Carmel Southend Ltd v Strachan & Henshaw Ltd

A repairing covenant does not generally require a tenant to provide perfect or pristine premises. Where more than one scheme would satisfy the covenant, the tenant may choose the reasonably possible and sensible option; damages are assessed by reference to the less expensive compliant scheme. Replacement is required only where repair is not reasonably or sensibly possible. The court must apply the objective standard required by the covenant, although the position of an incoming tenant may be relevant. A more extensive repair carried out by the landlord does not necessarily engage the second limb of section 18 of the Landlord and Tenant Act 1927 where the work is not a structural alteration distinct from the repairs covered by the covenant.

The claimant landlord sought damages for breach of repairing covenants in a 1990 lease of industrial premises. The defendant tenant admitted breach, but the parties disputed whether the required roof works comprised patch repairs, including replacement of roof lights and gutter works, or wholesale overcladding. The claimant had undertaken the more extensive works to satisfy the incoming subtenant, who wanted a new roof. The central issues were which remedial scheme was required by the lease and whether the cost of replacing the roof lights was excluded or reduced by the second limb of section 18 of the Landlord and Tenant Act 1927.

1. Repairing obligation. The covenant to keep the premises in good and substantial repair and condition did not require perfect or pristine repair. The relevant standard was objective and related to the premises and their reasonably intended use.
2. Choice of remedial scheme. Where alternative schemes would meet the covenant, the reasonably possible and sensible scheme should be preferred. Replacement was required only if repair was not reasonably or sensibly possible. The tenant could not rely on its own breaches to lower the required standard.
3. Application to the roof. The patch repair scheme, comprising replacement of all roof lights, necessary gutter works and replacement of the limited number of damaged asbestos sheets, was reasonably and sensibly possible. It was not futile or impracticable. Health and safety risks did not distinguish overcladding from patch repairs. The incoming subtenant’s demand for a new roof was relevant but did not determine the contractual standard, because it was not based on the lease covenants.
4. Section 18. The second limb of section 18 did not apply. The overcladding and patch repairs were both repair schemes, rather than structural alterations wholly distinct from the repairs required by the covenant. The landlord’s decision to undertake more extensive and expensive repairs did not supersede the lesser compliant scheme or create an additional deduction.
5. The claimant was awarded £24,462.44, representing the agreed cost of the patch repairs, subject to separate determination of interest and costs.