Business lease – Service charges – Landlord’s repairing covenants – Appellant landlords informing tenants of intention to replace roof – Works not done until year after originally stated – Delay meaning respondent not benefiting from service charge cap – Whether landlords could have completed works earlier with reasonable endeavours – Whether landlords’ liability arising where respondent not serving notice under provisions of lease – Appeal dismissed
In 2002, the appellants wrote to the tenants with the expenditure budget for 2003, asking them to note in particular that the BAFTA block roof needed to be replaced and that they intended to replace it in summer 2003. In the event, the works were delayed until the following summer. The appellants then brought proceedings against the respondent for a large sum in service charge arrears. The respondent counterclaimed for damages, contending that the appellants should have replaced the roof by the end of 2003, in which case it would have benefited from the service charge cap in respect of those works. The appellants contended that their decision to delay the works had been taken for the convenience of the tenant of the premises immediately beneath the roof (the BAFTA tenant) and was consistent with the principles of good estate management. They submitted that, in any event, liability did not arise in the absence of any notice given by the respondent under clause 5.5.2.
The judge awarded £201,000 on the appellants’ claim but went on to award a greater sum on the respondent’s counterclaim. He found that although it had been reasonable to consult the BAFTA tenant, that tenant would have been content for the works to proceed in summer 2003 had the appellants got matters under way sooner. He concluded that the works could, with reasonable endeavours, have been completed by the end of 2003. He held that the appellants were unable to rely upon the notice requirement in clause 5.5.2 in circumstances where, inter alia, they were already aware of the matter in question and had informed the respondent that they would attend to it within a reasonable timescale. On appeal, the appellants challenged the judge’s findings and contended that he should have confined any award of damages to the cost of patch repairs until 2004.
Held: The appeal was dismissed.
(1) The landlord’s obligation to repair the roof existed independently of clause 5.5.2 because it was created by other provisions in the lease. Clause 5.5.2 existed for the landlord’s protection, since without it the appellants would be liable from the moment the roof fell into disrepair: British Telecommunications plc v Sun Life Assurance Society plc [1995] 2 EGLR 44; [1995] 45 EG 133 considered. The effect of clause 5.5.2 was that no liability would arise until the landlord was notified by the tenant, and until a reasonable time had passed. What constituted a reasonable time was not linked to the giving of notice by the tenant, but would depend upon the circumstances, including the fact that the landlord knew of the need for repair without having been notified and had no reason to believe that the other tenants were happy to leave the item out of repair. The appellants could not rely upon the notice requirement in the first limb of clause 5.5.2 as a defence to the respondent’s claim, since they had waived that requirement by informing the respondent that they intended to repair the roof in the summer of 2003. Where a provision was for the protection of one party, that party could waive it unilaterally; the appellants had made it clear that they were not relying upon the requirement for notice.
(2) On the evidence before him, the judge had been entitled to come to the conclusion that, had the appellants used all reasonable endeavours, they could have completed the works by the end of 2003 in circumstances that met the BAFTA tenant’s reasonable requirements, and that that was a reasonable time within which to perform those works.
(3) It was not appropriate to restrict damages to the cost of patch repairs until 2004. As the judge had found, patch repairs were reasonable while the appellants were working up a scheme for replacement. However, once the appellants had been advised that replacement was required and had devised a scheme, patch repairs were no longer sufficient.
Mark Wonnacott (instructed by Ashfords, of Exeter) appeared for the appellants; Kenneth Munro (instructed by Shoosmiths, of Nottingham) appeared for the respondent.
Sally Dobson, barrister
