The mildly salacious Marchitelli v Westgate Terrace case has highlighted the importance of securing a specific determination from the First-tier Tribunal when bringing a S146 notice for a breach of the lease.
Breaches of the lease can come in all forms; at Brady Solicitors we’ve dealt with just about everything from noisy wooden floors to illicit pet elephants. The Marchitelli case concerned a leasehold property that was, the freeholder alleged, being used for ‘immoral purposes’ – in other words, the freeholder was sure that the flat was being used as a brothel.
Evidence and complaints from other leaseholders and residents in the block supported this, with reports of late-night disturbances and a steady stream of visitors to the flat.
Ms Marchitelli had rented out the flat to her cousin and there was no evidence that she was involved in the prostitution, but the freeholder alleged that she had been made aware of the activity and had refused to put a stop to it.
The freeholder took the case to the First-Tier Tribunal for a determination of a breach of a covenant in the lease. This breathless covenant stated:
“Not to do or permit or suffer in or upon the Demised Premises or any part thereof any illegal or immoral act or any act or thing which may be or may become a nuisance or annoyance or cause damage to the Lessors or the tenants of the Lessor or the occupiers of any part of the Building.”
Ms Marchitelli argued that she had instructed her letting agent to deal with the issue and end the tenancy.
What happened at the First-tier Tribunal?
The FTT found that there was sufficient and substantial circumstantial evidence that the flat was being used for ‘immoral purposes’. Online adverts, the complaints from fellow leaseholders and visits by numerous different men all led to the FTT determining that there had indeed been a breach of covenant.
No big surprise here perhaps that the FTT reached this decision.
The appeal however is a useful reminder for freeholders and their managing agents.
Ms Marchitelli appealed the decision, saying that there was insufficient evidence of the activity and, importantly, that the FTT had not expressly found her responsible for permitting the activity. Therefore, she claimed, she could not be liable for a breach of the lease.
The first appeal ground, concerning the lack of evidence, was dismissed.
The second ground however was upheld in Ms Marchitelli’s favour. The Upper Tribunal found that the FTT determination had failed to make any express finding that she had ‘permitted or suffered’ the use of her flat for immoral purposes. Whilst the evidence was there, the FTT panel had not properly considered it and so no clear determination had been made.
The Upper Tribunal has recommended the case go back before a different panel to consider the evidence as to whether the leaseholder allowed the breach to happen. In the meantime however, costs and time continue to escalate and there is no clear outcome for any party.
Our advice when dealing with a breach of the lease?
Clearly set out how the leaseholder is in breach and, importantly, the evidence to show how they have allowed the breach. Without a specific determination on this aspect from the FTT, it will be difficult to enforce a judgment.