Landlord and tenant – Repairing covenant – Specific performance – Claimant tenant of hotel seeking order for specific performance requiring defendant landlord to undertake works to provide permanent remedial solution to serious problem with hotel façade – Whether defendant liable to carry out works under repairing covenant – Whether claimant entitled to specific performance – Claim allowed
The Beetham Tower in Manchester was a 47-storey glass building completed in about 2006. The first 23 floors formed a Hilton Hotel. The floors above contained residential flats. A serious problem which emerged in 2014 when the bond between the glass and frames in elements in the curtain wall began to fail. The main contractor conducted an urgent investigation and came up with a short-term expedient pending a full investigation and the design and installation of a permanent remedial solution. However, the investigatory and remedial processes were so protracted that nothing concrete had been achieved when the main contractor went into liquidation.
The claimant had acquired a 999-year lease of the hotel from the original proprietor in 2011 for £60 million. It expressed concerns about the safety of the temporary stitch plates that the main contractor had installed and called on the defendant freeholder to comply with the repairing covenants in its lease and provide a permanent solution to the problem. It also objected to the adverse effect of the temporary fix on the appearance of the building and to the obstruction caused by safety barriers and hoardings at ground level, which impeded vehicular access to the hotel and valet parking, as well as obstructing light and the view into and out of the foyer.
Under the repairing covenant, the defendant undertook to keep the common parts “in good and substantial repair and when necessary as part of repair to reinstate replace and renew” them. The common parts included the external façade made up of fully glazed glass panels to form a sleek, uninterrupted wall of glass. The glass panels were a mixture of double-glazed vision units and single-glazed insulated shadow box units (SBUs). The defendant accepted responsibility for the façade but argued that it had complied sufficiently with its repairing obligations by providing the temporary fix while it pursued claims against the main contractor’s insurers and a subcontractor to fund a permanent solution.
The claimant brought proceedings against the defendant seeking, amongst other things, an order for specific performance requiring the defendant to undertake works under the repairing covenant to provide a permanent remedial solution for the SBUs. The solution proposed was the installation of an alternative glazed facing representing a like-for-like replacement of the existing SBUs.
Held: The claim was allowed.
(1) The words “good and substantial” made it clear that the premises did not have to be kept in perfect repair or in a pristine condition. However, it was not necessary for the disrepair to be so serious as to make the property currently non-functional for the covenant to be breached. The standard of repair was such repair as, having regard to the age, character and locality of the premises, would make them reasonably fit for the occupation of a reasonably minded tenant of the class who would be likely to take them. So far as age was concerned, the general principle was that the standard of repair was to be assessed by reference to the circumstances at the date on which the lease was granted, albeit having regard to the age of the premises at the relevant time. So far as character was concerned, good and substantial repair meant more than just that the building had to be capable of occupation. Clause 7.2 of the lease expressly stated that “when necessary” the obligation to repair extended to reinstatement, replacement or renewal. That was plainly a wide repairing covenant, although the extending words were qualified by reference to necessity. However, that qualification was not to be taken too far. The inclusion of the word “necessary” did not materially qualify or otherwise affect the proper interpretation of a repairing clause: Truscott v Diamond Rock Boring Co Ltd (1882) 20 Ch D 251, Re Mayor and Corp of London [1910] 2 Ch 314 and Gibson Investments Ltd v Chesterton plc [2003] 1 EGLR 142 considered.
(2) The claimant was entitled both to specific performance to compel the defendant to undertake a permanent remedial scheme and to damages to be assessed. It was well-established that specific performance was a discretionary remedy which would only be granted where it appeared to the court in all the circumstances to be just and equitable. The court always had to proceed with caution since it was a draconian remedy in the sense that failure to comply with an order for specific performance was a contempt of court. However, damages would not be an adequate remedy in circumstances where the claimant would either have to accept damages in lieu of an acceptable remedial scheme, which would be unfair and unjust, or undertake the repairs itself under the contractual provisions of the lease and then seek to recover such costs from the defendant in circumstances where the defendant itself might be unable to meet such costs. There was clearly a concern as to the defendant’s ability to meet such costs if the hotel required extensive remedial works. However, the defendant had not submitted that its financial or other circumstances were such that it would be impossible for the defendant to comply or that to order specific performance would cause it such serious and exceptional hardship as to make it unjust to do so. In the light of the incomplete evidence as to the defendant’s ability to finance such works, no such suggestion could credibly have been made: Jeune v Queen’s Cross Properties Ltd [1974] Ch 97, Co-operative Insurance Society v Argyll Stores [1997] 1 EGLR 52 and Rainbow Estates Ltd v Tokenhold Ltd [1998] 2 EGLR 34 considered.
(3) There was no reason why the process of investigation, deciding upon and designing a permanent solution should not have been undertaken at the same time as the stitch plates were installed. The claimant was, in principle, entitled to damages representing the loss incurred in the delay in retaining the temporary works and the loss incurred in the period while the barriers and hoardings had remained in place unnecessarily. The claimant was entitled to an injunction requiring that the defendant remove the hoardings within a specified period and did not replace them subsequently: Lechouritis v Goldmile Properties Ltd [2003] EGLR 60 and Timothy Taylor Ltd v Mayfair House Corporation [2016] 4 WLR 100 [2016] PLSCS 136 considered.
(4) As regards the claimant’s claim for damages for the loss of water pressure, the cause of the problem was the defendant’s failure to devise, implement or maintain a sufficient system for the inspection, maintenance and repair of the pressure reducing (PR) valves. If they had done so, on the balance of probabilities, the first PR valve would not have failed but, on any view, both PR valves would not have been allowed to become in a position and a condition where they both failed within what appeared to have been a short time of each other.
Paul Darling QC and Edward Hicks (instructed by Freeths LLP, of Birmingham) appeared for the claimant; Dermott Woolgar (instructed by JMW Solicitors LLP, of Manchester) appeared for the defendant.
Eileen O’Grady, barrister
Click here to read a transcript of Blue Manchester Ltd v North West Ground Rents Ltd
