Peter Calnan v Stack House Residents (Oxted) Limited

Did the appellant, Mr Peter Calnan, breach a covenant in his lease when, in 2020, he failed to lay carpet with underfelt immediately beneath it on the new floors he had installed in the dining area, hall and entrance lobby of his flat at 12 Stack House in Oxted, Surrey? If Mr Calnan did breach the covenant, was he still in breach after August 2023, when he laid wall to wall carpeting in the same area, on top of which he placed some rugs, without any underfelt between the new floors and the carpet?

Those questions arise on Mr Calnan’s appeal against a decision of the First-tier Tribunal, Property Chamber (the FTT) of 16 December 2024 under section 168, Commonhold and Leasehold Reform Act 2002, by which the FTT determined that Mr Calnan “is in breach” of the relevant covenant in his lease (without specifying when the breach occurred but implying that it was continuing).

The relevant covenant is included in a lease first granted in May 1976 and is in these terms:

“The Tenant shall furnish all floors of the premises with sufficient underfelt and carpets (except those in any bathroom or kitchen) to minimise the induction of sound from the premises to any other parts of the Estate”

Permission for the appeal was given by this Tribunal. At the hearing Mr Calnan was represented by Priya Gopal and his landlord, Stack House Residents (Oxted) Ltd, was represented byElizabeth Fisher. I am grateful to them both for their assistance.

The FTT made few findings of fact. In Marchitelli v 15 Westgate Terrace [2020] UKUT 192 (LC), at [49]-[52], I explained that the purpose of proceedings under section 168(4), 2002 Act, is to establish the facts on which steps to forfeit a valuable lease will then be founded. Before forfeiture proceedings may be commenced the landlord is required by section 146(1), Law of Property Act 1925, to serve a notice “specifying the particular breach complained of” and if that breach is remedied and compensation is paid no forfeiture will occur.   Before a section 146 notice may be served the FTT must determine that “the breach” has occurred (section 168(2)(a), 2002 Act).  It follows, therefore, that the determination required of the FTT must be sufficiently specific to provide the basis of a section 146 notice.  If is not, the County Court will face an impossible task when it is required to determine whether to forfeit the lease or to grant relief against forfeiture.  It is essential that the County Court is in a position, from the FTT’s decision, to assess the seriousness of the breach, the culpability of the tenant, and the appropriate response to an application for relief against forfeiture.  If that degree of certainty is not achieved it may be necessary for the County Court to rehear the evidence which has already been presented to the FTT.  That is not what section 168 contemplates and would render it pointless.    

The following facts appear from the documents or were agreed between the parties during or after the hearing of the appeal.

Stack House is a block of 18 flats on ground and three upper floors, set in its own gardens. The freehold of the block is owned by the respondent, Stack House Residents (Oxted) Ltd, which I will refer to as the Landlord. From its name, I assume that the Landlord is owned by the leaseholders.

Each of the flats in the building is let on a standard form of lease granted initially for a term of 125 years from September 1975. The leases were subsequently extended and the term of Mr Calnan’s lease is now 999 years. In each lease the leaseholder is referred to as “the Tenant”.

The standard form of lease includes a covenant by the Tenant to observe the restrictions listed in the First Schedule. These include, at paragraph 9, the requirement for the Tenant to furnish all floors (except those in any bathroom or kitchen) with sufficient underfelt and carpet to minimise the induction of sound from the premises to any other part of the Estate.

The lease also includes a covenant by the Tenant that they will not make any structural alterations without the previous consent in writing of the landlord (clause 3(i)(e)).

Mr Calnan acquired his lease of Flat 12 on the first floor of the building in July 2019. He wished to carry out some alterations, including the removal of a non-structural partition wall between the kitchen and the adjacent room used as a dining room (although it is referred to on the lease plan as a bedroom). He asked the consent of the Landlord and eventually, after a delay of more than a year, he was granted a licence to carry out the proposed alterations on 30 October 2020. At an early stage of the conversations concerning the licence Mr Calnan made clear that he intended to instal new flooring in the flat (for which the consent of the landlord was not required). On 16 September 2019 he was asked by the Landlord’s surveyor, Mr Sawyer, to confirm that the proposed flooring was suitable for a concrete floor (the structural floors of the building are made of concrete).

The new flooring which Mr Calnan installed as part of the works is of a proprietary vinyl material designed to be laid above a noise barrier marketed under the name “SoundMat 3 Plus”. The FTT was shown a sample of these materials and described them, as installed, as comprising two layers of heavy-duty hardboard with the SoundMat3 Plus layer between them and the vinyl finish on top.

Technical data sheets for flooring materials were provided to the FTT (as they had previously been provided to the Landlord and its surveyor). The data sheet for the vinyl flooring stated that on a six inch concrete slab with a suspended ceiling below the material would reduce impact noise transmission by 56dB. The SoundMat is a composite comprising two layers of acoustic barrier separated by 10mm of acoustic foam and is described by the manufacturer as providing “high quality sound insulation” and as ideally suited where “superior noise control” was required. The data sheet for the SoundMat3 Plus provided noise reduction data for its use with timber floors but not for concrete floors but confirmed that it was also suitable for use with concrete floors.

The Licence granted by the Landlord gave consent for the works described in a schedule. The main items of work were the removal of two partition walls, including the wall between the kitchen and dining room to create an open plan kitchen, and the installation of a new kitchen with a new boiler and appliances (the plans showed that the new boiler was intended to vent through an existing opening in the exterior wall). The list of works did not include the laying of the new floor. The final item of work in the list was to “supply and fit underlay and carpet to the dining area”.

On 5 April 2022 one of the Landlord’s directors, Mr Cook, and its surveyor, Mr Sawyer, inspected Mr Calnan’s flat and saw that the floors of the lobby, the hall and the dining area were uncarpeted. At some point it also came to the Landlord’s attention that the new boiler had been installed in a different location from that shown on the Licence drawings and that a new opening had been created in the exterior wall of the flat to accommodate the necessary vent.

Four months after the Landlord’s inspection, its solicitors wrote to Mr Calnan on 15 August 2022 asserting that he was in breach of covenant by failing to lay underfelt and carpet and threatening proceedings if the breach was not remedied within 21 days. Correspondence followed between the parties and their solicitors in which forfeiture proceedings were threatened both for the failure to lay carpet and underfelt and because the boiler had been installed in a different location from that permitted by the Licence with an additional opening in the exterior wall. In January 2023, in response to the threat of forfeiture proceedings, Mr Calnan acknowledged and apologised unequivocally for the positioning of the boiler and requested a variation of the Licence to accommodate it. On 31 January 2023 the Landlord’s solicitors appeared to agree to that request, subject to a further inspection and the variation being properly documented.

It is a striking feature of the correspondence on behalf of the Landlord that at no stage has it ever been suggested that there is a problem of noise transmission from Mr Calnan’s flat to other parts of the building. The Landlord has treated the requirement to install underlay and carpet as an issue of principle. The Landlord’s approach has been made explicit by Mr Cook who, in a witness statement provided to the FTT, explained:

“Compliance with clause 9 of the First Schedule of the Lease is mandatory. It provides “The tenant shall furnish all floors of the premises with sufficient underfelt and carpets (except those in any kitchen or bathroom) to minimise the induction of sound …”. It is not an option for the lessee to choose how to do it. Any complaints about noise are not relevant to this.”

On 29 August 2023, on Mr Calnan’s instructions, wall to wall carpet was laid in the dining room, hallway and entrance lobby to his flat. On top of the carpet he has placed a number of smaller rugs. These were present in December 2023 or January 2024 when Mr Cook photographed them in the entrance lobby. They were also seen and photographed by the FTT when it carried out an inspection, accompanied by the parties’ legal advisers, on 25 September 2024.

By section 168(1) of the 2002 Act, a landlord under a long lease of a dwelling may not serve a notice under section 146(1) of the Law of Property Act 1925 (which is an essential prerequisite of the exercise of a right of re-entry or forfeiture under any proviso or stipulation in a lease) unless it has been determined by the appropriate tribunal or a court, or has been admitted by the tenant, that a breach has occurred.

On 18 March 2024, the Landlord finally applied to the FTT for a determination that a breach of covenant in the Lease had occurred. The application alleged nine breaches of the Lease and Licence. Three of these concerned carpet and underlay and alleged that Mr Calnan (1) had failed to fit underlay and carpet in all rooms of the property except the kitchen and bathroom; (2) had removed underlay and carpet previously laid in the lobby and the entrance hall and had failed to furnish these floors with sufficient underlay and carpets; and (3) had changed the use of one bedroom to a dining area but failed to supply and fit underlay and carpet. Three more allegations were concerned only with the boiler and the new opening in the exterior wall. Finally, two general paragraphs alleged that work had not been completed within the period of nine months stipulated in the Licence, and that the Landlord’s costs had not been paid as required by the Licence.

Although the Landlord asked the FTT to find that Mr Calnan was in breach of the Licence, as well as of the Lease, I do not think the Licence is of any practical significance. The FTT did not make any determination that there had been a breach of the Licence, and its jurisdiction under section 168 is restricted to determining whether any breach has occurred of a covenant or condition in a lease. In any event, the breach by making a hole in the wall to enable the new boiler to be fitted had been admitted and a revision of the licence had been agreed in principle. The Licence provides that the right of re-entry (forfeiture) in the Lease will be exercisable if any covenant in the Licence is breached, but it does not say that a breach of the Licence will amount to a breach of covenant in the Lease. Additionally, the Licence permitted the Tenant to carry out the works in the Schedule but specifically did not require that he do so (clause 2.3 of the Licence) so Mr Calnan would not be in breach of the Licence if he omitted the carpet and underlay referred to in the Schedule. He was, of course, already under the obligation in paragraph 9 of the First Schedule to the Lease. To the extent that the costs of the proceedings have been increased by the inclusion of allegations about the Licence, they were unnecessary.

It is the FTT’s finding in relation to the covenant requiring compliance with paragraph 9 of the First Schedule to the Lease which is properly the subject of this appeal. Although three separate allegations were made in the application, only one breach is identified. There was nothing in the Lease which prevented Mr Calnan from changing the use of a room from a bedroom to a dining room, nor from removing carpet previously laid. The only credible allegation of breach of the Lease made in the application is of paragraph 9 of the First Schedule, and it does not become more convincing by being repeated three times. The issue for the FTT was whether there had been a breach of that obligation.

The FTT decided that there had been a breach. It took the view, first, that “the obligation to carpet with underlay did not depend on whether a particular level of sound attenuation was achieved”, and, secondly, that when the lease was granted in 1976, the expression “carpet with underfelt meant “carpet laid contiguously with underfelt or underlay”. It considered that the carpets must be installed so as to cover the entire surface area of the rooms. The covenant did not require that the carpet be installed in any particular way, such as with glue or gripper strips, as the Landlord had argued. It determined that Mr Calnan “is in breach” which indicates that it did not consider the rug on carpet it observed on its inspection was compliant and that the breach was continuing.

On behalf of Mr Calnan, Ms Gopal made four basic submissions. First, that a breach of paragraph 9 could not be identified without evidence that the installation of carpet and underlay would have reduced the transmission of sound between Mr Calnan’s flat and the rest of the Estate. There was no such evidence so the FTT had been wrong to find that there was a breach even when no carpet was present in the dining area, hall and entrance lobby. Secondly, that the presence of the SoundMat barrier satisfied the requirement for carpet and underfelt, so once again the FTT should not have found a breach of covenant. Thirdly, once carpet was laid in the dining area, hall and entrance lobby, the presence of the SoundMat satisfied any separate requirement for underfelt, so that any breach which might have been committed was remedied by August 2023. Finally, even if the SoundMat did not satisfy the requirement of underfelt, the rugs laid on top of the carpet from August 2023 were sufficient to mean that there was no breach.

For the Landlord, Ms Fisher refuted these propositions. The covenant required carpet and underfelt, and for so long as both were not laid one directly on top of the other on the floor, the covenant was breached, irrespective of the amount of sound, if any, which was capable of being transmitted from the flat to the remainder of the Estate.

Before deciding whether the covenant in this case has been breached it is first necessary to understand what it means. That meaning is the meaning which the parties would have understood in 1975, when the obligation was entered into. The meaning of the covenant the parties entered into does not change with time.

The covenant obliges the Tenant to furnish all floors of the premises (except bathroom or kitchen floors) with “sufficient underfelt and carpets … to minimise the induction of sound from the premises to any other part of the Estate”. The covenant is not simply to furnish the floors with underfelt and carpets. It requires “sufficient” underfelt and carpets to minimise sound induction. The covenant answers an unspoken question about how much underfelt and carpet, or what specification of underfelt and carpet the Tenant is required to provide, by describing the outcome which is required to be achieved.

The FTT considered that “the obligation to carpet with underlay did not depend on whether a particular level of sound attenuation was achieved”. If by that statement it meant that sound attenuation was entirely irrelevant, it was clearly wrong. The achievement of sound attenuation is the whole purpose of the covenant, and the level of attenuation is critical to the question of what carpets and underfelt are required.

But the FTT may have had in mind a more subtle point. It may have meant that, whatever level of sound attenuation has been achieved by the installation of modern sound insulation, the covenant will not have been complied with unless some carpets and underfelt have been provided on all floors of the premises. On that interpretation a state of affairs in which no underfelt and carpets are provided necessarily involves a breach of covenant, irrespective of the amount of sound capable of being transmitted to other parts of the building. That seems to me to be the true meaning of the covenant. It prescribes an action, the provision of carpets and underfelt, and the outcome which that action must achieve, the minimisation of sound induction.

In order to determine whether there has been a breach of covenant it is therefore necessary to ask two questions. First, has the tenant furnished all floors in the flat with carpets and underfelt? Secondly, are those carpets and underfelt sufficient to minimise sound induction, or transmission, between the flat and other parts of the building?

Carpets and underfelt are words whose meaning would have been well understood in 1975 when the lease was granted. That meaning has not changed, although the materials from which carpets and underfelt are made are now different. In particular, in the 1970s “underfelt” would have been comprised of a natural material, most probably wool or some other animal hair. Now underfelt is unlikely to be used at all and has probably been replaced entirely by synthetic materials, referred to as “underlay”, the expression used by the FTT. When the lease was first entered into for 125 years, and when it was later renewed for 999 years, the parties cannot sensibly be taken to have intended that the Tenant’s obligation would be to lay underfelt of the traditional kind. The covenant can clearly be performed using modern materials.

While “underfelt” can readily be interpreted as including modern synthetic underlay, I do not think the meaning of “carpets” has changed since the 1970s. In particular, I do not think that a synthetic acoustic barrier laid beneath the upper surface of a floor can be described as a carpet. Nor do I consider that the vinyl flooring laid on top of the various layers of flooring is a carpet.

On the other hand, the requirement to “furnish all floors with … carpets” does not require wall to wall carpeting or carpeting fixed by gripper rods or glued to the floor, as the FTT found and as Ms Fisher argued on the appeal. The extent or quality of the carpets to be provided is governed by the degree of sound attenuation which they achieve, and the first element of the covenant is satisfied so long as there is some carpet on the floors in each room. If sound induction has already been minimised by other attenuation measures which may have been taken, the covenant would be satisfied by a single rug laid in the middle of the room.

I agree with the FTT that a distinguishing feature of underfelt or underlay is that it is a material laid immediately beneath a carpet. Part of the purpose of underfelt is to protect the carpet itself from wear, as well as supplementing its insulating properties. For that reason, I do not think the SoundMat laid between the layers of flooring can be described as “underfelt”. If the same material was laid on top of the flooring, and a carpet laid on top of it, then it may be possible to argue that the covenant would be satisfied as there would be carpet and a material performing the function of underfelt, but that has never been the arrangement in this case.

To my mind the trickiest question to which this covenant gives rise is whether carpets alone, without underfelt, are capable of complying with the obligation. Does “sufficient underfelt and carpet” mean “sufficient underfelt and sufficient carpet” to achieve the required sound attenuation, so that some amount of both must be installed, or is “underfelt and carpet” a composite expression so that a carpet alone which achieved that standard would be compliant?

Taking account of the domestic context, it seems unlikely that the parties intended to be more prescriptive about the tenant’s choice of home furnishings than was strictly necessary. They must also be taken to have appreciated in 1975 that materials and fashions were likely to change over a term of 125 years. They have clearly identified the purpose of the obligation as sound attenuation, and any other reasons for laying underfelt beneath a carpet (such as heat retention or preservation of the carpet itself) are not part of that purpose. It would be inconsistent with that context and express purpose to read the covenant as requiring both carpets and underfelt if carpets alone would minimise sound induction, as in those circumstances the addition of underfelt would be pointless and would not contribute to the objective of the covenant.

I therefore interpret the covenant as requiring only so much carpet and/or underfelt as is required to achieve minimal sound induction. If carpet alone has achieved that standard, there is no need for underfelt as well, and the requirement of “sufficient underfelt and carpets” will be satisfied.

Additionally, and even if I am wrong about the need for both carpets and underfelt, I can see no reason why the covenant should not be fully satisfied by the tenant furnishing every floor in the flat with carpets on which he places rugs. In that situation the lower layer of carpet would act as “underfelt” to the rugs placed on top of it. I have already found that “underfelt” does not describe a particular material of a type in use in the 1970s but refers to a layer of insulation immediately beneath a carpet. The layer providing that insulation can be comprised of any material or fabric the tenant chooses, and in my judgment he is perfectly entitled to provide two layers of carpet rather than one of carpet and one of a more traditional underfelt.

Drawing all these points together, I am satisfied that Mr Calnan was in breach of the covenant at paragraph 9 of the First Schedule to his lease between the completion of the works (not later than 5 April 2022 when the uncarpeted floors were seen by Mr Cook and Mr Sawyer) and August 2023 when he laid a new carpet in the dining room, hall and entrance lobby.

There is no evidence that the transmission of sound from Mr Calnan’s flat to the rest of the building would have been improved by the addition of any more carpet or underlay than had been installed by August 2023. If a landlord alleges a breach of covenant, it is for them to prove that it has occurred. Once the floors of the flat had been furnished with carpets, there would only have been a breach if those carpets were not sufficient to minimise the induction of sound between the flat and other parts of the Estate. The Landlord produced no evidence that further sound attenuation could have been achieved by the addition of underlay or more carpet. The Landlord has therefore failed to prove that there was a breach after August 2023.

On the evidence, the breach was remedied by August 2023 when the new carpet was laid. There has been no continuing breach after that date. The Landlord was on notice that the breach had been remedied (at least as far as the entrance lobby was concerned) at the latest by January 2024 when the carpet was photographed by Mr Cook.

As I have explained above, in an application under section 168 it is important for the FTT to identify any breach it finds clearly. If it fails to do so the parties will be little further forward. If the Landlord decides to pursue forfeiture proceedings, in the absence of clear findings of fact the parties will be left having to call the same evidence again in the County Court to resolve arguments about the extent of the breach, waiver, or the terms of relief against forfeiture.

The FTT’s determination in this case is too broad and too imprecise and I set it aside.

I substitute a determination that Mr Calnan was in breach of paragraph 9 of the First Schedule to his lease by failing to furnish the dining area, the hall and the entrance lobby with underfelt and carpet between the completion of the works at the end of 2019 and 29 August 2023. He was not in breach after 29 August 2023.

Mr Calnan is entitled to apply to this Tribunal for an order reducing or extinguishing his liability to pay any administration charge in respect of litigation costs incurred by the Landlord in connection with this appeal. He is entitled to make the same application to the FTT in respect of litigation costs in connection with the application to it. Both applications are under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002. If Mr Calnan makes an application to this Tribunal, the parties should agree a short timetable for the exchange of submissions, and I will determine the application on paper.