Legal Updates

Commercial Property – Covenant to Repair  – Breach By Previous Tenant

The case of Latimer and Another v Carney and Others [2006],  concerned damages for failure to repair a property. The relevant legislation in this case was s.18(1) of the Landlord and Tenant Act 1927, which provides, so far as relevant:

'…Damages for a breach of a covenant or agreement to keep or put premises in repair during the currency of a lease, or to leave or put premises in repair at the termination of a lease, whether such covenant or agreement is expressed or implied, and whether general or specific, shall in no case exceed the amount (if any) by which the value of the reversion (whether immediate or not) in the premises is diminished owing to the breach of such covenant or agreement as aforesaid ...’.

The landlords of the premises involved in the case commenced proceedings against the defendants, their former tenants, for breach of the covenant to repair the premises (as stipulated under the terms of the tenancy). The landlords had obtained a report from a chartered surveyor as to the state of the premises on termination of the lease, and the report included an estimate of what it would cost to repair the property.

The landlord carried out repairs to the roof, as the previous tenant had not done so, and in due course a new tenant was found. The new tenant obtained planning permission to turn what had been a carpet shop into a fast food outlet, and so the landlords suitably refurbished the property to meet his needs. The work carried out by the landlord included works in addition to the work needed to repair the roof of the property after the previous tenant’s use.

At the trial for damages for breach of covenant by the previous tenants, the landlords failed to prove the actual cost of the repairs that the surveyor had identified as requiring to be done. The repairs had to be done in order to remedy the items in the surveyor’s schedule of dilapidations, and so the judge rejected the landlords' claim.

He held that the landlord had not proved either the actual cost of the repairs or the damage to the property after taking it back from the previous tenants. They had failed to separate out the costs of repair from the costs of the improvements necessary for the new tenant to take the property. It should be noted, however, that the judge accepted that in some cases it was sufficient to only show the estimated cost of repairs and that that would have been sufficient in this case. Unfortunately, the judge held that there was insufficient evidence to show this.

The landlords appealed.  The principal issue dealt with in the appeal was the application of s.18 of the Landlord and Tenant Act 1927, which imposes a limit on the amount of damages that a landlord could obtain for breach by a tenant of the covenant to repair.

The appeal was allowed.

The judge had correctly held that in an appropriate case the court could infer the damage to the reversion (namely the property which the landlord gets back from the tenant) from the evidence as to the estimated cost of the repairs. However the judge had incorrectly stated that there was insufficient evidence on the facts of this case to do so. Even though there was no expert evidence before him, he could have drawn the inference that the limit had not been exceeded from the fact that the landlords had had to repair the roof of the premises before the property could be let to a new tenant, and had had to carry out the improvements before the new tenant would take his lease.

The damage to the reversion should have been inferred from the estimated cost of repairing the roof. The damage to the reversion should also have been inferred from the estimated costs of remedying the number of other breaches by the previous tenant found by the judge, subject to a discount of 60% in order to take into account the uncertainty as to the extent that the disrepair affected the value of the property.

Please contact us for more information on assessing damages due under termination of a contract at  enquiries@rtcoopers.com

Visit http://www.rtcoopers.com/commercial_property.php

© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.
 

 

 

SearchBox

Search Shadow

NewsLetterBox

newsletter Shadow

TestimonialBox

Testimonial Bottom Shadow

testimonial Shadow Middle

More Testimonials

Testimonial Bottom Shadow