Does a right to enter leasehold premises to inspect them for any purpose or to survey or draw them confer a right to conduct an environmental survey that involves drilling boreholes? Does an environmental investigation constitute a survey, in the same way as a topographical or valuation survey? If so, how are rights of entry to carry out such investigations to be reconciled with a landlord’s covenant for quiet enjoyment?
In Heronslea (Mill Hill) Ltd v Kwik-Fit Properties Ltd [2009] EWHC 295 (QB); [2009] PLSCS 65¸ the High Court ruled that words are to be interpreted in the way in which a reasonable commercial person would construe them. The standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language or literalism. Consequently, construed in the context of the lease as a whole, the landlord did not have the right to undertake environmental investigations that would involve digging trial pits to a significant depth over two days.
Interestingly, the court reached its decision despite the landlord’s offer to sink the boreholes in an area that would be convenient to the tenant and despite provisions in the lease requiring the landlord to cause as little interference and disturbance as was practicable and to make good any damage caused to the tenant’s reasonable satisfaction.
The judge ruled that it was important to consider the interaction between the landlord’s covenant for quiet enjoyment and the reservations in the lease. He held that the covenant for quiet enjoyment would be undermined if the landlord could conduct lengthy and intrusive surveys no matter how much disruption might be caused.
The decision bears a remarkable similarity to that of the Inner House of the Scottish Court of Session in Possfund Custodian Trustee Ltd v Kwik-Fit Properties Ltd [2008] CSIH 65. In that case, the landlord relied upon a clause in a lease that reserved rights of entry to inspect premises, to view their repair and condition, and to draw up schedules of dilapidations. It asked the court to confirm that, as a result, it was entitled to drill five shallow boreholes and a single rotary borehole (potentially to a depth beyond 30 metres) into the ground.
However, construed in the light of other provisions in the lease, the court ruled that the clause did not cover investigations of the kind proposed. The landlord was entitled to examine the premises to see what could be seen, but not to carry out intrusive works on this scale.
Neither court decided the precise limits of the landlord’s rights of survey and inspection. However, these cases show that landlords would be well advised to reserve rights to carry out intrusive environmental surveys and inspections to establish whether land has been contaminated in any way. In addition, the parties should accept or apportion liability for remediating environmental damage caused before or after the date of the grant of a lease.
Allyson Colby is a property law consultant
