Allyson Colby analyses a decision on a landlord’s repairing obligations.
Key points
- A building was in disrepair, despite a temporary fix that appeared to be holding
- A remedial scheme that involved ongoing disruption was not acceptable in the context of an iconic modern building in a city centre location
- The court can order a landlord to comply with its repairing obligations, and did so without there being an agreed specification for the work
Before a repairing obligation can bite, a property must be in disrepair. The question that arose in Blue Manchester Ltd v North West Ground Rents Ltd [2019] EWHC 142 (TCC); [2019] PLSCS 30 was whether a building was in disrepair, even though the landlord had come up with a temporary fix, which appeared to be holding.
The property concerned was Manchester’s Beetham Tower, a 47-storey glass panelled building, comprising a 23-floor Hilton Hotel, with residential flats above. Just eight years after it was completed, workmen came across a serious problem. The structural sealant holding the glass in position was failing in places.
The contractor that built the tower, Carillion Construction, installed temporary stitch plates to keep the glass in place, and went into liquidation four years later without having found a permanent solution. The hotel operator, BML, was concerned about the safety of the stitch plates. It was also unhappy about their impact on the appearance of what should have been sleek and uninterrupted glass facades. And it complained that safety barriers and hoardings impeded vehicular access to the hotel and its valet parking service, as well as obstructing light and the view into and out of its foyer.
Repairing obligations
The 999-year lease of the hotel, granted for a premium of £60m, included a covenant that the freeholder would keep the common parts, which included the facades, “in good and substantial repair and when necessary… reinstate, replace and renew” them.
The cost of repairing was recoverable through a service charge, 49% of which was attributable the hotel (although BML was not liable for the cost of remedying inherent or design and construction defects).
The lease also included a “reverse Jervis v Harris clause”, enabling BML to repair at the freeholder’s cost, should it fail to comply with its repairing obligations (Jervis v Harris [1996] 1 EGLR 78).
Unsurprisingly, BML called on the freeholder to find a permanent solution, rather than attempt repairs itself. But the freeholder claimed that it was not realistic to expect it to undertake extensive and expensive remedial work.
The freeholder had purchased the building from the original landlord as a ground rent investment. It was entitled to a modest rent and had complied sufficiently with its repairing obligations while pursuing claims under collateral warranties, given by a subcontractor and Carillion’s insurers, to secure funding for a permanent solution.
Disrepairs
The judge noted that the original landlord had covenanted to remedy disrepairs, whatever the cause, and that the freeholder had purchased the reversion, accepting that risk as part of the package.
It was plain that, but for the stitch plates, the façades would be in disrepair – but were they in disrepair in their existing condition? “Good and substantial repair” did not mean that the building had to be in pristine condition. So it would not suffice for BML to say that the stitch plates were intended to be only temporary, or that it was entitled to a like-for-like replacement, regardless of all other considerations.
However, the standard of repair for which the freeholder was responsible was widely expressed and it was not enough for the freeholder to say that the facades were not in disrepair because the stitch plates were holding.
The plates increased the stress on the facades, which could cause the glass to break and other problems. They had been designed to last for no longer than three years and required regular inspection, which caused disruption. And, although the experts believed them to be secure, they could not say so with the confidence that would enable a conscientious landlord to permit them to remain, either indefinitely or for a specified period going forward. Therefore, the temporary fix had not discharged the landlord’s repairing obligations.
Furthermore, although the point had not been expressly considered in any reported cases, remarks made in Ruxley Electronics and Construction Ltd v Forsyth [1995] 3 All ER 268 suggested that aesthetic standards could be relevant. The stitch plates were intrusive and ugly; there would have to be some compelling reason for the tenant to have to accept them permanently and it was not outside what was contemplated by the lease to put the facades back into the condition they were, from a design, constructional, functional and aesthetic perspective, at the time of the lease.
Remedies
Specific performance is a draconian remedy. So was BML entitled to an order, without there being an agreed specification for the remedial work? The judge decided that it was. It would not be just and equitable to award damages, which would not be an adequate remedy, or to leave BML to carry out the repairs itself and seek to recover the cost from the freeholder.
There was no evidence to suggest that an order for specific performance would cause the freeholder serious and exceptional hardship, or that it would be impossible for it to comply.
Consequently, the freeholder would be required to repair the building within 18 months, to present substantially the same external appearance as at the date of the lease. But, if it could show that the costs would be disproportionate, it could apply to undertake a different remedial scheme, and would also be entitled to apply for more time in the event of unanticipated delays.
The judge turned next to the question of the safety barriers and hoardings. He accepted that it was reasonable to adopt safety measures until the stitch plates were installed, during inspections, and while contractors were working.
But things had moved at a snail’s pace. The freeholder had not done enough to minimise the disturbance caused and BML was entitled to damages, to be assessed, as a result.
Main image © Joel Goodman/Lnp/Rex/Shutterstock
Allyson Colby is a property law consultant
