Covenants by tenant to repair and maintain — Demised premises in state of decrepitude — Substantial dilapidations — Proceedings for re-entry — Term 65 years unexpired — Leasehold Property (Repairs) Act 1938 — Standard of proof — Whether proceedings for re-entry should be stayed
The plaintiffs are the owners of a reversion to a 99-year lease commencing in 1950 of premises at Barry Docks, South Wales. The demised premises include some 26,040 sq yds of the docks, a dry dock and buildings. The defendant tenant holds the lease at a rent of £4,000 and subject to a tenant’s covenant to use for dry dock purposes and to repair and maintain the premises.
The demised premises have fallen into a state of extreme decrepitude and the plaintiffs have served on the defendants a schedule of dilapidations detailing repairs in the sum of some £600,000. The diminution in value of the reversion was put at £3,000, some 8% of the capital value. The defendants, having been served with the appropriate notice under section 146 of the Law of Property Act 1925 alleging breach of the repairing covenant, served on the plaintiffs a counternotice claiming the protection of the Leasehold Property (Repairs) Act 1938. Under section 1(3) of this Act, “no proceedings, by action or otherwise, shall be taken by the lessor for the enforcement of any right of re-entry or forfeiture under any proviso or stipulation in the lease for breach of the covenant or agreement in question, or for damages for breach thereof, otherwise than with the leave of the court”.
The plaintiffs were granted leave to issue re-entry proceedings and to sue for damages by Master Cholmondeley-Clarke (May 6 1988); they also obtained directions under section 2 of the 1938 Act in relation to their costs and expenses arising out of the breach of the repairing covenant. The defendants appealed that decision, contending that none of the grounds in section 1(5) of the 1938 Act, for giving leave to proceed, were satisfied.
Held The appeal was dismissed; the plaintiffs are entitled to proceed with the forfeiture of the lease, as at least one of the grounds in section 1(5) of the 1938 Act is satisfied. (1) The landlords are entitled to have their buildings repaired now to prevent substantial diminution to the value of their reversion; although the buildings may have little use now, they may have a use at the expiration of the lease in 65 years’ time and by then the tenant may be financially unsound. Ground (a) of section 1(5) was satisfied. (2) Land Securities plc v Receiver for Metropolitan Police District [1983] 1 WLR 439 confirms that the standard of proof on the plaintiff to obtain leave to proceed is not as high as in any substantive action for forfeiture; provided the landlord has adduced evidence that shows an arguable case for leave, the evidence in rebuttal adduced by the tenant does not destroy the landlord’s case.
Land Securities plc v Receiver for Metropolitan Police District
[1983] 1 WLR 439; (1983) 267 EG 675 applied.
Peter Birts (instructed by the solicitor to Associated British Ports) appeared for the plaintiffs; and Kim Lewison (instructed by Brasseur & Bury, for Le Brasseur, Davis & Sons, of Newport, Gwent) appeared for the defendants.
