Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd

A landlord’s repairing covenant extends to structural repairs of a substantial nature allocated to the landlord by the lease. A roof or main wall may qualify even where the work does not affect rafters or beams. Whether repairs are substantial is a fact-sensitive question of degree. A tenant who gives notice may sue for damages, or after a reasonable period carry out necessary repairs and recover their reasonable cost. However, where the landlord gives sufficient notice of a compliant repair proposal and the tenant unreasonably prevents access, the tenant cannot recover for the landlord’s prevented performance. An assignee is not liable for particular repairing breaches committed by predecessors, although the assignee may be liable for qualifying disrepair existing on assignment.

Granada Theatres Ltd, assignee of a cinema lease, claimed the cost of repairs to the auditorium roofs and a declaration that repairs to the front elevation were the landlords’ responsibility. The lease placed substantial structural repairs on the landlord and other repairs on the tenant. Vaisey J declared that the roof and front-elevation works fell within the landlords’ covenant and ordered an inquiry into damages.

The landlords appealed. They argued that the works were tenant repairs, that accumulated disrepair gave rise to a cross-claim, and that Granada had lost its claim by preventing the landlords’ contractors from entering and carrying out the roof work. The central issues were the classification of the works and the effect of the parties’ conduct on the roof-repair claim.

Appeal allowed in part by a majority. The conclusion concerning the front elevation was upheld. The roof-damages order was set aside and the issue was remitted to Vaisey J. Costs were left to that judge.

1. Construction of the covenants. Reading the covenants together, the landlords were responsible for structural repairs of a substantial nature to the main walls, roofs, foundations and main drains. Structural repairs are repairs of or to a structure. The meaning of substantial is fact-sensitive and denotes a considerable, rather than merely non-trivial, repair.
2. Front elevation and roofs. The cement rendering and the underlying nine-inch brick wall were properly treated together where chemical reaction, water and frost had damaged both. Removing the rendering, repairing the brickwork and re-rendering were substantial structural repairs. Replacing or refixing approximately 500 to 550 slates out of about 12,000 was also substantial, despite no interference with rafters or roof beams.
3. Accumulated disrepair. Granada, as assignee, was not liable for particular breaches by predecessors, though it took the premises subject to its liability for qualifying disrepair existing on assignment. The proposed set-off therefore failed. In any event, such a claim would have required an appropriate counterclaim.
4. Repairing covenant and damages. A landlord’s covenant to repair operates on notice. A covenant to keep in repair creates a continuing breach while necessary repairs remain undone. Under Saner v Bilton 7 Ch. D. 815, the landlord has an implied licence to enter. Under Hewitt v Rowlands 151 L.T. 757 (C.A.), the tenant may sue without first paying for repairs, or may carry them out and claim their proper cost.
5. Ready and willing issue. The parties must act reasonably. The landlord must act diligently and give sufficient notice and information about the general nature and purpose of the work. The tenant must not unreasonably obstruct entry or take the work out of the landlord’s hands before a reasonable opportunity to perform. Romer LJ and Ormerod LJ held that the landlords’ communications were sufficient and that Granada’s conduct prevented performance, if the proposed work would have complied with the covenant. The formal order therefore made liability conditional on that issue.

Jenkins LJ dissented on the ready-and-willing issue. He considered that the landlords’ delay and reticence justified Granada in doing the work, although any damages would have been limited to the reasonable cost of covenant-compliant repairs.

1. Court of Appeal: Set aside the roof-damages order, declared that liability depended on whether the landlords’ proposed repairs would have complied with the covenant, and remitted that issue to Vaisey J. Save as aforesaid, the appeal was dismissed.
2. High Court: Vaisey J, on 13 June 1958, declared the roof and front-elevation repairs to be the landlords’ responsibility and ordered an inquiry into damages for roof repairs.