Janet Reger International Ltd v Tiree Ltd

A repairing covenant generally requires deterioration from an earlier condition. It does not ordinarily require a landlord to correct defective design or workmanship which was present when the lease began, unless that defect has caused damage requiring repair. Loss of amenity or unfitness for occupation does not itself establish disrepair.

A term will be implied into a detailed lease only where the strict requirements of necessity, obviousness, clear expression, consistency and reasonableness are satisfied. A right given to a landlord to carry out improvements cannot readily be converted into an obligation, particularly where the relevant work falls within the tenant’s express repairing covenant.

The tenant occupied the basement and ground floor of premises used for a retail lingerie business. Damp entered the basement because the damp-proof membrane had been defectively installed during reconstruction before the lease was granted. The tenant sought specific performance and damages, alleging breach of the landlord’s covenant to use reasonable endeavours to maintain, repair and renew the structure.

The tenant also argued for implied terms requiring the landlord to remedy the defective structure or to state whether and when it would carry out remedial works. The landlord counterclaimed for rent and service charges withheld under the lease. The central issues were whether the damp-proofing defect constituted disrepair, whether either term could be implied, and whether the tenant was entitled to suspend rent.

1. Repairing covenant. The damp-proof membrane formed part of the structure, but it had been defective from the beginning of the lease and had not deteriorated. A covenant to maintain connotes keeping the subject matter in its existing condition. A covenant to repair is engaged only when there has been deterioration from an earlier, better condition. The loss of amenity caused by a design or workmanship defect did not amount to disrepair.
2. The covenant did not require the landlord to carry out the proposed waterproof lining works. Those works would add protection to the premises and prevent damage to the tenant’s finishes; they did not repair damage to the structure. The authorities permitted correction of a design defect where structural damage had first caused the repairing obligation to arise, but that condition was absent here.
3. Implied terms. The proposed term requiring the landlord to remedy defective structural parts failed the established requirements for implication. It was neither necessary nor obvious, contradicted the express allocation of repairing responsibilities, and would convert the landlord’s contractual right to carry out works into an obligation. The proposed information term also failed because the tenant could ask the landlord whether it intended to act and could itself seek consent to undertake works.
4. Rent and insurance. The damp was not damage caused by an insured risk under the lease. The tenant was therefore not entitled to suspend rent and service charges. The court corrected an obvious mistaken cross-reference in the insurance provision, construing it as a reference to clause 5.2.
5. The tenant’s removal from the basement would have been reasonable, and certain losses would have been recoverable if breach had been established. Since there was no breach, the claim for specific performance and damages failed. The withheld rent and service charges were payable, with interest to be addressed after judgment.

First-instance judgment. No appellate history was stated in the judgment.