Faidi & Anor v Elliot Corporation

A landlord may waive a lease covenant where it consents to specified works that are plainly and fundamentally incompatible with continued enforcement of that covenant. A general clause preserving lease obligations after alteration does not prevail over the specific incompatibility created by the licensed works. Once waiver is established, the court cannot use its discretion over an injunction to impose a compromise requiring only partial compliance; partial carpeting could be achieved only by agreement or mediation. The waiver is confined to the rooms and obligation shown to be incompatible with the works, and does not determine the position for kitchens, bathrooms or other rooms not in issue.

Leaseholders of Flat 6 sought to enforce against the leaseholder of Flat 8 a covenant requiring carpet and underlay. The defendant had obtained a licence from the reversioner to separate the flats and install timber floors with underfloor heating and sound insulation. The county court held that the licence waived the carpeting covenant and dismissed both the covenant and nuisance claims. The nuisance finding was not challenged. On appeal, the claimants argued that a licence clause preserved the lease obligations and that the court could order partial carpeting. The respondent also raised a separate issue about enforceability between assignees, which the court did not decide. The central issue was whether consent to incompatible works waived the covenant.

The appeal was dismissed. The claim in nuisance was no longer in issue. The appeal concerned whether the defendant remained bound by the covenant requiring carpet and underlay in specified rooms.

1. Incompatibility and waiver. The licensed works included expensive timber flooring, designed to remain visible, and underfloor heating intended to be the primary source of heat. Requiring the entire floors to be covered with carpet and underlay would defeat the purpose of the works and render the heating ineffective. By consenting to those particular works, the reversioner had waived compliance with the carpeting covenant in the affected rooms.
2. General preservation clause. The clause stating that lease obligations continued to apply to the premises as altered was general in character. It could not override the specific effect of consenting to works incompatible with continued enforcement of the covenant. The covenant was therefore not enforceable in respect of the rooms with timber floors and underfloor heating.
3. No court-imposed intermediate solution. The covenant required full carpeting if it remained effective. If it had been waived, it imposed no carpeting requirement. The court could not use its discretion concerning an injunction to create a different obligation requiring partial carpeting. Such an arrangement could arise only by agreement or mediation.
4. Limited scope. The decision did not determine the application of the covenant to kitchens, bathrooms or rooms without timber flooring and underfloor heating. The separate enforceability issue raised by the respondent’s notice was left for determination in a case where it was necessary to the result.

The court also gave obiter encouragement to negotiation and mediation in neighbour disputes, particularly where a practical compromise might resolve the disturbance without defeating the parties’ respective interests.

• Court of Appeal (Civil Division): [2012] EWCA Civ 287. Appeal dismissed.
• Central London County Court: His Honour Judge Freeland Q.C. dismissed the claims based on breach of covenant and nuisance. The nuisance finding was not challenged on appeal.