Landlord and tenant — Repairs — Breach of covenant — Lease of luxury residential property — Landlords’ repairing covenants — Tenant withholding rent and claiming damages for breaches of covenant — Whether higher standard of service and repair to be expected owing to nature of property and level of rent charged — Whether landlords obliged to employ professional managing agent — Whether reasonable time for carrying out repairs to be judged stringently in case of high-class property at high rent
In October 2003, the claimant company took a lease of a luxury house in Buckinghamshire on behalf of one if its directors and his wife (Mr and Mrs L). The high-specification property, which had recently been constructed for the defendant landlords on a 4.25-acre site, comprised more than 10,000 sq ft and had six bedroom suites, an outdoor pool, tennis courts, an indoor pool, gymnasium, a home cinema, staff accommodation and outbuildings. The lease was for a term of three years at an initial rent of £240,000, payable quarterly in advance, with provision for annual increases. The letting included landlords’ contents such as furniture, fittings, entertainment systems and works of art. A security deposit of £40,000 was paid. There were various landlords’ covenants with regard to the repair and maintenance of the property, including its structure and exterior, garden and grounds, swimming pools, burglar alarm and mechanical and electrical installations. Works to remedy defects continued until the day before Mr and Mrs L moved in.
From the start of the tenancy, Mr and Mrs L complained of extensive problems with the property. These continued throughout the term and the claimant made deductions from the rent in respect of them. The defendants arranged for works to be carried out in connection with some of the defects. The claimant failed to pay the final quarter’s rent such that the amount of unpaid rent exceeded the amount of the security deposit. At the end of the tenancy, Mr and Mrs L moved out. The claimant brought proceedings against the defendants for damages of up to £187,296 for breach of the landlords’ repairing covenant and for the return of its security deposit. The defendants counter-claimed for the unpaid rent and for breaches of the tenant’s covenant to use the property in a tenant-like manner. A central issue concerned the extent of the obligations imposed by the landlords’ covenant. The claimant contended that: (i) the high level of rent entitled Mr and Mrs L to expect a high standard of service and repair, and for the property to be managed by a professional managing agent; and (ii) a “reasonable time” for remedying defects fell to be judged solely on an objective view of how long it was reasonable for the tenant to have to suffer the fault, which, in the context of a high-class property with a high rent, should be judged stringently.
Held: The claim and counter-claim were allowed in part. (1) The high rent charged by the defendants arose from the size, quality, location and features of the property and did not itself imply a “room service” standard of attention from the landlords analagous with a five-star hotel apartment. In a residential letting, the “household” is the tenant’s; the landlord’s obligation is merely to respond reasonably and to carry out the covenanted works of repair and maintenance to the property when things require attention. The level of rent makes no difference to that fundamental distinction. A landlord’s repair, maintenance and other such obligations derive from the terms of the lease or from statute, and, although the terms of the lease fall to be construed in their factual context, that assessment is an objective not a subjective one. In the absence of any express provision in the agreement, it is for the landlord to decide how it achieves compliance with its covenants; there was no obligation for the defendants to employ a professional managing agent. (2) A landlord’s covenant to repair the demised property or “keep” in repair is a covenant to repair on actual notice only, and no breach of covenant occurs until a reasonable time has expired thereafter. Where a defect exists at the start of the term, the landlord is not in breach from the outset, but only once it has actual notice of the defect. If the landlord is on such notice at the start of the term, it will be in breach of covenant only after a reasonable time for remedying the disrepair has elapsed after the commencement of the term, or after the date of the agreement if earlier. (3) What amounts to a “reasonable time” is not judged by the expectations of the tenant. A working test of whether a repair has been carried out within a reasonable time is to ask whether an owner-occupier, aiming to have the relevant work carried out as quickly as reasonably practicable after discovering it was needed, could or would have achieved that materially more quickly than in fact happened. Further, where a landlord is let down by a contractor, it is out of the landlord’s control and does not make the time taken unreasonable; a landlord is not the guarantor of a contractor’s performance where that is outside its control or anticipation. (4) A tenant’s duty to use the property in a tenant-like manner may require it to carry out minor running repairs or maintenance, namely the “little jobs” that a reasonable occupier would expect to undertake with regard to the type of property in question. (5) The defendants were in breach of covenant to a limited extent regarding the time taken to repair: the exterior lighting; the thermostatic control on the shower; the CCTV cameras; the garden irrigation systems; and the kitchen television set. They had also failed to keep the gardens sufficiently neat and tidy. There was no breach in respect of any other item claimed. Although the claimant was not the occupier and, accordingly, could not recover general damages directly for discomfort and inconvenience, it was appropriate to award damages representing the value of an amenity that it did not receive and was therefore unable to pass on to its licensee. The appropriate overall award was £3,250. The defendants were entitled to recover £42,773.61, being the amount of unpaid rent after applying the security deposit, plus £5,192.11 damages for various breaches of the tenant’s covenants, less the £3,250 owed by them to the claimant. |page:126|
The following cases are referred to in this report.
British Telecommunications plc v Sun Life Assurance Society plc [1996] Ch 69; [1995] 3 WLR 622; [1995] 4 All ER 44; (1997) 73 P&CR 475; [1995] 2 EGLR 44; [1995] 45 EG 133, CA
Earle v Charalambous [2006] EWCA Civ 1090; [2007] HLR 8
Electricity Supply Nominees Ltd v National Magazine Co Ltd [1999] 1 EGLR 130, QB
Fitzroy House Epworth Street (No1) Ltd v The Financial Times Ltd [2006] EWCA Civ 329; [2006] 1 WLR 2207; [2006] 2 All ER 776; [2006] 2 P&CR 21; [2006] 2 EGLR 13; [2006] 19 EG 174
Larksworth Investments Ltd v Temple House Ltd (No 2) [1999] BLR 297, CA
O’Connor v Old Etonian Housing Association Ltd [2002] EWCA Civ 150; [2002] Ch 295; [2002] 2 WLR 1133; [2002] 2 All ER 1015; [2002] 1 EGLR 38; [2002] 14 EG 127; [2002] HLR 37
Petersson v Pitt Place (Epsom) Ltd [2001] EWCA Civ 86; (2001) 82 P&CR 21; [2001] L&TR 21
Ultraworth Ltd v General Accident Fire & Life Assurance Corporation plc [2000] 2 EGLR 115, TCC
Uniproducts (Manchester) Ltd v Rose Furnishers Ltd [1956] 1 WLR 45; [1956] 1 All ER 146, Ass
Wallace v Manchester City Council [1998] 3 EGLR 38; [1998] 41 EG 223; (1998) 30 HLR 1111, CA
Warren v Keen [1954] 1 QB 15; [1953] 3 WLR 702; [1953] 2 All ER 1118, CA
This was the hearing of a claim by the claimant, Langham Estate Management Ltd, as tenant, against the defendants, Warren and Tessa Hardy, as landlords, for damages for breach of covenant and other relief in connection with a letting of residential property; and a counter-claim by the defendants for unpaid rent and breaches of tenant’s covenants.
David Holland (instructed by Stephenson Harwood) appeared for the claimant; Mark Warwick (instructed by Howard Kennedy) represented the defendants.
Giving judgment, HH Judge Hazel Marshall QC said:
[1] This is a claim by a tenant, brought after the end of the tenancy, for damages for the alleged breach of the landlords’ repairing (and similar) covenants in a lease of residential property and the return of its security deposit. There is a Part 20 counter-claim by the landlords for unpaid rent and alleged breaches of the tenant’s covenants, primarily the covenant to use the property in a tenant-like manner.
Background and facts
[2] Mr Warren Hardy, the first defendant, is a successful businessman. In the late 1990s, he and his wife decided to build their “dream home”. They bought an old house with 4.25 acres of land at Burnham Beeches, in Buckinghamshire, for its site, with a view to its demolition and replacement with a fine modern country house. It was called Juniper Hill.
[3] The renowned architect Quinlan Terry was engaged. The house was to be a massive 10,000 sq ft gross external area with six bedroom suites. It was of a grand but classic design, in brick and stucco, with a pitched slate roof, and bow-headed windows around the ground floor. It had a double-storey main central section with a double height ionic pillared portico and pediment over the front entrance, and a similar balconied section at the rear, where two single-storey wings enclosed the paved sun-terrace. The sweeping cobbled entrance drive skirted a large circular front lawn with an ornamental pool and fountain. The facilities included an outdoor swimming pool, a tennis court, an indoor swimming pool, a gymnasium complex, a home cinema, staff accommodation and various outbuildings. Quinlan Terry was to supervise the building works, to be undertaken by Denne & Co Ltd.
[4] Construction began in 2000, took more than 18 months and eventually cost approximately £7m, of which around £330,000 was spent on sophisticated home-entertainment systems. The project was directed by Mrs Hardy rather than Mr Hardy. As unfortunately often happens, there were problems with the quality of workmanship, in particular the finishes. She told me of having to insist that many items were redone, sometimes more than once.
[5] Mr Hardy told me that he visited the site only twice before the house was built, once when it was purchased and once at the topping-out stage. He first saw the new house at practical completion in March 2002, when the family moved in. He was not happy at the standard of what he then found. He had seen the building costs run away over their initial substantial budget, and was less than impressed at some of the final results. Mrs Hardy, no doubt rather more resigned after the pressures of dealing day-to-day with the project, was more ready to accept the situation and move on, but Mr Hardy was not. I inferred (and he confirmed) that this had caused some friction between them. Although he was loyally supported by his wife, it was his decision and energy to take a stand and to dispute both the architect’s fees and the builder’s charges. The former became the subject of litigation that was eventually settled. The latter became the subject of, in the end, four adjudications.
[6] These disputes were in progress during the first year of the Hardys’ occupation. In June 2003, they appointed a new mechanical and electrical services expert — a Mr Raymond Wood, of Norwood Ltd — to represent their interests. A great deal of work with which the Hardys were dissatisfied was put in hand in June 2003, when, I am told, the house was sheeted up and they moved out, at least for a time. Work continued, with the defects list being updated in July, August and September 2003.
[7] In mid-2003, however, Mr Hardy moved his business base to Monaco. Since the family was to join him, the question was whether to sell Juniper Hill or to rent it out. They were inclining to the former but, at this point, a Mr and Mrs Li emerged as prospective tenants.
[8] Mr Sammy Li (Mr Li), is a director of the claimant, Langham Estate Management Ltd (LEM). He was looking for a country house to rent for himself and his wife, Florence, when staying in the UK. The Lis are a wealthy family headed by Mr Sam Li senior, who effectively owns two property investment companies, Mount Cook Land Ltd and Mount Eden Land Ltd. Together, these companies own a large commercial property portfolio in the West End of London, which is managed by LEM. The Li family lives mainly in Hong Kong and Tokyo, but Mr Li junior was then visiting the UK for up to three months in the year, and his wife apparently for longer. Although they had a residence in central London, they also wanted a country residence for (it is said) entertaining business clients and also, no doubt, for recreation. There was also Mr Li’s large collection of classic cars to be housed. The lease of their residence at Ascot was due to come to an end. The letting particulars for Juniper Hill came to their attention and they liked it. I am told that they liked the fact that it was newly built and of apparently high quality. They liked its “hi-tech” installations. They also valued its security arrangements because, I am told, they have a great fear of possible kidnap attempts. Negotiations took place directly between Mr Li and Mr Hardy, and general terms were agreed. A draft of the proposed lease was provided by Mrs Li, who is a qualified English solicitor, although she does not appear ever to have practised.
[9] The Lis had a survey of the property, but their surveyor made it clear that the electrical and mechanical systems were so far state of the art as to be beyond the scope of his survey. The Lis appear to have baulked at the suggested fee for a specialist survey, and none apparently took place.
[10] The Lis then arranged for LEM to rent Juniper Hill for them. On 9 October 2003, LEM resolved that it was in the company’s commercial interests to enter into the lease for the occupation of Mr and Mrs Li. For the Hardys, the legal formalities were dealt with by solicitors and, on 20 October 2003, an agreement for a lease for a term of three years from 12 November 2003 was signed, with a recognition that it might be extended for a further one or two years on similar terms by mutual consent.
[11] The other material terms of the lease were as follows. The rent was £240,000 pa in the first year, with provision for an annual increase (which turned out to be £249,600 and £259,584 respectively). The rent was payable in advance by quarterly instalments commencing on 12 November 2003. There was a security deposit of £40,000. The property |page:127| was let together with the landlords’ contents, which included furniture, fittings, entertainment systems and works of art.
[12] At clause 2, the tenant gave the following material covenants. I quote these where necessary, but otherwise summarise their material effect:
(i) to pay the quarterly rent instalments “without any deduction or abatement whatsoever”;
(iii) to use the property in a tenant-like manner;
(iv) to keep the interior of the property and all fixtures and fittings clean and in as good a condition and state of repair as at the start of the letting, fair wear and tear and accidental damage by landlords’ insured risks only excepted;
(v) to “replace all electric light bulbs and fluorescent tubes both internal and external as and when necessary”;
(vi) to preserve the landlords’ contents from destruction or damage and to repair or replace as necessary with articles of similar value (fair wear and tear and so on excepted as above) or, if impracticable, to reimburse the landlords with the value of such items;
(vii) duly to deliver up the property and contents at the determination of the tenancy in the appropriate condition;
(viii) not to obstruct any gutters, drains, sanitary or water or waste apparatus belonging to the property;
(ix) to leave all landlords’ contents in the same rooms at the end of the tenancy as they were in at the beginning;
(x) to pay for the cleaning of curtains and carpets at the end of the tenancy (if new or cleaned at the beginning);
(xi) to permit the landlords or their agent (defined as Norwood Ltd) “with or without workmen and others at all reasonable times during the tenancy on giving 7 days written notice (except in case of emergency)” to have access to the property for the purpose of carrying out exterior painting or repairs or any other structural or proper repairs or maintenance of any fittings or equipment;
(xiv) to permit the landlords or their agent on similar notice to enter the property no more than once in three months during the daytime for the purpose of inspecting its state and condition;
(xvi) to give immediate written notice to the agent of any defect in the property;
(xix) to use the property only as a private residence (in the occupation of Mr Sam Li and his immediate family and staff);
(xxi) not to change or install any locks without the prior written consent of the landlords except for immediate security of the property (with copies of keys then delivered to the agent);
(xxvi) to clean all the windows at the end of the tenancy;
(xxviii) not to permit any waste soil or destruction to the property;
(xxxi) not to do, permit or suffer anything to cause damage to or deterioration of any external or internal surfaces or coverings or decoration of the property (fair wear and tear excepted);
(xxxiii) promptly to notify the landlords or the agent of any repairs required to the property or the landlords’ contents being the landlords’ responsibility, and not to instruct the tenant’s own contractor without prior written consent, provided that the tenant could instruct one of the named authorised contractors in the event of default by the landlords or an emergency.
[13] Apart from the usual covenant for quiet enjoyment, at clause 4 the landlords covenanted materially as follows:
(v) “to keep in repair and proper working order the installations contained in the Property for the supply of water gas electricity and heating and all mechanical and electrical items as are included in the contents but not further or otherwise PROVIDED THAT this Agreement shall not be construed as requiring the Landlord to carry out any works for which the tenant is liable by virtue of his duty to use the Property and the Landlord’s Contents in a tenant-like manner and PROVIDED FURTHER THAT the Tenant shall indemnify the Landlord in respect of the cost of repairs to such installations or items resulting from misuse of the same however and by whomsoever caused”;
(vi) to put and keep in repair and maintain the structure and the exterior of the property;
(viii) to pay the cost of maintenance and repair of the burglar alarm system, save where incurred by the tenant using it incorrectly;
(ix) “To maintain the garden and grounds of the Property in a neat and tidy condition keeping the grass regularly mown and the flower beds weeded and stocked and for this purpose to use all reasonable endeavours to employ a gardener to attend at the Property one day every week from 1 April to 30 September and one day every two weeks from 1 October to 31 March”;
(x) to maintain the indoor swimming pool at all times throughout the year and to maintain and keep the outdoor swimming pool open between 1 April and 30 September (but close it thereafter) and to keep them in good usable order, including any necessary treatment with chemicals.
[14] In addition, the landlords covenanted by clause 4(xiv) to (xvii) to convert the stables to provide additional garage space and to do certain other works, particularly with regard to adding light fittings to the property. They also warranted in clause 5 (among other things) that all gas appliances had been safety checked and all regulations regarding the letting had been complied with.
[15] Careful provisions were made as to an inventory (drawn up on 20 October 2003) and for a record of the condition of items at the commencement and end of the term, with the parties each to use inventory clerks: clauses 3(iv) and (6)(i). There were provisions for the resolution of any dispute and how the security deposit should be dealt with.
[16] In so far as any of the above covenants are not directly material to the matters in dispute, they give context by indicating the tenor of the regulation of this letting of an unusual and expensive high-grade residential property.
[17] In addition, the landlords were of course subject to the statutory obligations of a landlord of furnished residential property and generally as imposed by section 11 of the Landlord and Tenant Act 1985. These relate to a dwelling-house being kept reasonably fit for habitation, and various essential appliances and services being kept in proper working order. It has not been suggested that these obligations would go beyond the landlords’ express covenants (except possibly in respect of electrical services, which does not in the end turn out to be material) and it is not necessary to mention them further.
[18] However, the building dispute between the Hardys and Denne was still simmering at the time the agreement was signed, and defects and snags were still being dealt with. On 7 November 2003, schedules of mechanical and electrical (M&E) defects were produced by Norwood for the Hardys. On 10 November 2003, there was a site meeting with Norwood, the builders and others to discuss outstanding points. It is apparent that even at that time there were outstanding problems with the electrical installations, which Mr Hardy considered to be important. With the Lis being due to move in on 12 November, there was, understandably, concentrated activity by electricians, plumbers and cleaners the following day.
[19] On 11 November 2003, the “Check in” schedule of condition of the property was completed by inventory clerks for both parties and, on 12 November 2004, the Lis arrived. They brought with them a domestic staff of four Chinese ladies. Their function was to clean and cook, and only one seems to have spoken any English. Although possibly not immediately, they seem to have overflowed from the designated staff accommodation and used the swimming pool changing room in which to sleep.
[20] LEM complains that the Lis experienced “extensive” (Mrs Li’s word) problems with the property from the outset, especially with, for example, the basic requirement of the outdoor lighting of the drive and grounds, the functioning of the fountain and temperature fluctuations of the shower in the lady’s en-suite bathroom to the master bedroom. Ultimately, the proceedings that were started in February 2007 alleged 93 such problems, and that each was a breach of either clause 4(v), (vi), (viii), (ix), (x) or (xvii) above. I will refer to them in more detail later. I record here, however, that the Lis were apparently people with very high standards. Mr Richard Day, a management surveyor with LEM, who knew the Lis well from his then 10 years of employment with |page:128| the company, explained that they expected “perfection (or very close to it)”.
[21] LEM also complains generally that, for a letting at this level of rent, it was entitled to expect the property to be professionally managed, and it was not. Mrs Li described this as an expectation of management “akin to that of a 5-star hotel”, and the Lis found the standard of management inadequate and insufficiently responsive to their needs. Mr Wood, who was “the Agent” for the purposes of the agreement, was (as I find below) a practical and helpful man, but he was not a professional managing agent; he was an M&E services specialist. He and the Hardys both agree that his instructions were to “make the tenant happy”. However, this was set as a practical target, rather than by reference to legal obligation, because Mr Wood was not at that stage supplied with a copy of the tenancy agreement from which he might gauge the precise scope of the parties’ obligations. In the event, Mr Wood had only limited success in his task.
[22] LEM (or, rather, the Lis) also immediately complained that Mrs Hardy, who was still living in the area, was carrying out the everyday maintenance of the swimming pool herself. The Lis found this to be unacceptable, and regarded it as a breach of their right to quiet enjoyment. They felt that Mrs Hardy was being judgmental about how they were choosing to live in the property, for example, using the family room containing oil paintings as an enclosure for their two permitted pet dogs. They felt that Mrs Hardy had not “let go” of the house that was now theirs under the tenancy, that the Hardys simply did not understand their duties as landlords and that, consequently, much of Mrs Li’s time, and that of several LEM staff, had to be wasted in chasing them up and enlightening them. In January 2004, Mrs Hardy asked Mr Wood to manage the pools. Thereafter, she stayed away from the property.
[23] Inside a fortnight from the start of the tenancy, the Lis had deputed personnel at LEM, in particular Mr Day, to take up matters that were not to their satisfaction with Mr Wood on behalf of the Hardys. By the last week of January, the Lis had started to refuse to communicate with the Hardys at all, and LEM recorded that it would be best if communications were all in writing “for the record”.
[24] A list of some 30 “snagging” items was prepared on behalf of the Lis in January. By 6 February 2004, LEM had started corresponding entirely through the Hardys’ solicitor. LEM then concluded that its “only option”, in the light of the dissatisfaction of Mr and Mrs Li, was to withhold part of the rent due on 12 February 2004, notwithstanding the covenant that rent should be paid without deduction. It deducted £8,982.18, elaborately calculated at various daily rates with regard to various complaints about the indoor pool, the fountain, the outdoor lighting and Mrs Li’s shower.
[25] The Hardys were bewildered at the barrage of e-mails and the general attitude that they were encountering. Even Mr Wood was taken aback at the relentless flow of communications. Mr Hardy angrily suggested to Mr Day, on 24 February, that the Lis might like to negotiate leaving the property, but this suggestion was not taken up. The general pattern of complaints being made and vigorously chased up continued over the life of the tenancy, although Mr Wood said (and the documentation bears this out) that the situation did stabilise later, and complaints became fewer. The Hardys say that all the complaints that were made were dealt with properly and promptly where there was anything in them. However, they were generally of quite minor things, and many were either without foundation or quite unreasonable.
[26] The Lis had by chance discovered that the Hardys were in dispute with Quinlan Terry. In 2004, when the fourth adjudication started, they also became aware of the dispute between the Hardys and the builder because, in June 2004, an inspection was requested by the adjudicator relating to the M&E services. The Lis insisted that LEM organise a crew of surveyors, photographers and so forth to be present at this inspection in order to record in detail what took place, but without forewarning.
[27] In August 2004, Mr Day passed his functions regarding Juniper Hill to Mr Farmer at LEM, and had no more to do with the property after October 2004. He left LEM in March 2005. On the Hardys’ side, Mr Wood continued to be in charge of dealing with the tenants’ complaints and problems during the entirety of the lease.
[28] Further deductions from the rent continued to be made, particularly in the first year, (they eventually totalled £17,476.57). At a landlords’ scheduled inspection in December 2004, the Lis insisted that LEM organise another unheralded team of surveyors, consultants, cameramen and note takers to be present and to follow Mr Wood around.
[29] In February 2006, perhaps rather surprisingly, Mr Li broached the question of an extension of the letting with Mr Hardy. Mr Hardy was willing to negotiate, but, in May 2006, served a precautionary notice on LEM to vacate at the end of the term. Negotiations continued, and terms had been all but concluded in June 2006. However, LEM did not sign up and tried to make further changes while imposing a tight deadline. Negotiations ceased.
[30] In August 2006, on the instruction of Mr Li, LEM failed to pay the final quarter’s rent of £64,896. Mr Li instructed LEM to remain “forceful” on this, to reflect the unresolved dispute over abatement of rent from earlier in the tenancy. (Withholding the last quarter’s rent would, of course, mean that the rent unpaid by the tenant would now exceed the amount of the security deposit.) With confrontation obviously developing, on 6 September 2006 the Hardys’ served on LEM a statutory demand for the rent, but when this was challenged they undertook not to present a winding-up petition without notice. On 24 October 2006, LEM’s solicitor served a “Letter of Claim” on the Hardys, with the schedule of the 93 complaints that I have already mentioned.
[31] On 10 November 2006, the tenancy ended, and the Lis’ entourage departed, leaving the automatic entrance gates open. A “Check Out” report was made by the inventory clerks, with the attendance of the customary crew of other professionals on behalf of LEM: a photographer, a video camera operator, an architect and two surveyors. The report recorded 145 pages of items that were allegedly not in the same condition as initially. The uncontested evidence of Mrs Hardy is that the house was left in a dirty state and, indeed, the costs of further cleaning were conceded in the course of the trial. Mrs Hardy expressed incomprehension that people who were as assiduous as the Lis in raising small matters of complaint about others’ obligations should be so cavalier about complying with their own.
[32] Most of the Hardys’ cross-claim for damages for breach of covenant arise from the state in which the property was left. They immediately repaired some matters because they were moving back in. However, when they sold the house 11 months later, there was no request from their purchaser for any reduction in the agreed sale price on account of any remaining problems, and they have therefore not pursued these. In the end, therefore, their counter-claim was quantified at a modest £6,427.70 However, they resist LEM’s claim for damages, and they also claim the unpaid rent, totalling £40,831.50 at the end of the lease, after credit for the £40,000 security deposit.
Proceedings, trial and witnesses
[33] LEM commenced proceedings for damages on 21 February 2007 in the High Court. It did not initially quantify its claim, doing so only five months later, in July 2007. It then claimed “up to” £187,296, calculated as being 25% of the rent payable during the entire three-year term. The action was transferred to this court and there were interlocutory procedural skirmishes that I do not need to recite. By the time the matter came on for trial for five days before me, the issues had been narrowed a little, and the complaints tabulated in a manageable Scott Schedule form. However, the documents ran to 13 agreed lever arch files, and a further three files of documents that the claimant had not included were produced by the defendants. Thankfully, not all the documents were referred to. Mr David Holland, of counsel, represented LEM, and Mr Mark Warwick, of counsel, appeared for the Hardys.
[34] On behalf of LEM, the only witness to give oral evidence was Mr Day. He had been employed by LEM from 1994-2005, but he agreed that his involvement with the property had in fact been for a maximum of only nine months, from November/December 2003 |page:129| until August 2004, and really only up to the June. He had emigrated to Canada after leaving the company. LEM had approached him to give evidence in mid-2007, and he had then met with its solicitor when visiting London. His witness statement had been organised in February 2008, and LEM had paid all his expenses from Canada to attend the entire trial. However, Mr Day’s knowledge of pertinent events was almost entirely confined to reports from others, in particular Mrs Li. He had visited the property only twice, in June and December 2004, and neither occasion concerned tenant’s complaints. Most of his knowledge had been regained, or even gained, from the 10 lever arch files that had been sent to him by LEM’s solicitor to assist in the preparation of his witness statement, of which it had provided the first draft. Much of that statement’s 219 paragraphs consisted of commentary on documents in the trial bundles, many of which had not even been in existence when he had been at LEM, and of which he quoted large swaths. Much of the remainder volunteered his own opinions and explanations of the Lis’ actions and of the Hardys’ reactions.
[35] Mr Day was an engaging witness, charming, quick-thinking and fluent. However, he struck me as a man with a well-developed instinct for telling people what they would wish to hear, a talent to which I suspect his long employment with LEM owed a great deal. As one example: in an e-mail of December 2003, he reported back to Mrs Li that not only did Mr Wood agree that the faults were the landlords’ problem but also that it was “unfair” that she and Mr Li should be suffering them. Mr Wood agreed with the first proposition but denied any memory of the second, and I have no doubt that it was never said. This was a “white” lie, pandering to Mrs Li’s feelings. A further, and much more unpleasant, example is an e-mail of 10 February 2004, when Mr Day commented to Mr Li that although it was rather excessive to insist upon corresponding with the Hardys only through solicitors, it would have the advantage of making them “burn legal costs”. This was plainly said because Mr Day thought that it would appeal to Mr Li. It therefore also casts light on Mr Li himself.
[36] Throughout Mr Day’s evidence, written and oral, there was sympathetic interpretation of and speculation about the Lis’ attitudes and conduct. Some notably coarse language in Mr Li’s e-mails was said to be unusual and thus to show the extreme frustration that he must have been feeling at the time (this being with regard to the question of where the gardening equipment should be stored once his cars were in the garages). Other examples of his intemperate mode of expression Mr Day explained away as the natural “macho” style of the aggressive successful businessman from a highly competitive environment. Mrs Li’s nagging with regard to, for example, the time it took to replace one of 11 colour CCTV cameras, for which there was a temporary black and white replacement, was excused by her extreme concerns about security, as to which colour was apparently essential for her peace of mind. The remarkable lengths to which the Lis insisted LEM should go in sending a surprise army of professionals to attend and capture, on camera, every detail of visits to the property by Mr Wood — with the building dispute adjudicator in June 2004 (nothing to do with the lease) and on his own account in December 2004 (on a landlords’ general inspection) — were because of a “breakdown of trust” between the Lis and the Hardys, and the Lis’ consequent anxiety to ensure that no faults at the property were attributed to them (rather than the more obvious motives of looking for evidence for possible deployment against the Hardys, or simply inhibiting Mr Wood on his inspection.) This “mistrust” was quite understandable, as I understood Mr Day’s evidence, because Mrs Hardy had originally denied the existence of some non-functional underwater lights in the fountain, which the Hardys had never used and the Lis did not know about until after they had moved in, and also because of her intention to come and maintain the swimming pools (and possibly help tend the garden) herself, which the Lis, again quite reasonably, regarded as an intolerable impairment of their ability to do what they liked with the property for which LEM was paying.
[37] The worst that Mr Day admitted about Mr Li was that he was “an unforgiving soul”, but even Mr Day had been concerned on one occasion (he said in his witness statement) that Mrs Li might possibly be expecting “more than perfection”. However, it was his unshakeable view that, given the Lis’ admirable insistence upon high standards, their professed and justifiably extreme concern for security and the very high rent being paid, their conduct and requirements had all been both reasonable and understandable.
[38] Mr Warwick submitted that Mr Day was a partisan witness, and that I should view his evidence with circumspection. I agree. Although I do not think that he ever actually said anything that he could not have justified to himself as being true, I have no doubt that he was well aware of the role that he was intended to play in these proceedings, and he readily and uncritically accepted evidence expressed for him by others. This resulted, for example, in his initially failing to spot that when his evidence had been phrased formally in the “drafting process”, he had been led to refer to the wrong “Matthew” at LEM. In the end, I find Mr Day’s evidence to be of little more value than the contemporaneous documents, except for the light that it sheds on the attitudes of the Lis themselves. It is notable that Mr Farmer, Mr Day’s successor, was not called to give evidence.
[39] Mr Li gave no evidence. Mrs Li, who relayed virtually all of their complaints throughout the tenancy, made a brief witness statement, the main thrust of which was to confirm, blanket fashion, everything said by Mr Day in his statement and said on LEM’s behalf by somebody in the Scott Schedule. Her few additional comments were generally to the effect that the Hardys were unprofessional landlords who had not understood their obligations and had needed to be educated.
[40] Mrs Li did not attend the trial. I was told that since she now had a three-and-a-half-month old baby, she felt unable to travel from Hong Kong. Given her centrality in this case, I found this surprising. Neither LEM nor the Lis themselves lack the resources to enable Mrs Li to travel comfortably, even with a baby and even from Hong Kong. LEM applied for her statement to be admitted under the Civil Evidence Act 1995, which of course it was. I have given it the weight that I think appropriate to the evidence of a central witness who has not only relied upon another witness to report her acts and thoughts in the matter but whose statements are untested by cross-examination.
[41] On the defendants’ side, both Mr and Mrs Hardy and Mr Wood gave oral evidence. Their inventory clerk, Ms Nina Hobbs, had given a statement but was, at the last minute, not required for cross-examination.
[42] Mr Hardy gave evidence well and with dignity. He appeared to be a man of strong and forceful character, which no doubt underlay his business success. I formed the view that he would have been a tough but ultimately principled negotiator. I am satisfied that he gave evidence conscientiously, although his involvement in matters was more episodic than that of Mrs Hardy. The house had commanded his attention only as and when significant decisions were needed.
[43] Mrs Hardy was reserved, a little awkward, and at times inconsistent. She struck me as being capable and intelligent but not incisive, and also as being affected by the conflict between her loyalty to her husband and her difference of view with him concerning the worth, financial or emotional, of pursuing the disputes with the architect and the builder. I was surprised and unconvinced by her evidence that she had no real knowledge of the course or content of the adjudications with the builder because that had been her husband’s province. When asked to explain the inconsistency between her present evidence, that there had been no problems of any note with the house while she had been living there, and her statement in the fourth building adjudication that “living in this house was an endurance test”, she said that this was a reference to the stress of being involved in the dispute procedures. I did not find that convincing either. I am not persuaded that the house was functioning in quite such a problem-free manner as might have been wished, and I think that Mrs Hardy has somewhat rationalised her experiences out of her memory. However, those problems were the residue of complaints concerning the contractual performance of the builder and also the inevitable teething problems with a new house. Such matters are not necessarily things that would give rise to breaches of a landlord’s repairing covenants. |page:130|
[44] I approach Mrs Hardy’s evidence with caution, but I am satisfied that she is basically an honest person, and that on more directly material matters of detail, such as the specifics of her part in the letting and management of the house, her evidence is broadly reliable. In fact, her evidence was mainly material to the Hardys’ own complaints as to the state of the premises when LEM left them; it was Mr Wood who handled the matters that affected the performance of the landlords’ covenants of which LEM complains.
[45] Mr Wood I found, without reservation, to be an excellent witness. He was clearly nervous, never (I understand) having been called to give oral evidence before, but his honesty and conscientiousness were transparent. He had prepared the narrative response to the claimant’s list of complaints in the Scott Schedule, which formed his first witness statement. He had also prepared a second witness statement, shortly before the trial, to give a more full written account of this evidence on what were then understood to be the live points, and by reference to documents. His evidence, both written and oral, was thorough and clear with regard to its content (although it was necessary to recall him towards the end of the trial to explain a point concerning which period of time he had been referring to, where this was not agreed between counsel). His account withstood cross-examination. He was conspicuously balanced and objective in his comments, which were not entirely in the Hardys’ favour. I had the clear impression that he was not even thinking about this. I have no hesitation in accepting his evidence.
General
[46] By way of general findings: first, I am quite satisfied that the Hardys entered into the letting of Juniper Hill with the best of intentions to satisfy the tenant and that their instruction to Mr Wood to “make the tenant happy” was perfectly genuine. I am also satisfied that they were genuinely bewildered by the stream of complaints that they then encountered concerning matters of which they themselves would have been far more tolerant, either generally or temporarily. I am also satisfied that they believed that they were doing everything they could, and sparing no expense, to try to resolve the complaints that they received (although with increasing weariness). None of this, of course, means that they necessarily succeeded in fulfilling the landlords’ obligations under the lease. Neither is a lawyer, and they may not have perfectly appreciated what was required.
[47] Second, though, I was puzzled that they should have entered into this tenancy agreement, which envisaged everything in the property being in repair and in proper order by 12 November 2003, while they were still asserting and recording the faults of which they were ultimately to complain formally in the fourth building adjudication, commenced in May 2004 — at any rate without mentioning this to the prospective tenant. Although the tenant had had a survey, and the “check in” report would record the agreed condition of the premises, including any defects that were visible, any hidden problems, such as electrical faults, would not be so recorded and could easily cause future complaint. Furthermore, it must surely have been obvious that maintaining these claims against the builder while at the same time letting out the property as being in full repair and working order would appear to be inconsistent. I can understand the Hardys’ viewing their disputes with their architect and builder as being entirely their own business and none of their tenants’, but there was no guarantee that the tenants would take the same view, and Mr Hardy had already noted that Mr Li “drove a hard bargain” regarding the rent. Taking the course that they did does appear, at least with hindsight, to have been courting trouble.
[48] I have not had to resolve this puzzle further, however, because I have to decide only whether, on an objective basis and in accordance with established law, the Hardys did or did not comply with their covenants in the tenancy agreement. I simply record, therefore, that I am satisfied that this was not an attempt to cheat the tenant, as contrasted with mere failure to appreciate the possible implications of the situation. This was coupled, at least on Mrs Hardy’s part, with a fond but misplaced belief that she would remain involved with the property, and build a friendly relationship with the tenants, so that any practical problems would be resolved amicably to everyone’s satisfaction if they should arise. Mrs Hardy was, I find (and as the Lis thought), loath to “let go” of the home for which she plainly had a far greater affection than her husband. The ultimate pursuit of the fourth adjudication owed more to his strength of feeling than to her’s.
[49] Third, although LEM is (as I keep reminding myself) the tenant under the tenancy and the proper legal party to these proceedings, in this context it was quite plainly just the willing puppet of the Lis. The evidence shows LEM operating totally, and even “to the letter”, on the instructions of Mr and Mrs Li and with their approval, with the sole aim of doing their will. There is no evidence of any independent thought from anyone else. It follows, in my judgment, that LEM is fixed with the actions and attitudes of the Lis as though they were its own, and cannot disown them.
[50] This means, ultimately, those of Mr Li, and although he gave no evidence, there is plenty of evidence of his approach. Both Mr Hardy and Mr Day agree that Mr Li could be very charming, but also ruthlessly aggressive. He could quickly shift from one attitude to the other and, indeed, the negotiation concerning the new letting illustrates this being employed as a tactic. Since Mr Li is highly competitive, every situation is a negotiation and, potentially, a confrontation, and is approached, and even planned, with this in mind. An example is the measure noted above of attendance at landlords’ inspections of the house, and the instruction that those attending the June 2004 visit should be careful not to reveal to Mr Wood that LEM had already obtained its own report on the electrical systems in the house. (This secrecy is all the more extraordinary in the light of Mr Day’s present evidence that statements in this report caused him concern and Mrs Li “alarm” that the wiring was actually dangerous.) Mr Li appears to relish confrontation, and to derive satisfaction not merely from “winning” but from doing so emphatically by causing expense, inconvenience or irritation to the other party. In this context, the Lis’ theme of having “high standards” appears to be not so much an admirable quest for excellence, but a justification for being relentlessly demanding in getting what they have decided they want without compromise. Of course, having a bullying attitude does not disentitle a party from its contractual rights. It may, though, cause a party to fail to behave like a reasonable tenant.
[51] Fourth, and however Mrs Li may have viewed the matter, LEM was not taking the equivalent of a 5-star hotel apartment, but was renting a house for ordinary residential occupation in the normal way of life. The level of maintenance and attentiveness required to deliver the expected guest experience at a top-class hotel is not the same as that required to fulfil the repair and maintenance obligations of the landlord of a rented house. In a hotel, the “household” is run by the hotelier, and a cohort of people is employed to enable instant attention to guest requirements and the constant, and hopefully unobtrusive, upkeep of the premises and its installations. In a residential letting, the “household” is the tenant’s. The landlord’s obligation is simply to respond reasonably to carry out the covenanted works of repair and maintenance to the property when things require attention, they being works that would otherwise fall to be carried out by the owner-occupier in the course of normal living.
[52] The level of rent makes no difference to this fundamental distinction. The high rent in this case arose from the particular size, quality, location and features of the property, and did not in itself imply a “room service” standard of attention from the landlords. Neither does calling the letting a “commercial” transaction make any difference. The terms of the tenancy agreement, on their true construction, define the scope of the landlord’s (and tenant’s) obligations, and not whether the landlord is in the business of letting out residences or is merely letting out his own residence while he has no use for it.
[53] Furthermore, what the Lis (more accurately LEM) were paying for by renting a property was not trouble-free living in the sense that no problems would arise, but trouble-free living in the sense that when relevant problems were reported, someone else (the landlords) would deal with them. They were also occupying, as they full well knew, a newly built house, completed only 18 months earlier, in which some |page:131| residual bedding-down problems would inevitably still be occurring as elements settled.
[54] Fifth, Mr Wood said, and I accept, that, in his experience, the number of matters requiring maintenance and repair call-out work was not unusual and “no more than the norm”, in his view, for a property such as this; that is, a property with this number and complexity of systems, pumps, circuits and so on.
[55] Sixth, and last in this general section, because of the way in which LEM has elected to produce its evidence (and in contrast to the defendants), I have no evidence from whoever actually prepared LEM’s assertions in the Scott Schedule. All I have is Mrs Li’s easily made and totally untested statement that she confirms everything other people have said. However, much of the tenant’s comments in the Scott Schedule reads like an argument defending a position, written by someone interpreting facts of which they have no direct knowledge, and it is not even clear from the contemporaneous documents whether the complaints that Mrs Li herself made at the time were made from her own experience or were based upon reports from her Chinese staff, some of whose complaints were quite obviously ill-founded. I have little confidence that Mrs Li even read all the material that she has purported to confirm before doing so, and still less confidence that her statement that it is all true can be relied upon.
[56] I have no clear evidence of when either of the Lis was actually present at the property or for how long, apart from what I might infer from references in documents or from Mr Day’s evidence of the first seven months. Mrs Li could easily have provided such information, but has said only that she and her husband spent “a considerable time overseas” and had a “hectic schedule” when in the UK — during which time it appears that they did not occupy this property alone, but also another in central London. I therefore have no clear, still less direct, evidence of the supposed effects of the alleged breaches of covenant upon the occupiers apart from repetitive suggestions of the Lis’ frustration, annoyance and great inconvenience. There was a reference to their engaging their own gardeners on one occasion in preparation for guests visiting, and a specific complaint that, in 2006, they had to rig up an alternative power supply to the fountain pump to save the fish, but no financial consequences have been mentioned, although I believe that there are records of costs in respect of the replacement of infra-red bulbs in the CCTV cameras, responsibility for which was disputed. Otherwise, there are only the calculations, which Mr Day could not explain, that had been made in order to decide what amount LEM should be instructed to deduct from rent payments in order to bring home to the Hardys the Lis’ dissatisfaction and level of expectation. One or two small invoices are referred to in these, but special damage has not been pleaded.
Law: Scope of the landlords’ covenants
[57] The law on this topic is relatively straightforward in principle, but rarely has to be applied in the context of such a high-value letting of residential property. Both parties’ obligations depend upon the true construction of the lease in all the circumstances, and there is much authority indicating the proper approach. I understand the following propositions to be common ground except where indicated, and I also deal with some points that are more specific to this case.
[58] First, a landlord’s covenant to repair the demised property (as contrasted with a covenant to repair other property retained by it) is construed as a covenant to repair on notice only. This is actual notice, meaning sufficient information to indicate that repairs are needed: British Telecommunications plc v Sun Life Assurance Society plc [1996] Ch 69* per Nourse LJ. This is because the landlord cannot be expected to be aware of any want of repair in a property to which it has no access, and this applies even though it may have reserved a right to inspect: see Dowding & Reynolds Dilapidations: The Modern Law and Practice (3rd ed) (Dowding & Reynolds), in para 22-03, and the cases there cited. No breach of covenant therefore occurs until such reasonable time has expired.
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* Editor’s note: Also reported at [1995] 2 EGLR 44; [1995] 45 EG 133
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[59] Second, if the covenant is one to “keep” in repair (as here), then, by implication, that includes putting in repair at the start of the term. However, where a defect or want of repair exists at the start of the term, is the landlord in breach of covenant immediately from the outset of the term? It appears that actual notice of a defect (in the sense above), rather than constructive notice, is still required for liability to arise in that situation, a concession of counsel approved by Glyn-Jones J in Uniproducts (Manchester) Ltd v Rose Furnishers Ltd [1956] 1 WLR 45. This appears to apply by analogy with the requirement of notice regarding want of repair arising during the term itself.
[60] Third, however, no case appears to have dealt expressly with the question of whether, if the landlord is already on actual notice of a want of repair (or other defect requiring its intervention) at the date upon which the tenancy commences, it is in breach of covenant from that date, or whether the breach occurs only after a reasonable time for the remedying of the disrepair has elapsed after the commencement of the term. In my judgment, since liability still depends upon the landlord’s having the requisite degree of notice, the correct principle is the latter. This is for three reasons:
(i) In the case where the term commences immediately, the landlord’s obligation to the tenant comes into effect only when the lease is executed, and it is then a covenant to do the necessary works. A reasonable time to do them must therefore be allowed.
(ii) To hold the landlord liable from the moment the term commenced would be equivalent to holding that the landlord impliedly warrants the condition of the premises. This is contrary to generally established principle (aside from statutory intervention).
(iii) If the situation is tested against the position where the landlord obtains notice before the letting but not so long before it as to give a reasonable time for remedying the matter, it would be illogical that he should be held liable for a period during which it was impossible for him to comply with his obligation.
[61] Fourth, where, as here, the term of the tenancy commences only after the date upon which the tenancy agreement is executed, the landlord’s obligations come into effect from the date of the agreement. Accordingly, if a want of repair (or suchlike) of which the landlord has sufficient notice exists at the date of the agreement, the reasonable time for the landlord to comply with the obligation to keep the property in repair during the term will, in my judgment, run from the date of the agreement.
[62] Fifth, a landlord’s covenant to “keep in proper working order” or to “maintain” is likely to be wider in its scope than a covenant to “repair”, although even this will depend upon the true construction of the covenant in its context. This point is particularly relevant to plant, machinery, equipment and installations. “Repair” involves remedying a state of disrepair that has arisen, and the obligation does not arise until it has. “Keep in proper working order”, and possibly merely “maintain”, may well require proactive preventative maintenance work, or carrying out adjustments or general servicing before any actual fault develops or a want of repair exists. The covenant to “keep in proper working order”, in particular, may also require the remedying of design or construction defects, which are not wants of repair. This is because such a covenant means ensuring that the relevant installations perform their intended functions “in a proper, safe and reliable manner” (see Ultraworth Ltd v General Accident Fire & Life Assurance Corporation plc [2000] 2 EGLR 115) or, to put it more simply, that they “work properly”: see O’Connor v Old Etonian Housing Association Ltd [2002] EWCA Civ 150; [2002] 1 EGLR 38*.
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* Editor’s note: Also reported at [2002] 14 EG 127
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[63] Sixth, the landlords’ covenant in this lease, at clause 4(v), extending as it does to “the contents”, must refer (it is agreed) to the items on the inventory. LEM suggests that this means that the tenant had no obligation to repair any such items (see Petersson v Pitt Place (Epsom) Ltd [2001] EWCA Civ 86; (2001) 82 P&CR 21) and all that |page:132| was brought into play was the tenant’s obligation to report any defect. However, I reject this. The first proviso in clause 4(v) makes it plain that the tenant’s duty to use the property in a tenant-like manner (which may require a tenant to carry out minor running repairs or maintenance — see below) is not excluded by this covenant but delimits its extent. The landlords’ obligation is to do all such repair and maintenance as is not within the scope of the tenant’s covenant, leaving that obligation intact where it applies.
[64] Seventh, as noted above and as is common ground, where a landlord is obliged to effect a repair, it must do so within a reasonable time. The approach to this has been the subject of considerable dispute. For LEM, Mr Holland submitted that in the context of a lease of a luxury property at a very high rent, the “reasonable time” must in any event be “short”. He submitted (although I could not see the logic of this) that this is particularly so where the landlord’s agent and its nominated contractor are set out in the lease. For the Hardys, Mr Warwick argued that there is no such presumptive approach.
[65] Mr Warwick’s first submission was that, on the facts, the Lis had themselves caused delays and difficulties on works being done because they had required express advance personal consent from Mr Day or Mrs Li to any and every person who might attend the property to do such work. They could not therefore complain about delays caused by this. I agree in principle, but it is not quite so simple.
[66] LEM could not complain at any delay in carrying out landlords’ works that was caused by the Lis insisting upon procedures not laid down by the lease. Equally, they could not complain of delay caused by the procedures that were actually laid down. Under clause 2(xi) of the lease, the tenant stipulated for seven days’ advance written notice of any proposed attendance for maintenance or repair work. Identification of the person proposing to attend adds little to this. The Lis were therefore entitled to rely upon this clause to enable themselves to consider intended appointments, and, indeed, any attendances made on less notice would be outside the terms of the lease unless the Lis waived this requirement. The Lis could not complain of delays caused by, in effect, operating the seven days’ notice process, but, in addition, this provision sheds light on the kind of timescale that the parties must have seen to be reasonable dispatch with regard to the landlords’ obligation to carry out non-emergency works. Except in cases of emergency, at least seven days was seen as being reasonable between the landlords receiving notice of a want of repair or maintenance matter within their responsibility and the first visit to deal with it, and, clearly, a matter could require further visits on a similar timescale if it was not the kind of thing that could immediately be remedied. This is significant evidence of the parties’ joint views of the basic order of magnitude of a “reasonable time”.
[67] Mr Warwick’s general proposition was that what was a “reasonable time” must be viewed in the context of the actual facts in each instance, but that on any basis matters such as the tenant’s expectations or particular personal concerns (such as security) were legally irrelevant to the true construction of the landlords’ obligations. Citing Carnwath LJ in Earle v Charalambous [2006] EWCA Civ 1090*, in [43], he submitted that the approach, although obviously expressed there with regard to a repair involving building operations, is that:
what is a reasonable time will depend on the circumstances, but is likely to include time to find out what is wrong, to take the necessary advice, to prepare specifications and to accept and instruct a builder.
For example, the high-quality nature of the property may mean that replacement parts are not commonplace but have to be specially ordered, taking longer than might be the case for an “off the shelf” component, or that with a complex system it may be more difficult, and take longer, to identify and locate a fault and therefore to repair it. In addition, if the landlord is let down by the failure of a contractor to turn up when booked, or if a reasonable repair is apparently effected but fails and has to be redone, that is out of the landlord’s control and does not make the time taken unreasonable.
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* Editor’s note: Reported at [2007] HLR 8
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[68] Mr Holland argued that, on a proper view of what should be reasonable, none of these latter points would avail the landlord. His argument was, in effect, that a reasonable time is to be judged solely on an objective view of how long it would be reasonable for the tenant to have to suffer the existence of the fault, and this view would be stringent in the context of a very high-class property with a high rent.
[69] I reject Mr Holland’s approach. First, for example, it would involve the landlord carrying, or contracting with its agent to carry, a whole raft of spare components for systems in the property on the off-chance of their being required. This goes beyond the duties of a landlord, which is to get on reasonably promptly with obtaining any spares actually required to be ordered and installed. Second, it would make the landlord the guarantor of any contractor’s performance in respects that are quite outside its control or anticipation. In my judgment, such a burden is not implicit in a landlord’s repairing (etc) covenant. Each incident must be considered on its own facts.
[70] Eighth, Mr Warwick submitted that the starting point in any case (and certainly where there is no suggestion that the landlord was behaving unreasonably) is how long it took in practice to effect the repair. However, this really does no more than restate the burden of proof.
[71] In my judgment, a good working test is the following. Looking at what actually happened, does it appear that an owner-occupier whose objective was to get the relevant repair (or other) work carried out as quickly as reasonably practicable after discovering that it was needed could, or would, have achieved this materially more quickly than in fact happened? This seems to me both to take account of the actual circumstances while also giving due weight to the fact that the landlord has an obligation to put the tenant’s interest in having the repair done ahead of any conflicting interest of its own that might cause a delay. This might arise if, for example, the landlord wanted to defer doing works so as to be able to do other works at the same time, or if it wanted to try the least expensive possibilities for eliminating a fault before more expensive ones were resorted to, or if it wanted to delay in order to make an insurance claim. A landlord is not, in my judgment, entitled to put its own interests in saving money, or not disturbing the original perfection of finishes, ahead of the tenant’s interest in having the fault located and rectified within a reasonable time (according to the nature and effect of the fault). This does not mean that it cannot give any weight to its own interests, but it does mean that it will be in breach of covenant if doing so causes it to exceed a reasonable time for the repair in all the circumstances.
[72] Ninth, a landlord’s obligation under a tenancy is to achieve compliance with the requirements of its covenants on their true construction. Absent any express provision in the agreement, it is up to the landlord how it does so. Apart from the gardens (which I will deal with specifically), there was no obligation in this tenancy for the landlords to provide maintenance services in any particular way, nor to employ a professional managing agent, although they could do so if they chose. Mrs Hardy’s acceptance in cross-examination that the Lis were entitled to expect “professional” management is nothing to the point. It either meant no more than a “high standard” or it was an opinion on a point of law. The Lis had, in my judgment, no right to object to Mrs Hardy’s proposing to attend to the pool maintenance herself, however unwise in terms of tenant relations it might have been for her to expect to do so. Although this point is not directly material to any claim, it is further illustration of the parties’ respective attitudes, and, in particular, that the Lis had a mistaken notion of what “quiet enjoyment” means in law.
[73] Tenth, as to the standard of repair or service to be provided, Mr Holland submitted that the very high rent implied not only a high-calibre property but also a commensurately high standard both of repair and of service by the landlords; this, he said, was underlined by the fact that the tenants’ covenants in the lease were very limited and, indeed, little more than the basic covenant merely to use the property in a tenant-like manner, while the landlords’ covenants were far |page:133| more onerous. In addition, the circumstances showed that the tenants were known to be very security-conscious. Whether the landlords had performed their obligations was to be measured against these background requirements.
[74] Mr Warwick countered this by reminding me of basic principles. A landlord’s repair, maintenance and suchlike obligations derive from the terms of the lease (or from statute). There are none at common law. They therefore depend upon the true construction of the lease in the usual way, and although context and facts known to both parties affect that construction, this is on an objective assessment and not a subjective one: see Fitzroy House Epworth Street (No 1) Ltd v The Financial Times Ltd [2006] EWCA Civ 329; [2006] 1 WLR 2207*, in [24], per Morritt C.
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* Editor’s note: Also reported at [2006] 2 EGLR 13; [2006] 19 EG 174
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[75] Eleventh, Mr Warwick also (and, in my judgment, rightly) reminded me that even a covenant to “repair” does not require premises to be kept in perfect repair, but only “substantial” repair (see Dowding & Reynolds (3rd ed), in para 9-03), and he submitted that this principle was of general application. I agree. Even the wider covenant to “maintain” and/or “keep in proper working order” does not mean that the landlord is automatically in breach if any fault develops, nor requires the emergence of every minor fault or maladjustment to be dealt with as though it required attention as an emergency.
Law: Scope of the tenant’s obligations
[76] On this aspect, Mr Warwick reminded me that although it may be the likely intention that a lease should provide that every part of the property will be subject to a repairing obligation of either the landlord or the tenant, that is not a rule. Just because, therefore, some item is not within the tenant’s repairing covenant, it does not necessarily follow that the landlord has covenanted to repair it.
[77] Although accepting that with a high-class letting high standards are appropriate, Mr Warwick also submitted that this is a two-way street, and a landlord letting a high-class property to high-class standards is entitled to expect high-class standards from the tenant as well. This affects what is to be expected under the tenant’s covenant to use the property in a “tenant-like manner” and, indeed, other covenants. He cited the oft-quoted passage of Denning LJ, as he then was, in Warren v Keen [1954] 1 QB 15, at p20, that:
The tenant must take proper care of the place. He must, if he is going away for the winter, turn off the water and empty the boiler. He must clean the chimneys, when necessary, and also the windows. He must mend the electric light when it fuses. He must unstop the sink when it is blocked by his waste. In short, he must do the little jobs about the place which a reasonable tenant would do.
(Emphasis added.)
[78] Based upon this last proposition, Mr Warwick submitted that scope of the tenant’s covenant to use in a tenant-like manner varies according to the nature of the property. Replacing ordinary standard batteries and light bulbs in a modest council house translates into replacing fancy and sophisticated batteries and light bulbs in a fancy and sophisticated country house.
[79] Furthermore, since the property is a large English country house clearly designed for use and occupation by a household with live-in staff — and, indeed, the lease itself expressly mentions staff — the landlords were entitled to expect and assume that the tenant or other occupier would have such staff, who would be able to perform the small tasks involved in looking after such a property in a tenant-like manner. He submitted that this meant staff with a sufficient command of English to be able to read and follow instruction manuals for the systems and appliances and follow oral instructions from contractors or installers. The staff could reasonably, he submitted, be expected to include someone with the skills of a handyman, to do any slightly more heavy duty or practical jobs. The Lis apparently brought neither. He further submitted that this was all the more so in this case where the tenant was itself a property management company. In my judgment, though, this latter proposition can go no further than Mr Warwick’s lowest position, namely that this would certainly mean that no lower standard than otherwise would apply in this case.
[80] As I understood Mr Holland’s position, he disagreed with Mr Warwick’s submissions largely on the basis that these were contrary to the relative apportionment, which he had argued for, of responsibilities between landlord and tenant, imposing these on the landlords rather than the tenant. This tended to reduce any positive content of the tenant’s covenant to use in a tenant-like manner, largely confining it (it would seem) to the duty to notify the landlords of any defect, down to a dripping tap or the failure of a remote control for the television, and then waiting for it to be fixed.
[81] I prefer Mr Warwick’s submissions. The draftsman of this lease was plainly aware of a potential conflict between the scope of a tenant’s covenant to use in a tenant-like manner that, as the well-known quotation above shows, includes a duty to do acts that could be argued to be “maintenance”, and an express covenant by a landlord to maintain. The first proviso to clause 4(v) shows that that clause was not intended to displace the obligation of the tenant. The drafting of the proviso does not assist as to exactly what the content of the tenant’s covenant to use in a tenant-like manner was thought to be, merely preserving it whatever it was. I find that it was therefore the general scope of such a covenant at common law, since that would apply to the facts of this case absent any landlord’s covenant that might be argued to affect it. The difference is perhaps between specifically focused periodic maintenance work, which is the landlords’ responsibility, and general cleaning and care, which is the tenant’s responsibility, but which may well involve positive actions.
[82] I find, therefore, that the appropriate “little jobs” (to use Denning LJ’s phrase) that a reasonable occupier and, hence, a reasonable tenant would expect to do himself with regard to this kind of property were intended to remain the responsibility of the tenant. In so far as it might not be expected that the occupier of a property of this grandeur and quality would personally do such jobs, it would be expected that such a person would have staff with the appropriate skills to do so on his behalf.
[83] I again find support for this view in the contemplation that the landlords should give the tenant seven days’ notice of an appointment to do work within their maintenance obligation. This clearly suggests that the jobs being envisaged were more significant than five-minute matters such as changing a battery, mending a fuse or tightening a washer.
Breaches of landlords’ covenants
[84] I turn now to the matters in dispute, which turn on the parties’ differing interpretations of their respective obligations in the context of this somewhat out-of-the-ordinary letting.
[85] Of LEM’s original 93 items of alleged breach, 27 (items eight to 10, 15-20, 23, 35, 42-43, 46-47, 52, 60, 67, 72, 81 and 83-90) had been dropped by the time of the trial. Mr Day, in his evidence for LEM, focused upon 12 matters said to have been of particular significance because of their duration, or their importance to the Lis’ enjoyment of the property or for demonstrating the lack of adequate management. Since two of these were not pursued, this became a “top ten” list. Because of the thrust of Mr Day’s evidence, Mr Warwick, on behalf of the defendants, proposed to concentrate on these topics while referring to some other parts of the evidence of Mr Wood, which dealt with each live matter individually. However, Mr Holland, did not confine himself to Mr Day’s list, pointing out (as I accept) that there was some formal evidence covering the entire Scott Schedule. All the “live” points (apart from one or two more that were abandoned during the trial) therefore remained in issue, although Mr Holland grouped them according to their subject matter when making submissions.
[86] Although I have had regard to each individual matter of complaint, because there are no shortcuts in this case, it would be absurdly disproportionate to deal with each individually. I will therefore set out those respects in which I find breaches of covenant to be established, followed by my general reasons for rejecting the remaining allegations of breach, my specific findings on Mr Day’s |page:134| “top ten” matters, since these were of special importance, and any other points that I think require individual comment.
[87] I make two preliminary observations. First, throughout LEM’s individual complaints there is a repeated theme that the landlords’ response, whether their first attendance or the overall time taken, simply “took too long” or was “unacceptable”, or that the specialist contractor who was called in “took too long” or that a component part “should have been obtained more quickly”. However, no factual evidence to support this assertion was called, and it was merely put forward as a supposedly self-evident proposition. To weigh against this, I have Mr Wood’s evidence of what happened and his explanations of why the time actually taken was taken. I found him a reliable witness with regard to fact, and I also accept that he was following the instruction to try to keep the tenant happy, which would be done only by resolving their issues as quickly as was reasonably possible. The question that I have to answer, therefore, comes down to whether, on the evidence, LEM satisfies me that the Hardys (through him) could and should have done better.
[88] A second theme of complaint is an assertion that a particular item “should not have broken down” or that the failure or event “should not have happened”. On its own, this is not an assertion of a breach of covenant. Without something to suggest that it was the landlords’ fault that the breakdown occurred (that is, some breach of the landlords’ obligations giving rise to the incident), it is no more than a statement of irritation.
[89] The Hardys’ responses to the complaints are in general one of four. Their most usual answer is that: (i) the fault or problem was remedied within a reasonable time in all the circumstances and, therefore, there was no breach of their obligation. Other recurrent responses are that: (ii) when the alleged fault or problem was investigated, no work was required, showing that there was no breach of covenant; (iii) the fault or problem was not within the landlords’ covenant but they remedied it within a reasonable time anyway; and (iv) the complaint does not in fact allege/disclose any breach of covenant in the first place.
[90] In the following paragraphs, I refer to the individual live issues by number, working from the version of the Scott Schedule with which the trial commenced, and additionally marking Mr Day’s “top ten” with an asterisk.
Summary of conclusions
[91] On the evidence, I find the following matters to have been proved as being breaches of the landlords’ covenants:
(1) Item 3*: Failure to repair the bulk of the exterior lighting system by 24 December 2003 (rather than 5 March 2004): see clause 4(v).
(2) Item 7*: Failure to repair the thermostatic control on Mrs Li’s bathroom shower by 24 December 2003 (rather than 13 February 2004): see clause 4(v).
(3) Item 28: Failure at the landlords’ expense to replace spent bulbs in CCTV cameras generally: see clause 4(v).
(4) Item 34*: Failure to keep the gardens in a sufficiently neat and tidy condition during the main summer months of, in particular, 2005 and to a lesser degree (primarily regarding cutting lawns) in 2006: see clause 4(ix).
(5) Item 53*: Failure fully to complete the repair of the pool surround paving and lights by around 1 April 2006, (rather than 22 May 2006): see clause 4(v) and (vi).
(6) Item 54*: Failure to repair the coloured CCTV camera by around 16 April 2005 (rather than 16 June 2005): see clause 4(v).
(7) Item 55: Failure to repair the timing mechanism of the garden irrigation system by mid-June 2005 (rather than the end of July 2005): see clause 4(v).
(8) Item 58: Failure to repair/replace the kitchen TV four weeks earlier than actually done, in August 2005: see clause 4(v).
[92] With regard to those breaches numbered (6) and (7), I find that no damage beyond the utterly de minimis is shown to have been occasioned to the tenant or occupier.
[93] LEM does not satisfy me of any breach of covenant in respect of any other item in the Scott Schedule. In general, my reason for these latter decisions is that I accept the defendants’ argument on the relevant point.
Reasons
Item 3*: Exterior lights not working
[94] First reported on 23 November 2003, this concerned the 76 external luminaires lighting the main drive, tennis court, garage buildings and other parts of the grounds, but in particular a large part of the drive. LEM says that it was never properly resolved. The Hardys say that it was resolved by 5 March 2004, although a further problem occurred with the garage lights in particular on 29 November 2004, which was resolved on 20 December 2004, and another problem on 19 April 2005, which was resolved on 29 April 2005: see item 39. The Hardys say that, in each case, the time taken to resolve the problem was reasonable in all the circumstances, and further complaints were either about other lights or related to blown bulbs, which were the tenant’s responsibility: clause 2(v).
[95] Mr Wood said, and I accept, that the problem arose because the 76 luminaires were installed in several sections or circuits, unfortunately all initially subject to a single safety device set to detect “earth leakage” and then to de-energise the system. This was, I was told, a super-safe safety system, quicker to function than a normal circuit breaker, and in fact operating because earth leakage was a sign of a possible problem rather than a signal of present danger. The disadvantage was that moisture getting into an underground cable junction box could cause earth leakage, harmless in itself but sufficient to trip the circuit, and could do so intermittently, and with the single global control device it was very difficult to detect which circuit was the cause of any failure. Having an electrical survey, locating faults, installing more isolating circuits under separate control and laying the required armoured cabling reasonably took from 23 November 2003 until 5 March 2004. The further fault in November 2004 required digging up the cobbled areas to relay cabling, and reasonably took five weeks. The third occasion was on any basis resolved within LEM’s own reasonable period of seven to 10 days.
[96] Mr Wood accepted that he was aware that there were problems with the outside lighting system in November 2003, at or before the commencement of the tenancy. My impression is that they were pretty obvious problems, and I am satisfied that there had been some experience of this prior to the letting, although the Hardys did not use the systems as intensively as the Lis wished to do.
[97] I have concluded therefore that there is some substance in this complaint. When the tenancy agreement was signed, the landlords were sufficiently on notice that there was a problem, and the fact that it might take significant work to solve it, that they should then have set about remedying it. I also accept that this was, and should have been seen to be, a reasonably significant matter for the occupier, especially in the dark winter months and especially for the Christmas period. I have concluded that two months to deal with at least the bulk of this problem, that is, before Christmas 2003, was the maximum reasonable time this should have taken in the circumstances, although with the possibility that minor faults still requiring remedy might then have occurred during January 2004.
[98] Consequently, I find that in respect of the period from Christmas Eve 2003 until 5 March 2004, the Hardys were in breach of clause 4(v) with regard to the exterior lighting, and I am satisfied, in this instance, that there was some discernible loss of amenity to the occupants.
[99] With regard to the two further problems in November 2004 and April 2005 (item 39), I find that there was no breach because the time taken to remedy these faults was reasonable, having regard to their nature and the works required in each case.
Item 7*: Shower thermostat in Mrs Li’s bathroom
[100] The temperature control on the shower in Mrs Li’s bathroom (Mr Li had a separate bathroom) had a habit of delivering cold water after a few minutes’ operation. This was reported on 23 November 2003. Tracing the installers, investigating and changing the thermostatic valve took until 10 December 2003, but did not work. Modifying the pipework improved the temperature but reduced the flow |page:135| (22 December 2003). Eventually, the only solution was the major work of removing a wall, and expensive Smallbone carpentry, to access a blocked distribution piston. This took until 13 February 2004.
[101] LEM does not complain at the sequence of attempts whereby the Hardys tried various measures before disturbing the expensive bathroom finishes, but they do complain at the length of time taken, suggesting that the work actually took only a few hours. I reject this, and prefer Mr Wood’s evidence that the work took, over all, several days.
[102] I am satisfied that the work was done in a reasonable time in all the circumstances from when it was put in hand — but this is another defect that I find was known to the Hardys before the tenancy commenced. Mrs Hardy candidly said that she had experienced this temperature problem herself, but that the water temperatures in the house had been turned down for safety reasons, for the children, and this had stopped it. She had only restored the temperatures before the Lis moved in, and had forgotten the previous problem. I accept Mrs Hardy’s evidence, but this means that the landlords did have actual notice of this want of proper working order at the time of the agreement for the tenancy. Actual notice or knowledge is not eliminated by being forgotten.
[103] A reasonable time for rectifying it therefore began to run from 20 October 2003. If it had been pursued diligently, then, once again, I consider that it could reasonably have been expected to be resolved before Christmas. I conclude that Mrs Li suffered around eight weeks of a malfunctioning shower, which she should not have had to suffer. Having said that, this was not the only shower in the house.
[104] I reject the further complaints under this numbered item. The complaint about the door lock was dealt with in a reasonable time, and the subsequent complaint concerning an alleged overflow of Mrs Li’s shower was a red herring, because no fault was ever established, and this was misconceived reporting by Mrs Li’s cleaning staff.
Item 28: Failed bulbs in CCTV cameras
[105] The dispute here turns on whose responsibility it was to replace blown infra-red bulbs in the 11 security cameras around the property needed to provide a night-time picture. The landlords say that it was the tenant’s responsibility under its covenant at clause 2(v) to:
replace all electric light bulbs and fluorescent tubes both internal and external as and when necessary.
[106] Ironically, LEM initially appeared to accept that this was its responsibility, but it changed its view and subsequently maintained that this was the landlords’ responsibility under their covenant to maintain the CCTV installation as part of the “electrical items” on the property. LEM would therefore call out the CCTV maintenance contractor to change a blown bulb, and an impasse developed over which of the landlords and the tenant would pay its charges, to the point where the contractor was threatening not to attend. As a result, an uneasy truce was devised under which attendances to replace bulbs were paid for by LEM, those to repair other faults, or for general maintenance, were paid for by the landlords, and those to do both were shared.
[107] In my judgment, LEM would be liable in this respect only if the infra-red bulbs came within the meaning of the term “electric light bulbs or fluorescent tubes” as used in clause 2(v) of the lease. Mr Warwick submitted that they did because they are electric, they do provide light and they are within the more sophisticated and “fancy” content of tenant’s covenants in respect of this sophisticated property. Mr Holland submitted that they do not because they are not within the natural and normal meaning of the phrase “electric light bulbs and fluorescent tubes”, and their replacement came within the scope of “keeping in proper working order” the CCTV system.
[108] I have not found this easy. The evidence from Mr Wood is that, given the amount of use and their average life, there would be a likely bulb failure about once in every two months at Juniper Hill, and bulbs are the kind of consumable item that it would be reasonable to expect a tenant to keep in store and replace. On the other hand, it would not be easy to tell whether a camera failure arose from a spent bulb or some other source, and neither would replacement be likely to be as easy as merely replacing a light bulb.
[109] In the end, I have concluded that Mr Holland is correct. In my judgment, clause 2(v) was referring to electric bulbs installed for the purpose of giving human beings light to see by, and this intention is supported by the fact that it was thought necessary to refer specifically to fluorescent tubes, which do the same thing but might not arguably be “bulbs”. Therefore, in principle, obtaining and fitting replacement infra-red camera bulbs was a landlords’ obligation within their duty to keep electrical items in proper running order. Only if this function then came within the tenant’s preserved duty to use the property in a tenant-like manner would it fall back on LEM, and I do not consider that replacing bulbs in a CCTV system that the landlords are otherwise obliged to keep working is properly seen as one of those normal “little jobs around the house” that a tenant is expected to perform, even in respect of a house such as Juniper Hill.
[110] In so far, therefore, as LEM has borne the costs of getting the contractor out to replace infra-red camera bulbs, I find that it is entitled to recover those costs from the landlords. I believe that, in this instance at least, records of such relevant expenditure have been kept, so that the amount in question can be ascertained.
Item 34: Gardens/gardening
[111] This relates to the landlords’ covenant at clause 4(ix).
To maintain the garden and grounds of the Property in a neat and tidy condition keeping the grass regularly mown and the flower beds weeded and stocked and for this purpose to use all reasonable endeavours to employ a gardener to attend at the Property one day every week from 1 April to 30 September and one day every two weeks from 1 October to 31 March.
[112] Mrs Li complained at various times about the standard of garden maintenance, namely in February 2004 (leaf clearing), August 2004 (a plant in a pot having died), April 2005 (the gardener attending only one day in three weeks), continually between May and August 2005 (the trimming of trees, shrubs and hedges, weeds in the drive and around the tennis court, dying trees/shrubs), February 2006 (gardener attendance) and July 2006 (the mowing of lawns while the ride-on mower was being repaired).
[113] At the time, especially in summer 2005, the Hardys’ response was that: (i) the gardens were being maintained to the same standard of neatness etc as when the tenancy commenced and the Lis were demanding a higher standard to which they were not entitled; and, (ii) the covenant at clause 4(ix) merely required a gardener to be employed to attend as there stipulated and there was a limit to what could be achieved. LEM’s riposte was that the covenant required the gardens to be maintained to the standard stated, the stipulated quantity of gardening time was nothing to the point and, anyway, the gardener(s) were also carrying out pool maintenance.
[114] The first issue, therefore, is on the true construction of clause 4(ix); which of the two descriptions of the obligation, that is, to achieve the result of keeping the gardens neat and tidy (etc) or to employ a gardener for the stated time, is the prevailing obligation? The conflict arises because, as I am quite satisfied, the work of one gardener on one day a week is not sufficient to keep up all aspects of maintaining a 4.5-acre garden to a good standard in the summer months.
[115] Either side’s construction has difficulties. If the essential obligation were to maintain the gardens to a stated standard, there was no point in specifying the intended quantity of gardeners. However, if the essential obligation were to provide a gardener (which would have the obvious merit of being a more certain obligation), one would have expected that to be stated foremost rather than relegated to second place, and not to be weakened by the reference to “reasonable endeavours”.
[116] Since this is a matter of construction, it is largely one of impression. My impression is that the tenant is correct, and that the governing obligation was to maintain the gardens in the specified condition. I find that the second obligation also had to be performed, but it is disjunctive and does not qualify or limit the first obligation.
[117] With regard to the second obligation, I accept that there were occasions upon which the gardeners did not attend as required, but |page:136| I also find that, at least on average, gardening time was made up, as Mr Wood said, and that, in any event, the efforts made by him to maintain the gardening service did amount to using reasonable endeavours in that regard.
[118] With regard to the first obligation, given the Lis’ general attitude, I am satisfied that they will have set their requirements higher than the level of mere general tidy efficiency that is the flavour of this obligation. The landlords were not obliged to provide a full-time gardening service, and there would therefore inevitably be times, say immediately before a hedge was trimmed, when it would look as though it needed trimming. Equally, the presence of a dead or dying plant is not in itself a breach of covenant.
[119] Once again, this is a matter of fact and degree. Having read the correspondence and noted that Mr Wood thought it appropriate to pass on certain photographic evidence to the gardening company, I have concluded that during, in particular, the summer of 2005, the gardens were to some degree below the required standard. I am also satisfied that there was some falling short of the covenant again, particularly in respect of the regular mowing of lawns, during summer 2006. “Regular” mowing means, in my judgment, mowing sufficiently frequently to keep the lawns looking reasonably tidy, and if this needed a sit-on mower that was out of action, one should have been hired in.
[120] I therefore find this covenant to have been breached to some degree for a period of around four months, between mid-May and mid-August 2005, and also to a lesser degree in the following year. I am also satisfied that this produced some degree of loss of amenity to the occupiers.
[121] Were it material, though, I would also find that the Lis’ outright refusal, in 2005, to water plants in containers to prevent them from dying was a breach of their covenant to use the property in a tenant-like manner. It was totally unreasonable and was a refusal that was made simply to be difficult and to make a point of how much they expected to be done for them. In the event, however, nothing appears to turn on that.
Items 53 and 80: Outdoor pool uplighters and pool surround
[122] This complaint concerned frequent failures of the uplighters around the outdoor swimming pool, and was made in April/May 2005. Initially, attempts were made to solve it by excluding moisture, but that did not work, although I find it was a reasonable approach. In summer 2005, it was noted that the pool paving surround was failing and Norwood reported to the Hardys that the entire surround should be refurbished, including paving and uplighters (which, owing to new building regulations, would then need to be differently positioned). This work therefore now fell within both clauses 4(v) and (vi) but also within the landlords’ right under clause 2(x) to enter the property “at all reasonable times during the tenancy” for the purposes of “carrying out any necessary or proper[ty] repairs to the Property…”. The aim was to do all the works together and to do so during the winter of 2005-06, and competitive tenders were sought in October 2005 after the outdoor pool was closed. However, one of the tenderers was slow in producing a quotation, and the work was eventually placed with another, but only in February 2006. It did not begin until March 2006, and although the pool was filled at the beginning of April, I find that the paving was not finally completed until around 22 May 2006.
[123] In this situation, I find that there was no breach of the landlords’ covenant regarding maintaining a functioning uplighter system in 2005 because it was then established that the only way of repairing this effectively was as part of a complete rebuilding of the pool surround. This was plainly a major operation, and I have no doubt at all that the Lis would have objected to such work being done during the summer use of the pool, even though the Hardys arguably had a right to do it then. I do, however, find that their delay in getting on with the works in the winter caused by waiting for another tender was unreasonable, and was the cause of the work being started only in March 2006 and not being concluded until after 1 April 2006. There was therefore a breach of the landlords’ covenants 4(v) and 4(x) during April/May2006. However, I can see little evidence of any actual damage or inconvenience caused to either the tenant or the occupiers. The pool was apparently filled only around 10 days late, and use of an outdoor pool in April is not likely to be major. There is no evidence that the extended time taken to complete the paving works caused any actual inconvenience to the Lis. Indeed, as the complaints made in this regard ceased after 7 February 2006, I suspect that the Lis may not even have been at the property. Any inconvenience suffered was therefore relatively slight but measurable.
Item 54*: Failure of tennis court CCTV camera
[124] On 28 January 2004, the failure of a security camera was reported. The specialist contractor was called in and attended on 1 February, taking away the faulty camera, but lending (at the landlords’ expense) another camera. The original camera needed repairing and was not restored until 16 June 2004.
[125] The reason why the original camera took so long to replace is apparently that the repair was not authorised by the Hardys until around 20 April 2005. This, I find, was an oversight, but it was careless and was a breach of the landlords’ covenant at clause 4(v) to repair “all electrical items”, since this would allow only the reasonable time for doing the repair itself.
[126] However, the loan camera was available in the interim, although it was a black and white model, rather than colour. Mr Wood says that this was the only difference. Mrs Li was apparently claiming that the picture could not be viewed at night, but I can place no weight on this untested assertion, especially as I note that she did not complain about this between 1 February and 6 April 2005, which would have been remarkable had it been a problem; I have no reason to believe that she was absent from the house in all that time.
[127] I therefore find that although there was a breach of covenant with regard to around 10 weeks of the time taken to repair this camera, since it could and should have been restored by mid-April 2005, neither tenant nor occupier suffered any discernible damage as a result.
Item 55: Garden irrigation system
[128] This was reported on 1 June 2005, and there were two issues, namely irrigation occurring at unscheduled and intrusive hours in the daytime and also some breaks or faults in the system itself. The former were resolved only in late July, when the specialist contractor was called in and pointed out that there was a battery in the timing system, of which Norwood had not been aware, that was run down and causing the erratic timing. No damage was apparently caused by any unexpected functioning of the irrigation system. The latter constituted minor breakages that were not dealt with until October/November 2005 because the specialist contractor was booked up for three months. There is no evidence that anything died or that the gardens suffered visually while these latter matters were not deal with.
[129] I find that there was a technical breach of the landlords’ maintenance covenant with regard to the timing of the irrigation system, which was plainly not “working properly” during June and July. This was not resolved within the reasonable time that normal “maintenance” of a system with which an operative was appropriately familiar would imply. However, this was a purely nominal breach, causing no actual damage or real inconvenience to anyone. In respect of the further matters, I find that there was neither breach of covenant nor damage.
Item 58: Failing plasma TV in kitchen
[130] This was reported in June 2005 as having “lines” on one quarter of the screen. After an initial dispute concerning who was liable to replace it because Mr Wood seems (wrongly) to have thought that it was the tenant’s responsibility, there was some delay while a quotation for repairing it (around £500) was obtained and the Hardys considered whether to repair or replace it (at a cost of around £1,500). Eventually, they did the latter.
[131] Although Mr Wood said in evidence that this TV was always on whenever he attended the house — and I could easily believe that it was given extremely hard use by the Lis and their staff — it is not suggested that it was subject to misuse. Consequently, it fell within the landlords’ obligation to keep the electrical items in proper |page:137| working order. In this respect, I find that the delay in replacement was unreasonable, to the extent of around four weeks, and there was some measurable inconvenience to the occupiers as a result.
Mr Day’s other “top ten” matters
Item 1*: Leak under sink in staff kitchen
[132] This was a minor leak or weep, notified to Norwood, by e-mail, at night on 18 November 2003. It was remedied by a Norwood operative hand-tightening a pipe fitting on 28 November 2008. The Hardys say that this was a reasonable time, and Mr Wood also said that this was the kind of thing a staff handyman could have done. LEM’s complaint eventually became that anything in excess of a five-day response was not acceptable. The landlords pointed out that the response was six working days.
[133] However, from the evidence, Mr Holland went on to tie this complaint to a recorded leak beneath the staff sink noted in the defects report of Norwood of 7 November 2003, alleging, therefore, that this was a defect of which the landlords had had notice at the commencement of the lease.
[134] That fault, though, was estimated to require £200 to remedy. I had therefore deduced that what had probably happened was that there had been a more major fault before the lease commenced that had been remedied in the flurry of activity on 10/11 November 2003, immediately before the lease term was due to start, but that the pipe joint had not been fully tightened when this repair was done, leaving the residuary minor leak that became the subject of this notification. As counsel disagreed about the effect of Mr Wood’s evidence upon what work had been done when before the term commenced, Mr Wood was recalled, and confirmed what I had deduced.
[135] On the evidence, I find that this was not a failure to repair the previous more major fault, but a different and minor fault, of which the landlords had no actual notice until 19 November 2003. It was not an emergency. Therefore, a first appointment to repair at least seven days hence would be within a reasonable timescale for this kind of job. I consider it marginal whether it was the type of job that would fall within the tenant’s own covenant to use in a tenant-like manner (and a handyman could certainly have done it), but, on balance, I consider that it was properly reported to the landlords. However, it was then reasonably dealt with in all the circumstances. There was no breach of covenant.
[136] However, even if there had been, it was so utterly trivial and caused neither LEM nor the Lis any loss, damage or even justifiable annoyance. I cannot understand why this should ever have been given the prominence Mr Day gave it. It is ironic that it is the first complaint on the list, setting the tone for what followed. That it was doggedly persisted in by LEM graphically illustrates the unbalanced and demanding attitude that characterised the tenant’s approach to this letting.
Item 2* (and 91): Garden fountain not working
[137] This refers principally to the pump for the fountain, reported by Mrs Li on (effectively) 19 November 2003. It became extended to underwater lights in the fountain basin, once these were discovered to exist. The problem also had a link with the electrical problem regarding the outdoor lighting, already discussed: see 3*.
[138] Mr Wood first attended with an electrician on 10 December 2003; a replacement pump was obtained on 17 December 2003 and, on 22 December, the pump was replaced, with new transformers and connecters in the pump chamber, which stopped the electrics tripping the pump as well. Unfortunately, on 30 December 2003, the replacement pump failed and fused both pump and light system, although the Lis isolated the pump fuse and got the garden lights working. (Thus, they did have some practical ability when necessary.) Norwood attended on 6 January 2004, obtained a replacement pump under warranty and installed it on 15 January 2004. It then worked for two-and-a-half years, until August 2006. LEM complains that it then failed again, and caused the tenant “serious inconvenience” because it had to rig up a temporary pump system to prevent fish from dying.
[139] On his 10 December 2004 visit, Mr Wood revealed to the Lis that there were underwater lights in the fountain. The Hardys had never used these because they had fish, and Mrs Hardy had forgotten (I accept) that she had ever specified them in the first place. However, finding that they had lighting that they had never expected, the Lis were immediately insistent that those lights should be in working order. It took time to trace the original electrical contractor to get the lights brought back into service. This was done only on 30 January 2004, when it was found that two lights were working: one had a failed bulb, and one unit had failed and required a replacement. This was ordered, obtained and fitted on 11 February 2004.
[140] LEM, taking the matter as a whole, agrees that it was all rectified by 11 February 2004, but says that it should have been done within three to four weeks of the first complaint (although, initially, it demanded the resolution of the pump problem by 4 December 2007, in order to “chivvy” the landlords). It says that it was entitled to have all the building services fully functional, including the fountain lights (whether or not they had been known about), and the failure of the first replacement pump was nothing to the point. The Lis, or at least Mrs Li, were present at the property over this period, and not having a working fountain over the new year, nor fully functional pond lights until February, was plainly frustrating for them, since it helped cause an outbreak of bad language from Mr Li.
[141] The Hardys’ response is that the matter was dealt with in a reasonable time in all the circumstances, and was fully rectified on 15 January 2004, by the second replacement pump. They say that the lights were never part of the systems that LEM was intended to use because they had not been in use, nor even visible, at the start of the term, and they were not within the parties’ contemplation.
[142] On the balance of probability, I find that the original pump, which was not tested at the start of the tenancy because no one was thinking of using it, was not working then, but that the Hardys had no sufficient notice that it was not operational then nor until notified by Mrs Li on 19 November 2003. This problem was, I find, rectified by obtaining a replacement unit on 22 December 2003, that is, in less than five weeks and in the run-up to Christmas. This was reasonable. The failure of the second pump on 30 December 2003 was not a continuation of the same want of repair. It was a different pump, and it was a failure of the unit, not the wiring. This was a new want of repair, and it was remedied within 16 days, despite the holiday period. This was again reasonable.
[143] The further failure of the pump in August 2006, said by LEM not to have been remedied before the end of the term in November, is said by Mr Wood to have been due to a build up of “mulch” in the fountain affecting the pump. No evidence contradicting Mr Wood was called, and even if written material arguing for other possible causes was properly admissible evidence of fact (which it is not), I find his evidence persuasive. Mulch is a cleaning issue and, in principle, cleaning falls within a tenant’s duty to use the property in a tenant-like manner, which is expressly not displaced by clause 4(v). I can see no landlords’ covenant that might be argued to place this cleaning burden on the landlords’ shoulders. I find that cleaning out the fountain does not come within maintenance of “the exterior” of the property in clause 4(vi), nor within clause 4(ix) regarding garden and grounds, which relates only to “neat and tidy condition”, and I can see no reason to put a strained construction on such covenant in LEM’s favour, when cleaning falls squarely within a tenant’s covenant of tenant-like use. If there were any loss or damage here, it was therefore caused by LEM itself, and not any breach of the landlords’ covenant.
[144] With regard to the fountain lights, I find, on the balance of probability, that the state of the lighting system when the property was let was the same as was found at 30 January 2004. I do not know if the failed light unit or bulb prevented the entire set from working. However, I accept that the Hardys had never intended it to function and LEM and the Lis were each unaware of it and did not expect to get a functioning pond light system. While most people would be pleased to find that they were going to get an unexpected additional facility once |page:138| it could be made operational, Mr Li seems to have been merely angry that this unexpected “extra” was not instantly on hand.
[145] Considering all the circumstances, including the Christmas season, the need to investigate from scratch how to get the light system fully functional and trace spare parts, that such a light system is scarcely an essential and that LEM and the Lis had never even noticed its omission, I find that the system was made operational within a reasonable time, and there was no breach of clause 4(v).
[146] I should add that in so far as the garden fountain failed to operate because of leaves in the outlet holes in the upper basin, although LEM tried to argue that this was landlords’ maintenance rather than tenant’s obligation of tenant-like user (ie cleaning), in my judgment it was the latter, and the fact that the bowl was high up and not easy to reach made no difference. It is apparent that the precise effect of several obligations under this lease has not fallen exactly where the parties might have expected because they did not consider the effect of the drafted obligations upon every detail of the property. LEM’s attitude has been that any such item must therefore be the landlords’ responsibility because they would not have intended to assume it. I entirely accept the latter, but the former does not follow. Just as the Hardys have undoubtedly found themselves being expected to finance items that they did not anticipate, the same may just as easily happen when a tenant has not fully appreciated the extent of its duty of tenant-like use.
Item 6*: Swimming pool maintenance
[147] This referred to: (a) a complaint of “debris” in the indoor pool for some days while Mrs Hardy was maintaining it; (b) a requirement for the replacement of a leaking ring in a trichlorinator, noted on 19 December 2003 and replaced on 15 January 2004 (see also item 25); and (c) a report from an expert engaged by Mrs Li to test the pool water, said to show that the pool was “unsafe” to swim in on 18 December 2003 because of poor maintenance. LEM in fact accepts that this last complaint was resolved once it was brought to the attention of a pool specialist.
[148] The main thrust of Mr Wood’s response is that although he was not a pool specialist, the tenant’s complaints were exaggerated, and that its swimming pool specialist was applying the standards for public commercial pools, not private pools.
[149] I agree with this. I have formed the clear view that this complaint was inflated by the Lis as part of their determination to stop Mrs Hardy from coming to the property by whatever deterrent they could muster. On the balance of probability, I am quite satisfied that Mrs Hardy was well capable of carrying out competent day-to-day maintenance of the pools as she had done when living at the property. I accept her evidence that the “debris” was a small amount of dirt (although perhaps more than a “speck”) that must have been imported by the Lis or their family or friends. The fuss made about alleged danger of “acid” water from the leaking trichlorinator I find to have been played up. I also accept Mr Wood’s assessment that the tenant’s expert was applying inappropriate standards. Once Mrs Hardy had withdrawn, this matter calmed down, although it provided the excuse, later, for LEM to be instructed to withhold rent.
[150] With regard to all the other complaints concerning pool maintenance (chemicals, leaks, failure of mechanisms, etc), I find that in so far as any was within the landlords’ covenant (and the Lis complained with regard to the outdoor pool at times when it was agreed to be closed), it was dealt with in a reasonable time in the circumstances. Those circumstances include that no such complaint appears to have been an emergency, and that the lead time for obtaining spare parts is not within the landlords’ control.
Item 14*: Floodlights not operating automatically
[151] Although this was one of Mr Day’s important complaints, Mr Wood’s evidence was not challenged in cross-examination. It was that the initial “fault” reported by LEM on 19 January 2004, was a request to change the range of the beam on the light sensor, and was dealt with as such. When, on 6 February, an operational fault was first clearly reported, Norwood brought in the security specialists to deal with it. It is quite unclear to me that there was any actual fault in the system at all from that point on, since it was reported that: (a) apparent problems were caused by someone having switched off beams; and (b) the Lis were expecting non-automatic lights to work automatically. What is clear, though, is that this was all dealt with by the specialists and, after 26 February 2004, no more complaints were made. No breach of covenant is shown.
Item 31*: Failure of gas hob in main kitchen
[152] This was a specialist liquid gas hob. On 25 July 2004, it was reported not to be working and investigations revealed that there was no gas supply. Not knowing what was the problem, Norwood brought in a gas inspection company, which found that there was nothing wrong with the system, but the external manual gas valve had been turned off. Why it should have been is a mystery, but it is not shown that it was the landlords’ fault, and there was no want of repair in the system, which was physically in perfectly proper working order. There was therefore no breach of covenant.
[153] I have not been satisfied that any later complaint concerning the working of the gas hob discloses any breach of the landlords’ covenant, particularly in the light of evidence concerning the lack of tenant-like care of appliances by the Lis’ staff (for example, item 49*) and the fact that the reset knob on the gas alarm was found to have been “disabled” (that is, broken) at the end of the tenancy, when the Hardys’ contractors were eventually able to gain access (item 40).
Item 49*: Malfunctioning kitchen extractor fan in staff kitchen
[154] LEM claimed that the cause of a problem of condensation and oil dripping from the extractor hood in April 2005 was “unclear” but likely to have been an installation defect with the ducting. Mr Wood’s evidence is that the maintenance contractor attended, dismantled the hood and cleaned its parts in June 2005, having been initially deflected from this likely cure by the fact that Mrs Li claimed that she had had the hood cleaned. His cleaning cured the problem. I am satisfied that the hood had not been cleaned, and this was a breach of the tenant’s own covenant. There was nothing wrong with the installation and there was no breach of the landlords’ covenant.
Other complaints
[155] I dismiss the other alleged breaches of covenant maintained at the trial and not already referred to. In doing so, I have not overlooked the fact that the tenant was obliged to report any “defect” in the premises to the landlords (under clause 2 (a)), a responsibility that it appears it performed extremely conscientiously. That does not necessarily mean that the existence of a defect is a breach of covenant giving rise to a legitimate complaint. I also bear in mind that the reporting of, for example, “indications” on an alarm, may be a reasonable act on a tenant’s part, even if it turns out that nothing is wrong, especially in the early days of a tenancy before the tenant is familiar with the functioning of systems. Once again, however, that situation is entirely neutral as to whether there is in fact a breach of covenant.
[156] I find that the following matters, although within the landlords’ responsibility for repair and maintenance etc, were dealt with within a reasonable time in all the circumstances, that is, having regard to the nature of the complaint (often of very minor effect), the steps necessary to remedy it, the fact that some aspects of this process, such as ordering parts or the earliest a contractor could attend, were outside the landlords’ control, the willingness of the Lis to give access and the general timescale implicit in a requirement for seven days’ notice of any contractor attending. This applies to items: 12 (washing machine); 13 (easing picket gate); 24 (pool extractor alarm starter, as to which in any event inconvenience was obviated by leaving the extractor fan permanently on until the repair was made); 25 (in so far as this is not repeat of 6*); 26 (“tide mark” on indoor pool); 28 (CCTV equipment other than bulbs); 32 (pool wave machine); 36/38 (pool “leak” in basement); 40 (investigating false gas alarm alerts); 44 (coach house alarm); 45 (boiler pump failure and, in any event, no damage occurred because the standby pump operated); 48 and 50 (dripping/blocked taps in staff areas); 62 (“dropped” sash window, in fact only within |page:139| the landlords’ covenant at all because it is arguably “exterior” within clause 4(vi) rather than interior joinery: see below); 63 (noisy garage doors noted by landlords, not reported by tenant); 68 (basement pump failure, the back-up pump system operated as intended); 70 (leak in swimming pool changing room WC cistern — noted by landlords not reported by tenant; major works required for minor leak of clean water); 71 (replacement of “bug” killing device on outdoor pool reported five days before closure); 76/77 (dripping tap and shower hose in staff bathroom); 78 (maintenance and fitting release devices to garage doors noted by landlords and not reported by tenant; delayed by contractors failing to attend and the Lis’ stopping works/not moving cars); and 82 (swimming pool air-handling alarm).
[157] In respect of the following items, I find that that there was no breach of covenant because there was no fault or want of repair requiring remedy, either at all or by the landlords. The relevant items are: 4 and 5 (fire alarm signals); 21 (allegedly “defective wiring” that was in fact “health and safety” detail requirements: see further below); 22 (alleged malfunctioning of vent CP2 alarm); 27 (fountain pump cover — adequately serviceable); 29 (outdoor pool chlorination levels); 30 (pool changing room telephone point); 41 (outdoor pool heating in winter); 59 (basement control panel fault indicator); 64 (hairline decorative shrinkage cracks); 66 (“sunken” paving slabs noted by landlords, not raised by tenant); 69 (electrical failure because of general power cut); and 93 (flooding or “ponding” on rear staff patios in inclement weather). In many cases, particularly of alarms allegedly malfunctioning and the telephone point complaint, the systems were simply functioning as they should, and the Lis or their staff did not understand them.
[158] In respect of several items relating to adjustment of internal joinery, in particular doors described as “warped”, “misaligned” or “stiff” (items 11, 37, 61, 62, and 65), I accept the defendants’ submission that these were not in fact within the landlords’ covenants at all, although they dealt with them in a reasonable time in any event. The landlords’ repairing covenant at clause 4(vi) extends only to “the structure and the exterior” of the property, and its repair and maintenance covenant at clause 4(v) covers only services installations and mechanical and electrical items. Doors fall into neither category. Whether easing doors would come within the tenant’s covenant at clause 2(vi) as “keep[ing] the interior… in the same good… state and condition and repair” as at the outset, I do not need to decide, although, on balance, I am inclined to think that it would, and would have to be appropriately well done. This omission appears to be a drafting deficiency in the lease, since I have little doubt that the landlords would have wanted to keep direct control of any works to doors in the context of letting a property such as this.
[159] Items 51 (indoor pool ceiling lights), 56 (fountain underwater lights) and 57 (kerb lights) were all occasions of light bulbs that required replacement and that were therefore, in my judgment, within the tenant’s covenant at clause 2(v) of the lease, notwithstanding that they may have been “challenging for the domestic user” (as Mr Wood said) in respect of the last. In fact, Norwood replaced the indoor pool ceiling light during the term, without charging the tenant.
[160] I find that, as with item 49 (allegedly defective extractor hood), several items were the tenant’s fault or responsibility and not the landlords’. These are items: 33 (alleged “malfunction” of burglar alarm system that, if there were indeed any faults, I find to have been caused, on the balance of probability, by the Lis’ wrongful installation of air-conditioning units through the windows, contrary to the lease terms, and being incompatible with the way the systems worked); 73 (broken shower head in the changing room, which I find to have been caused by tenant misuse, since shower heads do not break unaided); 74 (blocked drain in master bedroom shower — clearing such a blockage was within the tenant’s duty of tenant-like user); 92 (the replacement of a failed battery for the remote control to kitchen TV — batteries are consumables, and their replacement is within the tenant’s duty of tenant-like use of systems and or defraying general outgoings; the fact that these batteries were special and expensive makes no difference to this principle).
[161] Item 79, which Mr Holland abandoned, was another fat-blocked drain caused by the occupants (the tenant’s licensees).
[162] I should mention, further, item 21 — “defective electrical wiring” — because the complaint sounds serious. The thrust of it was that LEM’s electrical services engineer’s report obtained on 11 February (engaged originally in respect of the problems with the outdoor lighting) showed “electrical defects” in the house wiring. The defendants say that this is a distortion, and, once again, Mr Wood’s evidence was not really challenged, although a good deal was made of the reference to several, apparently serious, electrical faults in his report of 7 November 2003. His evidence was that in so far as these impinged on the occupation of the house, they were dealt with urgently before the term commenced, and I find no evidence that anything truly serious still existed after that time. Mr Wood explained that there was no defective wiring, but the installation had, admittedly, been poorly finished off, and some health and safety requirements and recommendations had not been met. Although these were obviously defects of good practice, none (I infer) caused the electrical wiring to be a hazard, and I note that this was not one of Mr Day’s “top ten” complaints. I think that it is questionable whether some of the shortcomings would fall within clause 4(v), as is pleaded, at all, but I accept that they were dealt with by 19 February 2004, which was a reasonable time on any footing, and, in any event, I cannot see that any loss or damage would have been caused to LEM or the Lis.
Measure of damage for breach of landlord’s covenants
[163] The modern expression of the correct approach to assessing the measure of damage for a breach of the landlord’s covenant is to be found in Wallace v Manchester City Council [1998] 3 EGLR 38*, at p42B-D, per Morritt V-C, a residential property case. I derive the following from this case, and from the authorities following it, such as Earle.
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* Editor’s note: Also reported at [1998] 41 EG 223
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[164] The essential question is:
what sum will, so far as money can, place the tenant in the position he would have been in if the obligation to repair had been duly performed by the landlord?
[165] After noting that this inevitably involves a comparison of the property as it should have been with what it in fact was for the period when the landlord was in breach, the V-C then says that for periods when the tenant remained in occupation of the property the loss requiring compensation is “the loss of comfort and convenience” to him that results from living in a property that was not in the state it ought to have been in.
[166] There are two ways of arriving at a logical figure for the assessment of such damage. One is to put a global figure on the loss and damage suffered; the other is to make an appropriate allowance against the rent paid for the relevant period, usually as a percentage. The former places more emphasis upon valuing the loss suffered and the latter upon valuing the value not received. They ought to amount to the same thing, but one approach may feel more natural than the other, depending upon the facts. It is entirely a matter for the trial judge which approach it is more appropriate to adopt, and it is even permissible to combine the two, although care must be taken to avoid double-counting. It is also advisable to cross-check the result of either approach against the other as a reality check.
[167] Since it is a point that is rather obscured among the quantity of complaints in this case, I remind myself that a tenant is awarded damages for the landlord’s non-performance of its covenants, and not for his performance of them. The fact that the landlord’s performance of the covenants may have inconvenienced the tenant is irrelevant (unless the nuisance caused was excessive for the carrying out of the necessary work). I have found only six relatively limited instances of breach of the landlords’ covenants causing any discernible discomfort or inconvenience to the occupiers to have been proved. One of these |page:140| (28 replacements of infra-red camera bulbs) sounds in special damages and can be calculated from records that I understand have been retained, but I have to assess general damages in respect of the others.
[168] In this case, there is the added complexity that the tenant who is entitled to the damages is LEM, which was not itself the occupier. The former approach (that is, assessment of damage for discomfort and inconvenience suffered by the tenant) therefore cannot apply directly. The corporate tenant suffers no discomfort, and I note the comment of Judge Hicks QC in Electricity Supply Nominees Ltd v National Magazine Co Ltd [1999] 1 EGLR 130, at p135B that:
there is nothing in the authorities to require that, in the case of a letting to a trading company, damages for breach of a landlord’s covenant to repair must take the form of an unexplained global sum for inconvenience and disruption
[169] In both Larksworth Investments Ltd v Temple House Ltd (No 2) [1999] BLR 297 and Crédit Suisse v Beegas Nominees Ltd [1994] 4 All ER 803*, a global figure for damages was awarded to a corporate tenant of office premises on the ground that there was a visible want of repair “with an effect on amenity and efficiency of the offices” for an identified period, (Larksworth) or “having regard to the inconvenience suffered by staff and customers” (Credit Suisse). In each case, however, the tenant was in occupation, and that aspect could be argued to have had some depressing indirect effect upon the tenant’s business or trading performance. Mr Warwick also submitted that in Earle (above) Carnwath LJ found Judge Hicks’ reasoning in Electricity Supply Nominees persuasive, Judge Hicks having found Credit Suisse of no assistance on the question of the proper approach to the assessment of damages for a corporate tenant.
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* Editor’s note: Also reported at [1994] 1 EGLR 76; [1994] 11 EG 151
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[170] Neither counsel had found any illustrative case in which damages had been awarded to a company tenant that had taken a letting of residential property for occupation by someone else. In this case, LEM was not in occupation, and it is difficult to see upon what basis it suffered any damage at all itself. All that happened to the damage of LEM as a result of the breaches of covenant that I have found (aside from the infra-red bulb replacements) was that it received a few more telephone calls and e-mails from Mrs Li than it otherwise would have done, which it was expected to chase up with the landlords. This caused it no actual loss. It did not have to employ any extra staff or incur any extra expense as a result.
[171] However, Mr Warwick did not quite feel able to urge that I should award LEM nominal damages only. He recognised that it was unreal to suggest that I should not take into account the effects of any breaches of covenant on the actual occupier. His submission was that in the absence of any direct evidence from the occupier of the actual effect upon it of the loss of amenity caused by any breaches of covenant that I found (as contrasted, I interpose, with argument, often theoretical, made by others on their behalf), the award of damages would be merely the kind of irreducible minimum that is awarded in cases of breaches causing mere inconvenience rather than serious discomfort or damage (such as damp, leaks, water or wind ingress, wood rot or malfunctioning electric circuitry). Such awards, he submitted, were to be measured in hundreds of pounds, not thousands.
[172] I consider that Mr Warwick was right not to press for nominal damages only. Even though a company in LEM’s position may not itself have suffered any damage as a result of a breach of the landlords’ covenant, it does so in the sense that it has paid for something that it did not receive. The law does not, in my judgment, permit a landlord to get away with non-performance of its covenant while still being paid on the basis of having performed. The appropriate compensation for the tenant is a payment representing the value of the amenity that it did not receive, and was therefore unable to pass on to its licensee. The assessment then comes back to the third principle of Wallace, cited above, but without regard to any particular susceptibilities of the actual occupiers.
[173] LEM did not quantify its claim when launching its proceedings in February 2007, but did so in July 2007, at a maximum of £187,296, this being a 25% discount on the total rent that should have been paid (not all of it was) over the entire three-year term of the letting: £749,148. However, this was claimed in respect of the totality of the “defects and problems experienced”. I would have regarded this assessment as over-ambitious even if all the matters of which Mr and Mrs Li complained had in fact been breaches of the landlords’ covenant, but in the light of my very limited findings of breach, it is not even within range. In fact, the breaches that I have found are so relatively minor, and so short in duration, that I consider that the only appropriate approach is the award of a global sum.
[174] Mr Warwick submitted that an indication of an appropriate upper limit of damages for any discomfort or inconvenience genuinely suffered by the Lis was to be found in Mr Li’s ultimate offer to treat LEM’s claim as worth a £5,000 allowance as part of his negotiations over the terms of a new lease. This, he submitted, was unlikely to be an overestimate. I do not, however, regard figures put forward as part of a negotiation in a wider transaction as being any safe guide to value, and I proceed to make my own assessment from first principles.
[175] In doing so, I take into account: (i) the level of rent payable (equivalent to daily rates of £658, £684 and £711 in 2003-04, 2004-05 and 2005-06); (ii) the total extent of the property, facilities and covenants for which that rent was being paid; and (iii) the degree of loss of amenity that I consider to have been caused to the reasonable occupier by the relevant breaches. My conclusion is that the overall appropriate global sum is £3,250.
[176] Without being scientific, I attribute this roughly as follows: £600 (about £60 per week, that is, a little above 1% of the rent) in respect of the failures of the outdoor lighting for around 10 weeks in winter; £150 (about £2.50 per day) for the inconvenience of Mrs Li’s having to use a different bathroom for a comfortable shower, or to take a bath, for eight weeks); £2,000 (£1,200 and £800 each) for the two summers’ substandard garden maintenance (a definite, but merely below standard, loss of amenity, but affecting only around four of the main summer months, and when the Lis were not continually in occupation of the house); £200 for the late availability of the open air pool and completed paving in 2006; and £250 for the inconvenience of not being able to watch television in the kitchen for a month. Rounding this up to £3,250 allows for any nominal damages in respect of other breaches.
[177] I will give judgment for this sum, together with the costs of replacing the CCTV infra-red camera bulbs that I have mentioned as special damages, which should merely require ascertaining the figures.
Breach of the tenant’s covenants
[178] By the start of the trial, the Hardys’ counter-claim had reduced to 11 items out of an original 28, totalling £6,427.70. They identified the relevant covenants alleged to have been breached, which, in most cases was clause 2(iii) (duty to use in a tenant-like manner) and/or a combination of clause 2(vii) (delivery up) and clause 2(iv) (interior cleaning maintenance and repair). It is important to note that clause 2(vii) expressly links the standard in which the tenant is obliged to deliver up the premises to that stipulated in clause 2(iv) by use of the word “aforesaid”. Other specific covenants are identified where relevant. It is easiest to deal with each of the remaining allegations in order.
Cleaning of drive (1)
[179] This relates to the degree of moss left covering the cobbled drive at the end of the tenancy. I do not find this to be any breach of the tenant’s covenants. The growth of moss was a natural occurrence, caused no lasting damage to the surfaces, and therefore did not fall into the covenants against either waste or damage to surfaces: clause 2(xxviii) and (xxxi). On its true construction, I find that clause 2(iv) applied only to the interior of buildings on the property, and not just to anything inside the boundary fence. This leaves only clause 2(iii), tenant-like user, and I am not persuaded that removal of moss would fall within that duty unless and until the moss either became dangerous or caused some other impediment to the convenient use of the premises or the functioning of its facilities. There is no evidence |page:141| that it did. In fact, I am inclined to think that the removal of moss, if and when it became significant in these respects, would have come within the landlords’ own covenant to “maintain… the exterior” of the property and/or to “maintain the… grounds… in a neat… condition”.
Stains to garage floors and walls (2)
[180] This relates to exhaust and oil marks caused by the Lis’ cars. The response is that the stains were noted on the check-in inventory and that anyway it is fair wear and tear. I find this breach to be proved. If the stains could be cleaned off, as the defendants did, then doing so was within the tenant’s obligation of tenant-like user and/or proper interior maintenance. Unfortunately, in the final claim, the cost of this item is combined with item (1), which I have not upheld. I note, however, that the original figure in the counter-claim was £125 for this item, and I will award that sum.
Damage to LPG gas detection unit absence of reset key (9)
[181] The parties agree that this item depends upon who “chewed up” the key. On balance of probabilities, I find that it was the tenant (more accurately, the Lis’ staff). The damage claimed is £270.88.
Replacement of two Creston batteries in TV remote control units (13)
[182] This is the obverse of item 92 in LEM’s claim, under which I have already found that replacing batteries was part of the tenant’s duty under clause 2(iii), but LEM also argues that only one battery was noted to be run down on the check-out inventory. I find that this is because Mr Wood had previously sent one replacement to the Lis in September 2006, shortly before the tenancy ended. In the circumstances, I find this breach to be proved, in the sum of the £517.01 claimed.
Cleaning of house (21)
[183] This was conceded in the sum of £2,643.75. I should simply add that this was a case of contractors letting down LEM as to the standard of their final clean, and does not imply that the Lis did not generally keep the house clean during the tenancy, with the assistance of their four staff.
Reprogramming of window alarm system and reconnection (23)
[184] The Lis had taken the windows off the burglar alarm system in order to install their air-conditioning units, and had also altered the programming codes, leaving, according to Mrs Hardy, incorrect ones. LEM says that the alarm company was called in, in any event, to reset new personal codes for the Hardys, so there was no damage. Mrs Hardy’s evidence was that she would call the alarm company in just to change personal codes, but then she said that she thought that the Hardys might well have accepted to live with the Lis’ codes if they had been given them. I do not believe this. I find that the alarm company would have been called in to reset personal codes. However, they would not have had to be called in to reinstate the windows on the alarm system if the Lis had not wrongfully disconnected them. The invoice from the alarm company includes a time element of 5.5 hours’ labour. Reconnecting elements of the system is a bigger job than resetting codes, and I would be satisfied that four hours of this would be attributable to this extra work. I therefore find this item proved in the sum (including VAT) of £229.74
Light bulbs not replaced (24)
[185] Except for one infra-red bulb, I am satisfied that these light bulbs were not replaced by the tenant. I am not satisfied that this was only in respect of “lights which did not work” (as LEM asserted) even if that were material. I therefore find this breached proved. There is evidence of the replacement cost of two fibre optic bulbs in the indoor swimming pool, at £244.48. There is no evidence of the cost of 35 outside bulbs and 10 halogen bulbs and transformers; merely an estimate from Mrs Hardy of £1,150, with no supporting evidence. This is a very large sum. I am satisfied that these bulbs were far more expensive than the average light bulb, but I do not feel able to accept Mrs Hardy’s estimate on its own. In the circumstances, I will award half of her estimate, that is, £575, making £819.48 for this item.
Blocked patio drain (25)
[186] Clearance of this is conceded in the sum of £70.
Garage drain “blocked by oil” (26)
[187] Although described as an “oil” blockage, Mrs Hardy’s evidence was that three bags of debris, including leaves, silt and car oil, was removed from this drain. LEM’s response is that this was the product of flooding about which they had been complaining since September, but which had not been dealt with, and was caused by natural forces, not car oil. The evidence suggests that occasional flash flooding in heavy rains was not an unknown phenomenon of the area. It was (I find) the tenant’s job, not the landlords’, to deal with blocked drains, whether or not these were exterior and whether or not car oil exacerbated any problem. This problem manifested itself before the end of the tenancy and was not attended to. I therefore find this breach to be proved in the sum of £105 for clearing the drain.
Change of telephone call point number between house and main gate (27)
[188] Although I am satisfied that the Lis changed this number and did not give the correct number back to the Hardys, I am not satisfied that it caused any additional expense to the Hardys because I consider that, on balance, they would themselves have changed it again anyway, and the cost of this item is small.
Exit gates left in “open” position (28)
[189] Shortly before the end of the tenancy, the Lis (or more accurately, I think, the staff or contractors who were removing their effects) complained that the entrance gates were “stuck open” and not working properly. The Hardys called out the maintenance contractor, who discovered, after investigation, that there was nothing wrong, but that the gates had been set manually to the “open” position. This was thus a false alarm, and I conclude that it was yet another instance of the tenant complaining rather than checking the obvious possibilities for itself (or explaining the workings of the gates to its staff or visitors). I find this to be a breach of the covenant to use in a tenant-like manner, and it directly caused the Hardys to spend £411.25 unnecessarily. I therefore award damages in this amount.
Total value
[190] In conclusion, therefore, I find that the defendants prove the damages claimed in their counter-claim for the several proven breaches of the tenant’s covenants in the lease in the sum of £5,192.11.
Overall outcome
[191] At the start of action, the claimant was claiming damages for breach of covenant (which I have now assessed at £3,250 plus the sum for the replacement of infra-red camera bulbs, which requires to be quantified), together with the return of their £40,000 rent deposit, and the defendants, after applying the rent deposit to the admittedly unpaid amounts of rent (earlier deductions and the final unpaid quarter’s rent) were claiming £40,831.50, together with damages for breach of covenant, which I have determined in the sum of £5,192.11. In the light of my judgment, the overall result is that the defendants are entitled to recover from the claimant the sums just mentioned (£46,023.61) less £3,250, that is, £42,773.61, to be further reduced by the sum attributable to the infra-red camera bulbs, which I trust can be agreed.
[192] I will hear counsel on any further matters, and the form of the order that I should make consequent upon this judgment.
Claim allowed in part; counter-claim allowed in part.
