive manner, and therefore was not defective.

In its original finding, the FTT had found that the restrictive right of way to foot only must have been a defect for the following reasons:

  • there would have been no point in having a garage as part of the demise if it was to be accessed by foot only;
  • the owners of both the flats have the same right of way over the driveway and that the lessor would have not agreed to restricting its right of way to foot only when making the lease;
  • that the connection of the right of way with the garage and garden suggests that the garage was intended to be used by vehicles;
  • that the inclusion of “on foot only” was probably intended to “qualify the rights of way for all others”, rather than the right of way for the lessor and owners and occupiers of the flats.

On appeal the Upper Tribunal disagreed with all of these points and determined that a new lease should be granted on the same terms as those contained in the existing lease.

 

Commentary

This case reinforces the idea that while any extension may be a method to correcting a defect in a lease, the statutory provisions in respect of this are likely to be interpreted in a very restrictive way when it comes to the idea of a defect.

There must be sufficient evidence that it is a true defect rather than simply an undesirable term in the lease.

 

 

26 May 2020

Liz Rowen

With over 10 years specialist property management litigation experience, Liz has accrued a wealth of knowledge and experience in all things property management.
One Response to “Remedying a lease defect within a lease extension”
  1. In my experience, the vast majority of garages are not used for parking cars – they are used for storage of personal possessions and/or tools and gardening equipment. Consequently, it seems a basic error to assume the original intention was that the garage was to be used for a car – particularly as there was very restricted access for a vehicle.

    As with most things in the world of leasehold – it is unwise to assume or presume. It’s far better to check the actual facts, read the actual documents, and ask the actual people involved – including the freeholder who arranged and signed the original lease, when they’re available.

    Thanks for the post.

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