Landlord and tenant — Landlord and Tenant Act 1985, section 11 (replacing section 32 of the Housing Act 1961) — Landlord’s implied covenant to repair — Whether certain works carried out by council landlords were ‘repairs’ — Position in regard to consequential damage to tenants’ decorations — Appeal from decision of assistant recorder in county court in favour of landlords
litigation arose after fairly radical remedial works had been carried out to
council houses, including the appellants’ house, after a period of palliative
treatment — The houses were ‘fundamentally flawed’ in their design or
construction or both and in particular were not watertight — The remedial
treatment included the removal of the whole front and rear elevations and the
roof structure, replacing the flat roof by a dual-pitched tiled roof, new
windows and doors and the stripping out of interior fittings — The tenants were
moved during the progress of the works to temporary accommodation — The cost of
the work done to the appellants’ house was £10,718, increasing the market value
of the house from about £10,000 to about £18,500 and prolonging its estimated
life by some 30% — At a meeting with tenants the council had said that they
would pay £50 per house as a contribution towards the cost of redecoration
after the works — The appellants, who had sought to obtain an acceptance from
the council of liability for the full cost of redecoration, were not satisfied
and brought an action in the county court
recorder held that the works in question were not ‘repairs’ and that therefore
the respondent council could not have obtained possession in order to carry out
their statutory repair obligations under section 11 of the 1985 Act — He concluded
that they had gone into possession under a contractual licence; that there was
no inconsistency with section 12 of the Act, as this forbade contracting out
only when there was a duty to repair; and that there was nothing
£50 on account of redecoration — The tenants appealed
Appeal held that the assistant recorder’s approach was broadly correct — They
considered a number of authorities and concluded that, on any of the three
tests which emerged, the works carried out did not constitute repairs — The
tests were (1) whether the alterations went to the whole or substantially the
whole of the structure or only to a subsidiary part, (2) whether the effect was
to produce a building of a wholly different character from that which had been
let, and (3) what was the cost of the works in relation to the previous value
of the building and what was the effect on the value and life of the building —
The council’s workmen were not therefore on the site in pursuance of a
statutory duty to carry out repairs — The Court of Appeal considered that the
best explanation of their presence was that they were there under a licence
granted by the appellants to the council, one of the terms of which was the
payment of £50 towards redecoration — Other terms included the provision of
temporary accommodation during works and the free removal of goods and chattels
— The assistant recorder was right to dismiss the appellants’ claim — Sir John
Megaw, agreeing in the result, considered that the distinction between
‘repairs’ and works to remedy serious defects laid bare a gap in the law which
could have serious consequences — He accepted, however, that an attempt to
cover by legislation the rare cases where difficulties might arise could lead
to more problems than it would solve — Appeal dismissed
The following
cases are referred to in this report.
Bradley v Chorley Borough Council (1985) 83 LGR 623; 17 HLR 305;
[1985] 2 EGLR 49; 275 EG 801, CA
Brew Bros
Ltd v Snax (Ross) Ltd [1970] 1 QB 612;
[1969] 3 WLR 657; [1970] 1 All ER 587; (1969) 20 P&CR 829; [1969] EGD 1012;
212 EG 281, CA
Lister v Lane and Nesham [1893] 2 QB 212, CA
Lurcott v Wakely and Wheeler [1911] 1 KB 905, CA
McGreal v Wake (1984) 13 HLR 109; [1984] EGD 333; (1984) 269 EG
1254, [1984] 1 EGLR 42
Post
Office v Aquarius Properties Ltd [1985] 2
EGLR 105; (1985) 276 EG 923
Quick v Taff-Ely Borough Council [1986] QB 809; [1985] 3 WLR 981;
[1985] 3 All ER 321; (1985) 84 LGR 498; [1985] 2 EGLR 50; 276 EG 452, CA
Ravenseft
Properties Ltd v Davstone (Holdings) Ltd [1980]
QB 12; [1979] 2 WLR 897; [1979] 1 All ER 929; (1978) 37 P&CR 502; [1979]
EGD 316; 249 EG 51, [1979] 1 EGLR 54, DC
Stent v Monmouth District Council (1987) 19 HLR 269; [1987] 1 EGLR
59; 282 EG 705, CA
This was an
appeal by James McDougall and his wife, Joan McDougall, from the decision of Mr
Assistant Recorder Fryer Spedding, at Hartlepool County Court, rejecting their
claim against Easington District Council, the present respondents, in respect
of damage done to the decorations of the appellants’ council house during works
carried out by the council.
Michael Hart
QC and Jonathan Holmes (instructed by Kirkup Lascelles & Creed, of
Peterlee) appeared on behalf of the appellants; David Gilliland QC and Richard
Merritt (instructed by the solicitor to Easington District Council) represented
the respondents.
Giving
judgment, MUSTILL LJ said: During December 1985 Mr and Mrs McDougall moved out
of their rented council house at 37 Oakerside Drive, Peterlee, so that
Easington District Council could carry out works, designed to improve the
watertight characteristics of the building. Five months later, when they moved
back, they found that the house needed redecorating in order to restore its
previous internal condition. The council refused to carry out this work or to
pay more towards the cost than the sum of £50 which had been promised before the
tenants moved out. The McDougalls therefore brought an action in the Hartlepool
County Court to recover the balance. Mr Assistant Recorder Fryer Spedding
rejected the claim and the McDougalls now appeal.
37 Oakerside
Drive forms part of a council estate built some 20 years ago for Peterlee
Development Corporation in accordance with the practice of system-building,
which was then popular but which has recently been a source of much trouble.
Essentially, the house comprised a set of prefabricated concrete panels tied
together to form a group of open-ended boxes. The open ends were closed with
timber-framed elevations. The roofs were flat with a space between the roofs
and the tops of the panels. Rainwater drainage was effected by internal
downspouts from a central collecting point.
During 1976
the housing stock, which included Oakerside Drive, was transferred by statute
from Peterlee Development Corporation to the Easington Council. In the same
year the appellants began to live at no 37 with Mrs McDougall’s brother, who
was then the tenant. In November 1984 the brother left and the tenancy was
transferred to the appellants in their joint names. The tenancy agreement
contained a tenants’ repairing covenant in respect of the interior dwelling,
but no express covenant by the landlords. It is, however, common ground that by
virtue of section 32 of the Housing Act 1961 (re-enacted as section 11 of the
Landlord and Tenant Act 1985 with effect from April 1 1986) the council were
obliged:
(a) to keep in repair the structure and exterior
of the dwelling-house (including drains gutters and external pipes) . . .
Unfortunately,
it had already become clear by the time of the transfer in 1976 that these
houses were unsatisfactory. There were four principal defects. (1) The bolts
holding together the concrete sections were prone to corrosion. (2) The roof
skins were not watertight, with the result that rainwater collected in the roof
spaces. (3) The central downtake for the roof water was ineffectual, in some
way which does not emerge clearly from the papers. (4) The design of the
elevations, or their construction, or both, was such that rainwater percolated
round the frames. In consequence, the occupiers of these houses were constantly
suffering discomfort and damage from the entry of water.
Under the
terms of the statutory transfer from Peterlee Development Corporation, the
council were entitled to a capital grant from central funds in respect of
financial burdens which they were required to assume. The negotiations for such
a grant seem to have been prolonged. While they were in progress, the council
dealt with the tenants’ numerous complaints by a palliative policy of making
the premises temporarily wind and watertight through the application of mastic
sealant and similar measures. Such repairs could never furnish more than a
temporary solution, since the houses were fundamentally flawed. The tenants
began to apply pressure for a more permanent solution through the medium of an
action group and, when the council ultimately received a grant sufficient to
cover a substantial part of the cost, it was decided to tackle the problem at
the root by eliminating the faulty elements of the design. In the event, this
was carried out as follows. The whole of the front and rear elevations, the
roof structure and the rainwater dispersal system were removed, and the
interior fittings were stripped out. Essentially, each house was reduced to its
original framework of concrete boxes, apart apparently from certain skirtings
and doorframes which were left in place. Instead of the original timber
elevations, there was installed a sandwich construction of inner blocks and
outer brickwork, with cavity insulation. New windows and doors were fitted. The
flat roof was replaced by a dual-pitched tiled roof. The rainwater dispersal
system was replaced by external guttering and pipes. The floor slabs were
grouted, and the underfloor voids were filled with cement. No doubt remedial
work was also done to the panel ties, although this does not emerge from the papers.
On completion of the structural works the sanitary fittings were refixed or
replaced. The kitchen fittings and sink top were renewed, with new pipework for
the water and gas installations. The floors were retiled throughout. The
exterior and some of the interior timber items were painted, but the internal
doors, doorframes, walls and ceilings were not painted or decorated.
The cost of
the work done at 37 Oakerside Drive was £10,718. It had the effect of
increasing the market value of the house from about £10,000 to about £18,500
and of prolonging the estimated life of the building by some 30%.
Plainly this
was not work which could be carried out with the tenants in situ, and the
council therefore planned to execute the scheme in phases, with each group of
occupiers being moved to temporary accommodation, paying either the same rent
as for their own house or the rent appropriate for the transit house, whichever
was the lower. The cost of removing or storing the tenants’ furniture would be
borne by the council.
This scheme
was presented to the tenants of the 113 properties involved by means of a
circular document, the terms of which treated participation in the scheme as
very much a fait accompli. Except for a reminder that a tenant could be
excluded from the scheme by exercising the statutory right to buy before the
scheme got under way, nothing was said to suggest that a tenant could simply
stay put and
granted that, since the tenants had been pressing for so long to have the
problem solved, they were ready to put up with the inconvenience which this
would involve. Nothing was said in the circular about the state of decoration
after the work was done. Not long afterwards, however, there was a meeting
between council officials and the tenants at which the appellants were present,
although they had not yet taken over the tenancy from the brother. In the
course of this meeting it was explained that the council would pay a
redecoration allowance of £50. The officials were pressed on this but were
adamant that no more would be paid.
The appellants
duly moved out of no 37 in November 1985. There is nothing in the evidence to
suggest that they had by then made any protest or comment about the cost of
redecoration beyond whatever may have been said by tenants at the meeting.
However, on March 18 1986 solicitors wrote to the council on their behalf
contending in reliance on recent authority that, where a local authority had
carried out works on a property, they had a duty to redecorate on completion.
The solicitors put the council on notice to accept the task of redecorating, in
default of which the appellants would do the work themselves and charge the
council with the cost. The council repudiated liability, maintaining that they
had proposed a package deal, involving the execution of the works, the removal
of the appellants at the council’s expense to transit accommodation of their
own choice and a contribution of £50 to the cost of redecoration. The
appellants had chosen to comply. The works were being done. They had moved to
the transit accommodation. Now they wished to renegotiate the package. This was
unacceptable.
Further
correspondence did not resolve the dispute, and the appellants commenced the
present action.
In dismissing
the claim, the trial judge analysed the matter as follows. First, he considered
whether the work done on the house amounted to ‘repairs’, and directed himself
in the light of the authorities that this word should be given its meaning in
ordinary language, by reference to the terms of the tenancy agreement, having
regard to the state of the property at the time of the demise and the cost of
the works. He concluded that, even with an extensive stretch of language, these
works could never be described as repairs. Accordingly, the council could not
as a matter of law have been entitled under the statute to require possession
from the appellants, and accordingly must have carried out the works either as
trespassers or pursuant to an agreement. After examining the circumstances, he
decided that there was a contractual licence under which possession was given
upon certain terms. Finally, he considered whether the position was affected by
section 12 of the Act, which precluded the council from contracting out of the
obligation to repair under section 11 (formerly section 32), and decided that
it was not, since that section applied only to the duty to repair, and what had
happened here went beyond a repair. There was accordingly nothing to relieve
the appellants from their implied agreement to accept £50, and no more, on
account of redecoration.
Although on a
few matters of detail I might regard the issues in a rather different light
from the learned recorder, I consider that his approach was broadly correct.
Like him, I believe that one must first consider by what right the council had
taken possession of the house and had put into disrepair the internal
decorations which the tenants had, pursuant to the covenant, hitherto been maintaining
in good order. For this purpose one must, I believe, assume that, if these were
works which the council were obliged to carry out in order to fulfil their
duties under section 32, they must have had a corresponding right to enter on
the premises, even though the Act does not expressly say so, and if necessary
to exclude the tenants for that purpose: at least unless the tenants could
effectively dispense the council from the linked duty and right, by declining
to have the work done: a question which does not arise for decision here.
Accordingly, if it were the case that the appellants could have insisted on
this work being done, then the council could equally have insisted on being
allowed to do it; and, if they had done it, they would have been obliged to pay
the cost of any consequential redecorations. Precisely how this obligation
arises in point of law is perhaps debatable. For my part, I would incline to
think that the repairs could not be complete until the redecoration was done,
and that, if the repairs were thus left uncompleted, the landlord would be in
breach of section 32. Be that as it may, there is no doubt that the obligation
does exist: see McGreal v Wake (1984) 13 HLR 109 and Bradley v
Chorley Borough Council (1985) 83 LGR 623.
If, on the
other hand, the work done on the houses fell outside the council’s statutory
duties, they had no right to insist on doing the work. The presence of their
contractors on the site must have been the outcome of some form of consent on
the part of the tenants and their obligations with regard to repair would have
to be worked out by reference to the circumstances in which such consent was
given. I return to this question at a later stage.
Accordingly,
the question which must first be asked is whether the works carried out at 37
Oakerside Drive amounted to repairs or to something different. The council’s
reasons for suggesting a negative answer are, I believe, twofold. The first is
that there is nothing in the evidence to suggest that, when the appellants left
their house, there was any ingress of water of which they had notified the
council and which has nevertheless remained unrepaired. Thus, so it is said,
there was nothing to repair at the material time, and the council must have
been acting otherwise than under section 32. The second contention is that,
even if there was anything to repair, the appellants could never have compelled
the council to do more than carry out the short-term work which had been their
answer to the leakages in the past, so that once again the council must have
been volunteering to act in a manner to which the statute had no relevance.
I do not
accept either of these contentions. In the first place they assume that
prophylactic measures taken to prevent the occurrence of deterioration in the
future of a kind which has already had to be repaired in the past is incapable
of amounting to a repair for the purposes of section 32. I do not regard this
as the ordinary understanding of the word. Moreover, in his judgment in Ravenseft
Properties Ltd v Davstone (Holdings) Ltd [1980] QB 12, a judgment
which has received the express or tacit approval of this court on more than one
occasion, Forbes J held that the removal of the whole of the stone cladding on
the face of a building and its replacement by new cladding which incorporated
expansion joints which had not previously been there, in order to prevent
further dangerous falls of stone, was capable of amounting to repair. There was
no suggestion that it made any difference that not all the stones had fallen
off or were just about to do so. It seems to me that the repairs in that case
consisted of putting right a situation which had caused trouble in the past and
was likely to do so in the future. So also here.
Second, I
believe it unsound to assume that the steps which the landlord can be compelled
to take pursuant to his obligations under section 32 are always identical to
those which he is entitled to take when exercising his implied liberty to enter
and carry out repairs. Often there will be a choice of methods for solving the
problem. As Hoffmann J said in Post Office v Aquarius Properties Ltd (1985)
276 EG 923, [1985] 2 EGLR 105,* it must be a matter for judgment for the paying
party which method to adopt. I see no reason why the position should be any
different where the choice is between two ways of putting right an immediate
problem once and for all, and where further it is between a temporary method of
alleviating the symptoms of a chronic problem and a more radical cure of the
underlying cause.
*Editor’s
note: Reported also at [1985] 2 EGLR 105.
Assuming,
therefore, that the steps which the council took were capable of amounting to
repairs, the question is whether the work done to no 37 in fact fell into this
category. There are many reported cases on this topic. In addition to those
already mentioned we were referred to Lister v Lane & Nesham [1893]
2 QB 212, Lurcott v Wakely & Wheeler [1911] 1 KB 905, Quick
v Taff-Ely Borough Council [1986] QB 809, Brew Brothers Ltd v
Snax (Ross) Ltd [1970] 1 QB 612, Stent v Monmouth District
Council (1987) 19 HLR 269. Some of the problems discussed in these cases do
not arise here. In particular, we need not consider the position which exists
where the defects in design do not lead to structural disrepair but merely to
lack of amenity; for there is no doubt that there had been in the past, and
would continue to be in the future, deterioration in the structure which needed
to be put right by one means or another. Nor do I think it necessary to attempt
a complete reconciliation of the whole body of authority by means of a single
statement of principle: for I believe that whatever particular formula one
selects from the various judgments, the result in the present instance must be
the same. It is sufficient to say that, in my opinion, three different tests
may be discerned, which may be applied separately or concurrently as the
circumstances of the individual case may demand, but all to be approached in
the light of the nature and age of the premises, their condition when the
tenant went into occupation, and the other express terms of the tenancy:
(i) Whether the alterations went to the whole or
substantially the whole of the structure or to only a subsidiary part;
(ii) Whether the effect of the alterations was to
produce a building of a wholly different character from that which had been
let;
(iii) What was the cost of the works in relation to
the previous value of the building, and what was their effect on the value and
lifespan of the building.
Whichever of
these tests one chooses to apply, and whether they are taken separately or
together, the answer in the present case seems to me the same. When the work
was complete, the house not only looked different; it was different. The
changes were not simply cosmetic. The roof, elevations and fenestration were of
different configurations and materials. With the exception of the basic
concrete boxes, no feature of the house was left untouched in the course of the
work. The outcome was a house with a substantially longer life and worth nearly
twice as much as before. Acknowledging that repairs, properly so called,
inevitably involve an element of renewal and improvement, I still think it
clear that the learned recorder was right to hold that these could not be
described as repairs. They gave the building a new life in a different form.
Accordingly,
the presence of the council’s contractors on the site and the damage which they
inevitably did to the interior decorative condition of the house, must be
accounted for in some other manner. The idea that the council were trespassers
must obviously be rejected. If the appellants’ attitude corresponded with that
of the tenants as a group — and there is no reason to doubt that it did — so
far from objecting to the council’s plans, they were eager that they should go
forward.
This being so,
there appear to be only two sustainable analyses of the council’s position.
First, that they executed the works pursuant to a contract and, second, that
their contractors were on the site as licensees. As to the former, I can see
that in theory it might be possible to spell out of the documents and the
conduct of the parties an offer and acceptance, binding the council to do the
work and to provide transit accommodation exactly in accordance with their
circular, while at the same time binding the tenants to move out and back in
accordance with the plan, and to permit the council to have access and to do
whatever they thought appropriate to the house. The tenants’ rights would then
have to be worked out by reference to such a contract; and in particular it
would have to be accepted that the council would have to pay, and the tenants
would have to accept as an upper limit, the sum of £50 in respect of
redecoration.
Such an idea
is perhaps sustainable in the abstract, but it sits very poorly with the
reality of the relationship between the council and their tenants. The council’s
circular bears no resemblance to an offer, which the recipients could consider
whether to accept or not, whereby if it were accepted the tenants could be
compelled to move out and have their houses dismantled and rebuilt, and the
council could be compelled to go ahead with the scheme as formulated, come what
may. Rather, I would prefer to see the relationship as creating a licence,
whereby the tenants allowed the council to come in and do the work.
What, then,
were the terms upon which the council were to exercise this liberty? If the exchanges between the parties had been
completely silent on the question, I would have had no difficulty in finding an
implied obligation on the council to reimburse the tenants for the cost of any
uncompleted redecoration, such obligation arising in an entirely conventional
manner from the request by the council to act in a certain way, and by the
tenants in fact acting in that way. The result would therefore be precisely the
same, although arrived at by a very different legal route, as if the council
had been acting under the powers conferred by section 32. In the present case,
however, the circumstances were not as I have just postulated. The exchanges
between the parties were not silent as to the terms on which the tenants would
allow the work to be done. The council promised them transit accommodation,
free removal, and a contribution towards their redecoration expenses. The
appellants did move out into temporary accommodation and did accept the free
removal both out and back. This being so, it seems to me impossible to
understand the relationship otherwise than as a licence upon terms, whereby the
council were authorised to act as they did, if they gave the tenants the
recompense which they had promised. This recompense included the payment of £50
on account of redecoration. In the circumstances, I can see no room for the
implication which would otherwise have arisen, of a promise to reimburse the
tenants for all the amounts by which they were out of pocket by acting in
accordance with the council’s request.
Accordingly, I
would hold that the learned recorder was right in dismissing the appellants’
claim. I confess that at first sight this had seemed to me a harsh result; for,
if the council had said nothing about redecoration, as they might well have
done, the tenants would have been entitled to reimbursement in full. Upon
reflection, I am not sure that this is a fair assessment. After all, the
appellants took up the tenancy with full knowledge of the problems which had afflicted
the house for a decade or more. When they returned to their dwelling on the
completion of the work, they were able to occupy at the same rent as before a
house which was better in every respect than the one which they had originally
agreed to take. If their present action fails, the only price which they will
have to pay is the cost of some interior decorating, valued at about 3% of the
moneys provided by the council. This does not seem too bad a bargain.
Be that as it
may, I consider that the learned recorder was right in the opinion which he
formed on the facts and the law and I would dismiss the appeal.
STUART-SMITH
LJ agreed that the appeal should be dismissed for the reasons stated by Mustill
LJ and did not add anything.
Also agreeing,
SIR JOHN MEGAW said: I agree in its entirety with the analysis which Mustill LJ
has made of the statutory provisions, the authorities and the facts of the
present case, and with the conclusion which he has reached on the basis of that
analysis.
While I agree
with Mustill LJ that that analysis and conclusion produce a result which is not
unfair or unreasonable on the facts of this present case, it appears to me that
the analysis lays bare a gap in the law which could, at least in theory, have
undesirable consequences.
Assume facts
such as exist in the present case: that is, serious defects in the structure
which can be properly remedied (I must, of course, avoid the word ‘repaired’)
only by works which fall outside the meaning of ‘repairs’, or defects which it
is sensible should be remedied by such works rather than by repeated temporary
or ephemeral repairs. Assume further, as it would be right to expect in a
council tenancy, that there are no special terms of the tenancy governing such
a situation. On those assumptions, the landlord, under the law as it has been
interpreted, cannot be compelled by the tenant to remedy the defects, other
than to the extent that they may be ameliorated by repeated, temporary,
repairs; and the landlord can lay down such terms as it sees fit as a condition
of carrying out the works which are required to effect a proper remedy of the
serious defects. So, conversely, the tenant can refuse the landlord permission
to carry out the appropriate remedy or can lay down unreasonable terms as a condition
of agreement. All this arises because of the distinction which the law has
drawn between ‘repairs’ and works of remedy of serious defects which fall
outside the meaning of ‘repairs’.
It may be,
however, that in practice — in real life as distinct from legal theory — the
cases where such difficulties would arise would be rare, sinai the carrying out
of such works would usually be very much in the interest of both landlord and
tenant; and an attempt to cover by legislation such rare cases where the parties
had failed to agree might lead to more problems than it would solve.
The appeal
was dismissed with costs to be paid by the legal aid fund; Law Society to be
given 10 weeks to apply to set the costs order aside. Leave to appeal to the
House of Lords was refused.