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Additions to a buildings original structure in breach of covenant

Should leaseholders pay for their repair asks Nicholas Kissen, Senior Legal Advisor at LEASE

In the decision of Christopher Moran Holdings Limited v Carrara-Cagni [2016] UKUT 152 (LC) the Upper Tribunal (Lands Chamber) considered the responsibility of sub-lessees to pay towards the costs for repairing two conservatories, that had been added to the original structure of a building after leases of all the flats had been granted.

The building was constructed in the early 1970’s and comprised a mixture of commercial units and flats.

After leases of all the flats had been granted, two conservatories enclosing sections of a roof terrace were added to the building.

Major works were started to the exterior of the building, and included repairs to the two conservatories. Being in a poor state of repair the conservatories were demolished and rebuilt.

An application was made by a sub lessee to the First-tier Tribunal (Property Chamber) to decide the extent of her liability, if any, to contribute towards the cost of the major works.

The First-tier Tribunal decided that the sub lessee was not liable to pay towards the repair costs.

The landlord succeeded in its appeal to the Upper Tribunal (Lands Chamber) who decided that notwithstanding that the conservatories had been added in breach of a prohibition on alterations the subtenant was liable to pay for the repairs through the service charges.

"There is simply no reason for the historic lawfulness of the addition to the Reserved Property to make any difference to the analysis of the continuing rights and obligations of different parties. Ultimately the power to consent to alterations lies with the freeholder, over whose actions the flat lessees have no control, and who owes them no duty. It cannot be suggested that a lawful addition, erected with the consent of the freeholder and the Lessor of the penthouse underlease, would fall outside the Lessor’s repairing obligation or the liability of lessees to contribute."

Section 19(1) requires two things. Under section 19(1)(a), an interim service charge must be “reasonable in amount”. Under section 19(1)(b), a charge relating to expenditure already undertaken requires the relevant insurance costs to have been “reasonably incurred”.

What are the implications of this decision?

Unless specifically excluded by the language used in the lease a repairing covenant will apply to subsequent alterations and additions to building.

Even if the additions were created in breach of covenant this is irrelevant as to the rights and obligations of different parties to the lease.