Blue Manchester Ltd v North West Ground Rents Ltd

A repairing covenant may require reinstatement, replacement or renewal where necessary, including remediation of inherent or design defects. Disrepair is assessed by comparing the present condition with the standard contemplated by the covenant, having regard to safety, function, age, character, locality, inconvenience and, where relevant, aesthetics. A temporary repair may be insufficient even if it presently preserves functionality, particularly where its safety cannot be confidently assured for the foreseeable future. Specific performance may be ordered where damages are inadequate and the required result can be stated with sufficient certainty. A landlord must also minimise disruption caused by repair works and must maintain building services with reasonable systems of inspection and maintenance.

The claimant, the long-lease owner of a hotel within Beetham Tower, sought relief against the defendant freehold owner. The claims concerned defective structural bonding in shadow box glazing units, temporary stitch-plate repairs, continued ground-level hoardings, and failures in hot-water equipment and pressure-reducing valves. The claimant relied principally on the landlord’s repairing and service obligations, covenants concerning obstruction and quiet enjoyment, and damages arising from interruption to the hotel’s water supply.

The trial concerned liability only. The court also considered whether specific performance should compel a permanent façade remedy, whether the hoardings were justified, and the costs of an earlier interim injunction.

1. Façade disrepair. The court adopted the five-part analysis discussed in Dilapidations: The Modern Law and Practice: identify the subject matter; determine whether it is damaged or deteriorated; determine whether its condition falls below the covenant standard; identify the work required; and consider whether that work is outside the parties’ contemplation. The standard of “good and substantial repair” was assessed by reference to the age, character and locality of the building. The covenant extended, where necessary, to reinstatement, replacement and renewal.

2. The stitch plates made the shadow box units presently secure for a time, but were expressly designed as a temporary three-year solution. Their safety beyond that period had not been established by a suitably qualified façade consultant. They also altered the structural design, required repeated inspections and retightening, caused continuing disruption, and materially impaired the building’s original appearance. The façade was therefore not in good and substantial repair.

3. The defendant was required to adopt a permanent solution substantially along the lines of option B, unless investigation established that this was not reasonably practicable except at disproportionate cost. Preventative work could fall within a repairing covenant where there was existing deterioration and the work was reasonable in all the circumstances.

4. Specific performance. Following Rainbow Estates Ltd v Tokenhold Ltd [1999] Ch. 64, Jeune v Queen’s Cross Properties Ltd [1974] Ch. 97 and Co-operative Insurance Society v Argyll Stores [1998] AC 1, specific performance was discretionary and required caution. It was appropriate because damages were inadequate and the required result could be expressed with sufficient certainty. The defendant was ordered to remove the stitch plates and reinstate or replace the units and frames so as to achieve substantially the original external appearance, subject to permission to apply if that outcome proved impracticable at disproportionate cost.

5. Hoardings. The covenant against obstruction was not confined to transient obstructions. It had to be read with the lease as a whole and the general law, so temporary obstructions reasonably required for inspection or repair could be justified. The continued hoardings were unjustified outside such periods because the defendant had failed to obtain or require a reasoned safety justification. The defendant was liable for damages and was ordered to remove them, subject only to temporary exclusion zones reasonably required for future works.

6. Water supply. The defendant had failed to establish and maintain adequate inspection and maintenance systems for the isolation valves and pressure-reducing valves. Those breaches caused the hotel’s discoloured water and loss of pressure. The claimant was not contributorily negligent because it had not been warned of the relevant risk, and the claim was based on a strict contractual obligation.

7. Interim injunction costs. The claimant had failed to give a full and fair presentation of the steps already being taken by the defendant, but the application was justified to obtain information and protection while the water-pressure problem remained urgent. Two-thirds of the claimant’s costs of the interim injunction were ordered to be costs in the water-supply issue.