It is well
known that a substantial amount of the housing provided by local authorities is
in a substandard condition and there seems little reason to doubt the
proposition that the proportion of defective council housing may well have
risen in the wake of the ‘right to buy’ provisions introduced in 1980, since it
is the better-quality properties which have been sold off. Unfortunately, a
significant number of these defects occur in houses of relatively recent
construction, reflecting an unhappy period of poor design, untested building
techniques and sloppy workmanship.
Tenants
seeking to have such design defects remedied face an uphill struggle, even
though they invariably have the ‘protection’ of sections 11-16 of the Landlord
and Tenant 1985, which require their landlord, among other things, to keep in
repair the structure and exterior of the dwelling. This statutory provision has
proved quite inadequate to cover one of the more common problems, namely damp
arising from condensation. This was graphically demonstrated in Quick v Taff-Ely
Borough Council [1985] 2 EGLR 50. Here, the Court of Appeal ruled, albeit
reluctantly, that a house plagued by severe condensation problems could not be
said to be in disrepair within the meaning of section 11. This was because
there was no evidence of any physical damage to the structure and exterior
of the property. The size of the problem was also revealed in that case, since
Dillon LJ pointed out that, had the case gone against the defendant council, it
would have faced a £9m bill putting right similar defects in all its
properties!
Thus, a
straight repairing obligation will only oblige the landlord to rectify damage
to the structure, when in the vast majority of condensation cases the damage is
‘confined’ to decorations and furnishings, not to mention health and general
amenity. If a tenant is to have any contractual remedy against his landlord he
must therefore establish the existence of an express obligation which goes
beyond the ordinary concept of repair. This avenue was recently explored in Palmer
v Sandwell Metropolitan Borough (1987) 284 EG 1487. Here, the plaintiff,
a secure tenant of one of the defendant’s properties, was seeking to establish
that an obligation to put right inherent defects had been incorporated into her
tenancy agreement. Her house was one on an estate of some 500 properties, all
of which had been constructed in the late 1960s using the ‘Bison wall frame
system’. Severe condensation problems were experienced by the residents on this
estate from the outset and, although certain steps were taken by the council,
the difficulties remained. The plaintiff’s tenancy commenced in 1974 and from
1978 onwards the property suffered from enough condensation problems to render
a substantial part of the house uninhabitable. It was conceded that any
disrepair to the structure and exterior was minor and thus damages under
section 11 would have been limited to £200, hence the need to establish an
additional basis for a claim.
This rested
on a booklet sent out by the council to all its tenants in 1983, entitled
‘Tenants’ Handbook and Charter’. This had been produced by the defendant
council in response to section 41(1) of the Housing Act 1980 (since replaced by
section 104 of the 1985 Act), which obliges local authority landlords to
publish clear and simple information about the terms of their secure tenancies,
the provisions of the Housing Act and the provisions of sections 11-16 of the
Landlord and Tenant Act 1985. Even its own counsel was forced to describe this
unfortunate publication as a ‘ragbag’ (members of the Court of Appeal were far
less polite); one of its contents was a ‘Tenants’ Charter’, a model tenancy
agreement which differed in significant respects from the plaintiff’s existing
agreement, most notably in that it included a term obliging the landlord to
rectify design defects which result in condensation. The issue was therefore
whether this ‘model tenancy’, including the clause relating to inherent
defects, had superseded the tenant’s existing agreement.
Given that
the existing tenancy was a secure tenancy, its terms could be varied only in
accordance with what is now section 104 of the Housing Act 1985 and, for
present purposes, this meant that it was necessary to show that the parties had
agreed a variation. This could be done only if it could be established that the
council by sending out the booklet had, in law, offered to vary the terms of
the tenant’s lease and that this offer had, in law, been accepted.
With great
reluctance the Court of Appeal felt obliged to differ from the trial judge and
to conclude that this was not so and that there had been no agreement to vary.
The court felt that, although the terms of the booklet might be read as
having been intended to be an offer to enter into the new-style tenancy with
existing tenants who accepted new homes, there was no basis for reading it as
an offer to existing tenants who were staying put. In any event, the court was
satisfied that the terms of the booklet were far too uncertain to amount to an
offer; their lordships also thought that it would have been necessary for the
council to have indicated a method and time-scale for acceptance.
Although
this was sufficient to decide the case, the court went on to consider two
points which merit a mention even though the court’s remarks are, strictly,
obiter. First, the court thought that even if the booklet had amounted to an
offer, it could not be said that the tenant had accepted that offer. Although
it is possible to accept an offer by conduct, this can be so only where this is
unequivocally consistent with acceptance. In the present case the tenant had
merely remained in possession and continued to pay rent, acts which were
equally consistent with non-acceptance of the terms of the new tenancy.
Finally, the
court gave brief consideration to the construction which it would have put on
the clause imposing the obligation to correct inherent defects, had it been
incorporated, and this may be of some interest to those faced with the
interpretation of such clauses, which are by no means uncommon in both the
residential and the commercial contexts. In particular, the court rejected a
‘state of the art’ defence, ie that there can only be a design defect within
the meaning of the clause if the defect is one which has been recognised in the
light of technical knowledge at the date when the building was constructed. The
court was firmly of the view that the question of whether or not there is a
design defect must be examined in the light of technical knowledge at the
date of the lease.
out of the 1954 Act
The
contracting-out provisions of the 1954 Act, contained in section 38(4), are
widely used, especially where landlords are planning to redevelop the premises
and do not wish to get tangled up with having to oppose the grant of a new
tenancy. Naturally, any landlord thinking that he had successfully contracted
out of the Act would be disconcerted, to say the least, if he found that this
was not the case. This was indeed the outcome of recent litigation and it seems
wise to draw attention to this decision, not because it comes as any great
surprise but rather because this note may save other landlords falling into the
same trap.
In Essexcrest
Ltd v Evenlex Ltd [1988] 01 EG 56 the parties negotiated an
underlease to which it was plainly intended the 1954 Act should not apply;
indeed there was a term in the lease which stated that the Act did not apply.
This lease was duly executed, and the tenant took possession, on December 29
1982, prior to any application to the court for its approval of the
agreement, as required by section 38(4); consequently, the ‘blanks’ left in the
contracting-out provision in the lease for the insertion of the date of the
court order were left unfilled. The joint application was duly made and an
order of the court was forthcoming on January 24 1983. The landlords wrote to
the tenants, enclosing a copy of the court order, asking them to endorse their
underlease with a memorandum of the order; they suggested that this should be
the course adopted, since the ‘blanks’ in the lease itself could not now be
filled in, as the lease had already been executed. This the tenants did.
However, at the end of their term the tenants applied for a new tenancy, under
the provisions of the 1954 Act, claiming that there had been no effective
exclusion of the Act.
With this,
the Court of Appeal was reluctantly forced to agree. The terms of section 38(4)
make it quite clear that court approval must be obtained before the
lease is granted. In this case the parties had not entered into an agreement
which was expressly conditional upon the obtaining of court approval and the
Court of Appeal could find no basis for implying such a condition. Given that
an unconditional lease had been executed the parties should, the court said,
have re-executed the lease after obtaining the court order; the
unilateral endorsement of the lease was not sufficient. The lesson is clear.
