Landlord and tenant — Dilapidations — Repairs — Liability for dilapidated roof of industrial unit — Action by landlords against tenants — Whether works specified by landlords constituted works of repair within the scope of the repairing covenant or were works of renewal outside it — Action concerned two industrial units, but main issue related to the larger, the lease of which had terminated — There was a general repairing covenant well and substantially to repair, replace etc the demised premises including the roof — At the date of grant the roof was already deteriorating — Bitumastic coating had not been applied until galvanising had to a large extent worn off and by date of action the roof was beyond patching; it had come to the end of its useful life and needed to be replaced — Replacement of roof would cost £84,364 — In its dilapidated condition the unit had virtually no value for lettings, but its value as repaired would be about £140,000 or £150,000 — As the cost of repairs was less than the diminution in the value of the reversion, section 18 of the Landlord and Tenant Act 1927 did not apply — The only question in regard to this unit was whether the replacement of the roof constituted a repair — Authorities referred to included Lurcott v Wakely and Wheeler, Brew Bros Ltd v Snax (Ross) Ltd, Ravenseft Properties Ltd v Davstone Holdings Ltd, Halliard Property Co Ltd v Nicholas Clarke Investments Ltd and Post Office v Aquarius Properties Ltd — Held (rejecting arguments based on inherent defect, giving back to landlords an entirely different thing, disproportionate cost of repair, and the test of what a reasonable landlord would do) that this was a repair or replacement of part within the meaning of the tenants’ covenant — It was not a different thing, but merely an industrial building with a new roof — Consequently a claim for damages of £84,364 in relation to the larger unit had been established by the landlords — Held, however, that a claim by the landlords in relation to the smaller unit, based on a covenant by the tenants to allow the landlords to enter and carry out repairs on the tenants’ default and recover the cost, failed on the facts — On the application of the Leasehold Property (Repairs) Act 1938, Judge Paul Baker, like Nourse J in Colchester Estates (Cardiff) v Carlton Industries plc, followed the decision of Vinelott J in Hamilton v Martell Securities Ltd in preference to that of McNeill J in Swallow Securities Ltd v Brand
The following cases are referred to in this report.
Brew Bros Ltd v Snax (Ross) Ltd [1970] 1 QB 612; [1969] 3 WLR 657; [1970] 1 All ER 587; (1969) 20 P&CR 829; [1969] EGD 1012; 212 EG 281, CA
Colchester Estates (Cardiff) v Carlton Industries plc [1986] Ch 80; [1984] 3 WLR 693; [1984] 2 All ER 601; [1984] EGD 461; (1984) 271 EG 778, [1984] 2 EGLR 64
Elmcroft Developments Ltd v Tankersley-Sawyer [1984] EGD 348; (1984) 270 EG 140, [1984] 1 EGLR 47, CA
Halliard Property Co Ltd v Nicholas Clarke Investments Ltd [1984] EGD 341; (1983) 269 EG 1257, [1984] 1 EGLR 45
Hamilton v Martell Securities Ltd [1984] Ch 266; [1984] 2 WLR 699; [1984] 1 All ER 665; (1984) 48 P&CR 69
Lister v Lane and Nesham [1893] 2 QB 212, CA
Lurcott v Wakely and Wheeler [1911] 1 KB 905, CA
Post Office v Aquarius Properties Ltd [1985] 2 EGLR 105; (1985) 276 EG 923
Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1980] QB 12; [1979] 2 WLR 897; [1979] 1 All ER 929; (1978) 37 P&CR 502; [1979] EGD 316; 249 EG 51, [1979] 1 EGLR 54, DC
Swallow Securities Ltd v Brand (1981) 45 P&CR 328; 260 EG 61, [1981] 2 EGLR 22
Torrens v Walker [1906] 2 Ch 166
In this case the plaintiff landlords, Elite Investments Ltd, claimed an injunction, damages and other relief in relation to alleged breaches of repairing covenants by the tenants, T I Bainbridge Silencers Ltd, in respect of leases of units in an industrial building situated in the Sycamore Trading Estate on the edge of Squires Gate Aerodrome in Blackpool.
David Neuberger (instructed by Hills, of Bolton) appeared on behalf of the plaintiffs; Jonathan Brock (instructed by Allen & Overy) represented the defendants.
Giving judgment, JUDGE PAUL BAKER QC said: On the edge of Squires Gate Aerodrome in Blackpool is the Sycamore Trading Estate and in that estate is a large industrial building. It was erected in the latter part of 1940 as a factory for the assembly of Wellington bomber aircraft. It had a concrete floor, and a steel frame supporting a lattice metal roof truss. The walls were built in brick and blockwork to a height of approximately 9 ft 6 in with corrugated galvanised steel cladding above. The pitched roof was also covered with corrugated galvanised steel sheeting with a row of lights or windows about halfway up each side. The roof sheets were bolted on to purlins. The building was about 820 ft long and 180 ft wide, giving a total area approaching 146,000 sq ft. For the most part it was an open space inside, but there was a certain amount of office, and lavatory and similar accommodation provided there. The roof is now in a serious state of dilapidation and I am concerned with the liability for those dilapidations as between the plaintiff landlords and the defendant tenants.
In 1963 the Sycamore estate, including the building that I am concerned with, was bought by a company called Stargate Engineering Ltd. The directors were a Mr and Mrs Stephens. Before or during Stargate’s ownership the building was subdivided into three units. Unit 6 (with which I am not concerned in this case) was the largest unit, comprising in approximate terms 100,000 sq ft. Then there was a smaller unit in the middle, with which I am concerned, in approximate terms 12,800 sq ft. Then Unit 1, with which again I am concerned, was approximately 33,000 sq ft.
These three units were leased off separately. The first one to be let, so far as the evidence before me goes, was Unit 6. That was let on January 8 1964 by a lease of that date between Stargate Engineering and a company called the Dental Manufacturing Co Ltd for term which lasted from January 8 1964 till October 8 1984. The repairing covenant in that lease was of a somewhat limited nature. In clause 5(a) it was simply:
to keep the whole of the premises and its roof and other parts in a safe condition and carry out all necessary works to that end and such works as shall be necessary in the tenant’s opinion to keep the buildings, pipes, fittings, cables and services fit for occupation and use for the tenant’s business to the intent that a tenant shall have and make no claim against the landlord in common law or otherwise by reason of any part of the premises, its roofs, walls, pipes, fittings and services, or the main structure, becoming unsafe or dangerous, or unserviceable or unfit for use by reason of decay, rust, age, fire or tempest.
So that was very limited and there was an exclusion of any claim against the landlord. The reason for that is partly because the landlord covenanted at clause 3(3) as follows:
Within 12 months from the date hereof to treat with rubberised roof coating the exterior of the corrugated iron roof and corrugated iron walls of the demised premises.
That covenant would suggest that it was the landlord at that time who first put on a rubberised roof coating or bitumastic coating of which we have heard a good deal of evidence in this case. Mr Stephens gave evidence before me, and his evidence was somewhat more equivocal in this sense, that he agreed there was a black covering, a coating, not the original galvanised, but he was suggesting either it was on when he bought it or that it was put on by the tenants. That it was put on some time after the original structure was erected is I think clear from the report of Dr Miller, who has made a scientific investigation into the corrosion of samples of the corrugated galvanised steel sheeting which was to be found on this roof. This was of course at a much later date but, among other things, he says in his report, which has not been challenged at all (on p 15):
Severe corrosion of material has taken place. The evidence of our investigations leads us to conclude that at some stage in the history of the sheets they were exposed to an aggressive medium for a period long enough to result in the total loss of all galvanising and partial rusting of the substrate.
He returns to that theme (on p 17): discussing the results of his experimental programme, from an analysis that he has done:
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This suggests that the galvanising was absent from the sheets when the coating was applied and the rusting of the substrate mild steel had begun.
In other words, the original galvanising had disappeared, or largely disappeared, and then it was coated with the bituminous coating. Dr Miller was only concerned with four sheets which had been taken off specifically for the purpose of his investigation, but it is likely that that was the situation generally over the roof.
That is Unit 6. I have gone into that largely as a matter of history. Coming to the units which I am particularly concerned with, the first one to be let was the small Unit 7 on April 25 1972, again between Stargate Engineering and a company called BKP Fabrications Ltd and it was for a term which is still running. It was from January 1 1972 till December 31 1991, so that is 20 years. There is still more than five years of that to run. It is an irregular-shaped unit. It is quite clear from the plan that it has, as I have said, some 12,000 sq ft, mostly in the centre of the building. It has two small accesses to the two elevations, west and east elevations, just sufficient to allow for a door and a little bit of extra frontage. The rest of the frontage is taken up by offices pertinent to Unit 1. It itself has no offices or other amenities, just a space. The repairing covenants in relation to that unit are of importance and, with one variation, they are similar to those in the other unit, to which I am going to come shortly. There are no landlord’s covenants to repair in this case. In the tenant’s covenants in clause 2(3) there is a painting covenant, which I can pick up in the middle:
In the seventh, fourteenth and last years of the term to paint and treat the exterior of the corrugated iron roof and walls of the demised premises with rubberised roof coating to a similar specification as is now applied all to the reasonable satisfaction of the landlord or his surveyor.
So there we pick up the rubberised roof coating again, ‘similar . . . as is now applied’.
Then the repairing covenant is the following one:
From time to time and at all times during the said term at its own cost well and substantially to repair, replace, cleanse, paint, maintain, mend and keep the demised premises and the fixtures and fittings and the walls, roof, fences, yard, sewers, pipes and drains, in so far as such sewers pipes and drains serve the demised premises, in or under the demised premises and the appurtenances thereof and with all necessary replacements, reparations, cleansing, amendments whatsoever, and the demised premises so painted, repaired, replaced, cleansed, maintained, amended and kept as aforesaid at the expiration or sooner determination of the term quietly to yield up.
I do not think I need read the rest of the covenant, which goes on in relation to fixtures.
Then, of importance too, is subclause (7):
To permit the landlord and its agent, with or without workmen or others by itself authorised at all convenient times to enter upon and examine the condition of the demised premises and thereupon the landlord may serve upon the tenant a notice in writing specifying any repairs necessary to be done and require the tenant forthwith to execute the same and if the tenant shall not within ten days after service of such notice proceed diligently with the execution of such repairs then to permit the landlord to enter upon the demised premises and execute such repairs and the cost thereof shall be a debt due from the tenant to the landlord and to be forthwith recoverble by action.
Those are the only covenants I think I need notice in that lease.
Now coming to Unit 1, this lease was made on June 15 1977 between Stargate Engineering and a company called Matthews Engineering Ltd. There does seem to be some connection between that company and the lessee, BKP Fabrications Ltd, because the same person appears as surety in both, a gentleman called Stanley Norman Matthews. This was let for a term from January 1 1976 to October 8 1984, and therefore it was a term which was concurrent with the term of Unit 6, and, of course, has now ended. The covenants, although one has a different number, are in near identical terms. The painting covenant reads as follows:
As and when necessary to paint and treat the exterior of the corrugated iron roof and walls of the demised premises with rubberised roof coating to a similar specification as now applied all to the reasonable satisfaction of the landlord or its surveyor,
not, be it noted, on the seventh and fourteenth years, which would have been inappropriate with such a short term.
Then the general repairing covenant in clause 5 and the covenant to allow the landlord to enter and do repairs and recover the cost (which in this one is 2(8)) are in exactly identical terms with the two covenants which I read out from the other lease and therefore I do not take up time reading them again. Those are the leases and the relevant provisions.
In January 1980 these leases, and as I understand it also the lease of unit 6, were assigned to the defendants. In April 1982 a company called Dominion International Ltd became the landlords. In fact they bought the share capital of Stargate Engineering and then there was some transfer of the properties between the one company and the other. At all events, in April 1982 they became the immediate landlords of the defendants, T I Bainbridge Silencers Ltd. That I think is sufficient to deal with the title as at the time when the action commenced. There have been certain other changes in the title since the action has commenced which I will come to later.
I shall now deal with the schedules of dilapidations and notices which were served and for this purpose I go to a bundle of correspondence. Because of what has happened I can take this fairly shortly. On August 2 1983 two notices with attached schedules were served by the then landlords, Dominion International, upon the tenants, those notices being served under section 146 of the Law of Property Act 1925. There are two notices, one for each lease. The notice was in normal form sent out by Johnson Kelly, the landlords’ surveyors, and required the repairs to be remedied within three months, but each notice contained the statutory notice calling attention to the Leasehold Property (Repairs) Act 1938. In fact that notice was not required in the case of Unit 1, which was within a little over a year of the termination of the lease, but it was required in relation to Unit 7. The tenants on receipt of that served the counternotice invoking the protection, such as it was, of the Leasehold Property (Repairs) Act 1938. They also called attention to some defects, or alleged defects, in the notice, and that led to further notices being served on September 8 1983 with exactly the same schedules but with slightly fuller notices. On October 3 the appropriate counternotice was served under the 1938 Act. There were, according to the evidence, certain discussions over the ensuing winter, meetings and so forth, but on March 1 the landlords decided on a new tack and the first of two notices starts off:
As agents for the landlord Dominion International Ltd, we hereby give you notice under the provisions of clause 2(8) of your lease that the repairs as specified in the schedule are necessary to be done and you are required forthwith to execute the same,
and there is a similar notice calling attention to the appropriate clause in the other lease. Then the schedules appear again for the third manifestation. At this point I think I can read the schedule as it relates to the roof. Para 1 of the notice says:
Roof. Strip off existing corrugated steel roof sheets and remove internal insulated lining panels. Replace with new corrugated roof sheets or similar and new insulated lining panels.
There was an identical notice in relation to Unit 7. There were a large number of other repairs in the notice, particularly in the notice relating to Unit 1, which it will be remembered were large premises.
That requirement as to the roof was challenged by the defendants on the basis that there was no obligation to do the roof in the way suggested; it was beyond the scope of the repairing covenant. That is one of the more important issues I have to deal with. The tenants having taken that attitude indicated that they were not prepared to accept liability or allow the landlords to come in and do the repairs themselves with the consequence that the tenants would have to pay for them at the end of the day. Faced with that attitude the landlords commenced the proceedings which are before me. On May 17 the writ was issued and it claimed an injunction restraining the defendants from obstructing the plaintiffs from entering and executing repairs, in accordance with the covenants I have mentioned. It also claimed a declaration that the plaintiffs are entitled to recover the cost of carrying out the said repairs. There was no question at that time that the plaintiffs were about to do the repairs or had started on them, or anything of that sort. Concurrently with that there was a statement of claim and a notice of motion in which they ask for an interlocutory injunction restraining the defendants from preventing the plaintiffs or their workmen from entering to do the repairs. As I said, there was a statement of claim to parts of which I will be referring later, but at this stage I think so far as the pleadings go I can just refer to para 5 of the amended defence:
It is averred by the defendant that the work specified in the schedules to the notices in so far as it relates to the roof goes beyond repair and amounts to renewal. Consequently the notices are invalid under the Leasehold Property (Repairs) Act, which is confined to breach of covenant to repair.
So right from the outset issue was joined on that point.
The interlocutory application came before Judge Fitzhugh, sitting as a judge of the Chancery Division, in Manchester on July 6 1984|page:45| and the upshot of that was that he dismissed the motion, ordering the plaintiffs to pay the defendants’ costs of it. I have not gone through the evidence or seen his reasons; I have just seen the order. I am told that there was a very substantial body of evidence before the learned judge and at the end of the day it has had the result I have stated.
That was in July 1984, within a month or two before the lease of Unit 1 was due to end, that is to say on October 8 1984. In the meantime, while those proceedings were going on, as I have described, a large number of repairs had been attended to by the defendants, not the roof, because of course they were disclaiming any liability in regard to the roof, but, as I have said, the schedules contained a number of requirements on the part of the landlords and many of those were being attended to. Here again I do not need to go into any detail, I can simply point to p 62 of bundle 4, which contains a large number of invoices and particulars about the individual works, which there are summarised up to May or June 1984. On the repairs and renewals which the defendants had carried out on the roof and walls of the building some £19,000 had been expended since 1980; then there were other sums on the general interior, making a total overall, with floor repairs and things like that, of over £100,000. From June to October these documents show that the defendants expended some £24,000 on the premises. That is all on Unit 1. The others are spread all through the units.
That considerable expenditure did satisfy many of the items in the schedule of dilapidations. It left a number of other items, apart from the roof, outstanding. It seems that having spent that money the defendants were advised by their surveyor to spend no more money because they had spent sufficient, to this extent, that spending beyond that they would then be spending money over and above the value of the reversionary interest of the plaintiffs. It was stopped for that reason. There were left a number of items, apart from the roof, which were still being claimed when this case opened before me, but during the course of a long weekend which intervened in the trial the surveyors for the plaintiffs and defendants respectively got together at the site and were able to agree and get their respective clients to agree all those other items. That from my point of view was a very happy outcome of those particular issues. All I need do is just record the result of it. As regards Unit 1 the tenants admit to a sum of £10,325 for the dilapidations, exclusive, of course, of the roof, and exclusive of VAT, which would be at 15%. As regards Unit 7 they agreed a sum of £1,500 exclusive of the roof and exclusive of VAT, and of course in the case of that one it will be subject to liability. So the case has narrowed as it has proceeded and now I just have to deal with the roof.
I have already mentioned Dr Miller. I can go back now to October 1 1984 just at the time, within a week, before the lease of Unit 1 was going to expire. On that day Mr K W Stacey, Mr A J Simpson, and one or two other interested persons attended at the site and four sheets of the corrugated roof were removed for the express purpose of submitting them to analysis. They were divided in half and the tenants were offered and took, as I understand it, half (longwise) of the panels and the landlords retained half. These panels were all taken from the same area of the roof. There are photographs to show exactly where they are taken from and what they look like after they have been taken down. They were all together, two and two, in the centre, not at the eaves or at the top of the roof, but from somewhere in the centre of the roof and towards the middle of the roof which covers Unit 1 and Unit 7. There has been some dispute before me as to whether that was a fair sample, and some difference, which I had better now deal with. Mr Stacey, the surveyor for the landlords, said:
I was there when they were taken off
he indeed directed it, he had some men there. There was also Mr Paice, who was one of the directors of the defendant company, and Mr Simpson was there.
There was a general discussion of which sheet — of course, there were 2,500 sheets on the roof — what we should take to get a representative sample. I took from the centre rather than the top. There was a discussion but no one suggested that what I took was an unfair sample. They did not agree or disagree, they just observed. I believe it was a fair sample.
Mr Simpson, as I have said, was there on behalf of the tenants; he was a surveyor, too. He said:
I was present on October 1 when the samples were taken. I was asked if I would approve a fair sample,
it was either Mr Stacey or Mr Hind, his assistant,
I explained that this was not a fair sample. There is no way in which four sheets could be fair. It is such a small sample. I made that clear. It was the first time that I had taken a personal interest in this matter.
From what I have seen of the gentlemen and what I have seen of the rest of the evidence about the roof and its defects, I prefer the evidence there of Mr Stacey. It is obviously a very difficult thing to do. He did not take it from the worst area, which was down by the eaves. I notice that the roof is leaking and even on the defendants’ evidence the defendants concede that to patch up the roof would require an expenditure now of over £8,000, so that quite a number of these panels must have been defective at the time. In October there were patches of rainwater in the building which had come through the defective roof. Mr Stacey’s volume of photographs shows this, and his evidence to me was: ‘There was water on the floor after the lease ended which had come through the roof.’ Other photographs, which the defendants have put in, show a better picture from that point of view. They were taken in October 1984. They show that the interior had been dried out or cleaned out at that stage.
Dealing with some further evidence about this before I make a finding about the matter, Mr Simpson told me, for example, that, he having been brought in at this time, in October 1984, it was not unreasonable to replace the roof. The whole would have to be done: his objection to it was on economic grounds. It is not that the works were not necessary to get a good roof on the place, but it just was not worth doing for the additional rental. That was the burden of his evidence. But he did tell me that just looking at the roof physically it was not unreasonable to replace it. Mr A W Roberts, who came in much later to advise the landlords (he did not come in until shortly before the trial, as I understand it), when the roof had further deteriorated, because the building had been empty for the intervening time, told me that if it was empty, as it was said:
I would advise the tenants to make it wind and watertight and cover it with bitumastic, then I would put it on the market on a wind and watertight basis until the economic climate improved, because there will, it is true, be substantial annual maintenance expenditure; or just leave it till it falls down, keep it for a few years, it is bound to have some economic value.
So there is no one suggesting that the roof is in good order, it is just a question of whether it is wise to repair it. That is the burden of that evidence. It was undoubtedly worse in April of this year, when the second set of photographs were taken, but it had been unoccupied. There had been no one to clean the place up in the meantime. I do not draw the inference from that that the roof had suddenly failed all over between October 1984 and April 1986. Nor do I accept the suggestion that the property was in any way vandalised. There had been some break-in at the doors, but the pictures clearly show that the property was deteriorating through damp rather than vandalism by persons who were intent on mischief.
The roof overall does seem defective and I have no reason to doubt that the panels which were taken out by Mr Stacey were representative panels from this roof at that time. The panels were submitted to Dr Miller, who made his report, which no one of the other experts has challenged. Mr Simpson told me: ‘I cannot dispute the evidence of Dr Miller.’ Mr Roberts had a number of minor criticisms of it. In para 14(a) of his report he says: ‘With regard to the condition of the roof sheets I accept the report as prepared by International Research & Development Co Ltd’ – that is Dr Miller’s employers – ‘with the following comments and observations’, and then there are a number of detailed observations. In his conclusions he says (at subpara (9) of this para):
The report has proved conclusively that the sheets were in a poor condition when the coating was applied. It also proves that the use of the coating material applied was incorrect and this has accelerated the corrosion of the sheets. It also proves that the coating material applied during the term has been consistent with that originally applied.
That was with reference to Dr Miller’s conclusions, which he expressed in writing at the end of his report. Dr Miller’s conclusions were thus:
The results of the chemical analysis and metallographic analysis lead us to conclude that the sheets were in a poor condition when the coating they presently carry was applied . . . No 3: Although the coating applied has had a beneficial effect on arresting corrosion of the mild steel sheets where it has remained adhering to the sheets, the fact that the coating is easily cracked has allowed water to come into contact with the basic metal and corrosion has occurred, accompanied by spalling of the bituminous coating. No 4: The sheets are presently no longer fit for their intended purpose, since corrosion has penetrated the basic metal and the sheets are no longer watertight. No 5: In areas where the sheets were heavily corroded the sheets were not capable of|page:46| fully supporting maintenance loads recommended in the code of practice for loadings for roof coverings.
That was a fairly damning report in relation to the sheets, and anyone who has seen the photographs of the sheets cannot really be surprised at the conclusion to which Dr Miller came after his extensive scientific investigations.
Considering that evidence as a whole, I reach the following findings about the roof: (1) The roof was not coated when it was first put on. It was left as a galvanised sheet and there is no doubt in that environment, at Blackpool, in a marine environment with the sea and salt air, it would be better if it had been. (2) The bitumastic coating which was on from about 1964 onwards was put on after the galvanising had worn off to a large extent. (3) The roof was deteriorating throughout and was deteriorating at the time of the grant of the respective leases but at that stage it would still have seemed to be repairable. But (4) by October 1984 the roof was beyond patching, at all events on the exposed western side, and needed to be replaced in toto. The witnesses agree that if one side was to be done, then the whole would have to be done; it is not a practical proposition to do the western pitch and leave the eastern, less exposed, pitch.
Given that it has to be replaced, I next turn to the question of what that involves. In this I was assisted by Mr Alan Frank Simmons. Mr Simmons is a building contractor and is an experienced estimator of building works and their costs. He gave his estimates based on incorrect data to start with, he got wrong the respective areas, but his final figures were: to replace the roof over Unit 1 would cost £84,364, and for Unit 7 would cost £30,677. He supported that with a detailed estimate and sheet of workings as to how he arrived at those figures and also by a cross-check with another system of estimating which gave slightly higher figures. From this sheet and from his evidence it would seem that he contemplates putting on a polyvinyl chloride coated steel profile, that is to say corrugated sheeting. Such a material would be maintenance free, if not indefinitely, certainly for a long period. It is lighter than the original galvanised steel would be. Then there was a new form of polyester insulation, different from what is there now, a substance called Coolag. It was, he thought, more expensive than replacing it with galvanised steel, but if one was then going to coat the galvanised steel, as would seem to be necessary from my findings, with a bituminous coating straightaway, then the costs would not be far short of the costs of the new material, especially taking into account the fact that the new material comes in longer strips and therefore less time is needed by men on the roof fixing it on.
Mr Roberts had certain objections to that and I think, in fairness to Mr Roberts, I must say that he was presented with these figures and this proposal at a very late stage in the trial and really did not have a proper opportunity to consider them. Therefore, if I do not accept everything he says, it is not any criticism of him; he just did not have a proper opportunity. Mr Roberts’ evidence was on these lines: it is all very well with the new material, but if you use that, if you start changing the material, then you have got to look at the whole structure; it might have a number of other effects which of themselves are going to add to the cost. He did not challenge Mr Simmons’ figures, Mr Simmons’ figures have not been challenged by anybody, but the position taken by Mr Roberts was, as I say, that there would be some what I might call knock-on costs. If you are going to change the material you ought to get structural engineers in to see that the existing structure is suitable to take it, the purlins might have to be examined and moved, the gutters and downpipes might have to be changed, the insulation, being new insulation, might give you unforeseen problems of condensation and it would not match in very well with the galvanised steel side cladding, which has fared much better than the roof sheets. All these matters Mr Roberts drew to my attention. I did not find all of those very convincing, I am bound to say, especially having regard to the fact that the new roof material is lighter than the original galvanised steel, but at the end of the day I do not know that it is very relevant to consider those having regard to the fact that it would cost much the same price to put on the old roof. So it would not in any way increase the damages. If by putting on this new roof the landlords landed themselves with additional costs on the lines that Mr Roberts indicated, then not only is it not claimed in this action but also, as far as I can see, it could not be claimed because to that extent it would be effecting an improvement in the structure.
The next matter I must deal with is the value of this property and on this I am only concerned with Unit 1, the unit in respect of which the lease has ended. I have described the building as something of a white elephant, though some of the witnesses recoiled from that description. It is in an area where there is very little demand for large industrial buildings and is of a type of industrial building which is quite old, built, as I have said, over 40 years ago. Three valuers have given me assistance on this aspect of the case. One thing on which they are all agreed is that it is not possible economically to demolish and redevelop this site. They all approached their task on the basis that one has to make the best job one can with the existing building. Mr Stacey, the landlords’ surveyor, said that a tenant or a purchaser could not be found for the building without the roof being replaced. If you offered this building without the roof to a purchaser, the purchaser would adjust the price that he was prepared to offer for the building by the amount that the roof was going to cost him to replace. Similarly, a tenant would want a roof to be supplied or allowance for the cost to be made in some way in his rent, or a severe modification to be made of the covenants. Mr Stacey also told me he thought the building as it stood with the roof in its present condition — and I have found that the building has a leaky roof — was not as good as an open storage area, although Mr M W Mitchell, one of the other valuers, thought that a building was better than a hard standing; there was some cover at any rate. Mr Mitchell, who gave evidence for the tenants, put a value on it of £97,250 at the date of expiry. He has supported that by calculations in a very clear report. In his first valuation he puts a value of 60p per sq ft on the main works area. There are other valuations for the office areas, and so forth, but those areas are so small that they are insignificant in connection with the valuations. Mr Stacey’s corresponding figure, doing a valuation on the same lines, was 40p per sq ft, but Mr Stacey’s valuation was qualified by his reservation that it could not be let at all on this basis. In justification for the 60p Mr Mitchell said in cross-examination: ‘We might get 60p on a full repairing lease. We have got a good prospect for Unit 7 at 50p’. The defendants are trying to underlet Unit 7. It was put to him: ‘If you are negotiating at 50p for Unit 7, how could you say that 60p is the right figure for Unit 1?’ The point was made that Unit 7 is an odd-shaped unit, there is no toilet and office accommodation in Unit 7 as opposed to Unit 1 and there is no parking. On the other hand, the market, it would seem, is better for smaller units that for large units and by any count an area of 33,000 sq ft is a large unit. That was the only comparable he had. He said ‘That is only part of the jigsaw’, and his view was that this unit would get 60p. I am bound to say I did not find that at all convincing. In the first case there is no comparable. It is a prospect for 50p. There is no contract. I have looked through the correspondence; there is no indication of the terms as to repairs on which the unit is going to be let. Mr Mitchell himself told me that he thought Unit 7 had been on the market since January 1985. It seemed to be a reasonable prospect. He thought it was on tenant’s full repairing terms other than the roof, and there was no premium. So there is no settled comparable in relation to Unit 7, and no other comparable really, which is of any value, was adduced.
Mr Simpson had a much more realistic figure on this of 50p. He thought the most you could do would be to let it on a wind and watertight basis. There was no one in sight who was prepared to take it on that basis, but in the end he came to say that someone somewhere would take it.
I much prefer Mr Stacey’s view of this matter; his approach seems much more realistic and really there is no prospect of letting Unit 1 as it is. So that on this part of the valuation case I prefer Mr Stacey’s realistic estimate that it has a virtually nil value at the time for lettings. It is also a fact that, although it has been marketed, it is now one and a half to two years since the defendants went out and no tenant has appeared.
Turning to the valuation as repaired, that is, on the basis that the building was re-roofed, then Mr Stacey would put 80p per sq ft, Mr Mitchell puts 75p a sq ft, and Mr Simpson puts 65p a sq ft, which would give, in Mr Stacey’s case, £21,000, Mr Mitchell’s £19,000, nearly £20,000, and Mr Simpson I think £17,000 for that part of the premises. Then Mr Stacey, the roof having been repaired, would apply a multiplier of six and that would give him a final valuation of £160,200. Mr Mitchell and Mr Simpson would apply a multiplier of five, which would produce in Mr Mitchell’s case £121,750. I do not think I have got Mr Simpson’s final figure, but it is something of the order of £100,000 to £104,000, which would be his final figure with the repaired roof. Each valuer sought to justify the multiplier. In Mr Stacey’s case it was six. He thought that was much lower than normal|page:47| anyway, which is often nine or ten, which thereby reflected the poor prospects of this place. Mr Mitchell thought at five the yield is 20%; that would justify the cost of the financing, with a little over. At six, which gives you 16%/17% yield, it barely covers the cost of the financing; there is nothing over.
For the reasons I have mentioned in connection with the first valuation, it is all very speculative, because there are no real comparables that I can see. On the one hand you have a new roof, maintenance free, so that there is a chance of getting a full repairing and insurance covenant from any lessee. On the other hand, you have got the element of the depressed area where it is difficult to let even modern buildings. It really is just a question of trying to assess what is between these valuers. So that at the end I would see the value here at about £140,000 or £150,000, the value with the new roof as proposed by Mr Simmons.
On those findings I do not have to consider the Landlord and Tenant Act 1927, section 18, because the cost of repairs, even with the VAT, which I am not sure should be taken into account in this context, is not greater than the diminution in value of the reversion.
Now I must come to the principal issue, which is, is the replacement of the roof a repair? This roof is a part of the building which, as I have found, has come to the end of its useful life. As a matter of language, it is directly within the repairing covenant (I am looking at one of the covenants): ‘At all times . . . well and substantially to repair, replace . . . the demised premises . . . and the walls, roof . . .’ The painting covenant does not modify that, in my judgment, in any way. One cannot read the painting covenant, which is to apply a rubberised roof coating, as in any way limiting the ambit of the repairing covenant. It is well settled that if you have two covenants and they to some extent overlap, then that does not excuse the covenantor from performing each of them. One will see a reference to that in the judgment of Harman LJ in the case of Brew Bros Ltd v Snax (Ross) Ltd [1970] 1 QB 612 at p 627G. The situation, in my judgment, would seem to be covered by the well-known leading case of Lurcott v Wakely and Wheeler [1911] 1 KB 905, which has not been cited to me directly but is referred to in the judgment of Harman LJ that I have mentioned, at pp 632 and 633. I will deal with that first with the preface that Harman LJ’s judgment was a dissenting judgment and, having dealt with Lurcott v Wakely, I shall go on to Brew Bros. For my purpose the case is sufficiently set out by the learned lord justice in the passage I have mentioned. He said (at the top of p 632):
The leading case is Lurcott v Wakely and Wheeler . . . There the front external wall of a house had to be taken down in compliance with a demolition order and was so taken down and rebuilt by the plaintiff landlord, who sued the defendant lessees under a repairing covenant and succeeded. The dangerous condition of the wall was due to old age.
Then he said: ‘Lord Esher MR cited Torrens v Walker [1906] 2 Ch 166′ — that is an obvious slip because it must be Master of the Rolls Cozens-Hardy he is referring to: Lord Esher had died by the time Torrens v Walker had come to be decided. Be that as it may, Harman LJ refers to the citation of Torrens v Walker where
Warrington J decided that under a covenant to repair there may be such a change of circumstances that the covenantor is not liable on the ground that what he is required to do is not repairs at all.
Then Lister v Lane and Nesham [1893] 2 QB 212 is mentioned. Then there are citations from Lurcott v Wakely. In the extract from the Master of the Rolls’ judgment at letter C I can note the test, which he puts in this way:
Is what has happened of such a nature that it can fairly be said that the character of the subject-matter of the demise, or part of the demise, in question has been changed?
There is also an extract from the speech of Buckley LJ in the case of Lurcott v Wakely, which I will read:
Repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal, as distinguished from repair, is reconstruction of the entirety, meaning by the entirety not necessarily the whole but substantially the whole subject-matter under discussion. I agree that if repair of the whole subject-matter has become impossible a covenant to repair does not carry an obligation to renew or replace . . . But if that which I have said is accurate, it follows that the question of repair is in every case one of degree, and the test is whether the act to be done is one which in substance is the renewal or replacement of defective parts, or the renewal or replacement of substantially the whole.
If one stops there, it would seem to me that a roof is not substantially the whole subject-matter. A large part of the building, the steel frame, the walls, the floor and foundations, the internal offices and so forth are all still there. The repair of a roof, even with new and improved material, would not be changing the character of the subject-matter of the demise. I would not say that putting a new roof on this building was renewing substantially the whole. But the law has developed since Lurcott v Wakely and there have been a number of other authorities to which I must make reference.
Brew Bros itself is a case which distinguished Lurcott v Wakely and held that what was required there went beyond the covenant to repair. In that case a flank wall had become dangerous and threatened to collapse on a neighbour. It caused a shift in some foundations which cracked some drains, which then began to seep water. That wetness undermined the foundations of the wall and the whole situation was aggravated by the removal of a tree which, when it was there, soaked up a lot of this moisture. It was clear that the wall being dangerous was a nuisance to the plaintiff’s neighbours, but the real issue in the case was as between the landlord and tenant of the dilapidated premises: who was liable? The tenant had entered into a repairing covenant. The repair of the drains of itself would be manifestly insufficient. They would just crack again and would not cure the basic problem. The learned judge in the case below, Megaw J, held that the works required to remedy the defects were so substantial and costly that they would almost equal the cost of the new building. He was talking of a figure of some £8,000. That being so they did not constitute repairs. The repairs required were to put in complete new foundations, to rebuild the wall and repair the drain. Between the hearing before Megaw J and the hearing in the Court of Appeal the landlord did the repairs and they came out at a cost of about £5,000, which would be less than the value of rebuilding altogether. Harman LJ would have held that it did come within the repairing covenant, and he dissented because he took each item, the drains, the wall, the foundations, on its own and said that, when considered singly, each one comes within the repairing covenant. The majority differed from him in that approach and said you must look at the works as a whole; when you do that it takes it outside the repairing covenant.
Sachs LJ puts it this way, at p 640 E:
It seems to me that the correct approach is to look at the particular building, to look at the state which it is in at the date of the lease, to look at the precise terms of the lease, and then come to a conclusion as to whether on a fair interpretation of those terms in relation to that state, the requisite work can fairly be termed repair. However large the covenant it must not be looked at in vacuo.
Then he refers to a number of authorities.
At p 641 B he said:
Having thus stated what seems to me the appropriate approach to the problem, having had the advantage of reading the judgment of Phillimore LJ on this issue, and being in agreement with what he is about to say, it suffices for me to record that to my mind the trial judge properly approached the question as being one of degree and reached the correct conclusion. I also agree with the view of Phillimore LJ that the court must look at the work required as a whole and not seek to look at component parts of that work on the doomed premises individually.
Phillimore LJ to whom we were directed in that passage, in his judgment (at p 646) says:
The vital question in each case is whether the total work done can properly be described as repair since it involves no more than renewal or replacement of defective parts, or whether it is in effect renewal or replacement of substantially the whole. It is, as Megaw J held, a question of degree in each case. It is well established that a tenant is not liable to produce a different thing from that which he took when he entered into the lease or to remedy the results of bad design. On what basis, then, where a house is doomed at the time he leases it, is he to be required substantially to rebuild it so as to hand back to his landlord something which is in fact quite different from what he took? Does it matter whether it is falling down because of old age, bad design or past neglect, and, if so, why?
In my judgment, the work which these tenants were required to perform and to pay for went far beyond what any reasonable person would have contemplated under the word ‘repair’. This was well on the renewal side of the line. If I had to decide this case on the basis that the tenants had only to perform the work which has been actually performed by the landlords I would have taken the same view — this went beyond repair!
As a result of this case, the test as I see it is whether the totality of the work can properly be described as repairs, since it involves no more than renewal or replacement of defective parts, or whether it is in effect renewal or replacement of substantially the whole subject-matter of the demise.
That case has a number of features which, in my judgment,|page:48| distinguish it from the present one. There new foundations had to be put in. Second, the cost of the works was not very far off the cost of a new building. Phillimore LJ refers to that on p 643 A: Megaw J:
made it clear that he accepted that the cost would be just under £8,000, subject to any additions found necessary, and that the cost of a new building would be about £9,000 to £10,000, whereas the value of this building after the proposed work had been carried out would be between £7,500 and £9,500.
So that there was a correlation there between the cost of the works that were required to repair the old building, the cost of putting up a new building altogether, and the value of the building after the works had been done; they were all in the same area.
So the third point which I would mention is that when you get a situation where the value is very much less than the cost of a new building it is the cost, not the value, which is relevant for determining whether one has gone beyond repairs. That is the case I have got here. The cost of putting this new building up has been estimated, I think, at about £30 a foot, so we are getting near to £1m to re-erect a completely new building, which is very much beyond the figure which I put on the value of it as repaired, ie £140,000. When assessing the size of repairs which are going to cost money, then what you look at, as a guide as to whether you are going over the top and you are really giving back to the landlord a complete new building, is what the new building will actually cost. The value of the resulting building has no bearing, in my judgment, on the construction of the covenant itself. Account is taken of that in the application of section 18 of the Landlord and Tenant Act 1927 and on that basis Brew Bros is quite distinguishable.
The next case that was mentioned was Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1980] QB 12. This case exploded the notion which had been current up to then that remedying an inherent defect could never be a repair; it is always a matter of degree. I am not really concerned with that aspect of the case in this present case, but there is a passage from the judgment of the late Forbes J at p 21, which has been cited with approval in the Court of Appeal in a later case and is helpful. Forbes J says at letter B:
I find myself, therefore, unable to accept Mr Colyer’s contention that a doctrine such as he enunciates has any place in the law of landlord and tenant
that is the notion I have just mentioned.
The true test is, as the cases show, that it is always a question of degree whether that which the tenant is being asked to do can properly be described as repair, or whether on the contrary it would involve giving back to the landlord a wholly different thing from that he demised.
In deciding this question, the proportion which the cost of the disputed work bears to the value or cost of the whole premises, may sometimes be helpful as a guide.
This was a totally different case on the facts. The two points that I would call attention to are that the proposed test involved giving back to the landlord a wholly different thing from that which he demised and, then, in applying the test, it may be helpful to look at the proportion which the cost of the disputed work bears to the value or cost of the whole premises. Having regard to the remarks I have just made, I would stress the cost rather than the value if they are seriously divergent.
Then I was referred to a case called Halliard Property Co Ltd v Nicholas Clarke Investments Ltd, decided in 1983 by French J, and it is reported at (1983) 269 EG 1257, [1984] 1 EGLR 45. This was a case where at the back of a residential property there was some lean-to, or single-storey room which collapsed. There was very little left of it and it required replacement. Therefore in itself it would clearly be a renewal of the whole subject-matter. What gave some support for the landlord in that case was that it was only part of the whole demised premises, though it seemed to be a somewhat separate part. It was, I think, only about one-third of the whole of the demised premises. The learned judge held that it was on the renewal side and beyond the scope of the repairing covenant and he put it this way, at the end of the report:
Regarding, as I do, this matter as a borderline case, the conclusion that I come to is that the reinstatement or rebuilding of this utility room is not covered by the obligations imposed upon the defendants by the repairing covenant. In my judgment that which would be involved in rebuilding the utility room could not properly be described as a repair. While, of course, that which would be handed back on the expiry of the demise would include the intact ‘two thirds in area’ on the front part of the premises, it would involve handing back to them, so far as the utility room was concerned, an edifice entirely different from the unstable and jerry-built structure of which the defendants took possession at the start of this lease.
So the basis on which the learned judge went is that it was a separate part of the demised premises which was renewable. This course was foreshadowed by a dictum of the Master of the Rolls in Lurcott v Wakely, which I have read, where he said that ‘the character of the subject-matter of the demise, or part of the demise, in question has been changed.’ French J’s statement seems a classic application of that part of the Master of the Rolls’ judgment. But of course here there is no question of the roof being an independent part of the demised premises; it is an integral part of the unit.
I did not get any real assistance from Elmcroft Developments Ltd v Tankersly-Sawyer (1984) 270 EG 140, [1984] 1 EGLR 47. That was clearly on the repair side of the line, supplying a liquid dampcourse at a relatively low cost. Although it was a distinct improvement, remedying an inherent defect in the property, it was a repair because of the insignificant cost of it.
Finally, my attention was called to a case before Hoffmann J, Post Office v Aquarius Properties Ltd, reported in (1985) 276 EG 923, [1985] 2 EGLR 105.* This was a substantial building in London with a basement which became flooded because of a totally unexpected rise in the water table. The basement had been constructed in such a manner that it could not cope. It was not designed to anticipate such a turn of events and it was obviously an extremely complicated thing to remedy. His lordship held that the complicated and extensive alterations and structural additions to the basement that were necessary went beyond what could be claimed under a repairing covenant. The work in question did not come within the scope of repair but entailed structural alterations and improvements to the basement, so that it did not fall within the tenant’s repairing covenant. Of course, on the facts, that was totally different from what I have got here. The way the learned judge approached it one sees from the last part of his judgment. Having been referred to the cases, some of which I have already mentioned, he says he found most assistance from Sachs LJ’s judgment in Brew Bros, to which I have referred, and continues:
This says, in effect, that the whole law on the subject may be summed up in the proposition that ‘repair’ is an ordinary English word. It also contains a timely warning against attempting to impose the crudities of judicial exegesis upon the subtle and often intuitive discriminations of ordinary speech. All words take meaning from context and it is, of course, necessary to have regard to the language of the particular covenant and the lease as a whole, the commercial relationship between the parties, the state of the premises at the time of the demise and any other surrounding circumstances which may colour the way in which the word is used. In the end, however, the question is whether the ordinary speaker of English would consider that the word ‘repair’ as used in the covenant was appropriate to describe the work which has to be done. The cases do no more than illustrate specific contexts in which judges, as ordinary speakers of English, have thought that it was or was not appropriate to do so.
*Editor’s note: Also reported at [1985] 2 EGLR 105.
Pausing at that point, if that is the test — and, if I may respectfully say so, there is a lot to be said for it — it is clear that the proposed works are included because I have the words ‘replace the roof’ specifically in the covenant.
Hoffmann J went on:
Mr Dinkin for the landlords formulated a number of propositions which he said could be derived from three recent cases . . . The most important was that the test for whether or not the work which needed to be done was repair was whether it would give the landlord a wholly different thing from that which he had before. In this case, he said, the landlord would still have essentially the same building and therefore the work was repair. This proposition, in my view, illustrates the wisdom of Sachs LJ’s warning, because it does not make sufficient allowance for the range of distinctions embodied in ordinary words. I think Mr Dinkin’s proposition does express what is usually implied in the distinction between repair and rebuilding or reconstruction, but these are not the only concepts which border upon repair. There are words like ‘improvement’, ‘alteration’ and ‘addition’ which are distinguishable from repair in different ways. For example, one usually thinks of an improvement as a fairly substantial and identifiable addition to or change in a building but involving a subsidiary part rather than the building as a whole. Nevertheless, ‘improvement’ is different from repair.
There was an improvement in that case because at the end of the day there was a basement which could cope with a totally unexpected rise in the water table. In this case, although there will be an improved material in the roof, it is not in any sense giving the landlords something different.
That I think concludes my review of the authorities. Mr Brock, in his very forceful argument before me (and I am much indebted to him for the range and interest of it), took five points, all of which he said, when you take it as a whole, lead to the conclusion that this is a replacement and not a repair within the repairing covenant. He said,|page:49| first of all, that the roof was inherently defective; it ought to have been painted at the beginning and was not. It had a limited life expectancy, the building was coming to the end of its life. I do not find that to be so in regard to the rest of the building. Most of the building, as I find, seems to be still good. There were defects in the bricks, but they are not more than normal, and it is quite plain that the rest of the building has quite a good life in front of it yet. As to its being an inherent defect, as we have seen going along, that of itself is not fatal to the idea that nevertheless when it fails there is a repair. Over and above that I do not regard such failure to paint galvanised sheeting at the outset as an inherent defect. It may have heightened the need to repair and to do further paintings later, but that is not, in my judgment, any sort of inherent defect in the roof.
Then Mr Brock pointed out to me the size of the matter in dispute. The roof and the side cladding were indeed 80% of the surface. What was left really was just a space. So replacing that is really replacing substantially the whole of the building. That goes to assist one, in assessing a matter of degree, but it is not conclusive in this case. In the first place no one is suggesting that the side cladding should be changed, and therefore it is far less than 80% of the surface which is involved in replacing the roof; and it is not right to say that what is inside is just a space, because there is 10% or so of offices, and so on. It is nowhere near justifying one saying that putting on a new roof comes to substantially replacing the whole of the building.
Then Mr Brock said, third, that what is now proposed is completely different from the roof that is there at present and it is quite different from what there was before. That is going to be a completely different material. He also called attention to the points that Mr Roberts had made of the consequential effects of the new material.
As I see that, it is not that the roof is going to be very different. It is a new material, but that is just taking advantage of better materials that are now on the market. It does not really alter the basic structure of the building and, after all, this is quite a simple building, it is not some complex structure such as Hoffmann J had to consider [in Post Office v Aquarius Properties]. This is a relatively simple building and the roof will not be largely changed simply because it has got a roof looking similar to the existing roof but made of modern materials. Further, it seems largely irrelevant, because the old material is available and costs the same. Mr Brock placed the greatest emphasis on the cost; it is totally disproportionate, he said, to the value of the building in repair. I have already dealt with that going through the cases, and in my judgment that is a false point. What has to be compared in this connection in determining whether you have got a repair or not, is not the value of the resulting building with the new roof but what it will cost you to do away with the building altogether and build a new one, or substantially build a new one. Then he said, having looked at the factors no reasonable landlord would do it. That again is not the test, if I may respectfully say so; it is a question of whether the tenants have undertaken to do what is done and what is the true meaning of the covenant.
So my conclusion on that, as is evident from now, is that this is a repair or replacement of part within the meaning of the covenant. It is not a different thing. It will simply be an industrial building with a new roof. The consequence is that I find that the case for damages in relation to Unit 1 in the sum I mentioned of £84,364 is established.
I must now deal with the claim which is based on the covenant to allow the landlord to enter and do the repairs and recover the cost from the tenant. This raises some matters of a little complexity, and particularly with regard to Unit 7. In view of what I have found, that the full cost is recoverable and it is not diminished by the operation of section 18 of the Landlord and Tenant Act 1927, any claim based on this covenant in relation to Unit 1 does not arise.
To put this into context, a covenant of this type has been found in leases apparently since the beginning of the century, but there is a body of recent authority which has been concerned with the impact on it of the restrictions on the landlord’s right to recover damages for repairs imposed by the 1938 Act. The most important case now is that of Vinelott J in Hamilton v Martell Securities Ltd [1984] Ch 266. There was in that case a claim to recover the cost of repair. The landlord had done repairs and now he was claiming the cost of them pursuant to some such covenant as we have got in this case, to permit the landlord to do repairs and look to the tenant for the costs. Vinelott J held that that claim amounted to a debt and was not damages and as such was outside the scope of the Act of 1938. In taking that view he differed from a decision of McNeill J in Swallow Securities Ltd v Brand (1981) 45 P&CR 328.* The same point was presented to Nourse J (as he then was) in Colchester Estates (Cardiff) v Carlton Industries plc [1986] Ch 80† . McNeill J took the view that the sums claimed were damages and therefore caught by the Act of 1938. Nourse J, when the matter came before him, followed Vinelott J. In the case before him the landlord had not expended any moneys, but the learned judge made a declaration that the leave of the court is not required by the plaintiffs to commence proceedings for the recovery of costs incurred by the landlord of making good defects, decays and wants of repair under the relevant covenant. Nourse J, as I said, followed Vinelott J. He did so on three grounds. First of all, he thought the decision of Vinelott J was right; second, he noted that a number of authorities, one in the Court of Appeal on a related point in relation to recovering the costs of surveyors’s fees, had not been cited to McNeill J but had been cited to Vinelott J, and were very persuasive; third, he decided that when a judge of co-ordinate jurisdiction is presented with two decisions of brother judges he should for preference follow the later one unless there is a very good reason, such as that the later one was per incuriam, for not following it. I take the same attitude to this and accept the decision of Vinelott J in preference to that of McNeill J without further examination of the merits of the argument.
*Editor’s note: Also reported at (1981) 260 EG 61, [1981] 2 EGLR 22.
† Editor’s note: Also reported at (1984) 271 EG 778, [1984] 2 EGLR 64.
None of the cases that I have mentioned went as far as what I am asked to do here, which is to give relief in anticipation of the works being done and to assist them being done. Those cases were concerned with declarations as to whether the Act of 1938 impinged upon the covenant or not, and it has been held that it did not. As regards Unit 1, as I say, it does not arise in view of the findings as to damages, but I would have had very great difficulty in accepting and applying that covenant in any event, in the case of Unit 1, where the lease has ended. It seems to me that the covenant only operates during the term, and if, for whatever reason, the repairs are not done by the plaintiffs during the term, then, as it seems to me, the landlord is left with his rights under the repairing covenants, but I do not reach a final decision about that.
As to Unit 7, of course, the lease is still running and has some years still to run. It is clear from what I have said that the fact that the defendants have relied on the 1938 Act cannot assist them in resisting liability under the covenant in question. That has now been settled by the authorities to which I have been referred. I must now refer to certain further facts in relation to the plaintiffs. I have already mentioned that this action started on May 17 1984, when the landlord was then Dominion International Ltd, the landlord plaintiff. On March 20 1985 Sycamore Trading Estate was sold to a company called Elite Investments Ltd, the present plaintiffs. It would seem from documents in bundle 3 that something over £900,000 was paid at that stage. Concurrently with that, there were assignments of their rights under the leases and under the then pending litigation. Two documents were entered into between Dominion International and Elite Investments, in one of which there was assigned to the present plaintiffs the benefit and advantage of the action including the judgment debt and interest and costs. In another document there was a transfer of property by the assignor to the assignee which assigned all the rights which had accrued out of breaches of covenants contained in the leases by the tenants, whether or not such breaches were past or present. The lease of Unit 7 is one of the leases referred to there in the schedule, though not of course the lease of Unit 1, which had by then expired. It has not been suggested before me that those documents were not effective according to their tenor. The next fact I need to notice is that on July 23 1985 Dominion International went into liquidation with a substantial deficiency, and of course that stayed the proceedings for a time, but on February 24 of this year, the present plaintiffs were substituted in these proceedings. The Preston district registrar made an order to that effect on that date, lifted the stay of proceedings, and ordered that Elite Investments be substituted as plaintiffs in this action in place of Dominion International. That of course led to the necessity to amend the statement of claim, and at the outset of this trial I gave leave for that to be done to adjust it to the change of plaintiff. On this part of the case I think I should refer to paras 11 to 13 of the statement of claim, as amended. It says:
By further notices, both dated March 1 1984, Dominion, by its solicitors, gave notice to the defendant, pursuant to clause 2(7) of the 1972 lease and clause 2(8) of the 1977 lease specifying the repairs necessary to be done and requiring
the defendant forthwith to execute the same. 12 The defendant has failed to proceed with the execution of the said repairs or any of them within ten days of the service of the said notice or at all. 13 The plaintiff intends and proposes, and until the assignment of the reversion thereto Dominion intended and proposed, to enter upon the premises demised by the 1972 lease and to execute the said repairs pursuant to the powers conferred by the said covenants therein.
I have no evidence whatever that the plaintiff intends and proposes to take any such course of action. Mr Stacey, who has come nearest to any sort of evidence on this, said in cross-examination by Mr Brock: ‘The building has deteriorated, I do not know whether the landlord is willing to repair the roof or that he is not prepared to spend the amount of money.’ That was in context of why had the roof not already been done of the other part. The notices were served by Dominion Investment Ltd. It is true there has been an assignment of the benefit of anything coming from the action and the benefit of any breaches of covenant, but, in order to operate the relevant clause of the lease, the tenant having failed to do the repairs is required to permit the landlord to enter upon the demised premises and execute the repairs, and then what he spends will be a debt.
In this case nothing has been proved before me as to what Elite’s intentions are with respect to doing any repairs to Unit 7. I have got no correspondence in which Elite has demanded that the tenant should do these repairs. Of course the proceedings have been going on and it has no doubt been necessary to determine whether what is proposed is a repair or not; but as to whether Elite wishes to avail itself of its rights under the relevant clauses in the lease I am left in the dark and in those circumstances, as it seems to me, it would be quite wrong to grant any sort of injunction or make any declaration as to what the outcome would be if the landlords did take that attitude. Accordingly, the action in regard to Unit 7 fails, it being clear that there is no action for damages sustainable in regard to that unit.
Under the arrangements which I had with counsel I propose to adjourn for the costs to be debated on a later occasion.
