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CHAPTER 16 LEASEHOLD COVENANTS

Covenants to repair

In Carmel Southend Ltd v Strachan & Henshaw Ltd [2007] EWHC 1289 (TCC); [2007] 35 EG 136, Carmel was claiming damages for full replacement of its roof on the basis that patch repairs were futile because of the history of the roof leaks. Patch repairs would also have been impractical and there would have been incidental damage to other parts of the roof. Strachan & Henshaw Ltd (S&H) argued that its liability was limited to patch repairs which would have been sufficient. It was held that patch repairs would have been appropriate and adequate and some incidental damage would have been anticipated even with a full replacement of the roof. S&H were not liable for more than patch repairs simply because Carmel had agreed to re-let the premises with a new roof. The case is useful because it indicates what is necessary to deliver premises in good and substantial repair and condition as follows:

A covenant ‘to keep in good and substantial repair’ does not require the tenant to put the property into perfect repair (see Proudfoot v Hart [1890] 25 QBD 42) or pristine condition (see Commercial Union Life Assurance Co v Label Ink [2001] L&TR 380).

The standard of repair is that of an intending occupier ‘who judges repair reasonably by reference to his intended use of the premises’ (Commercial Union). In that case the judge criticised the landlord's surveyor for basing his complaints upon ‘what a pristine building should look like, not what was required by covenant to keep what had been a pristine building in good and substantial repair’.

An obligation to keep in good and substantial repair and condition is different and more extensive than an obligation merely to repair (see Welsh v Greenwich London Borough Council [2000] 49 EGLR 118). This may be wide enough to require the tenant to put the property into that condition even if it had never been in such condition before (this point was not relevant in the case).

If there is more than one possible method of repair, each of which would comply with the required standard, the choice is for the tenant to make.

Replacement will only be required if repair is not reasonably or sensibly possible (see Ultraworth Limited v General Accident Fire and Life Assurance Co [2002] EGLR 115 and Dame Margaret Hungerford Charity Trustees v Beazeley [1993] 2 EGLR 143 ). In the latter case, the Court of Appeal agreed with the trial judge that, although a new roof was required, the carrying out by the trustees of running repairs during the tenancy was enough to demonstrate compliance with their obligations, particularly given the age and character of the property in question.

A tenant cannot rely on his own breaches of covenant in order to lower the standard of repair. As Robert Walker J, as he then was, put it in Ladbroke Hotel Limited v Sandhu and Singh [1996] 72 P&CR 498:

‘If a tenant disregards his repairing obligations and as a result the premises become run down and commercially unattractive, it hardly lies in the tenant's mouth to rely on that fact as lowering the standard of repair required under the tenant's repairing covenant.’

The standard of repair must also take into account the reasonably-minded incoming tenant taking a lease on the same terms as the actual lease. But the standard of repair is an objective one, which does not depend on what, in the particular circumstances at the relevant time, an incoming tenant would accept.

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