Chesterton is at the centre of a High Court dispute to determine whether works on a climate-control system constitute a tenant’s improvement or a repair.
The company is asking the High Court to rule that works on a defective heating and air-conditioning system at its offices in Colmore Row, Birmingham, should be classified as a “tenant’s improvement” at its own expense, rather than a “repair” that could lead to a rent increase.
Chesterton claims that the replacement system, which will enable simultaneous heating and cooling in different parts of the premises, will free an extra 1,243 sq ft of floorspace, and will increase the letting value of the building by more than £30,000 pa. It is alleged that Chesterton will incur “considerable extra cost” in replacing the existing two-pipe system with a new four-pipe model.
The company says that, in the circumstances, the works should be regarded as a “tenant’s improvement”, even though the system was defective and it had covenanted with the landlord, Gibson Investments Ltd, to keep the components in good repair.
In the High Court, Jonathan Gaunt QC argued that the work, which is said to be 60% completed, should be disregarded for the purposes of any future rent review. He maintained that work in compliance with a repairing covenant could nevertheless incorporate an improvement.
However, the landlord contends that the work constitutes a work of repair pursuant to Chesterton’s obligation under the covenant. Papers before the court, which were submitted by the landlord’s counsel, Jonathan Brock QC, maintain that “a repair is a repair”.
The hearing continues.
Gibson Investments Ltd v Chesterton plc Chancery Division (Judge Rich QC) 21 May 2003.
Jonathan Brock QC (instructed by Addleshaw Goddard, of Leeds) appeared for the claimant; Jonathan Gaunt QC (instructed by Osborne Clarke, of Bristol) appeared for the defendant.
References: PLS News 21/5/03