Landlord’s covenant to keep building in good and tenantable condition — Tenant went into possession of building — Building not watertight — Whether repairing covenant wide enough to require landlord to make building watertight — Held, landlord in breach of covenant — Judgment and damages for tenant
The premises at 66 St James’s Street, London SW1, were L-shaped with its two outer sides clad in bronze-coloured anodised aluminum panels. The first four floors were let on a 25-year underlease in January 1985 and in June 1985 the underlessees assigned the unexpired residue of the term to the plaintiff tenant at a rent of £200,000 pa. The tenant was aware that there had been a problem in that water was leaking from the exterior to the interior of the building. The first rent review was in July 1988 and the landlord gave notice to increase the rent to £385,000.
The tenant decided to sell the underlease and vacated the premises, which still leaked. The tenant was unable to assign the underlease because of the water-penetration problem without an assurance from the landlord that it would bear the cost of repair. The tenant then commenced proceedings for the landlord’s breach of its repairing covenant. By clause 5C of the lease the landlord covenanted to maintain, repair, amend, renew, cleanse, repaint, redecorate and otherwise keep the building in good and tenantable condition, including the structure of the building and in particular the walls.
Held Judgment for the tenant.
1. The words “amend” and “renew” in clause 5C were capable of going outside the word “repair”. The words “defects or want of repair” in the proviso showed that some meaning beyond repainting was contemplated.
2. The words “otherwise keep in good and tenantable condition” went beyond merely to repair. The obligation was to put the building into that condition which given the age, character and locality of the property would make it reasonably fit for the occupation of a reasonably-minded tenant of the class likely to take it.
3. The required condition was to be judged not by reference to the actual state of the building at the date of demise, but to the requirements of a hypothetical reasonably-minded tenant of the class likely to take it.
4. It was beyond doubt that the aluminium cladding on the building had not been put into nor kept in the putative necessary good and tenantable condition during the tenant’s occupancy. The experts agreed that the only practical solution was to dismantle all the existing cladding and replace it with a newly-designed system. If that were done, the tenant would merely be getting what the hypothetical reasonably-minded tenant would always have expected.
5. Accordingly, the landlord was in breach of the covenant and the tenant was entitled to an award of damages, which should reflect, however, the counterclaim for arrears of rent and service charge when damages were assessed.
Jonathan Gaunt QC and Richard Gray (instructed by Fladgate Fielder) appeared for the tenant; Martin Rodger (instructed by Braby & Waller) appeared for the landlord.
