Manchester’s Beetham Tower is a 47-storey glass building, which has been described as “the first skyscraper outside London”. It is reputed to have cost £150m to construct and houses a Hilton Hotel with residential flats above. But, only eight years after completion, the structural sealant used to attach the glass panels to the façade began to fail. The main contractor, Carillion Construction Limited, investigated and came up with a temporary fix, before going into liquidation four years later. Hence the litigation in Blue Manchester Ltd v North West Ground Rents Ltd [2019] EWHC 142 (TCC).
The tenant of the hotel called on the freeholder to comply with the repairing covenants in its 999-year lease, for which it had paid £60m, and to provide a permanent solution to the problem, citing concerns about the safety of the temporary stitch plates that Carillion had installed. It also objected to their adverse effect on the building’s appearance and to the obstruction caused by safety barriers and hoardings at ground level, which impeded vehicular access to the hotel and its valet parking service, as well as obstructing light and the view into and out of the foyer.
The freeholder had covenanted to keep the common parts “in good and substantial repair and when necessary as part of repair to reinstate replace and renew” them, and had agreed to exclude inherent or design and construction defects from the service charge. It accepted that the façade was its responsibility, but argued that it had complied sufficiently with its repairing obligations by providing the temporary fix while it pursued claims against Carillion’s insurers and a subcontractor (which, it hoped, would enable it to fund a permanent solution).
Was the façade in disrepair with the temporary solution in place? The judge ruled that it was insufficient to argue that the common parts were in disrepair simply because the landlord had installed temporary stitch plates, and that the tenant was entitled to a like-for-like replacement, regardless of all other considerations. The question was: was the temporary solution structurally safe for an unspecified period going forwards?
The stitch plates had been designed to last for no longer than three years. They required regular inspection, causing disruption, and, although the experts believed that they were secure, they could not say so with the confidence that would enable a conscientious landlord to permit them to remain, either indefinitely or for a specified period. Therefore, the façade was not in good or substantial repair. Furthermore, although the point had not been expressly considered in any of the reported cases, the judge accepted that aesthetic considerations can be relevant in some cases and considered that there would have to be some compelling reason for a tenant of a building of this nature to have to accept a time-limited repair such as this on a permanent basis.
So, despite the freeholder’s arguments, the judge granted an order for specific performance requiring the freeholder to repair the building within an 18-month period so that it presented substantially the same external appearance as at the date of the lease (but granted the freeholder permission to apply to undertake a different remedial scheme, or for an extension of time, if needed). The judge also agreed with the tenant that the barriers and hoardings should not have been left in place for so long and ruled that it was entitled to damages, to be assessed, as a result.
Allyson Colby, property law consultant