Jonathan Seitler QC and Miriam Seitler debate moot points in property law – this time, Jervis v Harris clauses.
Question: Is a Jervis v Harris clause all it is cracked up to be?
YES: Jonathan Seitler QC, barrister at Wilberforce Chambers, argues that Jervis v Harris clauses are useful for a landlord seeking works to be carried out. This is for four reasons:
1. A Jervis v Harris clause is a powerful self-help tool for the landlord which, absent an express clause in the lease, it would not otherwise have. Such clauses are known as Jervis v Harris clauses after the landmark decision in which their potency was recognised, Jervis v Harris [1996] 1 EGLR 78, or “enter and repair” clauses.
The clause allows the landlord – or requires the tenant to permit the landlord – to enter the property for the purposes of inspecting it and then serve a notice on the tenant specifying items of disrepair which the landlord finds on that inspection, for which the tenant is liable, requiring the tenant to do those works within a specified time.
If the tenant fails to do those works in that time, the clause will allow the landlord to enter the property again, a second time, this time to actually carry out the works itself. The landlord can then recover the cost of doing those works from the tenant, as a debt.
2. A Jervis v Harris clause allows the landlord to dodge the hurdles of the Leasehold Property (Repairs) Act 1938. In relation to a lease of a term of seven years or more with at least three years to run at the date of a claim to enforce a right to damages in respect of breach of a repairing covenant, the landlord must, if the tenant serves a notice seeking the benefit of the 1938 Act, go through the process of obtaining the permission of the court to enforce such claim. That permission will be given only if the landlord can squeeze within at least one of five “portals” defined in the Act, each of which comes down to a question of whether the claim is really urgent, necessary and just or equitable.
It is a right bore for a landlord to have to do this, but an enter-and-repair clause gets around the whole tortuous process. How? Simple. A claim for money spent on repairs by the landlord under an enter-and-repair clause is a remedy based not on a claim for damages but on a claim for debt, and therefore falls outside the statutory scope.
3. A Jervis v Harris clause avoids the limit on recoverable damages imposed by section 18(1) of the Landlord and Tenant Act 1927. The first limb of section 18(1), as is well known, provides that damages available for breach of a repairing covenant are limited to the diminution in the value of the reversion caused by the breach; the second limb of section 18(1) says that no such damages are recoverable at all where the property is to be pulled down or where structural alterations are to be carried out at the end of, or shortly after, the end of the term (so as to “supersede” the need for any repair works of the type which the tenant is in breach for not doing).
Again, though, section 18 relates to claims for damages. A landlord who relies on an enter-and-repair clause is not enforcing a claim for damages but is pursuing a contractual debt. In this way, Jervis v Harris clauses slip around those two major statutory restrictions on the landlord’s ability to obtain compensation for breach of a repairing covenant – and this is why they are so popular with landlords and so dangerous for tenants.
4. The self-help nature of the remedy allows the landlord to carry out the works to his own satisfaction and relatively quickly (compared with bringing a claim for specific performance or damages). This may be particularly important if adjoining premises are affected detrimentally by the disrepair or the property is in a state and condition that requires works to be done urgently.
NO: Miriam Seitler, barrister at Landmark Chambers, offers five reasons that Jervis v Harris clauses may prove to be problematic for landlords.
1. The scope of a Jervis v Harris clause is limited by its contractual wording. For instance, in most cases, the drafting will limit the scope of the clause to breaches of repairing covenants. That means that failures to decorate (which are often dealt with separately and which anyway are subject to a right to relief under section 147 of the Law of Property Act 1925) and failures, for instance, to reinstate alterations, will usually not be covered by the clause. Therefore, they will not be properly the subject of a landlord seeking to reclaim the cost of such works as a debt. Nor will the clause apply to breach of future covenants, such as a covenant to yield up in repair.
2. A failure by the landlord to comply with the conditions precedent of a Jervis v Harris clause will prevent a landlord from successfully relying on it. Landlords need to be careful about the drafting of enter-and-repair clauses because, generally speaking, they are construed against the landlord – not surprisingly, given that they imbue the landlord with substantial powers: see Amsprop Trading Ltd v Harris Distribution Ltd [1997] 2 EGLR 78. A landlord can be easily tripped up by inaccuracies in the notice, or invalid service of it on the tenant.
For example, the notice should specify the items of disrepair at the premises and require the tenant to remedy those items of disrepair. It is usually not necessary or desirable also to specify the works which the tenant is required to carry out in order to remedy that disrepair. One of the reasons for this is that if the tenant fails to carry out the works and the landlord does so in default, the landlord will be stuck with that method of remedy, which it may find sub-optimal once it effects its second re-entry and begins the process of carrying out the works.
3. The practical burden of arranging the work and bearing the cost of it (until it can be recovered from the tenant) is not insignificant. The landlord bears the responsibility of co-ordinating the contractors, surveyors and other professionals, while also ensuring that the tenant’s occupation is not unreasonably disturbed – for example, by the landlord’s works taking longer than they reasonably needed to. Logistically, it can be challenging to arrange working around the tenant’s occupation.
In terms of cost, the landlord exposes itself to the risk of carrying out the works and incurring their expense and then later finding out that it has to counter arguments from the tenant to the effect that the process was not followed properly and the claim on the debt is therefore invalid; or that the work that the landlord has (already) done is outside the scope of the tenant’s repairing obligations; or that it was done badly or at a cost which is unreasonable. This is a major pain for the landlord, having already taken the risk and incurred that expense.
4. It is unrealistic to expect that a Jervis v Harris clause is an entirely self-help remedy; use of one exposes a landlord to the risk of litigation in a number of ways. The most obvious risk for a landlord arises if it proceeds to do the works by relying on a bad notice or by failing to comply with the contractual conditions precedent; this exposes it to a claim for damages from the tenant for breach of the covenant for quiet enjoyment, derogation from grant and trespass. To avoid this risk, a landlord will often take the safer route of seeking declaratory relief in advance of exercising the right to enter and carrying out the work, thereby eliminating the self-help nature of this remedy.
A less obvious but still significant risk is if the tenant refuses the landlord access and the landlord is forced to seek an injunction. An injunction is a discretionary remedy and therefore a court will consider many factors before granting the landlord an injunction. In the context of enforcing a Jervis v Harris clause, these include the nature and seriousness of the relevant defects, the extent to which there exists a genuine dispute as to whether the works fall within the tenant’s obligations, the landlord’s reasons for wanting to carry out the works, the tenant’s reasons for refusing access, the likely effect on the tenant of carrying out the works – and, in particular, whether it will need to move out or will otherwise be substantially inconvenienced – the likely consequences for the landlord if the works cannot be carried out, the extent of any existing or anticipated damage to the landlord’s reversionary interest, any offers made by the tenant and the tenant’s likely solvency at the end of the term as compared with the time at which the application is made – see Hammersmith & Fulham LBC v Creska (No 2) [2000] L&TR 288, where an injunction for access was refused.
5. The use of a Jervis v Harris clause is unduly oppressive for tenants. From the tenant’s perspective, it loses all the normal statutory protection (of the 1938 Act and the 1927 Act) but for no good reason of principle – but simply by virtue of being a debt rather than a claim for damages. Further, the case law reflects that attempts by tenants to argue that it is implied that the right can be exercised only in good faith for the purpose of genuinely protecting the landlord’s interests have not been successful. A landlord can exercise a Jervis v Harris clause for the sole purpose of putting pressure on the tenant.
Further, a tenant cedes all control of which method of repair to adopt. When exercising a Jervis v Harris clause, the landlord is entitled to select which method of repair to adopt, and its choice cannot be criticised, provided that it chooses a method which is reasonable in all the circumstances. This opens the tenant up to extensive liability which is entirely unrestrained by any statutory controls.
This article is a summary of a roundtable discussion in which the authors participated at the RICS Dilapidations Forum held at Savills on 4 March 2019.
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In last month’s Moot Point, on tenants’ alterations, Miriam claimed victory once again, and now leads 3-2. Who will triumph this time?
