Better Intelligent Management Limited & Anor v Zaid Alothman Holding Limited & Ors

A repairing covenant may require remediation of an inherent design or installation defect where the works remain properly characterised as repair and do not give back a wholly different thing from that demised. The existence of an inherent defect does not, by itself, exclude disrepair.

The court must identify the particular defect said to constitute disrepair and determine whether the relevant subject matter has deteriorated. Condensation may be evidence of disrepair, but is not necessarily the disrepair itself. Where the trial judge has not made the necessary factual findings, the appropriate course may be remission rather than appellate fact-finding.

Long leaseholders of student accommodation appealed findings concerning alleged disrepair to windows, liability under repairing covenants, service-charge recovery and costs. The trial judge held that the problems were construction or installation defects, not disrepair, and made declarations adverse to the freeholder and management company.

On appeal, the appellants argued that failed window seals and glazed units had progressively deteriorated and constituted disrepair, and challenged the costs order. The respondents opposed the appeal and issued a notice concerning the extent of remedial works if disrepair were established.

1. Appeal allowed in part. The appeal succeeded in relation to the failed window seals and glazed units. The trial judge had focused on moisture and condensation rather than the alleged disrepair in the progressive failure of the seals and units.
2. The loss of gas from the glazed units and the resulting deterioration in their thermal properties could, in principle, constitute disrepair. This was not limited to physical failure of the seals.
3. The presence of a design or installation defect was not, without more, determinative. A defect present from construction may nevertheless result in disrepair if the relevant subject matter has deteriorated. The trial judge’s reasoning could be understood as treating installation defects as incapable of giving rise to disrepair, and he had not made sufficiently specific findings about the nature and cause of the failure.
4. The issue was remitted to the trial judge to determine the nature and cause of the defects, including whether the failure was progressive. The related decisions reflected in paragraphs 5–7 and 9–10 of the order were set aside and remitted as potentially affected by those findings.
5. The appeal failed in relation to water penetration. The trial judge was entitled to find that staining, damage to finishes and damp in insulation did not establish damage to the condition of the relevant subject matter, particularly where the principal alleged defects had themselves been found not to be disrepair.
6. The respondents’ challenge to the finding on the scope of works disclosed no error of law and was rejected. The costs issue was also remitted because further findings on the central disrepair issue might affect the appropriate costs order. Absent that prospect, the original costs order would have been within the trial judge’s wide discretion.

• High Court, Chancery Division: HHJ Monty KC determined the leaseholders’ claim after trial on 7 May 2024. The judgment held that the relevant problems were construction or installation defects rather than disrepair and made declarations concerning repairing obligations, notices, service charges and costs.
• High Court (Business and Property Courts): The appeal was allowed in part. The issues concerning failed seals and glazed units, related declarations and costs were remitted to the trial judge; the water-penetration issue and challenge to the scope of works were rejected.