Riverside Property Investments Ltd. v Blackhawk Automotive

A repairing covenant requiring premises to be delivered up in good and substantial repair does not require perfect or pristine condition. The relevant standard is objective and reflects the reasonable expectations of an intending occupier using premises of the relevant type.

Where repair and replacement are both reasonably possible, the tenant may choose the less expensive compliant method. Replacement is required only where repair is not reasonably or sensibly possible. Alleged defects must be assessed by their actual effect on the condition of the premises, rather than by theoretical risks or a standard of perfection.

Costs under contractual provisions concerning dilapidations are recoverable only where they are sufficiently connected with preparing and serving a dilapidations schedule or enforcing the repairing covenants, and are properly evidenced.

Riverside, the landlord of an industrial unit, claimed damages from its former tenant, Blackhawk, alleging breach of repairing covenants in respect of the roof. Blackhawk had replaced damaged sheets, roof lights and deteriorated fixings before surrendering the lease.

Riverside nevertheless stripped off the repaired roof and installed a new roof. It claimed the replacement cost and associated professional and management expenses. The central issues were whether complete replacement was necessary, whether Blackhawk’s works left the roof in breach of covenant, and which costs were recoverable under the lease.

1. Repairing obligation. The covenant to repair and yield up the premises in good and substantial repair did not require perfect or pristine condition. The applicable standard was that of a reasonably minded intending occupier of an industrial warehouse taking a lease on the same terms.
2. Repair or replacement. Complete replacement was required only if repair was not reasonably or sensibly possible. Where two methods would properly perform the covenant, the tenant was entitled to select the less expensive method. The roof could be put into covenantable condition by repair, and Blackhawk was not required to provide an improved or upgraded roof.
3. Actual condition. The evidence established that the repair scheme was substantially effective. Riverside’s complaints principally concerned possible defects, workmanship and theoretical risks. They did not establish actual or significant disrepair at the date of surrender. The continued presence of asbestos-cement sheets did not itself constitute disrepair. The use of topfix fasteners was not, in itself, a breach, and the evidence did not show that their installation caused an actual problem.
4. Roof claim. The claim for £87,522 for replacing the roof therefore failed in its entirety. Any minor defects could have been addressed during snagging or the defects liability period.
5. Costs. Costs recoverable under clause 2(22)(b) had to be incidental to preparing and serving a dilapidations notice or schedule. Costs under clause 2(22)(c) had to relate to enforcing the repairing covenants. Reports not sent to the tenant, work connected with the proposed early surrender, and expenditure incurred in opposing reasonable repair works did not qualify. In-house costs could in principle be recoverable, but adequate records and proof of causation were required.
6. The recoverable costs were assessed at £1,942.05, but that sum had effectively already been paid. The claim was dismissed and judgment was given for Blackhawk.

First-instance decision. No prior appellate decision is stated in the judgment.