Amsprop Trading Ltd v Harris Distribution Ltd

[1997] 2 All ER 990, [1997] 1 WLR 1025, [1997] 47 EG 127

Court: Ch D

Judgment Date: 07/11/1996

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LANDLORD AND TENANT - THE GENERAL LAW - LEASES AND UNDERLEASES - CONTENTS OF LEASE - UNDERLEASES - RELATIONS BETWEEN LESSEE AND UNDERLESSEE - LIABILITY OF UNDERLESSEE - FOR BREACH OF COVENANT TO REPAIR - WHETHER PLAINTIFF ABLE TO ENFORCE COVENANTS DIRECTLY AGAINST SUBTENANTS - WHETHER PREVIOUS HEAD LANDLORD ENTITLED TO ENFORCE COVENANTS AGAINST SUBTENANTS

In 1975, K Ltd was granted a lease of a warehouse for 99 years from 1973, and in 1987, the reversion was transferred to A Ltd. On 21 December 1987, K Ltd granted an underlease of the premises to the first defendant, HDL. In clause 3 of the underlease, HDL covenanted with 'the landlords' (which was defined to mean K Ltd and its successors in title and assigns) to keep the premises in repair and to deliver them up at the end of the term in good repair. By clause 3(7), HDL covenanted to permit the superior landlords and the landlords to enter the premises in order to view the state of repair, and by clause 3(8), HDL covenanted to remedy any defects in repair within three months of being given notice thereof, and in the event of the superior landlords or the landlords carrying out such works on its failing to do so, to pay their costs and expenses. In 1993, HDL assigned the underlease to the second defendant, TDG, and on 7 May 1993, the plaintiff, ATL, acquired the reversion to the headlease from A Ltd. In February 1996, ATL served notice on TDG requiring it to carry out certain repairs within three months of service of that notice. However, one month later TDG vacated the premises and surrendered the underlease and soon afterwards ATL forfeited the headlease. Subsequently, ATL commenced proceedings against HDL and TDG seeking a declaration that they were liable to pay ATL the costs of remedying any disrepair in the premises, or alternatively, damages. A preliminary issue was ordered to be tried as to whether ATL was entitled to enforce the covenants directly against the defendants. ATL contended that it was, on the ground that A Ltd could have done so by virtue of s 56(1) of the Law of Property Act 1925, since clause 3(7) and (8) of the underlease was for its benefit and that that right passed to ATL when ATL acquired the reversion to the headlease: Held where the identity of the covenantee was clear and unambiguous, s 56 of the 1925 Act did not operate to confer the benefit of the covenant on a party who was not within the ambit of the expressly identified covenantee. Moreover, s 56 only allowed a person to sue on a covenant, where not named as a party to it, if the covenant purported to be made with him; it was not enough merely to show that the covenant was made for his benefit. In the instant case, the covenants in clause 3 of the underlease were made with K Ltd and its successors in title and assigns, but K Ltd's landlord, A Ltd, did not fall within that expression. Accordingly, although clauses 3(7) and (8) expressly referred to superior landlords, it would not have been open to A Ltd to enforce the covenants contained therein directly against the defendants. It followed that ATL could not do so either and the action would therefore be dismissed.