12 Days of Christmas – Day 3

As the festive season is now upon us, our team of Real Estate Litigation elves have been searching through the archives for the most interesting and important legal developments this year. In our "12 Days of Christmas" feature, we take you on a whistlestop tour of the most interesting of developments that haven't made it into our new blog.

In day 3, we turn to the Upper Tribunal decision in Blackhorse Investments (Borough) Limited v London Borough of Southwark. This case provided a useful insight into the extent of the Upper Tribunal's jurisdiction to modify covenants under section 84 of the Law of Property Act 1925.

The background

Blackhorse owned The Black Horse public house in Southwark. Southwark Council was the landlord. On the 24th February 2022, the Upper Tribunal (Lands Chamber) made an order under section 84(1) of the Law of Property Act 1925, modifying the covenants in Blackhorse's lease. The modifications related to covenants restricting alterations, assignment and subletting, and a number of covenants relating to the requirement that the tenant keep the premises open as a licensed public house.

Southwark did not participate in the application as the papers had never made it to the correct department within the Council. Southwark later applied to the Tribunal to set aside the order. As part of their application, Southwark argued that they had not been effectively served with the application and that the order contained misleading information.

The case centred on two main issues:

1. The extent of the Tribunal's power to set aside its decisions under Rule 54 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010; and
2. Whether the Tribunal had stepped outside of its jurisdiction under section 84 in modifying some of the covenants.

The decision

The Tribunal ruled that it had the power to set aside a decision under Rule 54 if it was in the interests of justice to do so and if certain conditions were met. These included where papers were not sent or received by a party or the Tribunal, where a party was not present at a hearing or where there was some other procedural irregularity. However, the Tribunal declined to set aside the order based on the facts of the case, finding that the application had been validly served.

On the question of jurisdiction, the Upper Tribunal held that section 84 of the 1925 Act only gave the Tribunal the jurisdiction to modify covenants that restrict the use of land. It found that the covenants requiring Blackhorse to keep the pub open and trading as a licensed public house were positive in nature and could not therefore be modified. It also held that a covenant restricting assignment of part (as opposed to the whole) of the premises was not a restriction on the use of land. Those parts of the order that went beyond the Tribunal's jurisdiction were set aside, leaving the rest of the order intact. This was of little comfort to Blackhorse, however, who had already converted the pub into flats and sub-let them!

In summary, this case clarifies the Tribunal's jurisdiction and procedural requirements for modifying leasehold covenants. It also underscores the importance of proper service of documents and the potential consequences of procedural irregularities.

If you have managed to read this far, here is your reward of a festive joke to get you in the Christmas spirit: What happened to the man who stole an advent calendar? He got 25 days!!