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Case law: Court clarifies standard required where lease contains an obligation to keep property in repair

Landlords and tenants of properties will welcome clarification from the court on the standard required under repairing obligations in leases. They should start planning and negotiating in good time before any obligation takes effect, to ensure that the repairs satisfy the requirements of the lease and are carried out in time.

April 2020

This update was published in Legal Alert - April 2020

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A commercial lease will usually contain obligations for both the landlord and tenant to keep the property in good repair to avoid damage and/or deterioration – often for the tenant to make internal repairs and for either the landlord or tenant to make external repairs.

In one dispute the tenant of a hotel in a mixed use, iconic building in Manchester went to court asking it to order the landlord to comply with its repairing obligations under their lease.

A feature of the building is a cantilevered overhanging section from floor 23 upwards, made up of glass, insulated shadow box units (SBUs). Serious problems had developed with the sealant used in the SBUs. The main contractor involved in building the property dealt with this in the short term by screw stitching pressure plates to the frame profiles to hold the panels securely in position. This was supposed to be a temporary solution only but, before a permanent solution was devised, the main contractor went into liquidation.

Also, the SBUs ordinarily had a ‘clean, modern and unitised appearance’ but this was ‘significantly and adversely affected by the presence of the stitch plates’.

The lease required the landlord ‘at all times to keep in good and substantial repair and when necessary as part of repair to reinstate replace and renew where appropriate the Retained Property and the Common Parts’.

Where such words are used the standard of repair is ‘such repair as, having regard to the age, character and locality of the premises, would make them reasonably fit for the occupation of a reasonably minded tenant of the class who would be likely to take them’.

The landlord argued that the temporary solution satisfied its repairing obligation until it could make a claim against the contractor’s insurers (and a sub-contractor that was also involved). The tenant disagreed.

The court made the order as requested by the tenant and, in the course of doing so, clarified some useful points. It said that:

  • Repairing obligations will not usually be satisfied by temporary repairs, where the property only meets the required standard of repair for the time being. Temporary repairs will only be satisfactory if there are ‘compelling reasons’ why they should be.
  • The look of a building – an aesthetic matter - might need to be taken into account when deciding what standard of repair is required, although this depends on the circumstances. In this case the fact the property was a high-class, iconic building with a revolutionary look, in a prime location in Manchester, meant aesthetics were important and the standard of repair required was high.
  • There can still be a breach of a repairing covenant even if, despite being in disrepair, a property is still ‘functional’.

Operative date

  • Now

Recommendation

  • Landlords and tenants of properties with repairing obligations should start planning and negotiating in good time before any obligation takes effect, to ensure that the obligations are agreed and complied with, taking into account the points clarified by the court.

Case ref: Blue Manchester Limited v North West Ground Rents Limited [2019] EWHC 142

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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