Landlord and tenant — Provision in lease entitling lessee to extend term for a further 21 years from date of expiry — Whether on construction of provision and in the events which had happened the lessee was able to claim an extension — Lessee sought by originating summons a decision in his favour — Proceedings were originally brought against both the original lessors and the owners of the reversion at the date of expiry of the term, but the claim against the latter was dropped because the lease had never been registered as an estate contract under the Land Charges Act 1925 and so was void as against them — Claims therefore became a claim for damages against original lessors because of plaintiff’s inability to obtain the extension — Defendants resisted claim mainly on the ground that it was a condition precedent that the plaintiff should have complied with all his covenants, and that he had not done so — Covenants included keeping the property in good and substantial repair, painting the outside and painting the inside — This defence depended primarily on questions of fact, but involved also a question of law as to whether anything short of strict and complete observance of the literal terminology of such covenants could constitute compliance with the obligation in the sense required — After reviewing various authorities the judge expressed the opinion that the right to an extension of the lease would not be defeated by merely trifling or trivial breaches — However, on an exhaustive review of the evidence he concluded that there were defects of repair which could not be so characterised and that consequently the defendants had discharged the onus of establishing sufficient non-compliance with the covenants — The plaintiff was not therefore entitled to damages from the defendants for his inability to obtain the 21-year extension
This was an
originating summons by which in its original form the plaintiff, Mr Kitney,
claimed a new 21-year lease from MEPC Ltd or alternatively damages against both
MEPC and Greater London Properties Ltd if he failed to obtain a new lease, the
claim against the latter then being for breach of covenant. Greater London
Properties were the reversioners when the lease was originally granted. MEPC
were the owners of the reversion when the original term was due to expire. The
property in question was at 26-28 College Road, Harrow, and the lease was for
42 years from December 25 1932, with a provision for extension which was the
subject of dispute. As explained in the judgment, MEPC had dropped out of the
picture by the time the present summons came for hearing.
I L R Romer
(instructed by Dale & Newberry, of Feltham) appeared on behalf of the
plaintiff; A G Steinfeld (instructed by Davidsons) represented the defendants.
Giving
judgment, MR MICHAEL WHEELER QC said: I have before me the remnants of an
originating summons which was issued more than nine years ago concerning a
lease dated April 20 1933 and made between Greater London Properties Ltd (‘GLP’)
as lessors of the one part and a company called Gee Bee (Outfitters) Ltd as
lessees of the other part of property at 26 to 28 College Road, Harrow. The
lease was for a term of 42 years from December 25 1932 and would therefore have
expired in the ordinary way on December 25 1974. But it contained a provision
(to which I shall have to refer in detail later in this judgment) entitling the
lessees to extend the term of the lease for a further 21 years from December 25
1974 and it was in relation to this provision that the originating summons was
issued.
The plaintiff
is a Mr Kitney, who was the lessee as at December 25 1974, having taken an
assignment some eight years earlier. Originally, there were two defendants:
(1) MEPC Ltd (‘MEPC’), who were the owners of the
freehold reversion in December 1974; and
(2) GLP, who were the lessors and owners of the
freehold reversion at the time when the lease was granted in 1933.
In the
originating summons in its original form, the plaintiff claimed a new 21-year
lease from MEPC under the provision for extension to which I have just referred
or alternatively damages against both defendants if he failed to get the new
lease, the claim against GLP in that event being for damages for breach of
covenant. But by the time that the originating summons came before me MEPC had
effectively dropped out of the picture because in March 1977 the Court of
Appeal*, allowing an appeal from a decision by Whitford J given in February
1976, held that the claims against MEPC failed because the provision for
extending the lease had never been registered as an estate contract under the
Land Charges Act 1925 and was accordingly void as against MEPC.
*Kitney
v MEPC [1977] 1 WLR 981: 243 EG 131, reversing (1976) 238 EG 41, [1976]
1 EGLR 47
Thus, before
me, the contest has been solely between the plaintiff as the lessee at the
relevant period and GLP as the original covenantors under the lease: and the
plaintiff’s claim, therefore, has been purely one for damages for breach of
covenant because of the plaintiff’s inability to obtain the 21-year extension
to the lease.
Before
considering the rival arguments, there are certain parts of the lease to which
I must refer in detail.
First, the
definitions of the parties. The lease is expressed to be made
BETWEEN
Greater London Properties Ltd. . . . (hereinafter called ‘the Lessors’ which
expression is intended to include also the persons for the time being entitled
to reversion expectant upon the term hereby granted where the context so
requires or admits and the successors and assigns of the Lessors) of the one
part and Gee Bee (Outfitters) Ltd. . . . hereinafter called ‘the Lessees’ which
expression is intended to include successors and assigns of the Lessees (where
the context so requires or admits) of the other part.
Secondly,
Clause 3, which sets out the lessees’ covenants, commences in the usual way,
‘The Lessees as such Lessees hereby covenant with the Lessors as follows’: and
this is followed by 18 numbered subclauses, but I can go straight to what I
will for brevity call ‘the repairing covenant’ in subclause (5), which I must
read in full. In that subclause, the draftsman deploys what is (to me) an
almost bewildering use of the English language, but my approach to the
subclause has been made easier by the fact that both counsel (Mr Romer for the
plaintiff and Mr Steinfeld for GLP) agree that it can be treated as comprising
four parts.
The first part
is concerned with keeping the property in good and substantial repair and reads
as follows, remembering that it is a follow-on from the opening words of clause
3, ‘The Lessees as such Lessees hereby covenant with the Lessors as follows’,
the first part is this:
Well and
substantially to repair, renew, uphold, support, maintain, drain, point, pave,
cleanse, paint, grain varnish, enamel, distemper, whiten, colour, strip and
repaper glaze amend and keep the demised premises and all erections and
buildings that shall for the time being be erected or built upon the site
thereof together with the fences of those sides of the property marked on the
said plan with a ‘T’ within the boundary in good and substantial repair and
condition throughout the said term where and as often as need or occasion shall
require at the expense of the Lessee.
That is the
first of the four parts.
The second is
concerned with painting the outside of the demised premises and reads:
And
particularly will in a good and workmanlike manner wash and paint all the outside
parts of the said demised premises usually painted with two coats of good and
proper oil colour of a colour uniform with adjoining property (such colour in
case of difference being chosen by the Lessor’s Surveyor) in the year One
Thousand Nine Hundred and Thirty Six and thereafter once in every third year
and during the last year of the said term.
The third part
is concerned with painting the inside of the demised premises and reads as
follows:
. . . and in
like manner paint and strip and repaper grain varnish enamel whitewash and
colour all the inside parts of the demised premises usually painted papered
grained varnished enamelled whitewashed and coloured in the year One Thousand
Nine Hundred and Forty and in the year One Thousand Nine Hundred and Forty
Seven and during the last year of the said term.
Then finally
the fourth part is concerned with delivering up the premises fit for use and
occupation at the end of the term of the tenancy and reads as follows:
And the
demised premises so well and substantially repaired renewed upheld supported
maintained drained pointed paved cleansed painted grained varnished enamelled
whitened and coloured and kept as aforesaid at the expiration or other sooner
determination of the said term will peaceably and quietly leave surrender and
yield up unto the Lessors together with all landlord’s fixtures which during
the said term shall have been or shall be erected fixed or fastened to the
demised premises undefaced and fit for use and occupation.
Finally I turn
to the lessors’ covenants in clause 5 of the lease. Parallel with the lessees’
covenants in clause 3, clause 5 commences: ‘And the Lessors hereby covenant
with the Lessees that the Lessors’ and these words are appropriately followed
by the opening words of subclause (1), namely ‘Will at all times during the
said term . . .’ (the remainder of subclause (1) is irrelevant for present
purposes). I must, however, read subclause (2) in full. This starts off with a
common-form covenant for quiet enjoyment (but — as will be seen — with an
apparent disregard for the opening words of clause 5) and is followed by a
proviso which grants the lessees the right to a further term of 21 years on the
terms there stated.
Clause 5(2)
reads as follows:
And the
Lessors do hereby covenant with the Lessees that the Lessees paying the said
rent and observing and performing all and singular the covenants and conditions
aforesaid on the Lessees part to be observed and performed shall and lawfully
may during the said term peaceably and quietly have hold use occupy possess and
enjoy the said premises without any lawful molestation interruption or
disturbance by the Lessors or any person or persons claiming under or in trust
for the Lessors — then comes the proviso — PROVIDED ALWAYS and the Lessors
hereby agree that if the Lessees shall be desirous of extending this Lease for
a further term of 21 years from the expiration of the term hereby granted and
of such desire shall give to the Lessors six months’ previous notice in writing
then and in such case provided the Lessees shall have punctually paid the rents
hereby reserved and observed and performed all the covenants and conditions on
the Lessees’ part herein contained this Lease shall be continued for such
further term of twenty one years at the same rents as are hereinbefore reserved
and upon and subject to the same terms covenants and conditions as are herein
contained except this proviso.
It is common
ground that the plaintiff gave both GLP and MEPC notice of his desire to extend
the lease within the time-limit specified in the proviso. It is also common
ground that the relevant date at which to consider whether or not the plaintiff
‘had observed and performed all the covenants and conditions on the Lessees’
part herein contained’ is the date of expiry of the original lease, namely
December 25 1974.
The plaintiff
claims that he had duly complied with his covenants and is accordingly entitled
(as against GLP) to damages for breach of GLP’s covenant in clause 5(2). GLP’s
defence is two-fold:
First they say that the obligation imposed on ‘the Lessors’ in clause
5(2) refers to, and binds only, whoever were the lessors at the termination of
the original lease, namely MEPC, and that in the events which have happened
(and in particular the fact that at the date when the original lease came to an
end GLP were no longer the freehold reversioners) the covenant had ceased to
bind GLP. This is essentially a question of construction.
Secondly, however, GLP say that even if they are wrong on their first
defence, nevertheless the plaintiff’s right to an extended lease is subject to
the condition precedent that he must have complied with his covenants and that
even on the most generous interpretation of the repairing covenant in clause
3(5), on the facts the plaintiff had not complied with that covenant and was
not therefore entitled to an extended lease. This second line of defence
depends primarily on questions of fact but may also, I think, involve a
question of law as to whether anything short of strict and complete compliance
with the literal terminology of a repairing covenant like this can be said to
constitute compliance with the lessees’ obligation. For GLP, Mr Steinfeld
accepted that in a case such as the present the onus was on him to prove
non-compliance on the plaintiff’s part, though he jibbed, I thought, at having
to establish a negative in relation to the plaintiff’s obligations to paint the
premises inside and outside during the last year of the term.
I should here
mention that the premises which were the subject of the lease comprised an
extensive ground-floor shop over which, on two floors, were four flats numbered
26A, 26B, 28A and 28B respectively: and it is clear from photographs taken in
June 1977 that the property as a whole was by no means unattractive. It was
probably built as part of a larger development not long before the commencement
of the lease in December 1933.
I start with
the first of GLP’s two defences and I can deal with it quite shortly. By
definition, ‘the Lessors’ means GLP but ‘where the context so requires or
admits’ includes successors or assigns. Of course, there are places in
the lease where commonsense might ‘require’ ‘the Lessors’ to be construed as
meaning an assignee of the freehold reversion, as, for example, in payment of
rent under clause 3(1) and the covenant in clause 3(13) not to alter the
appearance of the premises ‘without the consent in writing of the Lessors’. But
there are only two references to ‘the Lessors’ in the proviso in clause 5(2)
and in my view Mr Romer is right in his submission that in the opening words of
the proviso ‘and the Lessors hereby agree’, ‘the Lessors’ meant (and still
means) GLP even if the second reference to the giving of at least six months’
notice ‘to the Lessors’ might, in the events which had happened, also include
MEPC: and I have little doubt that it was for this reason, and as a precaution,
that when the plaintiff did give notice under the proviso he gave it to
GLP and to MEPC. I can find nothing in the proviso (which is a
self-contained agreement not governed by the opening words of clause 5), or in
the lease as a whole, which could justify my concluding, as a matter of
construction, that the covenant in clause 5(2) was no longer binding on GLP. In
reaching this conclusion, I am adopting a similar approach to that adopted by
Wynn-Parry J in Wright v Dean [1948] 1 Ch 686, in particular p
694: it is true that in that case the option was to purchase the freehold
reversion and that, if duly exercised, it took effect forthwith: whereas, in
the instant case, the notice under clause 5(2), whenever given, would not take
effect until the end of the initial term. But I do not regard this difference
as significant. Accordingly, in my judgment, GLP’s first defence fails.
I turn now,
therefore, to GLP’s second defence, which depends on whether Mr Steinfeld can
establish that the plaintiff had failed to comply with the condition precedent
to his right to an extension of the lease having regard to his obligation to
comply with the terms of the repairing covenant in clause 3(5) of the lease.
I must start
by outlining the relevant dates:
On May 3
1974 the plaintiff gave notice to both defendants of his desire to extend
the lease. It is common ground that this notice was effective in form and in
time.
During the
same month, the plaintiff instructed JLW Building
Surveying Services (part of the well-known firm of Jones Lang Wootton,
chartered surveyors) to prepare a schedule of works required to be put in hand
in order to comply with the repairing covenant in the lease. This was in fact
undertaken by Mr K M Kennedy FRICS, a surveyor with the firm in question, who
had qualified in 1963 and had had considerable experience advising clients in
landlord and tenant matters: and during May 1974 Mr Kennedy produced a detailed
schedule of some 12 pages dealing with no less than 138 separate items. For
this purpose Mr Kennedy had been supplied with a copy of the lease and had
studied its terms.
Early in October
1974 Mr Kennedy’s firm were instructed to put in hand the repairs set out
in his May schedule of works. Mr Kennedy contacted a firm of builders, Woodward
& Overy, who, on October 11 1974, forwarded an estimate for the work.
Including VAT, the cost thus estimated amounted to some £10,650.
On October
18 1974 the plaintiff instructed Mr Kennedy to accept Woodward &
Overy’s estimate.
On October
22 1974 a formal contract was entered into between the plaintiff and
Woodward & Overy providing, inter alia, for the work to start that
day and to be completed by December 6 1974 under Mr Kennedy’s supervision.
During the
period October — December 1974 and during the course of the work,
some changes were made to the May schedule. A few items, mainly to do with
inside painting, were deleted: but in one case (item 95) the repair of metal
windows was upgraded to renewal, and in a few other cases the nature and extent
of the work to be done was altered in the light of the closer inspection (eg of
chimney-stacks and roof) which had not been possible when the May schedule had
been prepared. During his oral evidence Mr Kennedy told me that he visited the
site to see the progress of the work once a week or sometimes once a fortnight
but was in frequent contact with the builders by telephone. The schedule of
work as amended was subsequently signed by Mr Kennedy and dated December 6
1974. The total cost to the plaintiff of the work ultimately done by Woodward
&
Regardless of
MEPC’s position concerning extension of the lease (which their solicitors had
for some years — and correctly as it turned out — asserted to be void for
non-registration), the plaintiff was, of course, concerned to ensure that MEPC
were satisfied, as the current owners of the freehold reversion, that he had
duly complied with his repairing covenant and in August 1974 the plaintiff’s
solicitors wrote to MEPC’s solicitors suggesting a meeting with MEPC’s
surveyors ‘to agree the extent of the work required’, but it was not until
early December 1974 that Mr Kennedy was able to arrange for representatives of
MEPC to visit the property ‘to agree the dilapidations put in hand by [the
plaintiff]’. This meeting took place on December 10 1974, when Mr Kennedy
together with a Mr Woolland and a Mr Lacy, who were surveyors to MEPC, went
round the property together. I am satisfied that by December 10 at the latest
the scheduled work had been completed. I am also satisfied that the three men
went round the site in detail with the aid of Mr Kennedy’s amended schedule and
although there is some slight doubt as to whether the MEPC representatives went
so far as to agree that the repairing covenant had been complied with (Mr
Kennedy’s contemporary note records them as having said that they had no
further comments ‘at this stage’), it is clear, in my view, (i) that they were
well aware of the purpose of the meeting and MEPC’s interest in the work which
had been done; (ii) that they made no criticisms during what was clearly an
extensive inspection; (iii) that they did not suggest that any further work was
required; and (iv) that, although under cover of a letter of December 19 1974
Mr Kennedy sent Mr Woolland a copy of the amended schedule of works, neither
then nor subsequently did Mr Woolland or anyone else on MEPC’s behalf contend
that the plaintiff had failed to comply with his repairing covenant. Not
unnaturally, this was a factor upon which Mr Romer relied heavily.
As I have
already mentioned, the originating summons in which GLP was named as one of the
defendants was issued on April 9 1975 and this evidently stirred GLP
into activity, because comparatively soon after this, probably in June or July
1975, they, too, instructed a chartered surveyor, Mr J D Springett FRICS, to
inspect the property. According to his evidence, he carried out this inspection
on August 22 1975, having first studied the repairing covenant in the lease.
His report on his inspection was given in a letter to GLP which he wrote on
August 29 1975. A number of points in that letter (‘the first report’) require
comment:
(i) it is clear from the opening paragraph that
the instructions which he had received from GLP were to inspect the property
‘in order to give you my views of its general state of repair’;
(ii) Mr Springett was at pains to point out that
the first report was not intended to be a structural survey but ‘an indication
of the state of repair and the matters that require attention in my view after
my recent inspection.’
(iii) in the list of matters set out on pp 2 and 3
of the first report as having been noted during his inspection, there is no
criticism of the state of internal or external paintwork: but there are three
separate references to external window sills suffering from wood rot and
references to two metal windows as being ‘extremely rusty’ and ‘suffering from
severe corrosion’ respectively.
In the
following months GLP evidently consulted counsel, because in reply to a letter
from their solicitors of October 6 1975 Mr Springett in a letter dated October
10 1975 answered a number of questions which counsel had raised, as follows.
Mr Springett
considered that all the items set out on pp 2 and 3 of the first report
(with one irrelevant exception) must have been present on December 25
1974 and in his view none of those items (with the same exception) was
attributable to deterioration after that date. He put the cost at October 1975
prices of putting these items right in the order of £720.
As to the
state of decoration he said:
4. State of
Decoration of the Premises. Externally the properties have been recently
repainted and redecorated and in my view no claim can be lodged in this
respect. The general decorative condition of the interior of the properties is
also of a reasonable standard and I do not consider that any charge can be made
upon the tenants to have this re-executed.
It is not clear
how the second sentence fits in with the interior painting obligations in the
repairing covenant.
By May 1977
the Court of Appeal had allowed MEPC’s appeal and for all practical purposes
MEPC were out of the picture. Thus GLP was left as the only effective defendant
and it was no doubt against this background that GLP’s solicitors once more
contacted Mr Springett, and it is clear that he was then asked to carry out a
further inspection with special reference to possible breaches by the plaintiff
of his repairing covenant, because in a letter to GLP’s solicitors of July 2
1977 (‘the second report’) he states that:
I have now
carried out a further inspection of the property and I am pleased to be able to
give you my opinion of various breaches of covenant of the original lease.
Somewhat
surprisingly, GLP do not appear to have told Mr Springett why they required
this information and he did not ask them. In a schedule to his letter of June 2
1977 in which he set out ‘the various matters which have come to my attention’,
there is a great deal more emphasis on the state of the internal decoration,
although there is no suggestion that in 1975 at the time of his first report
(which contained no criticism of the state of internal decoration) Mr Springett
had been unable to obtain access to the flats. But in his second report, as in
the first, there are references to rusting metal and rotted woodwork. Leaving
aside the shop — which has not featured in the argument before me — Mr
Springett’s second report contains 38 items, though it is fair to say that six
of these are noted as ‘nil’. A number of these items had not appeared in the
first report at all, but it must be remembered that Mr Springett’s instructions
in May 1977 appear to have been significantly different from those which he had
received in the summer of 1975.
Mr Springett
reinforced his second report in para 4 of an affidavit which he swore on
February 15 1979, when he made detailed comments on the items in the schedule
to that report, indicating which of those items would in his opinion have
required attention in December 1974 and an estimate of the cost at that date of
the necessary work for dealing with those items. In the light of his criticisms
of the state of decoration in Flat 26B, it is somewhat surprising that, as Mr
Springett himself told me, in November 1977 the tenant of Flat 26B (a Mrs
Duckett) had informed him that the whole of that flat had been redecorated in
November 1974. I also find it a little surprising that Mr Springett made no
reference in this affidavit to his first report, and in fact the first report
does not appear in evidence until it is exhibited to a further affidavit sworn
by Mr Springett in June 1983.
Both Mr
Kennedy and Mr Springett gave evidence before me. But before examining their
evidence I must first consider the legal principles against which their
evidence has to be tested. For this purpose, I was referred to three reported
cases: Finch v Underwood (1876) 2 ChD 310 (CA on appeal from
Malins V-C); Bastin v Bidwell (1881) 18 ChD 238 (Kay J); and West
Country Cleaners (Falmouth) Ltd v Saly [1966] 1 WLR 1485 (CA, where
Danckwerts LJ gave the leading judgment).
In each of
these three cases, the tenant was held not to be entitled to a new or extended
lease because of his failure to fulfil his repairing covenant: and at first
glance, the grounds upon which these cases were seemingly decided appear to be
deceptively simple, namely:
(i) fulfilment of the repairing covenant is a
condition precedent to the grant of a new or extended lease and the relevant
date for testing ‘fulfilment’ is the end of the original lease;
(ii) the right (or ‘option’) to be granted a new
or extended lease is a ‘privilege’ which can be earned only by strict
compliance with the condition precedent.
(iii) it is no answer for the tenant to say that the
failure to satisfy the ‘strict compliance’ rule was ‘trifling’ or ‘trivial’.
Thus, in Finch,
Malins V-C had decided that a new lease should be granted because the repairs
which had not been carried out (estimated to cost — admittedly in Victorian
currency — between £13 and £45) were ‘only trifling’. But the Court of Appeal,
consisting of James and M Mellish LJJ and Baggallay J, would have none of this.
The repairing covenant in question was admittedly a good deal less verbose than
the one which I have to consider and apparently (see p 311) amounted to little
more than ‘to paint the inside work once during the term, and keep and leave
the interior in good repair’. But it was common ground that no attempt had been
made to comply with this covenant at all. In allowing the appeal, James LJ (at
p 315) said this of the tenant:
He can easily
send in his builder, get a report of what repairs are necessary, and do them
before he applies for the lease. There is no hardship in requiring this of him,
and I think he is not entitled to excuse himself by saying that the want of repair
is trifling. The answer to that is ‘No matter; your bargain was to leave the
property in thorough repair’.
See also,
Mellish LJ at p 316:
In a case
like this, if a tenant wishes to claim the benefit of such a covenant he should
send in his surveyor to see what repairs are needed and should effect the
repairs which the surveyor certifies to be requisite. The court would be
inclined to give credit to a survey thus honestly made, and would lean towards
holding the condition precedent to have been complied with. But in the present
case it is admitted that there was an existing breach of the covenant to
repair.
In Finch,
as Mellish LJ pointed out, there was an admitted breach of covenant. So, too,
in Bastin, where the covenant was to paint the premises internally and
externally before a certain date and thereafter three-yearly: and it was
admitted that this had not been done.
In West
Country Cleaners the covenant was to keep the interior of the premises ‘in
good and tenantable repair’ and to paint ‘in the last year’. Here again it was
admitted that the covenant had not been complied with and in particular that no
attempt at all had been made to paint the premises in the last year of the
term. The report of this decision does not give any clear indication of the
arguments which had influenced the court below, but the more important of these
can perhaps be extracted from the judgment of Danckwerts LJ. Having disposed of
an argument concerning waiver or estoppel, which does not arise in the present
case, Danckwerts LJ said, at p 1489:
The other
argument which was put forward was that, the state of the premises being so
good as regards decorative repair, the terms of the option in relation to the
right to ask for a renewed lease had been complied with. That seems to me to
ignore the fact that an option of this character is a privilege — a right which
has always been treated by the law as requiring complete compliance
[my emphasis]
with the
terms and conditions upon which the option is to be exercised.
Then, as to
triviality, Danckwerts LJ (at p 1490) said this:
As regards
the point that the triviality of the failure to observe a covenant means that
the covenant is no longer effective, it seems to me that that point is disposed
of by Finch v Underwood . . . it was held that even if the
repairs were of small value, nevertheless non-compliance with the repairing
covenant in that case rendered the exercise of the option for a new lease
unenforceable.
I have
considered all three of the above cases with particular care. I accept that in
general (and in particular in the case before me), fulfilment by the tenant of
his covenants is, as a matter of construction, a condition precedent to his
right to require an extended lease. But I beg leave to question what, in this
context, is meant by ‘fulfilment’ (or even ‘strict fulfilment’ or ‘complete
compliance’): nor do I see why the tenant’s right should be elevated to the
status of a ‘privilege’ which can only be earned by some special standard of
compliance with his obligations under the lease — a conclusion which would seem
necessarily to follow if his right is to be defeated by breaches which could
fairly be described as ‘trivial’ or ‘trifling’. If there is such a special
standard, it must, as it seems to me, apply to any breach of any
covenant (repairing or otherwise) which had not been made good by the end of
the original lease: and the penalty of being deprived of a right to an extended
lease would apparently apply even if the breach or breaches were not such as to
give the landlord a quantifiable claim in damages: it would also apply to
breaches for which, during the currency of the lease, the tenant would have had
little difficulty in obtaining relief against forfeiture, although it is true
that in Finch James LJ said (at p 314) that ‘The case is one of
condition precedent: it is not a case of forfeiture, and none of the
considerations applicable to forfeiture apply to it’. But in a case such as the
present where the tenant is seeking an extension of the lease (and therefore a
continuance of all his existing obligations) it would always be open to the
landlord, under the extended lease, to require any minor breach which still
existed to be made good: and the mere fact that here the tenant’s right was
unenforceable against the existing owner of the freehold reversion because of
non-registration ought not to affect the true construction of the repairing
covenant.
I asked Mr
Steinfeld whether he regarded ‘triviality’ as used in the above cases as the
equivalent of de minimis, and I instanced cases where the tenant had
failed to replace a broken slate in a roof or to repoint a small but relatively
unimportant section of brickwork (see, for example, photograph no 4 in the
present case which relates to item (32) in Mr Springett’s second report). Mr
Steinfeld replied that he did not seek to equate the two: and in my judgment he
was right, because failures such as these would not, I think, prevent the
demised premises from being, in December 1974, ‘well and substantially repaired’
etc or ‘fit for use and occupation’ within the meaning of the last of the four
parts into which the repairing covenant in the present case can be conveniently
divided as mentioned earlier in this judgment. For my part therefore I would be
prepared to ignore minor failures on the part of the tenant which related
solely to the fourth part of the repairing covenant.
I should also
point out that in the present case Mr Kitney did precisely what James and
Mellish LJJ said in Finch that the tenant could and should have done in
the way of consulting a surveyor and acting upon his advice (see the passages
from their judgments which I have already quoted): and although there was some
suggestion in Mr Kennedy’s evidence that he and Mr Kitney had discussed together
what remedial work should be done, having heard both of them give evidence I
have no doubt that it was Mr Kennedy’s advice which carried the day.
Nevertheless,
in spite of the doubts which I have expressed as to the standard of compliance
which is required to entitle the tenant to an extended lease and as to the
extent to which I can properly ignore minor failures on the tenant’s part, I
have come to the conclusion, on the facts of the present case and a careful
analysis of the views expressed by Mr Kennedy and Mr Springett, that Mr
Steinfeld has discharged the onus — albeit by a narrow margin — of establishing
sufficient non-compliance with the terms of the tenant’s repairing covenant to
have disentitled him (the tenant) from successfully claiming an extended lease
or, as against GLP, damages for breach of covenant by reason of his inability
to obtain the extension.
I do not
propose to review the evidence in detail, but the main factors which have
driven me — albeit with some reluctance — to this conclusion are as follows:
I gained a
strong impression (although it is not in itself fatal to Mr Kitney’s case) that
by the time Mr Kennedy came on the scene in early 1974 what I might call
routine compliance with the repairing covenant was considerably in arrears, and
that this reflected not only in the number of items in Mr Kennedy’s May 1974
schedule of repairs but also in the amount of money (in excess of £10,500)
which it cost to implement his amended schedule.
Secondly, it
seemed to me from some of Mr Kennedy’s answers in the witness box that although
he had had a copy of the lease when he drew up his May 1974 schedule, he
unwittingly allowed himself to be influenced more by the fourth part of the
repairing covenant (ie ‘to yield up the premises . . . fit for use and
occupation’) than by the more specific requirements in the second and third
parts to paint the outside and inside of the premises ‘during the last year of
the said term’. So far as I can understand, Mr Kennedy made no inquiries as to
when such painting had last been undertaken. On the contrary, although his
schedule provided for a considerable amount of painting, the test which he
seems to have applied was more to the effect ‘was the paintwork sufficiently
good not to require further redecoration, regardless of when redecoration was
last carried out’.
The obligation
to paint during the last year of the term is, in my view, an important one in a
repairing covenant of this kind because (leaving aside the question of
extending the lease) it ensures that the premises, if they revert to the
landlord, should have a minimum of two years before they require painting
again, and I do not think that the importance of this obligation is lessened
merely because the tenant may ultimately elect to apply for an extended lease.
Then as
regards the condition of the front window sills and the metal windows, it is
clear from Mr Kennedy’s schedule that he was very alive to the question of
wood-rot in the sills and of excessive rusting of the metal windows: and he
undoubtedly took steps which he considered necessary to deal with both these
problems. Taking wood-rot as an example, it is clear that deciding how to
remedy this involves a considerable degree of judgment: in some cases Mr
Kennedy recommeded replacement: in others he considered it sufficient to cut
out the parts where wood-rot was present. So far as the December 1974
inspection by the MEPC representatives was concerned, by that time the sills
had been repainted, and I am satisfied that it is far more difficult to detect
wood-rot in newly painted wood unless some form of probing is adopted. So I
cannot regard the lack of adverse comment by them as conclusive as to the true
state of the window sills. But I do find Mr Springett’s first report very
illuminating. True, it was made eight months after Mr Kennedy’s remedial work
had been completed, but the purpose of the first report was merely to give GLP
Mr Springett’s views as to the ‘general state of repair’ of the premises, in
contrast to the second report, which was deliberately directed to the question
of breaches of the repairing covenant.
Looked at in
this light, it seems to me to be inescapable that (in particular) the wood-rot
in the sills and the rusting in the metal windows must have existed at the end
of 1974: and Mr Kennedy in his oral evidence very frankly admitted to being
surprised by these and other criticisms which Mr Springett had made.
In his second
report, Mr Springett had listed a number of criticisms as to the state of the
interior decoration (which contrast curiously with his statement in his letter
of October 10 1975 which I have already quoted that ‘the general decorative
condition of the interior of the properties is also of a reasonable standard’),
and in his 1979 affidavit Mr Springett admitted that he could not say whether
the premises had been internally decorated during 1974. I have therefore taken
into account the fact that in the two and a half years which elapsed between
the end of the lease and the making of the second report (June 1977) some
deterioration in the standard of decoration was almost inevitable.
Nevertheless, I am not satisfied on the evidence as a whole that the obligation
to paint the premises inside and out during the last year of the term had in
fact been complied with.
In his 1979
affidavit, Mr Springett indicated which items in his second report would in his
opinion have required attention in December 1974 and his estimate of the cost
of doing the necessary work at that date. This estimate was not seriously
challenged and it seems to me — even allowing for the possibility that the
inclusion of some individual items covered by the estimate might successfully
be challenged or might be disregarded as being de minimis that I cannot
properly ignore defects on this scale even if, as Mr Steinfeld very fairly
accepted, the premises as a whole could not be said to have been in a bad state
of repair at the end of 1974. I have come to the conclusion, therefore, that
there was a failure to comply with the repairing covenant and that that failure
was such as to preclude Mr Kitney from successfully calling for an extended
lease: accordingly, it also deprived him of any claim for damages against GLP.
