Home Information Cases Bermondsey Exchange Freeholders Ltd v Ninos Koumetto (As Trustee In Bankruptcy Of Kevin Geoghehan Conway) (2018)

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Bermondsey Exchange Freeholders Ltd v Ninos Koumetto (As Trustee In Bankruptcy Of Kevin Geoghehan Conway) (2018)

Summary

A long leaseholder had breached the terms of his lease by underletting his flat for holiday lets via online platforms such as Airbnb. An injunction preventing such use was upheld.

Facts

The defendant leaseholder appealed against an injunction preventing him from letting out his flat on short-term lets through the use of websites such as Airbnb.

The claimant was the freeholder of a building which had been converted into flats. Many of the flats had been sub-let by the leaseholders on assured shorthold tenancies, usually for a minimum of six months. The defendant, who held a 999-year lease for one of the flats, initially sub-let his flat on that basis, but in 2015 the claimant became concerned that he was using the flat to provide short-term holiday accommodation through online portals such as Airbnb. The defendant was asked to desist, but he denied using the flat in the way complained of and claimed that, in any event, he was not prevented by his lease from doing so. The claimant sought an injunction. The judge found that the property had been widely advertised on Airbnb for short-term letting; that such use had not been authorised by the claimant's agents; and that it breached the lease. The clauses breached included clause 2.10(2) which prohibited the leaseholder from parting with or sharing possession of the flat or permitting any company or person to occupy the flat other than by way of assignment or underlease; clause 2.10(3) which prohibited the leaseholder from assigning or underletting the flat without the prior consent of the landlord; and clause 2.4 which provided that the flat could only be used as a residential flat with the occupation of one family.

Held

Was there a breach of the lease? - Yes.

Clause 2.10 - On a proper construction, cl.2.10(2) had two limbs; it prohibited parting with and sharing possession of the premises on the one hand, and permitting someone to occupy the premises on the other. It was a covenant designed to capture both unauthorised leases and unauthorised licences. The judge did not need to examine and finally determine whether the particular arrangements made by the defendant would be classified in law as tenancies or licences or which limb of cl.2.10(2) they offended, not least because the defendant's paramount defence had been that there had been no-one in occupation of his flat through such arrangements. Instead, the judge only needed to find that the whole flat had been occupied by others by arrangements made by, through, or on behalf of, the defendant at a time when he was not himself occupying it; and that was what she found. She found that the Airbnb arrangements were short "lettings" and for that reason went on to hold that the defendant's conduct had also been in breach of cl.2.10(3). The instant case did not have the necessary features to displace the presumption from Street v Mountford [1985] A.C. 809 that the provision of exclusive possession of premises to another for a period and for payment for that period constituted a letting, Street v Mountford and Swan v Uecker [2016] VSC 313 considered (see paras 39-59 of judgment).

Clause 2.4 - The words in cl.2.4 fell to be understood and applied in the context of a private residential development of a block of flats let on long leases with common terms. The context was one of residents living cheek by jowl and only with other residents. The user covenant was clear; cl.2.4 was breached when the flat was not being used as a residential flat but as short-term temporary accommodation for transient visitors paying for such use by way of commercial hire. Such a breach was found by the judge in the instant case (paras 60-66).

Should the injunction have been granted? Yes. The appropriateness of the grant or refusal of an injunction involved a weighing up of the facts and arguments on both sides and the careful exercise of a discretionary judgment as to whether to grant an equitable remedy. The judge had correctly directed herself that "an injunction does not automatically follow from a breach". She had identified that she was being asked to grant a "discretionary remedy" and had reminded herself that the use of the flat in the way complained of had ceased. However, she found that an injunction was warranted because (i) a breach of the lease had been established; (ii) relations between the parties had broken down; (iii) it had not been possible to resolve the matter by undertaking; and (iv) short-term arrangements through Airbnb-style platforms were a modern phenomenon offering new opportunities that might tempt other residents on the development. The case was tipped in favour of the grant of an injunction by the interests of clarity and certainty. Furthermore, it was not a case of an admission and a commitment not to repeat, rather a case in which the defendant had denied that he had permitted the flat to be used for commercial hire at all (paras 67-76).

Change to wording of injunction? The precise wording of the order had been shared with the defendant in draft and without demur. Its central message was tolerably clear. However, the court would consider any agreed variation of the terms of the injunction (paras 77-82).

Appeal dismissed

County Court (London)
Judge Luba QC
Judgment date
1 May 2018
References
LTL 27/9/2018 : [2018] 4 WLUK 619