Considers the circumstances in which repair works may be more appropriate than replacement where a landlord is attempting to claim under a repair covenant. Examines case law on which method is more appropriate and on the standard of remedial work to be undertaken. Reflects on the situation where performance of remedial works would be futile. Comments on the Technology and Construction Court ruling in Carmel Southend Ltd v Strachan & Henshaw Ltd on whether a landlord had been correct to carry out overcladding works to a roof where surveyors had agreed that patch repairs would be adequate

Pawlowski, Mark

English

Greenwich Academic Literature Archive

Greenwich Academic Literature Archive (GALA)– the University of Greenwich open access repositoryhttp://gala.gre.ac.uk__________________________________________________________________________________________Citation for published version:Pawlowski, Mark (2007) Patch me if you can. Property Law Journal, 194. pp. 11-13. ISSN 1461-0752Publisher’s version available at:__________________________________________________________________________________________Please note  that  where  the  full  text  version provided on GALA is  not  the  final  published version, the version made available will be the most up-to-date full-text (post-print) version as provided by the author(s).  Where possible, or if citing, it is recommended that the publisher’s  (definitive) version be consulted to ensure any subsequent changes to the text are noted.Citation for this version held on GALA:Pawlowski, Mark (2007) Patch me if you can . London: Greenwich Academic Literature Archive.Available at: http://gala.gre.ac.uk/1392/__________________________________________________________________________________________Contact: gala@gre.ac.ukProperty Law Journal 1128 August 2007COVENANTS TO REPAIR Patch me if you canMark Pawlowski examines a recent High Court ruling whichprovides further insight as to when repair – as opposed tocomplete replacement – will suffice‘Replacement is onlyrequired if repair is notreasonably or sensiblypossible.’Mark Pawlowski is a barrister and professor ofproperty law at theUniversity of GreenwichIt is not uncommon for a tenant todispute a landlord’s claim for disre-pair on the ground that continuing‘patching up’ of the premises provides areasonable (and less costly) way of complying with the tenant’s repairingcovenant than complete replacement.Indeed, if such a course is recommendedby a reasonable surveyor, it will be verydifficult for a landlord to argue for moreextensive remedial works, since it is forthe tenant to make the choice (ascovenantor) if there is more than onepossible method of repair. Moreover, ifthere is a cost differential, the landlord’sdamages will be based on the lessexpensive option. Repair or replacement?The case law makes clear that replace-ment work will only be justifiable ifcontinuing repair is not a reasonable orsensible option. The choice betweenthese alternatives will be heavily influ-enced by the relative costs involved inmere patching on the one hand, andcomplete replacement on the other: seePostel Properties Ltd v Boots the Chemist[1996] (replacement of flat roof cover-ings of large shopping centre). In Land Securities plc v WestminsterCity Council (No. 2) [1995] JonathanParker J held that the tenants were notobliged by the repairing covenant toreplace an air conditioning plant whichstill had a life expectancy of five years.In this case, there was another way bywhich the tenants could comply withtheir repairing obligation (involvingcrisis or ad hoc repairs from time totime) which did not involve replace-ment. Similarly, in Fluor Daniel PropertiesLtd v Shortlands Investments Ltd [2001]the landlord wrote to the tenantsinforming them that it was about tospend £2m replacing substantial parts of the air conditioning system and other structural repairs. The tenantschallenged this on the ground that theworks were unnecessary. Significantly,Blackburne J held that the lease did notenable the landlord to recover expenses(by way of service charge) incurred inrenewing or improving the system if theplant and equipment was still capable of rendering the particular service thelandlord had covenanted to provide.Moreover, the fact that an item of planthad reached the end of its recommendedlifespan (as suggested by industryguidelines) did not mean that it wouldbe reasonable for the landlord to want to replace it at the tenant’s expense. Here again, a programme of repair (asopposed to replacement) was moreappropriate, at a lower cost. Standard of repairIn Fluor the learned judge concludedthat the standard of remedial work to beadopted in such cases had to be such as the tenants, given the length of their leases, could fairly be expected topay for. The alternative standard (putforward by Nicholls LJ in Plough Invest-ments v Manchester City Council [1989]),namely that which a prudent buildingowner (if they had to bear the cost them-selves) might reasonably decide upon,was rejected because it did not take intoaccount the tenant’s more limited inter-est in the property. In the words ofBlackburne J:The landlord cannot, because he has aninterest in the matter, overlook the lim-ited interest of the tenants who arehaving to pay by carrying out the worksthat are calculated to serve an interestextending beyond that of the tenants. IfPLJ194 p11-13 Pawlowski  17/8/07  15:28  Page 1128 August 200712 Property Law Journal COVENANTS TO REPAIR the landlord wished to carry out repairsthat go beyond those for which the ten-ants, given their more limited interest,can be fairly expected to pay for, then,subject always to the terms of the leaseor leases, the landlord must bear theadditional cost himself.What a tenant could be expected topay is to be judged by reference to theformula adopted in Proudfoot v Hart[1890], namely whether the repair is to astandard necessary to make the prem-ises reasonably fit for the occupation ofthe tenant of the class which would belikely to take it. Put another way, the standard is thatof an intending occupier ‘who judgesrepair reasonably by reference to hisintended use of the premises’ (seeCommercial Union Life Assurance Co vLabel Ink [2001]). Thus, in Dame MargaretHungerford Charity Trustees v Beazeley[1993] the Court of Appeal agreed withthe trial judge that the landlords hadcomplied with their statutory repairingobligation (under s11 of the Landlordand Tenant Act 1985) by carrying outrunning repairs to the roof during thetenancy (albeit that the roof requiredcomplete overhaul). The landlord wasable to demonstrate compliance withthe covenant by reference to theProudfoot standard and, in particular,the age and character of the property inquestion (see Murray v Birmingham CityCouncil [1987] on repairs to roof). Futile workAs noted earlier, it is for the covenantorto decide how to perform the covenantprovided they act reasonably in theirpreferred choice. A tenant, therefore, isnot entitled to insist that cheaper worksare undertaken or insist on a minimumstandard of repair if that course ofaction is unreasonable. If, for example,continued patching work would befutile, the only meaningful method ofrepair will involve complete replace-ment – see Gibson Investments Ltd vChesterton plc [2002]. In the words ofAckner LJ in Elmcroft Developments Ltd vTankersley-Sawyer [1984]:The damp-course, once inserted, wouldon the expert evidence cure the damp.The patching work would have to go onand on and on, because, as the plasterabsorbed (as it would) the rising damp, itwould have to be renewed, and the costto the [landlords] in constantly beinginvolved with this sort of work… wouldhave outweighed easily the cost in doingthe job properly. I have no hesitation inrejecting the submission that the [land-lords’] obligation was repetitively to carryout futile work instead of doing the jobproperly once and for all.The above-cited passage suggeststhat, where one method of repair wouldinvolve the continual re-doing of thesame work from time to time andanother method would provide a once-and-for-all cure, the latter should beadopted as proper compliance with therepairing covenant. Much will turn, however, on theactual defect in question. In Elmcroft thedamage to the plasterwork could onlybe dealt with effectively by the insertionof a damp-course to prevent the risingdamp. In Stent v Monmouth DistrictCouncil [1987] the problem related to thefront door of a house which let in rain.The regular repair of the rotting doordid not cure the problem – this couldonly be achieved by replacing it with aself-sealing aluminium door. In Roper vPrudential Assurance Co Ltd [1992] thetenant of an agricultural holding washeld liable for the replacement of theelectrical wiring in the farmhouse. Thereplacement was due simply to old ageand the court had no difficulty in hold-ing that this fell squarely within thetenant’s covenant to repair. Again, in Manor House Drive Ltd vShahbazian [1965] the landlord wasadvised by its surveyor that a new zinclayer (below the canvas and bitumencovering) was required to render theroof watertight. This would then last forabout 25-30 years. The tenants arguedthat, instead of a new zinc roof, first aidrepairs could be done using a bitumencoating. Although this was less endur-ing, it was considerably cheaper. TheCourt of Appeal rejected this approachIt is for the covenantor to decide how to performthe covenant, provided they act reasonably in theirpreferred choice. A tenant is not entitled to insistthat cheaper works are undertaken or insist on aminimum standard of repair if that course of actionis unreasonable.Carmel Southend Ltd v Strachan & Henshaw Ltd[2007] EWHC 1289 (TCC)Commercial Union Life Assurance Co Ltd vLabel Ink Ltd[2001] L&TR 380Dame Margaret Hungerford CharityTrustees v Beazeley[1993] 2 EGLR 143Elmcroft Developments Ltd v Tankersley-Sawyer[1984] 270 EGLR 140Fluor Daniel Properties Ltd v Shortlands Investments Ltd[2001] 2 EGLR 103Gibson Investments Ltd v Chesterton plc[2002] 2 P&CR 494Land Securities plc v Westminster City Council (No 2)[1995] 1 EGLR 245Manor House Drive Ltd v Shahbazian(1965) 195 EG 283Murray v Birmingham City Council[1987] 2 EGLR 53Plough Investments Ltd v Manchester City Council [1989] 1 EGLR 244Postel Properties Ltd v Boots the Chemist Ltd[1996] 2 EGLR 60Proudfoot v Hart(1890) 25 QBD 42Roper v Prudential Assurance Co Ltd[1992] 1 EGLR 5Stent v Monmouth District Council (1987) 54 P&CR 193Ultraworth Ltd v General Accident Fire & Life Assurance[2000] 2 EGLR 115PLJ194 p11-13 Pawlowski  17/8/07  15:28  Page 1228 August 2007 Property Law Journal 13COVENANTS TO REPAIR on the ground that mere patching wasnot a reasonable option. In all these cases, therefore, replace-ment was the only sensible andcost-effective solution to the problem.Where, however, both a repair and areplacement solution could equally beadopted by a sensible and practicalperson, the fact that one is more endur-ing than the other will not preventeither from constituting performance ofthe covenant. In Ultraworth Ltd v GeneralAccident Fire & Life Assurance [2000] thelandlord sought damages for terminaldilapidations, under a lease of an officebuilding, alleging that the air condition-ing and heating system requiredrenewal at a cost of £420,500. Thetenant, on the other hand, contendedthat the systems could be reconditionedat a cost of about £100,000. HHJ Harvey QC held that the land-lord was not entitled to a new airconditioning and heating system simplybecause the system was new at the begin-ning of the term of the lease – it wassufficient that the system was in goodworking order. Moreover, where therewas more than one method of repair, theparty undertaking the covenant to repaircould choose which method to adopt. Inthis case, the tenant could reasonably optfor reconditioning the system as an alternative (and less costly) way of complying with the covenant. Latest High Court decisionThe factsIn Carmel Southend Ltd v Strachan &Henshaw Ltd [2007] the roof of thedemised property had leaked through-out the tenancy and attempts had beenmade to patch it up. At the end of thetenancy it remained in disrepair and thelandlord sought to recover the cost ofovercladding, which it considered to bethe only proper method of remedyingthe problem. The tenant challenged thison the basis that building surveyorsappointed by both the parties hadagreed that patch repairs would be ofthe appropriate standard to complywith the tenant’s repairing covenant.The landlord, however, had carriedout more extensive works for a numberof reasons. First, the subtenant (whohad remained in occupation at the endof the lease) had required the over-cladding of the roof as a precondition oftaking a new sublease of the property.Secondly, the landlord’s surveyor hadlater changed his mind and concludedthat overcladding was the only appro-priate remedial course and thatpatching repairs were impracticable,owing in part to certain health andsafety issues involved in working on anasbestos roof with defective roof lights. The rulingHHJ Peter Coulson QC concluded thatthe tenant’s patch-repair scheme was to be preferred. Apart from being bothfeasible and practicable, it was anappropriate method of repair havingregard to the state of the roof and thetenant’s obligations under the lease. Inparticular, the main problem areas werethe roof lights and the gutters – only afew roof sheets (not more than 20) weredamaged and required replacement.Patch repairs had been agreed betweenthe parties’ surveyors and were verycommon in the industry for this typeand age of roof. Far from being a futileexercise, therefore, such repairs wouldhave been more than adequate to putthe roof into appropriate repair and con-dition under the terms of the lease. Inany event, the principal source of theleaks had been the roof lights and therewas no dispute about these beingreplaced in their entirety as part of thepatch-repair scheme. In relation to the subtenant’s demandfor a new roof, this was only marginallyrelevant as the standard of repair (asnoted earlier) was an objective one whichdid not depend on what an incomingtenant would accept at the relevant time.In the instant case, the subtenant’sdemand was not based on the terms ofthe lease between the parties and, there-fore, had to give way to the viewsexpressed by the parties’ surveyors, whohad both initially agreed that patchrepairs were appropriate. The upshot,therefore, was that the landlord couldonly recover damages representing thecost of the patch-repairs scheme. ■Where there is more than one method of repair, theparty undertaking the covenant to repair can choosewhich method to adopt.The choice between two different remedial schemes will be governed by a number offactors:• If patching is futile, the replacement option will be preferred.• If, on the other hand, both repair and replacement alternatives are feasible, each ofwhich comply with the required standard under the lease, the covenanting party hasthe choice of option provided they act reasonably.• Replacement is only required if repair is not reasonably or sensibly possible.• In all cases, the standard of repair that must be taken into account is that of thereasonably-minded (incoming) tenant taking a lease on the same terms as the actual lease.• If the scheme of covenants in the lease places the obligation on the landlord tocarry out repair works and the tenant to pay for them (by way of service charge),the scheme is treated as being for the mutual benefit of both parties.Thus, wherethere is more than one reasonable way of carrying out the obligation, it is for thelandlord (based on the covenantor principle, above) to choose how to discharge it.The tenant cannot complain, provided the landlord acts reasonably in its choice,even though another method could have been adopted.• The standard of work, however, must be judged by what the tenant, given the lengthof the lease, could fairly be expected to pay for the works.Anything beyond this,given the more limited interest of the tenant, must be borne by the landlord itself.In summaryPLJ194 p11-13 Pawlowski  17/8/07  15:28  Page 13

Patch me if you can

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Patch me if you can

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