Covenant to repair

Covenant to repair

Covenant to repair

Adami v. Lincoln Grange Management Ltd [1998] 17 EG 148

There have been several cases since the last "Legal update" which have involved consideration of the law relating to repairs and dilapidations. In this case the question at issue was whether the lease contained an implied term that thelandlord would carry out structural repairs to the maisonette which was the subject matter of the lease.

The lease provided (inter alia) that the landlord would insure the property against a variety of risks, and the policy in question covered damage due to subsidence among other things. Clause 9(b)(i) of the lease contained a covenant requiring the lessee "to keep the demised premises and to deliver them up at the end of the term in good and substantial repair and condition". The property did in fact suffer damage from the effects of subsidence, and substantial remedial works were required to deal with the problem. There were difficulties in getting the works completed due to financial difficulties on the part of the insurers. The landlord therefore asked all the lessees to indemnify it against the cost of completing the works, and all the lessees apart from the appellant agreed. He, for his part, completed the necessary works himself, at his own expense, and then sued the landlord for breach of what he claimed was an implied covenant to keep the structure of the building in repair. The court did not accept that the landlord was under any such obligation. In Duke of Westminster v. Guild [1985] QB 688; [1983] 2 EGLR 37; (1983) 267 EG 762, said the court, Slade LJ had approved a passage from Woodfall in the following terms:

In general, there is no implied covenant by the lessor of an unfurnished house or flat, or of land, that it is or shall be reasonably fit for habitation, occupation or cultivation, or for any other purpose for which it is let. No covenant is implied that the lessor will do any repairs whatever . . .

So far as the insurance monies were concerned, there was in this case clearly an obligation to pay them out so far as possible on the works required to deal with the structural problems occasioned by the subsidence, but the obligations of the landlord under the lease went no further than this. The earlier case of Barrett v. Lounova (1982) Ltd [1990] 1 QB 384; [1988] 2 EGLR 54; [1988] 36 EG 184 was distinguished.

Creska Ltd v. Hammersmith & Fulham LBC [1998] 37 EG 165

This case is really just one more in the long line of cases as to what is meant by the word "repair", and how this may be distinguished from an "improvement". In most such cases, either landlord or tenant is usually to be found contending that they should not have to replace something old with something which is not only new but also different, on the basis that because it is also different (and therefore usually more expensive) it falls outside the scope of the relevant repairing covenant. In this case, the situation was rather the reverse. The tenants had covenanted to repair "the interior . . . and all electrical installations herein . . .". This included an underfloor heating system comprising cables set into the concrete floors of the building, many of which were found to be broken or damaged. The tenant wished to avoid the "very expensive option" of repairing the existing heating system, and to replace it instead with a new system of storage radiators. The court considered a number of the earlier cases involving the distinction between repairs and improvements before finding for the landlord: in the words of Evans LJ:

This is not a case where it is impossible or even impracticable to maintain the existing under-floor storage-heating system in good working condition nor where doing so would be "futile" in the sense that the repair would be short-lived and commercially unsound. Nor, in our judgment, can it be said that individual storage heaters are the same "electrical heating ... installation" in a different guise. It seems to us that they are two different methods achieving the same result, notwithstanding that the same techniques are employed. The council undertook to maintain the existing under-floor installation in good repair. It is defective and needs repair and the repairs, although expensive, can be carried out. The fact that repairs carried out now would incorporate some improvements in design, particularly the use of flexible connectors where appropriate, does not mean that they cease to be works of repair that the party liable under the repairing covenant is bound to perform. We therefore hold that the council are not entitled to discharge their obligations under the repairing covenant by substituting individual storage heaters for the under-floor system, and the question whether they would be entitled or bound to do so, if repairs to the existing installation were no longer practicable, does not arise.

Wallace v. Manchester City Council [1988] 41 EG 223

As regards the amount of damages which may be recovered from the landlord for breach of the latter's repairing obligations, the Court of Appeal in this case made a most thorough review of the relevant case law before confirming the award in the court below: £3,500 general damages for breach of the landlord's statutory repairing covenant under s. 11 of the Landlord and Tenant Act 1985, over a period lasting from 1994 (the date of the first recorded complaint by the tenant to the council's Housing Officer) and 1997 (the date of the court action).

Crewe Services & Investment Corporation v. Silk [1998] 35 EG 81

This case provides a useful reminder that when the landlord is suing the tenant for breach of the tenant's repairing obligations, then both at common law and under the provisions of s. 18(1) of the Landlord and Tenant Act 1927, there is effectively a "ceiling" put upon the amount of the damages equal to the consequential drop in value of the landlord's reversion. In this case the original award of some £15,940 was reduced on appeal to £3,000.

Rainbow Estates Ltd v. Tokenhold Ltd [1998] 24 EG 123

Readers will be aware of the broad general principle that the courts will normally decline to grant an order for specific performance of a repairing covenant because this would normally involve the court in the need for detailed supervision, and this the court will normally decline to do.

To every good rule, however, there must be an exception or two, and this case is one such exception. The property involved was a Grade II listed building, and the lessees had each covenanted "to keep and maintain the property in good and tenant-like repair throughout the term". In fact the premises were in a serious state of disrepair. Notices under the Housing Act 1985 and the Environmental Protection Act 1990, had already been served by the local authority. Moreover, the lessees' means were uncertain, and the landlord had no right of re-entry or forfeiture, so that he could not even prevent further deterioration by forfeiting the leases then doing the work himself and seeking to recover damages from the tenants. In the circumstances, said the court, it was prepared in this case, as an exception to the general rule, to order specific performance of the lessees repairing covenants.

Finally, as to the right of the landlord to set-off unpaid service charges against damages for breach of the landlord's covenants for repair and quiet enjoyment, see: Filross Securities Ltd v. Midgeley [1998] 43 EG 134.