Reedbase Ltd & Anor v Fattal & Ors

A landlord’s covenant to make good damage caused by repair requires reasonable restoration, assessed against the condition before the work and the facts of the case. It does not require exact like-for-like replacement where that is unreasonable.

Consequential loss to a tenant’s property falls within the covenant only where it is an inevitable consequence of the works. Loss caused by the tenant’s own failure to protect property, or avoidable loss that could have been mitigated, is outside the covenant.

For stage-two consultation on qualifying works, fresh estimates are required only where, objectively and in all the circumstances, the first estimates did not provide sufficient information and fresh estimates would materially advance tenant protection under the Landlord and Tenant Act 1985.

The appellants were tenants of two penthouse apartments. The respondents were the landlord, service charge trustee and management company. The management company repaired the asphalt roof beneath the terraces and replaced tenant-installed tiles using a pedestal system.

The appellants challenged service charges and counterclaimed for breach of the repairing covenant. They alleged that the replacement works failed to make good damage and that the landlord should have repeated the second stage of consultation after the tiling proposals changed.

The appeal was brought from findings by His Honour Judge Hornby in the Central London County Court. The central issues were whether the replacement works complied with the covenant and whether the changes required fresh estimates under the Service Charges (Consultation Requirements) (England) Regulations 2003.

The Court of Appeal unanimously dismissed the appeal. Lady Justice Arden gave the leading judgment, with Lord Justice Singh and Sir Patrick Elias agreeing.

1. Making good damage. The covenant in clause 2(7)(B) did not impose an absolute obligation to restore the premises exactly to their previous condition. Following Bradley v Chorley Borough Council (1985) 17 HLR 305, the obligation was to restore the property so far as reasonably possible, having regard to its condition before the works and all the circumstances. The landlord was not required to use an unreasonable fixing method or reproduce previously damaged tiles. New, superior tiles and reasonable maintenance obligations could satisfy the covenant.
2. The judge’s factual findings showed no material post-work ponding and no defective or poor-quality work. The claim concerning the plants also failed. Consequential loss to tenant property could in principle fall within the covenant where it was inevitably caused by the works, as discussed in McGreal v Wake (1984) 13 HLR 107. Here, however, the plants died because the tenants failed to restore irrigation or arrange watering. The loss was therefore outside the covenant and could in any event have been mitigated.
3. Consultation. The qualifying works were subject to the two-stage procedure in Part 2 of Schedule 4 to the Service Charges (Consultation Requirements) (England) Regulations 2003. The statutory purpose, explained in Daejan Investments Ltd v Benson [2013] 1 WLR 854, was tenant protection concerning unnecessary, defective or excessive service-charge costs.
4. Fresh stage-two estimates are required where, objectively and in all the circumstances, the first estimates did not give tenants sufficient information and fresh estimates would materially assist that protection. Relevant factors included the tenants’ knowledge and approval of the changes, the scale and purpose of the additional cost, the realism of obtaining fresh tenders, delay and prejudice to other tenants, and the continuing protection provided by section 19 of the Landlord and Tenant Act 1985.
5. Those factors pointed clearly against retendering. The appellants knew and approved the changes; the works remained substantially the same; the additional cost was relatively small and principally reflected their preferred tiles; fresh tenders were unlikely to produce savings; and retendering would delay completion. The appeal on both issues was dismissed. The damages issue did not arise and was not determined.

1. Court of Appeal (Civil Division): On 19 April 2018, the court dismissed the appeal on the repairing covenant and consultation issues. The damages issue was not determined. [2018] EWCA Civ 840.
2. Central London County Court: His Honour Judge Hornby found that the works complied with the landlord’s obligations, that adequate consultation and information had been provided, and rejected the appellants’ relevant claims. Judgment reference 3YK67837.