Landlord and tenant – Service charge – Repair and renewal – Respondent tenant challenging reasonableness of service charge for replacement of part of zinc roof of flat – First-tier Tribunal concluding cost glass-reinforced replacement was breach of covenant and not reasonable to incur expenditure in breach of landlord’s covenant – Appellant landlord appealing – Whether like for like renewal required – Whether reasonable to use alternative materials for replacement roof in breach of landlord’s covenant – Appeal allowed
The appellant was the freehold owner of 1-51 Bodley Manor Way, London SW2 which comprised three blocks of purpose-built flats, about 40 years old. The respondent held a long lease of flat 21, demised for a term of 125 years.
By clause 2.2, the respondent covenanted to pay a rateable and proportionate part of the reasonable expenses and outgoings incurred by the appellant in the repair, maintenance, improvement, renewal and insurance of the building and provision of services (the service charge). By clause 3.2, the appellant was obliged to maintain, repair, redecorate, renew, amend, clean, repoint and paint as applicable. Crucially, the appellant as landlord was required to repair, renew and at its discretion improve the roof.
The respondent challenged the reasonableness of a service charge demanded by the appellant for the cost of replacing part of the original zinc roof of the respondent’s flat with glass-reinforced plastic (GRP). The First-tier Tribunal (FTT), in exercise of its jurisdiction under 27A of the Landlord and Tenant Act 1985, concluded that the reasonable leaseholder who bought a lease of a flat with a zinc roof would be entitled to take the view that a GRP roof would be a diminution of that purchase. The GRP replacement would be a breach of covenant because of its shorter life expectancy, its aesthetic quality and the extent to which it was in keeping with the building. It could never be reasonable to incur expenditure in breach of a landlord’s covenant.
The appellant appealed contending that the FTT had not sufficiently explained why the replacement of the roof in GRP would be a breach of covenant; its findings of fact about the aesthetic quality of GRP were made on the basis of a single photograph and its conclusion was not open to it on the basis of the scant evidence.
Held: The appeal was allowed.
(1) The tribunal had no difficulty in finding that the FTT did not give a sufficient explanation for its decision. It determined that it did not matter whether the work was regarded as a repair or a renewal; but it did not say what was the legal test it employed in order to decide whether the proposed replacement roof would be a breach of covenant. It appeared that the FTT was unimpressed with the GRP replacement, and took the view that zinc would be better as well as longer lived, and that the reasonable leaseholder would be unhappy with GRP. But that went nowhere near to a statement of the legal test and an explanation as to why that test was not met.
(2) The FTT appeared to have decided that a replacement with GRP would be carried out in breach of covenant because it did not like what it saw in the one photograph to which it referred in its decision; because of the lifespan of the material; and because of what it thought a reasonable leaseholder would think. The FTT looked at the contrast between zinc and GRP rather than at GRP in itself; it might well be that zinc would be more in keeping with the character and age of the building but that did not mean that GRP was not in keeping with that age and character. It made no mention of locality. It was therefore clear that the FTT was not applying the test in Proudfoot v Hart (1890) 25 QBD 41 where the Court of Appeal determined the meaning of “good tenantable repair” as such repair as, having regard to the age, character and locality of the house, would make it reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it.
The proposed work was a type of repair and the covenant in paragraph 3.2 of the lease was a generic repairing covenant. There might be occasions when the use of the word “renewal” in such covenants was useful to counter an argument that the work that was needed went beyond repair; but that did not detract from the generic nature of the obligation.
(3) The question whether the quality of the work proposed, which everyone agreed was necessary work, was a breach of covenant was not the usual issue in an application under section 27A of the 1985 Act. In circumstances such as the present, the FTT would usually be asked to go straight to the analysis of reasonableness pursuant to section 19 of the 1985 Act. The FTT understandably asked itself, not whether the proposed work would be reasonable as required by section 19, but whether the work would be a breach of covenant by virtue of the material used. That question should have been answered using the Proudfoot test.
That test was a relatively low threshold and it was highly unlikely that it would be failed on the basis of the lifespan of the material or the level of aesthetic concerns that were expressed here (even without the additional assurances the appellant was prepared to give about matching the colour and ribbing of the zinc roof in the GRP). That was not the test the FTT used.
Further, the FTT made an aesthetic judgment on the basis of what was clearly inadequate evidence. The bundle contained a lot of evidence about the architectural quality of the building but it was not known what if anything the FTT had in mind in reaching its decision other than the one photograph to which it referred; its catch-all phrase proviso that it had looked at all the evidence did not mend matters. Although this was an expert panel, an unexplained decision based on inadequate evidence could not be justified on that basis; the GRP replacement had been found to be a breach of covenant on the basis of incorrect reasoning.
(4) As a result, the decision of the FTT had to be set aside and the matter remitted to the FTT for a re-hearing when all the grounds on which respondent objected to GRP would have to be examined.
Desmond Kilcoyne appeared for the appellant; the respondent appeared in person.
Eileen O’Grady, barrister
Click here to read a transcript of Lambeth London Borough Council v Gniewosz
