Brennan v Kettell

An ordinary covenant for quiet enjoyment is prospective and ordinarily protects against interruption by the lessor or those claiming under the lessor. Where the covenant expressly extends to interruption by title paramount, that protection is akin to a covenant for title. Knowledge of a third party’s occupation or of a defect in title does not defeat enforcement unless the lease expressly creates an exception. Any qualifying agreement must be clear and concluded. Surrounding circumstances may be considered only to identify objectively manifested intention.

New Way granted Brennan a 999-year lease of Unit 14. A discrepancy between lease plans left a strip of land within the registered title of Unit 13, later leased by the Bank to the Kettells. Brennan obtained rectification of the relevant titles and recovery of the strip.

The Kettells brought a Part 20 claim against the Bank under the lease covenant for quiet enjoyment. The Chancery Division dismissed that claim, holding that the Kettells had accepted the disputed area subject to the occupation and rights of Ferry Cars and Brennan. The appeal concerned whether the Bank was liable when Brennan, asserting title paramount, recovered possession, and whether correspondence qualified the covenant.

1. Disposition. The appeal was allowed. The order dismissing the Kettells’ Part 20 claim was set aside, and judgment was entered against the Bank for damages to be assessed.
2. The ordinary covenant for quiet enjoyment is prospective. It ordinarily protects the tenant’s lawful possession against interruption by the lessor or persons claiming under the lessor, and does not ordinarily cover matters existing before the grant merely because they have continuing consequences. The Court distinguished the reasoning in Southwark London Borough Council v Tanner [2001] 1 AC 1 because that case concerned the physical condition of premises.
3. The covenant in paragraph 1 of Schedule 3 was wider. Its express reference to interruption by title paramount made that part of the covenant akin to a covenant for title. Applying Page v Midland Railway Company [1894] 1 Ch 11, the Kettells’ knowledge of Ferry Cars’ occupation did not defeat enforcement. Any exception for a known defect in title had to be expressed.
4. The lease and surrounding circumstances had to be construed by reference to objectively manifested intention, shown by words or conduct, rather than subjective intention. The side letters did not establish a clear concluded agreement. They addressed the Bank’s concern about vacant possession and did not show that the Kettells accepted Brennan’s title or assumed the risk that the Bank lacked power to grant the disputed area.
5. The Bank had granted an express covenant covering title paramount while knowing, or being in a position to know, of the inconsistent plans and Brennan’s interest. Brennan’s recovery of the disputed area therefore interrupted the Kettells’ holding and enjoyment within the meaning of the covenant. Mance LJ added that any qualifying side agreement would have required pleading as a variation, collateral agreement, or part of a wider agreement. Longmore LJ agreed with both judgments.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 1186, allowed the Kettells’ appeal, set aside the order dismissing their Part 20 claim and ordered judgment against the Bank for damages to be assessed.
• Chancery Division, Liverpool District Registry: His Honour Judge Maddocks, sitting as a Deputy High Court Judge, found Brennan entitled to rectification and recovery of the disputed area but dismissed the Kettells’ Part 20 claim against the Bank. The Kettells appealed.