Breach of Covenant: JB Leitch Succeeds in Strike Out Application on the Grounds That the Upper Tribunal Does Not Have Jurisdiction

JB Leitch has recently succeeded in an application to strike out a claim on the grounds that the Upper Tribunal did not have jurisdiction to determine an issue relating to breach of covenant due to the time elapsed under the subject lease.

The background

On behalf of the freeholder of the subject property, which comprised a block containing ground floor commercial units and residential units above, JB Leitch made an application to the Upper Tribunal (“UT”) under s.84(12) of the Law of Property Act 1925, which states:

“The Upper Tribunal shall…have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction…

(12) Where a term of more than forty years is created in land…this section shall, after the expiration of twenty-five years of the term, apply to restrictions affecting such leasehold land in like manner as it would have applied had the land been freehold...”

As a result, the UT may consider applications in respect of leasehold land after 25 years of the term has expired.

This application relates to the ground floor commercial units of the building. The premises were originally demised under a lease dated 14 February 1980 for a term of 99 years. The term was extended to 999 years from 29 September 2001 by way of a surrender and re-grant dated 19 November 2010. The applicant acquired the leasehold of the commercial premises in 2016.

The lease contained two restrictive covenants:

1. Use of the premises limited to a retail shop as a tobacconist, confectioner or newsagent, and the premises not to be used for any noisy, noxious, dangerous or offensive trade or business in such a way that causes injury to neighbouring persons or properties, or any authority; and
2. To keep the premises open for retail trade during normal business hours in the locality, and to keep the windows suitably dressed.

The applicant claimed that permission was given by way of correspondence in 2017 to change the use from commercial to residential. The freeholder argued that, although discussions had taken place as to the potential of granting consent subject to conditions being met, these conditions had not been met and consent had not been granted.

The applicant applied for planning permission to change the nature of the property to residential, which was refused. Permission was granted some months later, but the freeholder stated that this was granted on false grounds as the application stated that no works had commenced. In reality, works had commenced without planning consent or the consent of the freeholder.

The applicant applied in 2024 to remove the restrictive covenant relating to commercial-only use. The freeholder stated that, in addition to it not having granted consent to the works, the Upper Tribunal did not have the jurisdiction to hear the application on the grounds that 25 years of the lease term had not elapsed as per s.84(12) LPA 1925. Only 14 years had elapsed since the surrender and regrant.

The decision

Finding in favour of the leaseholder, the Upper Tribunal agreed to strike out the application made by the applicant.

Referencing Roberts v Church Commissioners for England [1972], the term of a lease is to be calculated from the date of grant and not the date on which it is expressed to commence. The lease of the premises was granted on 19 November 2010, resulting in an expired term of less than 14 years.

Even if this reasoning could be argued, the alternative was that the term started on 29 September 2001, resulting in an expired term of less than 24 years. In either case, the Upper Tribunal did not have jurisdiction to hear the application.