Del Williams looks at examples considered by the courts during the past two years.
Scope and meaning of repair
The meaning of a covenant “to keep in good and substantial repair the demised premises” was one of the questions considered by Aldous J in British Telecommunications plc v Sun Life Assurance Society plc [4] 2 EGLR 66. In this case the plaintiff was the tenant of three parts of the premises in question under three subleases granted in 1969, 1973 and 1976 respectively. The defendant landlord held under an underlease whereby the land and the whole building was demised to it for a term expiring in June 2091. Under clause 5(b) of the sublease the defendant landlord covenanted “to perform the tenant’s covenants contained in the lease under which it holds the building” and the covenant in respect of repair was “to keep in good and substantial repair the demised premises”. In the summer of 1986 a bulge appeared in the brick cladding forming part of the external walls and main structure of the building so that the exterior of the building at fifth-floor level became out of repair, due to the poor fixing of the cladding to the inner wall. The defendant put in hand works to carry out necessary remedial work, which commenced in February 1988. At the time that the defect appeared, the plaintiff was in the process of disposing of the leases and it agreed to indemnify the assignees if the defects had not been remedied by September 1987 and claimed damages for the payments it made under the indemnities. The plaintiff argued that the landlord’s obligation was broken as soon as the premises were out of repair, but the landlord contended, inter alia, that there was no breach until a reasonable time to carry out the repairs had expired such time being calculated from the date at which the defect first arose.
Aldous J held, inter alia, that the covenant was at all times to keep the premises in repair and the obligation arose when the defect became evident. Applying the decision in Luxmore v Robson (1818) 1 B&Ald 584, the purpose of the covenant was not only to set out the landlord’s obligation, but to establish where the liability resided if the premises fell into disrepair. A covenant to “keep in good repair” required that the premises should not be allowed to fall into disrepair. A landlord’s covenant to keep in repair created an obligation to keep in repair at all times under the rule in Loria v Hammer [9] 2 EGLR 249. A disrepair amounted to a breach of covenant even if it was quite fortuitous; Bishop v Consolidated Properties Ltd (1933) 102 LJKB 257. The argument that there could be no business efficacy to impose an absolute liability on the landlord as opposed to making him only liable to carry out repairs within a reasonable time could not be accepted. By ensuring the duty to repair and settling liability in the event of disrepair, such a covenant gave business efficacy to the parties’ agreement.
The Court of Appeal [5] EGCS 139 (shortly to be reported in Estates Gazette) held, inter alia, that the general rule was that a covenant to keep premises in repair obliged the covenantor to keep them in repair at all times, so that there was a breach of the obligation immediately a defect occurred. There was an exception where the obligation was the landlord’s and the defect occurred in the demised premises; in which case he was in breach of his obligation only when he had information about the existence of the defect such as would put a reasonable landlord on inquiry as to whether works of repair were needed and he had failed to carry out the necessary works with reasonable expedition thereafter. The court did not express a concluded view as to the case where a defect was caused by an occurrence wholly outside the landlord’s control. However, there seemed no reason why such a case should not be made the subject of further exception to the general rule. That point would have to be decided if and when it arose. In the event, therefore, the landlord’s appeal was dismissed.
In considering whether an arbitrator’s award should be remitted under section 22 of the Arbitration Act 1950, Jonathan Parker J had to consider the scope of the decision in Proudfoot v Hart (1890) 25 QB 42 in Land Securities plc v Westminster City Council (No 2) [5] 1 EGLR 245. In this case the demised premises, Westminster City Hall, contained an air-conditioning plant said to have a maximum life of five years. In the course of a rent review arbitration of the building, the arbitrator made a comparison with Esso House, made a finding that the plant in that building was not worn out and made a deduction in the rent of City Hall to reflect the cost and time involved in carrying out works. He further held that on a proper construction of the repairing covenants City Hall would be in a proper state of repair if instead of replacing the air-conditioning plant patch repairs, ad hoc repairs or crisis repairs were done to parts of the plant from time to time. The applicant landlords applied: (1) to have the arbitrator’s award remitted to him under section 22 of the Arbitration Act 1950 on the ground that there had been no evidence before the arbitrator that there was a difference in the specifications of Esso House and City Hall; and (2) by way of an appeal under section 1 of the Arbitration Act 1979 (leave having been granted) contending that the arbitrator had erred in law in holding that a reasonably minded tenant would have regarded City Hall in repair by the carrying out by way of patch repairs, crisis repairs or ad hoc repairs. The parties agreed that it must be assumed at review that the tenants had complied with their repairing covenants. It was the landlord’s case before the arbitrator that by the rent review date of March 25 1991 it must be assumed that the tenants had spent £1.35m on a new replacement air-conditioning plant to satisfy the repairing covenant. The arbitrator rejected that argument and deducted £200,000 from the yearly rent to reflect the actual state of repair which he found complied with the repairing covenant. The test in Proudfoot v Hart is such repair as having regard to the age, character and locality of the house that would make it reasonably fit for the occupation of a tenant of the class who would be likely to take it. Counsel for Westminster submitted, inter alia, that the test in Proudfoot v Hart does not apply to functional items in precisely the same way as it applies to decorative items and, second, that in making his award the arbitrator in fact applied the correct test or, alternatively, there was no basis on the face of the award for inferring that he did not do so.
On these submissions Jonathan Parker J held that it was clear that the question before the arbitrator was whether the tenant’s repairing obligations obliged him to replace the plant before the rent review date. Further, it was common ground that W’s repairing obligations would only have so obliged it (ie they would only have been obliged to carry out works of replacement) if there was no other lesser way of complying with those obligations short of replacement. In any event, the arbitrator had concluded that the air-conditioning was not deemed to have been replaced. Jonathan Parker J concluded on this point that the arbitrator was saying that W was not obliged by the repairing covenant to carry out the works of replacement and acknowledging that there was, in fact, another way by which W could comply with its repairing obligations short of replacement. Finally, he rejected the submission that the test laid down in Proudfoot v Hart is not applicable to functional items as it is applicable to decorative items. On the general remission points he concluded, inter alia, that the tenants’ application to strike out would be dismissed. The authorities clearly establish that the discretion to remit under section 22 of the Arbitration Act 1950 is available where there has been a breach of the rules of natural justice, notwithstanding that the breach may have led the arbitrator to make an error of law in the shape of a finding of fact where there is no sufficient evidence to support it. However, the application to remit was allowed. The issue as to the physical state of the services at Esso House was a highly material matter. The arbitrator was in breach of the rules of natural justice in failing to allow the landlords an opportunity to adduce evidence on that matter.
The scope of the covenant to repair was considered by Chadwick J in Secretary of State for the Environment v Euston Centre Investments Ltd (No 2) [4] EGCS 167. In this case the tenant, the Secretary of State for the Environment, held a lease on Euston Tower, Euston Road, London NW1, for a term of 49 years from March 25 1970. The lease provided for a seven-year rent-review period at an initial rent of £1,729,200 pa and from March 25 1984 at a rent of £3,710,000 pa payable quarterly in arrears. The reversion immediately expectant upon the determination of the term was vested in ECI Ltd. The parties failed to agree the full yearly market rent as at March 25 1991 (“the review date”), under the terms of the lease and an arbitrator was appointed.
Expert valuers had the task of quantifying the effect on the rental value of the cost of removing asbestos from the premises. The tenant had been aware of asbestos in the building since 1984. The experts agreed that if it had been decided to remove part of the asbestos in 1984 they would have recommended removal of all other asbestos at the same time. On the evidence, the arbitrator concluded that all asbestos should have been removed prior to the review date, so that no change in his valuation was warranted to take account of asbestos removal thereafter. The tenant appealed and Chadwick J held, inter alia, that in determining the fair yearly market rent for the purpose of successive reviews provided for in the lease, there should be disregarded any diminishing effect on such rent of the tenant’s failure to repair the demised premises in breach of its obligations, as was the case in Harmsworth Pension Funds Trustees Ltd v Charringtons Industrial Holdings Ltd [5] 1 EGLR 91. Following the decisions in Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1979] 1 EGLR 54 and Quick v Taff-Ely Borough Council [1985] 2 EGLR 50, in a case where the tenant’s obligation under the lease was merely to keep the structure and exterior of the house in good and substantial repair, the covenant would only come into operation where there was damage which required to be made good. If the damage was caused by an inherent unsuspected defect it might be necessary to cure the defect and thus, to some extent, to improve without wholly renewing the property as the only practicable way of making good the damage to the subject-matter of the repairing covenant.
Further, the tenant would not be under any obligation to do any work pursuant to the covenant to repair unless the demised premises were at present out of repair. Following the decision in Post Office v Aquarius Properties Ltd [7] 1 EGLR 40 a state of disrepair connoted a deterioration from some previous physical condition and there was no reason why that test should not apply where there was an inherent defect. It was not sufficient that it would have been convenient to undertake the repairs along with other works of repair before the review date. The test was whether the works were necessary as the only practicable way of making good the subject-matter of the repairing covenant. The arbitrator had not applied the correct test and the award would be remitted for reconsideration.
In Credit Suisse v Beegas Nominees Ltd [4] 1 EGLR 76 an agreement of December 1977 between D (a developer) and the trustee for the defendant landlord provided for D to erect a building consisting mainly of offices which was erected and clad in aluminium panels by G (a subcontractor). The windows consisted of double-glazed units inserted into the panels. D had been granted a headlease of the building and had successfully negotiated with R to take up possession under an agreement to take an underlease in July 1982. In July 1982 D sold the underlease to the trustee and on the same day the underlease was granted to R for a term of 25 years from July 25 1983. On June 26 1985 the plaintiff tenant took an assignment of the underlease and at all material times held the term directly from the defendant landlord. Under the terms of the underlease the landlord covenanted by clause 5(c), subject to payment of a service charge representing 75% of the costs, “to maintain repair amend renew . . . and otherwise keep in good and tenantable condition . . . the structure . . . roof . . . and walls . . .”. From October 1982 water leaked through the panels into the building and both D and G were informed and by reason of the failure of D or G to cure the cause of those leaks no final certificate was issued in respect of the 1977 agreement. Water continued to penetrate the panels and in January 1988 the plaintiff resolved to move its West End office elsewhere. In January 1989 the rent was agreed at review at £365,000 (on the basis of £45 per sq ft (£484 per m2). Thereafter, the plaintiff sought to market the underlease, but because of the leaking panels, one prospective assignee withdrew and no further prospective assignee could be found. Meanwhile, in proceedings by the landlord against D and G, G consented to a Tomlin order by which, in the events which happened, it agreed to pay the defendant £2.3m as compensation for the failed cladding. The tenant brought the present proceedings against the landlord, claiming damages for breach of clause 5(c). At the end of the trial, during closing speeches, the landlord applied to amend its pleading to enlarge its claim to seek recovery of the appropriate proportion of the costs of replacing the cladding under the service charge provisions of the underlease.
Lindsay J held, inter alia, that in order to put and keep the premises in the specified condition of good and tenantable repair, the work required may not be a repair strictly so called. In such cases the required condition is not ascertained by reference to the state of the actual building at the date of the demise, but by the requirements as to condition of reasonably minded tenants of the class likely to take the premises at that date. In this case that ruling meant such condition that the building would be substantially watertight. The landlord was in breach of clause 5(c). The replacement of the cladding was within clause 5(c) as it was not a substantial rebuilding and the cause of the water leakage was irrelevant. Having regard to the obligation to “repair, amend and renew” within clause 5(c) the evidence showed that the water leaks had become worse owing to the movement of the panels and the failure of the seals at their joints so that there was a state of disrepair. Although the replacement of the cladding was too extensive to amount to a “repair” it fell within the obligation to amend.
Finally, damages would be recoverable as follows, namely (a) general damages for inconvenience suffered by staff and customers £40,000; (b) loss of premium expected on sale of underlease and abortive costs in attempts to dispose of the same £360,173; (c) rent, insurance and service charges payable after the date when the underlease would have been disposed to trial of £1,642m; (d) continuing liability to pay rent to the term date of 2008 in the sum of £2,298m after deducting the landlord’s counterclaim for arrears of rent.
Standard of repair
In another case involving a rent review a dispute, Walker J considered the question of the standard of repair in Ladbroke Hotels Ltd v Sandhu [5] 39 EG 152. In this case by a lease dated September 1970 the appellant tenant held a 99-year term of hotel premises subject to provisions for rent review. It was common ground that at review, it was to be assumed that the tenant had complied, inter alia, with their covenant to repair up to and including the rent review date. In the course of the rent review for June 24 1991, evidence was given that one of the buildings which had been badly constructed, namely a tower, required extensive works estimated to cost £500,000 to adequately remedy serious defects (“Pyle 1 works”). Evidence was also given of an alternative schedule of repairs, estimated to cost £60,000, which was a reasonable one to take on the assumption that the tower had a commercial life of 15 years (“Pyle 2 works”). In his award, the arbitrator determined that it was not open to the tenant to limit remedial repairs to the Pyle 2 works and that it must be assumed for the purposes of review that the tenant’s repairing covenant obliged the tenant to carry out the Pyle 2 works.
The tenant appealed the arbitrator’s award contending that the arbitrator had erred in disregarding the fact that a building may have a commercial life different from its structural life. Walker J held that there was not support in the decided authorities for the “commercial life” concept in construing, and therefore limiting, a tenant’s repairing obligations. The concession on behalf of the tenant, that no account was to be taken of the effect of the Leasehold Property (Repairs) Act 1938, was plainly right. The decision of the Court of Appeal in Anstruther-Gough-Calthorpe v McOscar [4] 1 KB 716 firmly established the general proposition that the standard of repair required by a repairing covenant is to be determined by the parties’ expectation at the time the lease is granted: and to rely on a diminished expectation of commercial life occurring in the course of the term runs counter to that general proposition. The arbitrator was entitled to decline to take account of the fact that the tower was very badly built because this fact was unknown to the parties’ predecessors when the lease was granted in 1970.
Damages for disrepair
The proper measure of damages was one of several interesting issues considered by Judge Bowsher QC (Official Referees’ Business) in Shortlands Investments Ltd v Cargill plc [5] 1 EGLR 51, whereby an underlease dated September 11 1981 the plaintiffs held a term for 99 years (less 10 days) from June 24 1981 of 150,000 sq ft (13,935m2) of office premises the rent for which was agreed at £3,396,000 in respect of the September 1991 rent review. By a subunderlease dated January 31 1985 the defendants held a term of parts of the building giving up possession of most parts of their demise upon the exercise of a break clause on September 29 1991. By the subunderlease the defendants covenanted to keep the interior of the demised premises in a good and tenantable repair and condition and to yield up in such repair and decorative conditions in accordance with the covenants. Three of the floors of the premises were eventually let to W Ltd in October 1992 to whom the plaintiffs paid £690,000 , being an estimate of the sum required to bring the premises up to the normally accepted letting condition. The plaintiffs claimed damages from the defendants based on a terminal schedule of dilapidations contending that the cost of carrying out the disputed repairs was the proper measure of damages. Because the plaintiffs’ had not carried out any repairs, the defendants submitted that the plaintiffs had not suffered any loss and that the cost of repairs was not the appropriate measure as the rule in Joyner v Weeks [1918] 2 QB 31 should not be applied in the light of dicta in Tito v Waddell (No 2) [1977] Ch 106. Further, that section 18(1) of the Landlord and Tenant Act 1927 limited the diminution in value of the reversionary interest because in current market conditions incoming tenants required specification changes, which would render unnecessary certain repairs.
Judge Bowsher QC held, inter alia, that at common law the measure of damages are the diminution in the value of the landlords’ reversionary interest and events after the determination of the lease do not affect the matter except that they may be evidence of what was in prospect at the time the lease came to an end. Having regard to the necessity to pay the sum to W Ltd the plaintiffs suffered damages notwithstanding the negative value of their reversionary interest. In the present case, the cost of repairs was the best possible guide in the assessment of damages. As the defendants were only liable for some of the items of disrepair the only way of assessing that part of the difference in the value of reversion was by examining the cost of repairs and then applying the limit imposed by section 18(1) of the Landlord and Tenant Act 1927. In determing the diminution in value for the purposes of the first limb of section 18(1) the test to apply was that derived from Cunliffe v Goodman [0] 2 KB 237, namely viewing the question as at the date when the covenant ought to have been performed, was it inevitable, either because of a settled intention of the landlords, or for some other extraneous reason that the premises would be pulled down or altered in such a way as to cause diminution of the value of the reversion. On the evidence, what was bound to happen and what was reasonably foreseeable was that the incoming tenant would use the disrepair as a bargaining point so that the value of the plaintiffs’ reversion was diminished. In considering the application of section 18(1) to the gross costs of repairs and loss of rent, the plaintiffs’ reversionary interest always would have had a negative value and one had to assume a transaction under which something was paid to the transferee of the interest. The diminution in the reversionary interest was the difference between the amount which would have been paid by the willing transferor of that interest to the willing transferee if the premises were delivered up in a condition in conformity with the covenants and the amount paid out by the willing transferor to the willing transferee if the premises were delivered up in their actual condition. Because the common claim was greater than the diminution in value so assessed, judgment would be for the latter. Damages of £294,934 were awarded to the plaintiff.
In Scottish & Mutual Assurance v British Telecommunications (unreported March 18 1994) (Official Referees’ Business) the demised premises was a 18,680 sq ft (173,5372m2) office block in Ipswich owned by the plaintiffs (SMA). By a lease dated July 15 1971 SMA’s predecessor let the premises to the Post Office Corporation for a term of 21 years who undertook to maintain and paint the premises and yield them up at the expiration of the term in good and substantial repair and condition. The tenant also covenanted, inter alia, to pay all expenses incurred incidental to the preparation and service of a section 146 notice and to pay all expenses of, and incidental to, the service of notices and schedules relating to want of repair to the demised premises whether served during or after the expitation of the lease. By a licence dated April 6 1984 SMA granted approval to carry out certain works at the premises subject to conditions, one of which was that BT “should reinstate the property to its original design and layout at the expiry of the Lease at its own cost should the Lessor reasonably so require”. On the expiration of BT’s lease SMA claimed for: (i) damages for BT’s failure to keep and yield up the premises in good repair; (ii)the costs incurred by SMA in connection with the preparation and service of notice and schedules under section 146; and (iii)for interest. The second claim was settled. BT’s defence relied upon section 18 of the Landlord and Tenant Act 1927 and that SMA were disentitled from relying upon BT’s failure to reinstate any of the works which had been the subject of the licence since notice to reinstate had not been duly given in accordance with the terms of that licence. The court held, inter alia, that where loss of rent during the period required to carry out repairs is to figure as a head of damage it is an essential prerequisite that it should be demonstrated on a balance of probabilities that the carrying out of those repairs after the end of the term has prevented or will prevent, the letting of the premises for that period. On the facts, there was no evidence whatsoever that SMA had lost, or was likely to lose, rent while the premises were being repaired. In those circumstances, the necessary factual basis for an award of damages to SMA on account of loss of rent did not exist.
In cases in which repair of the premises is shown to have been carried out, or established on the basis of the balance of probabilities to be likely, the cost of repair will be at least a prima facie guide to the diminution in value of the reversion. Where repairs have neither been carried out nor established to be likely to be carried out, the cost of repair may well be of little value as a guide to the diminution in value of the reversion and will be of no value if it is shown that the premises were at, or shortly after, the termination of the tenancy either to be pulled down or subjected to such structural alteration as would render the repairs covered by the covenant valueless: see section 18(1) of the Landlord and Tenant Act 1927. On the facts, this was a case in which it was not only appropriate, but necessary, to proceed on the basis that the diminution in the value of the reversion in the premises is to be measured by reference to the cost of repair. The section 146 notice did contain a requirement for the reinstatement of the premises to their condition before the carrying out of the licence works. VAT is allowable and should be allowed if the plaintiff is not registered for VAT and, if on the facts, it is probable and not unreasonable within the range of possible future developments that the works necessary to restore the value of the reversion will be carried out by him.
In Joyce v Liverpool City Council [5] EGCS 77 J was a weekly tenant of 58 Grovehurst Avenue, Liverpool 14. On May 13 1994 she issued proceedings against her landlord, the council, alleging that the council had failed to comply with its repairing obligations implied in the lease, despite notice of the defects. She claimed damages not exceeding £5,000. Her claim included an application for specific performance. W lived at 14 Eldersfield Road, Liverpool. On June 23 1994 he issued proceedings in the county court against the council, as his landlord, alleging that the council had failed to comply with its implied repairing obligations under section 11 of the Landlord and Tenant Act 1985. He claimed specific performance of the council’s repairing covenant and damages or damages in lieu limited in total to £2,000. A question arose whether, in proceedings by a domestic tenant alleging a breach by his landlord of a repairing covenant, a district judge, sitting as a small claims arbitrator, had power to grant relief by way of specific performance or injunction.
In each case it was held that district judges exercising their small claims arbitration jurisdiction could order specific performance and grant injunctions and that claims for such relief did not preclude the exercise of that jurisdiction. The Court of Appeal held, inter alia, that a circuit judge, acting within his jurisdiction and subject to express exceptions, might exercise all the powers of a High Court judge.
These included the power to grant interlocutory and final injunctions whether or not there was any claim to money or any other relief within the jurisdiction of the county court. That power covered proceedings automatically referred for arbitration by the district judge since those were undoubtedly proceedings which the district judge had power to hear and determine. Specific performance was, by its nature, a remedy ordinarily granted as a final and not an interlocutory order. Subject to that, there was no basis for drawing a distinction between injunctions and specific performance. Where, as here, the plaintiff’s claim was by a tenant against a landlord for breach of a repairing obligation, section 17 of the 1985 Act envisaged that the court dealing with that claim would have jurisdiction to grant specific performance.
Despite the safeguards in place cases would arise in which, despite the smallness of the sums involved, justice could not be done to an unrepresented claimant under the arbitration procedure. Trial might then be ordered. However, for the great mass of small and relatively simple claims the arbitration procedure had to be the norm. Section 11 claims could not form any general exception. Reasonable housing conditions were a condition of ordinary human happiness. But the evidence suggested that court trial of minor section 11 claims yielded a benefit to the legal profession out of all proportion to that gained by the tenant and diverted the minds of local authority landlords from purposes more germain to their public function.
Fixtures and fittings
In some dilapidations disputes the question of whether a particular item is a fixture, fitting or a chattel can be of some significance. In a vendor-purchaser dispute Jacob J considered some points which are useful in the landlord and tenant context in TSB Bank plc v Botham [5] EGCS 3. In this case the disputed items included fitted carpets, light fittings, gas fires, curtains and blinds, towel rails, soap dishes, tap fittings and shower head, mirrors attached to walls of a fitted bathroom, kitchen units, sink, “white goods” (including oven, dish washer, extractor fan, hob, freezer). Jacob J held that, whether a chattel had been so affixed to land or buildings as to become a fixture depended on the object and purpose of the annexation and if the chattel could be removed without doing irreparable damage to the premises. Neither the method nor the degree of annexation, nor the quantum of damage that would be done to the chattel or to the premises by the removal, affected the question save in so far as they threw a light upon the object and purpose of the annexation. If the object and purpose was for the permanent and substantial improvement of the land or building, the article would be deemed to be a fixture, but if it was attached to the premises merely for a temporary purpose or merely for the complete enjoyment and use of it as a chattel, then it would not lose its chattel character and it did not become part of the reality: Leigh v Taylor [1902] AC 157. The question of whether an item was intended to be enjoyed as a chattel was an objective test and one had to have regard to all the circumstances. Bearing those considerations in mind, once fitted carpets were put in the object was that they should stay until they were worn out. Although such carpets were removable they were clearly fixtures following the decision in Young v Dalgety plc [1987] 1 EGLR 116. The light fittings were not merely lampshades, but attached to the property and became part of it, as fixtures. The gas fires were mock coal gas fires fixed via pipes. They were of an appropriate size for the aperture of the fireplaces concerned. They were there to be enjoyed as fires in the rooms and not as chattels in themselves. On balance they were fixtures.
As regards the curtains and blinds it was accepted that the pelmets on the curtains were fixtures. The matching curtains and blinds were removable but, applying the same test in relation to the carpets, these particular curtains were specifically designed for the windows in question and should be regarded as fixtures. The towel rails, soap fittings, tap fittings and shower heads were all clearly fixtures and it had been conceded that the mirrors attached to the walls of the fitted bathroom were fixtures. Finally, the kitchen units and sink were manifestly fixtures. As regards the “white goods”, these were expensive items fixed into standard size holes and were removable. However, they were part of the overall fitted kitchen. They were all physically fixed, plumbed or wired in and in most cases aligned with/abutted to and not too easily removed from the fitted kitchen as a whole. In all the circumstances they too should be regarded as fixtures.
Scope of the demised premises
In Twyman v Charrington [4] 1 EGLR 243 the Court of Appeal considered, inter alia, whether the external walls were included in the demise. In this case, the plaintiff landlord occupied the first and second floors of a dwelling-house; the defendant occupied the ground floor and basement by way of an underlease. By clause 3(4) of the underlease the defendant covenanted: “(4) to repair maintain cleanse and keep in good and substantial repair and to replace or rebuild where necessary the demised premises and all additions and improvements thereto and all Landlord’s fixtures and fittings thereunto belonging and all appurtenances forming part of the demised premises (damage by any insured risk only excepted) and also when and so often as any Landlord’s fixtures belonging to the demised premises shall so require to substitute other fixtures of a similar description quality and value to the satisfaction of the Landlord.”
By clause 3(7) the defendant covenanted further as follows: “(7) to contribute and pay a rateable or due proportion of the costs and expenses (to be determined by the Landlord’s Surveyor) expended by the Landlord or the Superior Landlord in making laying repairing maintaining renewing rebuilding and cleansing all ways roads pavements sewers drains pipes watercourses mutual or party walls and fences mutual or party structures and other items which may belong to or be used for the demised premises in common with other premises near or adjoining thereto and to keep the Landlord and the Superior Landlord indemnified against such proportion of such costs and expenses.”
The plaintiff landlord incurred expenditure in repairing the roof and upon its non-payment by the defendant obtained an order for possession in the court below following forfeiture proceedings. The defendant appealed contending that the roof did not fall within the terms of clause 3(7). The Court of Appeal held, inter alia, that having regard to the terms of the underlease as a whole the external walls were not included in the demise.
The general basis of the underlease and clause 3(7) evidenced an intent that the tenant should be responsible for “internal repairs” of his demised premises, that he should have no obligation with regard to the internal parts of the premises occupied by the landlord and that the expenses of repairing the external parts were to be shared in common with the landlord. The roof could be regarded as a “mutual structure” and the same approach could be adopted in the case of external walls. Alternatively, the roof fell within the definition of “other item”. The fact that the roof was not physically adjacent to the demised premises did not prevent it being a “mutual structure”.
This article updates the topic from the matters discussed at [3] 49 EG 106.
Del Williams BA MDC LLB MRTPI ACIArb is professor of estate management at the School of the Built Environment, Liverpool John Moores University.
