Landlord and tenant — Works required to old office building — Whether repairs — Lessors’ covenant to keep exterior of building in repair — Lessees’ obligation to contribute a specified proportion of cost of carrying out repairs — Lessors’ right of access — Whether costs of certain preliminary investigations would come within the cost of repairs — Two separate actions raising similar points
method of construction was relevant to present proceedings — The building was
based on a steel frame with 24 steel columns round the perimeter, joined at
each floor level by steel beams — The building consisted of a basement, ground
floor and four upper floors — The floors were constructed of reinforced
concrete — The external walls of the building were not load-bearing, being of
the ‘curtain walling’ type — The block work and brick work lay up against the
steel stanchions and beams in most places — By the time the two leases with
which these proceedings are concerned were granted, in 1973 and 1974, there was
already evidence of the effects of rusting of the steel structure in the
cracking and displacement of bricks — Since then the process of rusting had
continued — In 1984 the plaintiff owners decided to commission a full
structural survey, involving also a report by structural engineers; and a
number of inspection holes, in the external walls and in the roof, were opened
up — The report showed corrosion in places, leading its authors to assume that
all the steelwork in the external wall was rusty and to recommend that each
external column and each external beam should be exposed — This would entail
the removal of brick or stone cladding, the removal of all rust by shot
blasting and the enclosure of the treated steel in concrete — Tenders for the
suggested works varied from £383,553 to £507,990 — The city council lessees
expressed willingness to contribute to certain repairs but did not accept any
liability in respect of work on the steel frame of the building, contending that
such work did not fall within the lessors’ repairing obligations, and hence not
within the lessees’ contribution obligations — Proceedings by the plaintiff
lessors began in 1986
was to establish that the works suggested by the experts’ report were ‘repairs’
to the cost of which the defendant lessees could be required to contribute — In
addition, the plaintiffs wished to establish that, in order to carry out the
proposed works, they had a right of access to the inside of the building —
Further, they sought a declaration that the defendants’ liability to contribute
covered the costs of necessary exploratory or opening-up works, including the
costs of the experts’ reports — The defendants resisted these contentions and
in particular denied that the repairing obligations in the leases included
keeping the steel frame of the building in repair
conflict in the evidence of experts, analysed by the judge in detail — The main
conclusions which he reached are as follows — (1) The court could not make the
declaration sought by the plaintiffs which would endorse the whole of the
proposed schedule of works recommended by the experts — The present evidence
did not establish the need for such works — In the absence of a full inspection
it could not be known whether all the steel members needed remedial treatment
and the court could not make an order which left it to structural engineers or
other persons to decide whether particular works were necessary — Whether a
specific remedial measure fell within the definition of ‘repair’ would have to
be considered in the normal way in the light of the circumstances — (2) There
was no justification for implying into the leases, which already included
several specific rights of entry, the suggested additional right to enter in
order to carry out repairs to the exterior of the building — (3) The plaintiffs
were not entitled to take down all the cladding, in order to expose all the
columns and beams for inspection, and charge a contribution for this, and for
the reinstatement of the cladding, to the defendants — (4) As regards the cost
of investigations preparatory to the carrying out of repairs, clearly a survey
directed to the remedying of a specific state of disrepair would be a
recoverable expense, but this would not extend to the complete structural
survey and structural engineers’ report mentioned above — This contained
recommendations which went beyond what was reasonably necessary to remedy the
disrepair
The following
cases are referred to in this report.
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
Lurcott v Wakely and Wheeler [1911] 1 KB 905, CA
Post
Office v Aquarius Properties Ltd [1987] 1
All ER 1055; [1987] 1 EGLR 40; (1987) 281 EG 798, CA
These were two
separate actions heard together by Scott J. The plaintiffs in both were Plough
Investments Ltd, the owners of an office building at 274 Deansgate, Manchester.
The defendants were lessees of parts of the building, Manchester City Council
being the lessees of the first, second, third and fourth floors and Eclipse
Radio & Television Services Ltd being the lessees of the basement and part
of the ground floor.
Miss Hazel
Williamson QC (instructed by Stephenson Harwood) appeared on behalf of the
plaintiffs; Robert Wakefield (instructed by the solicitor’s department,
Manchester City Council) represented the defendant city council in the first action,
and also (instructed by Booth & Co, of Leeds) represented the defendants in
the second action, Eclipse Radio & Television Services Ltd.
Giving
judgment, SCOTT J said: There are two actions before me. The plaintiff in each
is Plough Investments Ltd. In one action the defendant is the Manchester City
Council. In the other the defendant is Eclipse Radio & Television Services
Ltd. The actions have been heard together. The actions concern an office
building in Manchester, 274 Deansgate, which stands on the corner of Deansgate
and Camp Street, with the rear elevation facing Longworth Street. The fourth
side of the building shares a party wall with the next-door Deansgate property.
The building consists of a basement, a ground floor and four upper floors.
The basement
and part of the ground floor are held by Eclipse under a lease dated July 15
1974 for a term of 20 years from March 25 1974. The first, second, third and
fourth floors are held by the city council under a lease dated November 9 1973
for a term of 20 years from October 26 1973. The present lessor is, in each
case, Plough Investments Ltd. The fifth schedule to each lease contains a
lessor’s covenant to keep the exterior of the building in repair. The exact
terms of the respective covenants are not, however, identical. Each covenant
contains a provision requiring the lessee to pay a specified proportion of the
cost of carrying out the repairs. In the city council’s lease, the proportion
is two-thirds. In Eclipse’s lease, the proportion is 27 per cent.
The issues in
these actions concern the nature and extent of the repairs, to the cost of
which the lessees can, under the provisions which I have mentioned, be required
to contribute. The part of the ground floor not contained in Eclipse’s lease is
held by a third party under a lease granted at about the same time and in
broadly similar
this litigation apply also, I have been told, to the third party and its lease.
Apparently, however, the third party and Plough Investments Ltd are content to
allow the issues between them to await the result of these two actions.
The building
was built about 1925. It was, therefore, nearly 50 years old when the leases
were granted. The method of construction is important. The building is based on
a steel frame. Around the perimeter of the building there are 24 steel columns.
Each column consists of two steel stanchions, end on end, bolted together.
There are, in addition, a number of internal steel columns, but I need not
concern myself with the detail of these. The steel columns are joined at each
floor level by steel beams. There are 24 beams at each floor level. The beams
are attached to the stanchions by cleats and rivets. The floors of the buildings
are constructed of reinforced concrete. The external walls of the building are
not load bearing. The phrase ‘curtain walling’ has been used to describe them.
The details of the wall construction are set out in a report made in July 1984
by Mr Kendrick of W G Curtin & Partners, structural engineers, instructed
by Povall Worthington Associates, the chartered surveyors acting for the
plaintiff. In summary, the external walls consist on the Deansgate and Camp
Street elevations of concrete blockwork, on the Longworth Street elevation of
yellow silicate brickwork and on the party wall elevation of 9 in-thick common
brickwork. Some of the beams are protected by lead cladding. The blockwork and
brickwork lie up against the steel stanchions and beams. But in some places
there are gaps of up to 3 in between the face of the steel and the back of the
block or brickwork. This circumstance is partly attributable to the I-shape of
the steel elements. The roof of the building is of asphalt construction, with a
reinforced concrete base. It is a feature of the building that at fourth-floor
level part of the steel frame is exposed. This is not a design feature. The
expanation is simply that rooms which had been intended to be provided were not
in the event completed.
The steel
beams and stanchions were, before being surrounded by the brickwork or
blockwork cladding, treated with a coat of paint. Paint does not, however, last
indefinitely. In time rust is bound to appear. This is what has happened to
parts of the steel frame of this building. The outer stanchions and beams have
become rusty. Naturally there is considerable variation from place to place in
the degree of rusting that has occurred.
The rusting of
the steel frame of a building constructed as 274 Deansgate is constructed has
two particular possible consequences. First, and most important, the rusting
may continue to such an extent that the strength of the steel is reduced to a
point at which the rusted steel element no longer retains sufficient
load-bearing strength for the safety of the building. Second, the rusting
produces expansion. It has been calculated that rust occupies a volume seven
times greater than the volume of the steel that it has replaced. So a rusting
steel element will by expansion exert pressure on the brickwork that surrounds
it. If, of course, there is a void between the face of the steel and the
brickwork, the pressure will not begin until the volume of rust has filled the
void. But once the rust is in contact with the brickwork, the pressure will
inexorably increase for as long as the rusting continues. This pressure will
crack or displace the brickwork. The first signs of pressure will take the form
of hairline cracks either along the mortar joints or in the bricks or blocks
themselves. As the pressure increases the cracks will widen and individual
bricks will become displaced.
In 1973 and
1974, when the two leases with which I am concerned were granted, there was
already in evidence some cracking and displacement of bricks, caused by the rusting
of steel elements in the outside frame of the building. Some reparation had
been attempted. Cracked mortar joints had been repointed. In the years since
1974 rusting has naturally continued, and further cracks have appeared. Some
bricks can, on inspection, be seen to have become displaced. This is
particularly apparent at the corner of Camp Street and Longworth Street. It is
fair to note, however, the likelihood that a number of these displaced bricks
were in that condition in 1974. The rusting of the steel frame has probably
been exacerbated by the state of the flat roof of the building. Whether due to
an inherent design defect or whether the original design has been undermined by
the ravages of time, the roof has for some time permitted rainwater to lie on
its surface without draining away. This has led to some seepage of moisture
down the corner columns. In addition, the brick or concrete cladding around the
columns is not, and perhaps never has been, completely waterproof. Seepage of
moisture through the cladding has occurred. The result of all this has been an
inevitable rusting of the steel frame. There is, in my opinion, no doubt at all
but that this process of rusting has been in progress ever since the building
was erected. Equally there is no doubt but that the degree of rust on the steel
frame is greater today than it was when the leases were granted.
For some time
prior to the commencement of this litigation the council had been drawing the
attention of the plaintiff’s managing agents, Garner & Sons, to the
penetration of damp into the upper floors of the building. It was agreed that
some repointing was necessary, that the external walls might have become
slightly porous, that some leakage through the roof was occurring and that the
mastic around many of the windows was defective and needed replacing. (See
Garners’ letter to the council of January 20 1983). The council, by letter
dated August 2 1983, agreed that a building surveyor or architect be instructed
to prepare a detailed specification of the work to be carried out ‘to the
defective windows, parapet walls etc’. Garners responded by letter of September
9 1983, asking the council to confirm that as tenant it would accept
responsibility for the costs involved. This was a reference to the council’s
obligation under its lease to pay two-thirds of the cost of carrying out
repairs to the exterior of the building.
By letter
dated October 12 1983 the council agreed to be responsible ‘for paying
two-thirds of the reasonable costs of appointing a building surveyor or
architect to prepare a detailed specification of the work . . .’. The work
referred to was the ‘work to be carried out to the defective windows, parapet
walls etc which are affecting the fourth floor offices at Deansgate House’. It
was agreed that Mr M S Elliot of Povall Worthington Associates should be
appointed.
In the event,
however, Garners instructed Povall Worthington to carry out a much more
extensive investigation than that which had been contemplated by the
correspondence to which I have referred. A full structural survey of the
building was commissioned, involving also a report from structural engineers, W
G Curtin & Partners. It was proposed that a number of inspection holes in
the brick and stone cladding be opened up so that the condition of the steel
frame could be inspected by the structural engineers. By letter dated January
24 1984, the council expressed its general agreement with these proposals but,
before any opening up had taken place, had second thoughts and questioned the
relevance of the opening-up works to the problem of damp penetration to the
fourth floor or to the council’s contractual obligation to contribute to the
cost of external repairs. These reservations led to letters dated May 18 1984
and June 26 1984, whereby the council expressly declined to accept
responsibility for the costs of the proposed structural survey or the
opening-up works.
Povall
Worthington, in conjunction with W G Curtin & Partners, none the less
proceeded to carry out the full structural survey of the building as instructed
by Garners. Inspection holes were opened up. The location of these was
controlled by Povall Worthington. There were eight inspection holes in all. One
of these was through the roof. The other seven were in the external walls, in
locations which have been numbered A to G. Hole F exposed a beam at
fourth-floor level. The other six holes, A, B, C, D, E and G, exposed columns;
A, B, E and G were at corner columns; C and D were at a column on the Longworth
Street elevation, C at first-floor level and D at second-floor level; A, B, C
and D showed also the ends of a beam where the beam joined the column. These
holes revealed varying degrees of rust on the columns, beams, flanges or rivets
as the case may be thereby exposed to view.
Mr Kendrick of
W G Curtin & Partners prepared a report, based on his inspection, both of
the steel frame through these holes and of the general exterior of the
building. The report was incorporated into a full structural survey report,
dated July 1984, made by Povall Worthington. Mr Kendrick’s report contained
some three pages of conclusions, followed by recommendations. The conclusions
expressed the opinion that each of the areas that had been inspected ‘showed
signs of a possible structural problem, generally indicated by some cracking’.
The conclusions included also these comments:
The rear
corner column and beam in Location A have been severely affected by corrosion
to such an extent that their strength and the strength of their connection will
have been significantly reduced.
From our
internal inspection of the columns built into the walls in Locations E and G,
it seems likely that many other of the columns in the external walls have also
been severely affected by corrosion with probable loss of strength.
Severe corrosion of the beam bearing cleats in Location D and the beam flange
in Location F indicates that many of the beams built into the external rear and
side walls are likely to be very rusty with possible significant loss of
strength. . . . we feel that the condition of all the beams should be
considered suspect unless proved otherwise.
The general
construction details of the cladding blocks and also of the walls on all four
elevations do not seem adequate to prevent water penetration into the walls and
the consequent rusting of the steelwork built within them.
The
recommendations were expressed to be based on the assumption ‘that all the
steelwork in the external wall is rusty’. It was accordingly recommended that
each external column and each external beam be exposed, for which purpose the
brick or stone cladding would have to be taken down; that all rust thereon be
removed by shotblasting; that the steel be then treated with a rust inhibitor;
that the treated steel be then enclosed in concrete in order to compensate for
the reduced strength of the steel member in question, or, if strengthening
should not be necessary, be painted. The cladding would then have to be
rebuilt. There were recommendations also regarding the roof and the lift room,
but since there is now no dispute about these I need not take time to describe
them.
In November
1984 Povall Worthington produced a further report and schedule of works in
order to identify the particular remedial works which, in their view, could be
regarded as repairs to the exterior of the building to the cost of which the
lessees were, under the terms of their respective leases, required to
contribute. The report and schedule of works were based upon the conclusions
and recommendations contained in the W G Curtin report.
In para 1.2 of
the November 1984 report, it is stated:
We understand
from the brief and subsequent correspondence that the extent of the work is to
be minimised and that the nature of the work is to include only such items as
can be classified as ‘repairs’.
Following
inconclusive correspondence between the parties during 1985, the plaintiff in
January 1986 put the proposed work out to tender. The council’s response was to
repeat that it did not consider that all the items of work represented repairs
to the cost of which the council was obliged to contribute.
The amount of
the tenders submitted varied from £383,553 to £507,990. These were 1986
figures. There can be no doubt but that present costs would require a
considerable uplift on these figures.
By letter
dated June 26 1986 the council submitted to the plaintiff’s solicitors a
schedule specifying the works of repair to the cost of which the council
accepted it would be obliged to contribute. These works included ad hoc repairs
to the cracked bricks or stone blocks, but did not include any work on the
steel frame of the building. This was consistent with the council’s contention
that repairs to the steel frame did not fall within the landlord’s repairing
obligation under its lease.
The present
proceedings were commenced by originating summonses issued in August 1986. The
main purpose of the proceedings was, and is, to establish that the works
specified in the schedule of works are ‘repairs’ to the cost of which the
defendants can be required to contribute. In addition, the plaintiff contends
that it is entitled, to the extent reasonably necessary in order to effect the
repairs, to have access to the inside of the building, ie to the demised
premises. The plaintiff seeks a declaration to that effect. In addition, there
is a dispute as to whether the defendants are liable to meet not only the cost
of the repairs themselves but also the costs of necessary exploratory or
opening-up works and, in particular, the cost of the Povall Worthington and W G
Curtin reports.
The
contentions of the defendants are, shortly stated, first, that the landlord’s
contractual obligations under the fifth schedule to the leases to repair the
exterior of the building do not include the obligation to keep the steel frame
of the building in repair; second, that the rusting of the steel frame can be
satisfactorily and much more cheaply remedied by using a grouting technique,
the Bagrat method, that I will in due course have to try to explain; third,
that in any event the plaintiff has no right to have access to the demised
premises for the purpose of carrying out fifth schedule repairs; and, fourth,
that the obligations under the leases to contribute to the cost of carrying out
the fifth schedule repairs do not extend to obligations to contribute to costs
incurred by the plaintiff as a preliminary to the carrying out of the repairs.
I shall now
refer to the relevant provisions of the leases. Each of the leases contains a
demise for a term of 20 years. The demise is expressed to except and reserve
the rights and easements specified in the third schedule. A yearly rent payable
quarterly with five-yearly rent reviews is reserved. There is also reserved by
way of further and additional rent ‘the sum hereinafter specified (hereinafter
called ‘the Service Charge’) as a contribution to the expenses and outgoings of
the heating cleaning decorating and lighting [of the common parts] the painting
of the exterior woodwork and iron work and the cleaning of the outside
stonework . . .’. In the council’s lease the service charge is £3,485 per
annum. In the Eclipse lease the service charge is £1,286 per annum. In each
lease there is provision for the increase of the annual service charge.
The easements
and rights reserved to the landlord and specified in the third schedule include
in para (c) the right
to enter the
demised premises or any part thereof and remain thereon for the purpose of
cleaning repairing replacing laying or erecting any pipes electric mains wires
appliances lifts and lift shafts with all necessary doors supports and other
fittings and equipment fire escape exits heating and other apparatus water
courses or drains the Landlord making good all damage caused thereby to the demised
premises and causing as little inconvenience and disturbance as possible to the
Tenant and its occupation of the demised premises.
The fourth
schedule contains the tenant’s covenants. Para (4) requires the tenant:
to maintain
and keep the interior of the demised premises and every part thereof . . . in
good and substantial repair and condition.
Para (6)
obliges the tenant:
To pay a
proper proportion as determined by the Landlords surveyor (whose decision shall
be final and binding on the parties hereto) of the expense of repairing
cleansing emptying maintaining lighting extending and amending any party walls
and party fences roads and paths foundations sewers drains conduits gutters
pipes and sanitary and water apparatus and any other services the use of which
is common to the demised premises and any adjoining or neighbouring property.
I draw
attention to the reference to ‘foundations’ and to ‘party walls’.
Para (8)(a)
requires the tenant ‘Not to alter the demised premises or cut maim or injure
any structural part thereof’.
Para (8)(c)
obliges the tenant on notice from the landlord to remove alterations to the
demised premises effected without consent, and provides that:
if the Tenant
shall neglect to do so for seven days after such notice then it shall be lawful
for the Landlord . . . to enter upon the demised premises and to remove such
additional buildings erections works alterations or additions or changes to the
design layout external appearances or external decorative scheme of the demised
premises and to make good and restore the same to the state and condition
existing before the breach by the Tenant of the provisions of the said
paragraphs (a) and (b) and all expenses of so doing shall be repaid to the
Landlord . . . by the Tenant within twenty one days of a written demand in that
behalf.
I draw
attention to the express right of entry given to the landlord and to the
tenant’s obligation to pay ‘all expenses’.
Paras (10) and
(11) are in these terms:
(10) To permit the Landlord . . . at reasonable
times (after at least twenty four hours notice except in the case of
emergency):
(a) To enter and view the condition of the
demised premises and of any defects decays and wants of reparation to the
demised premises or other works or acts to be done there found and for which
the Tenant shall be liable hereunder to give to the Tenant or leave on the
demised premises notice thereof in writing AND if the Tenant shall not within
twenty one days after such notice (or immediately in case of emergency)
commence and proceed diligently with the execution of such repairs and works
and the performance of such acts as aforesaid it shall be lawful for the
Landlord . . . (but without prejudice to the right of re-entry hereinafter
referred to) to enter the demised premises and execute all such repairs and
works and do such acts as may be necessary to comply with the said notice and
the cost thereof shall be a debt due from the Tenant to the Landlord . . . and
shall be forthwith recoverable by action or by distress as rent in arrear.
(b) To enter the demised premises for the purpose
of taking schedules or inventories of the fixtures and things in the demised
premises to be yielded up at the determination date.
(11) To permit the Landlord and its agents
officers servants contractors licensees and workmen with all necessary
appliances at all reasonable times during the said term (after at least twenty
four hours written notice except in the case of emergency) to enter the demised
premises for all or any of the purposes mentioned in paragraph (c) of the Third
Schedule — the person or persons exercising such rights causing as little
damage to the demised premises as may be and making good all damage to the
demised premises occasioned by any such entry without unreasonable delay but
without payment of compensation for any annoyance nuisance damage noise
vibration or inconvenience caused to the Tenant.
Para (13)(c)
requires the tenant:
Not to load
or use or permit or suffer to be loaded or used the structure of any
building now erected or hereafter to be erected on the demised premises in any
manner which will in any way strain or interfere with the main timbers thereof.
I draw
attention to the reference to ‘the main timbers’.
This is not an
apt expression to use in relation to this steel-framed building but, in the
circumstances, the expression must, in my view, be read as a reference to the
steel frame of the building.
Para (17)
requires the tenant:
to reimburse
the Landlord . . . on written demand all fees charges costs and expenses
(including Counsels Solicitors and Surveyors costs charges and fees) incurred
or suffered by the Landlord . . . and arising out of or in connection with or
incidental to: (a) any application or request or proposed application or
request by the Tenant in connection with the demised premises or the user
thereof or any part of the provisions of this Lease and whether or not the same
shall be proceeded with by the Tenant (b) any breach of any of the covenants on
the part of the Tenant hereunder and any steps taken in contemplation of or in
connection with the preparation and service of a notice under Section 146 or
147 of the Law of Property Act 1925 . . . requiring the Tenant to remedy a
breach of any of the covenants herein contained notwithstanding forfeiture for
such breach shall be avoided otherwise than by relief granted by the Court (c)
any steps taken in contemplation of or in connection with the preparation and
service of a Schedule of Dilapidations during or after the termination of the
said term.
The fifth
schedule to each of the leases contains the landlord’s covenants. Para (1)
contains a covenant for quiet enjoyment in usual form. Para (2) imposes an
obligation on the landlord to insure the demised premises. Para (3) in the
Eclipse lease and para (4) in the council’s lease contain the critical
covenants. I should read each in full.
Para (4) in
the council’s lease provides as follows:
During the
said term to repair and maintain and keep the exterior of the Building
including the external walls roof and main timbers and the lift in good and
substantial repair and condition but the Landlord shall not be responsible for
any damage occasioned by alleged defects of which the Tenant might reasonably
be expected to be aware and of which alleged defects the Tenant has not given
any previous notice in writing and the tenant shall on demand repay to the
Landlord two thirds of the cost of carrying out such repairs.
Para (3) in
the Eclipse lease provides as follows:
During the
said term to repair and maintain and keep the exterior of the building and the
lift in good repair and condition but the Landlord shall not be responsible for
any damage occasioned by alleged defects of which the Tenant has not given any
previous notice in writing and the Tenant shall on demand repay to the Landlord
27.60 per cent of the cost of carrying out such repairs.
There then
follows a proviso, which I need not read.
There is
nothing else in the leases to which I need refer.
I have already
outlined in brief the issues in the action. The main issue relates to the
extent of the plaintiff’s repairing obligations in respect of the exterior of
the building. The issue does not arise, however, in respect of repairs which
have already been carried out and the cost of which the plaintiff is seeking to
recover. It arises in respect of remedial works (ie the works identified in
Povall Worthington’s November 1984 schedule of works) which have not yet been
carried out. This distinction would not matter if there were complete certainty
as to what the remedial works would consist of. But if the exact nature or
extent of the remedial works has to await an inspection of the steel members
after all the concrete and brick cladding has been removed, that certainty is
absent.
In the course
of the hearing, it was accepted by Miss Williamson, counsel for the plaintiff,
that inspection of the steel members might establish that some of the steel
members did not need any remedial treatment at all. Some of the members not yet
inspected might turn out not to be rusty to any material degree. This
inherently realistic concession seems to me to make clear that I cannot grant a
declaration in the terms sought by para 1 of the originating summons, which
underwrites the whole of the proposed schedule of works. I gave leave, however,
for an alternative form of declaration to be added as para 1A. The alternative
declaration assumes that all the external steel work, by the removal of all
existing cladding, be exposed for inspection. A declaration is sought approving
the works specified in paras 4.1 to 4.8 of the November 1984 report ‘save in so
far as the plaintiff’s structural engineers may advise on inspection that works
falling short of full encasement in concrete will be adequate in any particular
area’. But this is not, in my opinion, a qualification which could properly be
incorporated into a declaration of right made by the court. If there is a
dispute as to whether particular remedial works are or are not within the
plaintiff’s repairing obligations under the fifth schedule, it is for the court
and not for the plaintiff’s structural engineers to resolve the dispute. And it
cannot at this stage be assumed that there will not be a dispute. If complete
certainty as to the remedial works that the plaintiff is entitled to carry out
at the defendants’ expense must await a future full inspection of the external
steel members of the steel frame, a declaration comprehensively identifying
those remedial works cannot yet be made.
None the less,
there are several clear issues between the parties which can and should now be
resolved. One is whether the plaintiff is entitled to take down the cladding
round all the columns and all the beams so as to expose all the steel members
for inspection, to then rebuild the cladding and charge the cost of so doing to
the defendants.
Another issue
is whether the remedial works to the external members of the steel frame,
identified in the November 1984 report under paras 4.1 to 4.8, are capable of
representing repairs for the purposes of the plaintiff’s fifth schedule
repairing obligations. This is, in a sense, a hypothetical question. It depends
on the hypothesis that all the steel work is seriously affected by rust. I
doubt whether there is any declaration on this issue that I could properly
make. However, since both Miss Williamson and Mr Wakefield have addressed me on
this point, and since there are certainly some places where a considerable
degree of rusting has been established (eg location A), I think I should deal
with it in my judgment. Moreover, it bears on the first issue.
Another issue
is whether the plaintiff, if it is to be entitled to recover from the
defendants the cost of remedial works to deal with the rusting of the external
steel frame, must adopt the relatively cheap Bagrat method of grouting or can
proceed along the much more expensive lines recommended by W G Curtin &
Partners, its structural engineers.
Another issue
is whether the plaintiff has a right of access to the demised premises for the
purpose of carrying out repairs to the exterior of the building in accordance
with its fifth schedule obligations. And it is also an issue whether the
plaintiff can require the defendants to contribute to the costs of the
opening-up works and the surveyor’s costs incurred in connection with the
production of the November 1984 report and the schedule of works that
accompanied it.
These issues
overlap one another. The answer to one may have a bearing on the answer to
another. In particular, questions as to the extent of the landlord’s fifth
schedule repairing obligations and the landlord’s right to have access to the
demised premises for the purpose of carrying out the repairs bear upon one
another. If the landlord’s repairing obligation is construed as including an
obligation to maintain the external members of the steel frame in a broadly
rust-free condition, it may be that it would be impossible for the landlord to
do so without access to the interior of the building. It might then seem that
the right to enter the demised premises if reasonably necessary to carry out
repairs would have to be implied. If, on the other hand, the conclusion is
reached that, in a lease where a number of express and limited rights of entry
to the demised premises are reserved to the landlord, it would be wrong to
imply an additional right of entry, this conclusion will form part of the
context in which the extent of the landlord’s fifth schedule repairing
obligation falls to be decided. The obligation could not be construed as
covering repairs that the landlord had no practical means of effecting.
The landlord’s
fifth schedule repairing obligation is, although nominally an obligation, in a
sense also a right. If it were simply an obligation, then, presumably, the
three tenants of the building could choose to release the landlord, in whole or
in part, from that obligation. But the provision is not, in my view, simply, or
even mainly, for the benefit of the tenants. It is also a provision for the
benefit of the landlord. It enables the landlord to keep its building in repair
at the tenants’ expense. If the repairing obligation had been imposed on the
tenant, the tenant would have been entitled to decide on the manner in which it
would be discharged. Provided remedial works were sufficient to discharge the
obligation, the landlord could not require a different type of repair to be
effected. Under these leases, however, the relevant decisions regarding repairs
to the exterior are to be taken by the landlord. If reasonable remedial works
are proposed by the landlord in order to remedy a state of disrepair for the
purposes of its fifth schedule obligation, the tenants are not, in my judgment,
entitled to insist that cheaper remedial works be
reasonable ones. The tenants, after all, have to pay for the fifth schedule
repairs. But I accept Miss Williamson’s point that the tenants are not entitled
to require the landlord to adopt simply a minimum standard of repair. Provided
proposed works of repair are such as an owner who had to bear the cost himself
might reasonably decide upon and provided the works constitute ‘repairs’ within
the meaning of that word in the fifth schedule covenant, the tenant is not, in
my judgment, entitled to insist upon more limited works or cheaper works being
preferred. I agree with Miss Williamson that the landlord cannot be limited to
a minimum standard of repair only.
Much attention
was paid in the course of argument by both counsel to the question whether the
word ‘exterior’ in the critical covenants does or does not include the steel
frame of the building. In the council’s lease, it is, in my judgment, clear
that it does. Some effect must be given to the words ‘the main timbers’. These
words must be read as referring to the external sections of the steel frame. In
para (12)(c) of the fourth schedule, ‘main timbers’ can only be a reference to
the steel frame. The expression ought not to be given a different meaning in
para (4) of the fifth schedule.
In the Eclipse
lease the answer to the question is not so clear. Mr Wakefield submitted that
‘the exterior’ of the building was the surface cladding. He may be right, but
the answer is not, in my view, determinative of any issue in these actions. Let
it be supposed that the landlord has undertaken ‘to repair and maintain and
keep [the surface cladding of] the building in good and substantial repair and
condition’. The condition of the surface cladding depends on, among other
things, the condition of the external sections of the steel frame. If these
sections rust, the pressure will eventually crack and shift the surface
cladding. If they lose strength through excessive rusting, the stability of the
surface cladding may be threatened. When the words ‘including the external
walls roof and main timbers’ were inserted in the council lease, I do not
believe that those responsible thought they were thereby extending the scope of
the obligation being imposed. And I do not think that they were. If the external
sections of the steel frame become rusty and damage, or threaten to damage, the
external walls, an obligation to keep the exterior of the building in repair
would, as it seems to me, require the rust to be dealt with. Conversely, an
obligation to keep the exterior of the building including the steel frame in
good repair would not, in my view, require the removal of the cladding in order
to treat the rust on the frame unless the degree of rust was either damaging or
threatening to damage the exterior of the building.
These
conclusions are, I think, really in accord with the submissions made to me by
counsel. Mr Wakefield accepted that if rust on the steel frame had caused
bricks or blocks forming part of the external wall to crack, the cleaning of
the rust-affected steel would form a part of the repairs to be done pursuant to
the fifth schedule covenant whether or not the steel frame were regarded as
part of the exterior of the building. And Miss Williamson did not contend that
a degree of rust which did not materially affect either the external walls or
the adequacy of the strength of the steel member would none the less require to
be remedied in compliance with the fifth schedule repairing obligation.
Accordingly,
in my judgment, it is not possible to exclude remedial works to the external
steel frame from qualifying as repairs falling within the fifth schedule
repairing obligations in either of these leases. Whether particular remedial
works do or do not qualify will depend on a variety of other factors. I will
return to this later.
I want first
to deal with the issue of access to the demised premises for the purpose of
carrying out fifth schedule repairs to the exterior. There are in each lease a
number of express reservations to the landlord of rights of re-entry for
various purposes. I refer to, without repeating, para (c) of the third schedule
and paras (8)(c), (10) and (11) of the fourth schedule. These express rights of
entry are carefully hedged with safeguards for both landlord and tenant. Why,
where a lease has expressly provided specific and limited rights of entry for
the landlord, should an additional right of entry be implied? Miss Williamson’s answer is that the remedial
works to the steel frame that the plaintiff wants to carry out cannot
conveniently be carried out without the desired right of entry. This answer, in
my view, casts doubt on the qualification of the remedial works as fifth
schedule repairs. I do not think it would have been in the contemplation of the
parties that the landlord in purported discharge of the fifth schedule
repairing obligation would be entitled temporarily to deprive the tenant of
beneficial occupation of a part of the demised premises. If it is correct that the
proposed remedial works to the exterior of the building cannot be carried out
except from inside the building, I would conclude that the proposed works are
not ‘repairs’ for the purpose of the fifth schedule repairing obligation. In
any event, I can see no sufficient justification for implying into the leases
the additional right of entry desired by the plaintiff.
I now turn to
the issue whether the plaintiff is entitled in pursuance of its fifth schedule
repairing obligation to take down all the cladding so as to expose all the
columns and beams for inspection and to charge the cost thereof, and of
reinstating the cladding, to the defendants. This requires me to review some of
the evidence. I have already referred to Mr Kendrick’s report, given on behalf of
W G Curtin & Partners. Mr Kendrick was cross-examined about the contents of
the report and, in particular, his conclusions. He agreed that he had wanted to
open more inspection holes in the external walls than had been permitted by
Povall Worthington. Para 5 of the report said that the recommendations assumed
‘that all the steel work in the external walls is rusty’. Mr Kendrick said in
evidence that he could not be confident that all the steel work would be rusty.
This testimony was, in my view, realistic and inevitable, both in view of the
limited number of inspection holes and because not all the steel exposed at the
inspection holes exhibited a material degree of rusting. Mr Kendrick agreed
that the photographic evidence did not disclose any material degree of rust on
the external steel beams, as opposed to the columns. He said that if he had
been drafting his recommendations in the light of that evidence he would have
qualified subpara (b) of the para 5 recommendations. He would have substituted
the following:
Expose all
the beams on the external walls on the party wall and Longworth Street
elevations and expose some of the beams on the Deansgate and Camp Street
elevations, particularly at third floor, fourth floor and roof levels.
This testimony
alone makes it clear, in my opinion, that I ought not to make a declaration in
the terms of para 1 of the originating summons nor in the terms of para 1A of
the amended relief.
The worst
degree of rusting revealed by the inspection holes was at location A. Mr Kendrick
told me that he had not made any measurements of the amount of steel that had
rusted nor of the amount of steel that remained. He had not carried out any
test or made any structural calculations to ascertain the strength and
load-bearing capacity of the steel that remained. His conclusion, expressed in
para 4(a) of the report, that the strength of the steel members at location A
had been ‘significantly reduced’ by corrosion was not, in my view, soundly
based. It was a guess. I have already cited a number of passages from the
conclusions in Mr Kendrick’s report. They contain, in my view, a number of
exaggerations and unwarranted assumptions. He was not, in my view, justified in
saying that each of the areas inspected ‘showed signs of a possible structural
problem’. Some of the areas inspected showed hardly any rust at all. He was
not, in my view, justified in concluding that ‘many of the beams . . . are
likely to be very rusty with possible significant loss of strength’. Nor was
he, in my view, justified in regarding the condition of all beams as ‘suspect
unless proved otherwise’.
Mr Holmes, a
director of W G Curtin & Partners, and Mr Kendrick’s superior, also gave
evidence. He saw Mr Kendrick’s report when it was written but had not at that
stage inspected the building. In his evidence he expressed the opinion that the
steel beams on the Camp Street elevation did not require remedial treatment. He
remained of the view, however, that all the columns and most of the beams
should be opened up for inspection.
Mr Hayes was
the structural engineer called on behalf of Eclipse. He struck me as having a
balanced, careful and objective approach to the problem presented by the
condition of the exterior of the building and I was at the conclusion of his
testimony satisfied that I could safely accept his evidence and opinions, which
I preferred to those of the other expert witnesses. He accepted that there were
a few areas where the condition of the exterior of the building presented a
serious problem, but, these apart, said that he thought the building was in a
fair condition. The cracks in the external walls vary, he pointed out, from,
say, 3 mm or 4 mm in width to hairline width only. Only a small percentage of
the cracks are 3 to 4 mm in width. He accepted that cracks wider than, say, 1
mm could be regarded as evidencing a problem that needed to be dealt with.
Cracks varying between 0.5 mm and 1.5 mm were not, in his view, in themselves
serious. Mr Hayes expressed the opinion that the remedial works proposed by the
plaintiff could not be regarded as necessary on the basis of what was at
present known about the condition of the steel frame. I think this is
right. Only seven inspection holes were made. Not all of them revealed severe
rusting. There are 24 steel columns, each consisting of two stanchions. So
there are 48 sections in all. There are 120 beams in all, 24 at each floor
level. Neither in relation to the external frame as a whole nor in relation to
the columns alone is there, in my opinion, evidence of a degree of rusting that
would justify the wholesale removal of all the cladding. Mr Hayes said in
cross-examination that he would recommend an inspection hole at each corner
column at each floor level. He would concentrate on the corner columns because
it is at the corners that the worst cracking is evident. These inspection holes
would expose not only a part of the column but also the end of a beam and the
cleats and rivets fixing the beam to the column. What, if anything, should be
done by way of remedial work or the opening up of further inspection holes
would depend on the result of the inspection afforded by the original holes. Mr
Hayes accepted the likelihood that it would prove necessary to open up the
whole of the corner columns at locations A, B and G. He did not accept,
however, that minimum cracking, ie cracks less than 1.5 mm or thereabouts,
justified any opening up.
As to the
remedial works necessary to be done, Mr Hayes agreed that if the steel were to
be treated, loose rust should be first removed. He agreed that, where the steel
was badly rusted, it should be treated.
Mr Hayes was
not, of course, giving evidence of what would or would not represent ‘repairs’
for the purpose of the fifth schedule repairing covenant. He was giving
evidence of what he, as a structural engineer, would recommend be done in order
to maintain the building in a reasonable state and condition.
This evidence
satisfied me that the plaintiff has not made out a case justifying the removal
of all the cladding from all the beams or from all the columns in order at the
expense of the defendants to inspect the steel members.
The evidence
has made clear that when the leases were granted, in 1973 and 1974
respectively, a good deal of cracking of blocks and bricks, particularly at the
Camp Street/Longworth Street corner and the Camp Street/Deansgate corner, had
already taken place and that this cracking had been caused by the rusting of
the steel frame adjacent to the blocks or bricks in question. The evidence has
also made clear that this condition has worsened since 1974. Some repairs to
the exterior of the building which would fall within the fifth schedule
repairing obligations can, clearly, be carried out. These repairs would
include, at least, the replacing of badly cracked bricks or blocks as well as
the removal of rust from the underlying steel and the treatment thereof in so
far as that treatment was necessary in order efficiently to repair the external
walls.
But the
repairs would not, in my judgment, include the removal of all the cladding in
order to remove all rust from the whole external steel frame and to restore the
steel frame to the rust-free condition it enjoyed when the building was built.
Nor, in my opinion, would it include the removal and replacement of every
cracked brick or block, no matter how small the crack. There were cracks when
the leases were granted. A building of this sort, over 60 years old, is bound,
in my view, to have some cracks in the bricks or blocks.
The
authorities cited to me, of which I found Lurcott v Wakely &
Wheeler [1911] 1 KB 905, Brew Bros Ltd v Snax (Ross) Ltd
[1970] 1 QB 612 and Post Office v Aquarius Properties Ltd [1987]
1 All ER 1055* most helpful, establish that whether remedial work falls within
a particular repairing covenant is a question of degree to be determined by the
circumstances of the particular case. In Brew Bros v Snax, Sachs
LJ said, at p 640:
It seems to
me that the correct approach is to look at the particular building, to look at
the state which it is in at the date of the lease, to look at the
precise terms of the lease, and then come to a conclusion as to whether, on a
fair interpretation of those terms in relation to that state, the requisite
work can fairly be termed repair. However large the covenant it must not be
looked at in vacuo. Quite clearly this approach involves in every instance a
question of degree . . .
*Editor’s
note: Also reported at [1987] 1 EGLR 40; (1987) 281 EG 798.
If, in the
present case, the degree of rusting had so reduced the strength of the steel
frame as to require the substantial reinforcement of the whole of the external
steel frame in the manner contemplated by Mr Kendrick’s recommendations and the
remedial works proposed by the plaintiff, I would have been of the opinion that
the remedial works went, as a matter of degree, beyond ‘repair’. But if one
section only, say the section at or around location A, required strengthening
by being surrounded with reinforced concrete, I would not regard that work as
going beyond repair. At some point between those two extremes a line would, in
my opinion, need to be drawn. But these are hypothetical questions, for, as I
have already said, there is no satisfactory evidence that any part of the
external steel frame, including the section at location A, has been reduced by
rusting to a state in which it requires to be strengthened.
The same
approach of degree justifies, in my judgment, a distinction being drawn between
bricks or blocks suffering only hairline or minimal cracks and bricks or blocks
which are more severely cracked or have become displaced.
I must now
deal with the issue which has arisen regarding the Bagrat grouting technique as
a remedial measure for dealing with the rusting of the steel frame of the
building. The technique involves the injection under pressure of a cement
silicate emulsion around the rusting steel member. The emulsion reacts with the
rust to form magnetite (Fe3O4), a stable iron compound.
The magnetite surrounds the steel member, is impervious to water or water
vapour and so protects the steel from any further rusting. Mr Lappe, a chemical
engineer, has considerable experience with the Bagrat technique and gave
evidence to the effect that it has been widely used in Germany with
considerable success. It would represent, if used successfully on the Deansgate
building, a much cheaper method of treating the rusting of steel elements than
would the stripping, shotblasting and rebuilding process advocated by the W G
Curtin & Partners report. It is a technique that the council has used
successfully on some of its municipal buildings. The technique, however, is not
widely known or used in this country. Neither Mr Holmes nor Mr Kendrick had any
experience of it. There are apparent difficulties in applying the technique to
the external steel frame of this building. It is necessary that the steel to be
protected should be completely covered by the emulsion. The emulsion would be
injected under pressure through injection holes made through the brick
cladding. There must, it seems to me, be some doubt whether the emulsion would
succeed in covering the whole of the steel before, under pressure, it began to
exit through some weak spot in the brick cladding. Liquid under pressure will
take the easiest route and, despite Mr Lappe’s insistence that the emulsion
would not exit until it had completely covered the surface of all the steel, I
could not follow why that should be so.
It may be that
Mr Lappe is right and that the grouting technique would be successful. But in
view of the limited experience of this technique in England, coupled with the
apparent difficulties to which I have referred, the doubts about it expressed
by Mr Holmes and Mr Kendrick were not, in my opinion, unreasonable doubts.
I now come to
the issue regarding the costs of investigations preliminary to the carrying out
of fifth schedule repairs. Mr Wakefield relied on the literal meaning of the
words ‘the cost of carrying out the repairs’. Those words, he submitted,
covered, and covered only, the cost of execution of the remedial works. He
contrasted the language with the language to be found in paras (3), (8)(c),
(10)(b) and (17)(b) and (c) of the fourth schedule, all of which contain
provisions enabling the landlord to recover from the tenant various costs or
expenses. I see the force of the submission, but I must, I think, endeavour to
make some sort of commercial sense of the fifth schedule provision. A landlord
of a building such as this, on whom an obligation to keep the exterior of the
building in repair has been imposed, will be bound from time to time to
investigate the nature of apparent disrepair and to take advice as to the means
of dealing with the disrepair. I find it impossible to accept that the cost of
so doing is not, for fifth schedule purposes, a part of the cost of carrying
out the repairs. There is, in my opinion, a distinction to be drawn between, on
the one hand, general advice as to the condition of the building and, on the
other hand, specific advice as to the means of remedying a specific state of
disrepair. The council’s letter of October 12 1983, to which I referred earlier
in this judgment, contemplated the appointment of a surveyor to prepare a
detailed specification of the work to be carried out to remedy defective
windows, parapet walls and cracked blocks and bricks. The cost of obtaining
advice of this sort is, in my opinion, properly to be regarded as part of the
cost of repairs for the purposes of the fifth schedule provision. In the event,
however, the plaintiff be spoke a full structural survey and report. It may be
that such a survey and report would cover (inter alia) the ground that
would have been covered by the more limited instructions contemplated by the
council. But, at any rate, if regarded as a whole, the cost of the full
structural survey and report cannot, in my judgment, be regarded as part of the
‘cost
provision.
Accordingly,
in my judgment, neither the cost of Povall Worthington’s July 1984 report nor
the cost of W G Curtin’s report can be treated as costs recoverable under the
fifth schedule. The Povall Worthington report of November 1984 and the schedule
of works were, however, more limited. They were specifically directed to
remedial works to be done in accordance with the recommendations made in the W
G Curtin report. The difficulty is that, in my view, the recommendations were
excessive. They went beyond what was reasonably necessary to remedy the
disrepair. Some of the remedial works dealt with in the November 1984 report
are clearly reasonably necessary. Many are now the subject of agreement between
the parties. It follows that some preliminary costs have been incurred that
are, in my opinion, recoverable by the plaintiff under the fifth schedule
provision. But there is no breakdown that enables those costs to be identified.
It follows that I cannot make any declaration covering those costs.
I hope I have
now dealt with all the live issues between the parties. I will endeavour to
summarise my conclusions:
1 The remedial works set out in the schedule of
works referred to in para 1 of the originating summons are, in relation to the
external walls and the steel frame and taken as a whole, excessive, in that (a)
the present evidence does not establish the need for them, and (b) they go
beyond what could properly be regarded as repairs for the purposes of the fifth
schedule repairing obligation.
2 The plaintiff does not have an implied right
under the leases to enter the demised premises for the purposes of discharging
its fifth schedule repairing obligations.
3 Preliminary costs, whether incurred in
connection with exploratory or opening-up works or in respect of surveyors’
reports, are capable of being costs recoverable under the relevant fifth
schedule provision. But to be recoverable they must be incurred for the purpose
of remedying some particular condition of apparent disrepair. The costs of a
general structural survey are not recoverable. Nor are costs incurred in
connection with remedial works which do not represent fifth schedule repairs.
If, having
regard to the conclusions I have expressed, there are any declarations that
either side think it useful for me to make, I will hear counsel, either now or
after they have had an opportunity to consider this judgment. But I am not
prepared to make any of the declarations sought by the originating summonses
either in their original or in their amended form.
After a
discussion with counsel Scott J delivered the following judgment on costs.
I must now
deal with the question of how the costs of the two actions should be dealt
with.
The issue of
costs becomes difficult, in my view, because the action has been brought for
declarations, the plaintiff, not unreasonably perhaps, wanting to be clear what
were the extent of its rights before actually embarking on works of reparation
to the exterior of the building. In the event I have felt unable, for the
reasons I expressed in my judgment, to make any of the declarations, original
or amended, sought by the plaintiff. Miss Williamson, however, has submitted
that none the less the plaintiff has achieved a measure of success in the
actions, in that I held, in accordance with the plaintiff’s submission and
contrary to the defendants’ submission, that works of reparation to the
external steel frame were capable of being repairs for fifth schedule purposes.
Moreover, she drew to my attention that a part of the apparent dispute between
the parties related to the works necessary to be done to the roof, parapet
walls and lift room of the building. As to those, in the course of the hearing
the parties agreed what was to be done, and judgment on those matters was not
necessary. This is not a criticism of counsel in any way, but I have not been
referred to the details of what was agreed and invited to compare the details
of what was agreed with the parties’ contentions as set out in the Scott
Schedule. I have no view as to the extent to which the agreement represented
relative success for one or other of the parties.
I think it
inevitable in this action, the declarations that were sought having been all
refused, that there must be an order for costs in favour of the defendants. The
only question is whether the costs that the respective defendants ought to
recover should be discounted, in the case of Eclipse by reference to the two
matters to which I have just referred, and in the case of the council by
reference also to the failure of the council to persuade me that the grouting
technique was a technique which it would be reasonable for me to force upon the
unwilling landlord. On that issue the council failed. I suppose a quarter of
the time may have been involved in that issue. On the footing of an eight-day
trial two days were spent on it.
In the result,
having listened to what has been said on costs by both counsel, I have come to
the conclusion that I ought to make an order that the plaintiff pay
three-quarters of the costs of the action of Eclipse and one-half of the costs
of the action of the council, but on the footing that the percentages I have
mentioned do not include the costs of Dr Lappe.
