Duke of Westminster v Guild

A term requiring a landlord to repair retained property will not be implied into a detailed commercial lease merely because it would be reasonable or fair. The term must be necessary to give the contract business efficacy, and both parties must be presumed to have accepted it without hesitation.

An easement ordinarily carries ancillary rights enabling the dominant owner to undertake reasonably necessary repairs. It does not ordinarily impose a repair obligation on the servient owner. A covenant for quiet enjoyment and the rule against derogation from grant cannot create a positive obligation to repair where no such duty otherwise exists.

The landlords let commercial premises under a detailed lease which imposed extensive repairing obligations on the tenant but no express repairing obligations on the landlords. The premises drained through a pipe extending beneath both the demised premises and the landlords’ retained mews. When the retained section proved blocked and defective, the tenant incurred the cost of replacement drainage works and sought to set that expenditure off against rent.

A judge sitting in the High Court declared that the landlords were contractually obliged to repair the drain, owed a corresponding duty of care and had breached the covenant for quiet enjoyment. The landlords appealed. The central issue was whether a repair obligation arose by implication, tortious duty, quiet enjoyment or the rule against derogation from grant.

1. Appeal allowed unanimously. Slade LJ delivered the judgment of the court. The landlords were under no obligation to keep the retained section of the drain repaired, cleansed or unobstructed. The contrary declarations were set aside.

2. A term requiring the landlords to repair could not be implied into the lease. For an ordinary detailed commercial lease, reasonableness or improvement of the bargain is insufficient. The proposed term must be necessary to give the contract business efficacy, and both parties, treated as reasonable people, must be presumed to have agreed to it without hesitation. The special implication recognised for essential common facilities in a building in multiple occupation did not apply to this formal and apparently complete lease.

3. The proposed term was inconsistent with the lease’s structure. The tenant’s repairing obligations were careful and extensive, while no express repairing obligation was imposed on the landlords. The proposed implication would also create onerous duties extending beyond the drain and would conflict with provisions requiring the tenant to repair items belonging to the demised premises.

4. The lease remained workable without the proposed term. The tenant had to repair the part beneath the demised premises. The landlords could undertake those repairs and recover their cost, and could choose to repair the retained section and recover its cost. If they did not, the easement gave the tenant an ancillary right to enter the retained land and undertake reasonably necessary repairs at his own expense. The general law imposed no corresponding repair obligation on the servient owner in the absence of express contract or special local custom.

5. The authorities imposing a duty on a landlord controlling retained roofs, gutters or staircases did not govern the case. Those cases concerned damage caused by a dangerous or unwelcome substance escaping from retained property. Here, water originating on the tenant’s premises caused the problem because the tenant could not discharge it through the drain. The easement did not impose a positive duty on the landlords to facilitate that discharge.

6. An omission may breach a covenant for quiet enjoyment where the landlord is already under a duty to act. Neither that covenant nor the rule against derogation from grant independently creates a positive repairing obligation. As no underlying duty to repair existed, neither doctrine made the landlords liable.

1. Court of Appeal: The landlords’ appeal was allowed unanimously. The lower declarations were set aside, and declarations were made that the landlords were not subject to the alleged repairing obligation or duty of care. Costs were awarded to the landlords in this court and below. Leave to appeal to the House of Lords was refused.
2. High Court: A judge sitting as a High Court judge determined the preliminary issue for the tenant. He declared that the landlords were obliged to repair the relevant drains, owed a duty to keep the retained section repaired and unobstructed, and were in breach of that duty and the covenant for quiet enjoyment.
3. Master: The tenant was granted liberty to defend the landlords’ rent claim, and directions were given for liability for repairing the drain to be tried as a preliminary issue.