Repairing obligations need to be clearly drafted in subleases of part since merely replicating the terms of the headlease could be dangerous
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Key point |
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● Merely replicating headlease covenants in a sublease of part may not satisfactorily deal with the effects of a subdivision of the property |
The drafting of any sublease requires great care. In particular, the intermediate party – the tenant under the headlease and the landlord of the sublease – does not want to be liable to its landlord for breaches committed by its tenant and then find that it has no redress under the sublease. The temptation is to replicate the headlease covenants in the sublease. Although this may work reasonably well for a subletting of the whole of the premises comprised in the headlease, this can create real problems in the case of a subletting of part. A recent Court of Appeal case illustrates this.
Web of covenants
In Delgable Ltd v Perinpanathan [2005] EWCA Civ 1724; [2006] 17 EG 114 (see p114), the court had to ascertain the extent of the repairing obligations imposed in a sublease of part of premises. A headlease of the whole of the property had been granted in 1979 for a term of 20 years, and had then been continued under the Landlord and Tenant Act 1954. A sublease of the first, second and third floors of the building was granted to the respondent, also in 1979; this too had been statutorily continued. In 1999, the respondent acquired the freehold reversion. In 2004, it began proceedings, as head landlord, against the defendant, the current tenant under the headlease, claiming damages for her failure to repair the roof. She alleged that the obligation for such repairs fell within the repairing obligations imposed by the sublease on the respondent as subtenant of the upper floors.
Under the headlease, the tenant was obliged to repair “the Premises”. The premises were defined as “All that piece or parcel of land situate on the South side of Praed Street London W2 together with the shop and buildings erected thereon known as 15 Praed Street”. This repairing obligation was repeated in the sublease. However, for the purposes of the sublease, the premises were defined as the “first, second and third floors, 153 Praed Street London W2 and the stairway providing access thereto”. Both leases also contained two further obligations. The first was:
To pay a fair proportion… of the expenses from time to time payable for supporting repairing maintaining cleansing and renewing all walls fences gutter sewers drains and any other things the use of which is common to the Premises and to other property adjoining or near thereto.
The second was:
To procure that the exterior surfaces of all buildings or structures comprising or within the Premises previously painted grained or varnished are painted grained or varnished in every third year of the term and also in the last year of the term…
The issue for the court was, given the absence of any mention of the roof in either the headlease or sublease, where did the obligation to repair the roof rest? The trial judge decided that the roof did not fall within the sublease and that the duty to repair therefore fell on the appellant as head tenant. However, he also ruled that she could claim a fair proportion of the expense of carrying out these repairs under the contribution provision in the sublease and that the respondent, as subtenant, would have to pay 60% of those costs. The appellant appealed.
The appellant argued that the covenants in the sublease, the stairway aside, divided the building horizontally at the point between the ceiling of the ground floor and the floor of the first storey. If the subtenant were obliged to redecorate the exterior of “all buildings or structures comprising or within the demise”, the external walls of the upper floors have come within the demise, suggesting that the roof, too, was also included. In particular, the word “buildings” carried a connotation of something with a roof.
Lloyd LJ pointed out that it was unfortunate that those drafting the sublease had not considered the consequences of subdividing the property. There was no factual material to assist in the construction of the generalised definition of the premises. Although he agreed with the appellant that the external lateral walls were within the subdemise, he did not think that, where the wording of the tenant covenants in the sublease merely replicated the headlease, the court should strive to give effect to every word. It put too much weight on the word “buildings” to suggest that this had the effect of including the roof.
A reasonable outcome
Ultimately, he thought that the contribution provision was the best guide as to what the parties must be taken to have intended with regard to the roof. The appellant, safe in the knowledge that the respondent had not cross-appealed on the trial judge’s ruling on its obligation to contribute 60%, had argued that the roof was not covered by that clause. However, Lloyd LJ concluded that “any other things the use of which is common to the Premises and to other property adjoining or near thereto” was as broad as could be. In the context of the sublease, it was therefore sufficient to include the roof.
This meant that the appellant was obliged to repair the roof but was, as the trial judge had decided, entitled to a contribution towards the cost of the work. This was a fair and reasonable outcome. Had the parties intended that the subtenant should bear the entire cost of repairing the roof, it would have been expressed in clearer language than was to be found in this sublease.
Although this case turned not on a matter of principle but on the wording used, the ruling provides a useful warning to those drafting subleases of part. Leaving the issue of repairing obligations to a broad definition of the demised premises is a dangerous game.
Sandi Murdoch, senior lecturer in law, Reading University
