English Court of Appeal case concerning leases of commercial premises at 104 Cromer Street and at 106/108 Cromer Street in London. The subjects in both leases included the ground and basement premises but not the upper floors (which consisted of residential flats retained by the Landlord) nor the soil pipes on the rear wall of the building which served the upper floors.
The leases contained an obligation on the tenant to put and keep the subjects in good and substantial repair, decoration and condition. There was no corresponding obligation on the landlord to repair the parts of the building it had retained; the landlord’s only express obligations being in relation to insurance (of both the premises and the retained subjects) and allowing the tenant quiet enjoyment of the premises. A cesser of rent clause (i.e. ceasing liability for rent) also applied in the event the premises (or any part of them) were unfit for occupation and use.
The premises were damaged on at least 4 occasions between April 2004 and June 2005 by water and sewerage coming from the parts of the property retained by the landlord. The damage was repaired and insurance payments made. The tenant continued to pay the rent until June 2008 then stopped. The landlord took steps to forfeit the leases and re-enter the premises. The tenant argued that, as she had continued to pay the rent during the period in 2005 when the premises had been (in the tenant’s opinion) unfit for use, she was entitled to set that off against the rent due in 2008. The tenant also sought substantial damages for financial losses (including loss of business) arising from the leaks.
In order to succeed in such a claim the tenants had to establish a breach of duty on the part of the landlord in either contract or in delict arising from the various leaks. The basis of such liability was said to be either an implied obligation to keep the retained parts in repair or alternatively a common law duty as adjoining occupier to remedy any defect in those premises which was capable of causing damage to the leased subjects.
The Court of Appeal found that there was no reason to require the implication of an obligation on the landlord to keep the retained subjects in good repair. Although there was no express repairing obligation imposed on the landlord, the repair of the structure of the building was catered for through the provisions of the insurance clause. In the face of these provisions there was no reason based on necessity or business efficacy to alter the balance of the scheme by imposing an implied obligation to repair on the landlord, let alone one (as was argued for by the tenant) under which his liability to repair was absolute.
For much the same reasons, the existence of what the parties obviously intended should be a comprehensive scheme for the repair of both the leased subjects and the retained parts of the building was sufficient to exclude any liability in delict to which the landlord might otherwise be subject to in relation to the retained premises.
The full judgement is available from BAILII here*.
*We believe that the tenant disputes the facts as reported in the judgment (see here) and is appealing the case to the Supreme Court.
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