Janet Reger International Ltd v Tiree Ltd

Landlord and tenant — Covenant to repair and maintain property — Premises showing signs of damp — Damp caused by defective installation of damp-proof membrane — Whether covenant obliging landlord to repair defects — Whether lease having implied term to that effect — Claim dismissed The claimant was the tenant of basement and ground-floor business premises under a lease granted by the defendant landlord in 2000, following the redevelopment of the building. In 2003, the basement began to show signs of damp and the state of the premises deteriorated. The defendant instructed structural engineers, who identified the cause of the damp as a defective damp-proof course. The damp-proof membrane formed part of the building’s structure. The necessary repairs had not been carried out when, in 2004, the claimant relocated to alternative premises owing to the unusability of the premises. The defendant indicated that it was prepared to undertake the works, but denied responsibility for the cause of the damp or that it was in breach of any obligation to exercise reasonable endeavours to carry out the works in question. It maintained that financial liability for the repair works lay with the claimant, whose responsibility they were under the lease. The claimant disagreed and brought proceedings against the defendant for specific performance of the covenant to “maintain, repair and renew” the structure by carrying out works required to prevent damp from penetrating into the basement. It also claimed damages. The defendant counterclaimed for unpaid rent that the claimant had withheld on the basis that the premises were unfit for their purpose. The questions for the court were, inter alia, whether: (i) the defendant was, under the lease, expressly obliged to carry out the works to prevent the damp from penetrating into the basement; or (ii) there was an implied term that the defendant should use reasonable endeavours to remedy any defective part of the structure that caused, or threatened to cause, immediate damage to any part of the demise that the tenant was obliged to maintain and/or keep in substantial repair and condition under its covenants in the lease. Held: The claim was dismissed. (1) The defendant was not liable to carry out the works. A landlord’s obligation to repair arose when the subject of the covenant, in this case the structure, had deteriorated from a previous condition so that it fell below a standard to be expected by a reasonable tenant. It would be in a state of disrepair only if one could highlight a time when the structure had been in a better condition, as evidence of deterioration: Quick v Taff-Ely Borough Council [1985] 2 EGLR 50; (1985) 276 EG 452 considered. The fact that there might be a loss of amenity owing to bad workmanship did not automatically mean that there was disrepair. The obligation to repair did not require the landlord to remedy defective workmanship that had not been the cause of the damage to the structure, even though the defect might make the premises unsuitable or unfit for occupation: Post Office v Aquarius Properties Ltd [1987] 1 EGLR 40; (1987) 281 EG 798, Lee v Leeds City Council [2002] EWCA Civ 6; [2002] 1 EGLR 103 and Elmcroft v Tankersley-Sawyer [1984] 1 EGLR 47; (1984) 270 EG 140 considered. (2) The court would imply a term into a lease only if it was: (i) reasonable and equitable; (ii) necessary to give business efficacy to the contract; (iii) so obvious that it went without saying; or (iv) capable of being clearly expressed and not in contradiction of any express term of the contract. In the present case, under the lease, the landlord was not obliged to put the structure in good condition. The defendant was given the right, but not the obligation, to maintain and repair. To imply a term would be to turn a right into an obligation and transfer work falling within the tenant’s repairing covenant to the landlord: BP Refinery (Westernpoint) Pty Ltd v Shire of Hastings (1978) 52 AJLR 20 and Hannon v 169 Queen’s Gate Ltd [2000] 1 EGLR 40; [2000] 09 EG 179 considered. Steven Thompson (instructed by Suttons) appeared for the claimant; Stephen Jourdan (instructed by Dewar Hogan) appeared for the defendant. Eileen O’Grady, barrister