Allyson Colby appraises a novel case in landlord and tenant law that artfully addresses the question: who owns a valuable mural?
Key points
- Any parts of a building that are removed to enable a tenant to comply with the repairing obligations in its lease revert to being chattels
- It may be possible to imply a term that tenants can dispose of such items if they have no more than scrap or salvage value
- However, chattels that are valuable remain the property of the landlord
The appearance of graffiti on a building is often unwelcome – but not always. Murals created by the street artist known as Banksy often sell for huge sums of money. The Creative Foundation v Dreamland Leisure Ltd and others [2015] EWHC 2556 (Ch); [2015] PLSCS 263 dealt with a novel point of law, which the courts have never previously considered.
The case concerned a mural that appeared on the wall of a building in Folkestone. The mural, which was known as “Art Buff”, was attributed to Banksy and, according to press reports, was valued at up to £470,000.
The tenant, whose lease of the property included the structure and exterior of the building, had the mural removed and shipped it off for potential sale in America, without the knowledge or permission of the landlord. The Foundation took an assignment of the landlord’s rights in relation to the mural, obtained an interim injunction preventing the tenant from selling it, and sought an order requiring its return.
The Foundation argued that the wall had been part of the land. The lease prohibited the tenant from cutting or maiming the walls of the building. Consequently, it had not been entitled to remove, and then appropriate, any part of the wall. Following their removal, the bricks and mortar onto which the artwork had been sprayed regained their character as chattels, and title to them had vested in the landlord. Therefore, the tenant had committed the torts of trespass and conversion.
Repairing obligation
The tenant claimed that it had been obliged, or entitled, to remove the artwork to comply with the repairing covenants in its lease. It argued that Gibson Investments Ltd v Chesterton plc [2002] EWHC 19 (Ch); [2003] 1 EGLR 142 was authority for the proposition that it had been entitled to choose how to go about this and that it had replaced the brickwork to discourage others with ambitions to paint their own graffiti in exactly the same place.
The judge was prepared to accept that the tenant’s repairing obligation might have been engaged, but ruled that the tenant’s chosen method of repair had not been objectively reasonable. The tenant should have cleaned the wall or painted over the mural instead.
Fortunately for us, Arnold J chose not to leave things there and went on to consider who would have owned the brickwork had it been necessary to remove it in order to comply with the repairing obligations in the lease.
Implied term
The parties agreed that any items that ceased to form part of the property reverted to being chattels and that the court would need to imply a term into the lease dealing with the question of what happens to parts of a building – whether they are structural (such as bricks, joists and tiles), decorative (such as ceiling roses and fireplace surrounds) or landlord’s fixtures (such as baths and boilers) – which have to be replaced, or otherwise removed, to enable the tenant to comply with its repairing obligations.
The Foundation argued that the court should imply a term that such items belong to the landlord. Where the chattels in question are of no, or minimal, value, the tenant can, and indeed must, dispose of them, but must return items of worth to the landlord.
The tenant argued for a simple and practical rule. It tried to persuade the court to imply a term that all such items belong to leaseholders, who should not be required to obtain valuations of parts removed from a building during repairs or to negotiate with landlords over their disposal.
There was no authority directly on the point, but the judge considered two 19th century cases, Farrant v Thompson (1822) 5 B&Ald 825 and Elwes v Brigg Gas Co (1886) 33 Ch D 562, and the Court of Appeal decision in Herbert v British Railway Board (unreported, 15 October 1999). They tended to support the Foundation’s argument and confirmed the judge’s view that the default position was that every part of the property belonged to the landlord. The tenant had a relatively short tenancy of the property and must show that it would be proper to imply a term into the lease leading to a different result.
The mere fact that the tenant was discharging its repairing obligation did not lead to the implication that it would, as a result, acquire ownership of items that had previously formed part of the building. Furthermore, even if a term could be implied enabling a tenant to dispose of waste, or chattels with no more than scrap or salvage value, it did not follow that the same term should be implied in relation to chattels worth substantially more than this. The suggested term did not meet the criteria often used to decide whether to imply terms into contracts. It was not necessary to imply a term transferring ownership to the tenant and it did not go without saying that the parties would have agreed to this, had they addressed the point before signing the lease.
One of the parties was going to receive a windfall and the judge considered that the landlord had the better right to it. Consequently, the Foundation was entitled to recover the mural.
Allyson Colby is a property law consultant
