The Creative Foundation v Dreamland Leisure Ltd & Ors

A tenant’s repairing covenant may justify removing part of demised premises only where the proposed work is an objectively reasonable method of repair. A more invasive method bears particular scrutiny where less invasive alternatives exist.

Where a part of the premises is justifiably removed and becomes a chattel of substantial value, the proper implied term is ordinarily that it belongs to the landlord. Permission to remove or dispose of waste does not imply a transfer of ownership.

The claimant, an assignee of the landlord’s title and cause of action, sought summary judgment for delivery up of a section of wall bearing a mural attributed to Banksy. The tenant had severed and removed the wall section without the landlord’s consent, after which the mural was transported to the United States and offered for sale.

The tenant relied on repairing and decorating covenants in the lease and contended that, once removed in compliance with those covenants, the mural became its property under an implied term. The issues were whether removal was reasonably required for repair and who owned the resulting chattel.

1. The claimant was entitled to summary judgment for delivery up of the mural.
2. A repairing covenant is engaged only if the relevant part is out of repair or condition. The remedial work required is assessed objectively. Where several methods are objectively reasonable, the tenant may select one, but a materially more invasive method must be shown to be at least equally reasonable.
3. The tenant had no real prospect of establishing that severing and removing the wall was a reasonable means of complying with the repairing covenant. Painting over the mural or removing it by chemical or abrasive cleaning were less invasive alternatives, and removal would not solve the graffiti problem.
4. The lease had to be construed as a whole against its relevant background. An implied permission to remove or dispose of waste generated by repair did not entail a transfer of ownership. Where a part of the premises became a chattel of substantial value, it belonged to the landlord. The source of that value did not alter the result.
5. The defence that the mural became the tenant’s property was unsustainable as a matter of law. Delivery up was ordered.