Summary

The tenant was in breach of repairing covenants and accordingly liable for damages subject to a cap imposed by s.18 Landlord and Tenant Act 1927.

Facts

Claim for damages for terminal dilapidations in respect of business premises ('the premises'). The claimant ('M') was the freehold owner of the premises, which had been operated as a service station. The defendant ('Total') was the tenant of the premises under a lease dated 31 July 1964 ('the lease'). However, although M was the landlord, he remained in occupation and conducted businesses from the premises by virtue of a licence granted to him by Total. M's occupation as a licensee pre-dated his acquisition of the freehold. Total's tenancy of the premises came to an end on 14 September 2000. The disputes between the parties were essentially: (i) the extent to which, on the date of the expiry of the tenancy, Total was in breach of its repairing covenants; (ii) the reasonable costs of remedying the want of repair resulting from those breaches; and (iii) the extent to which the value of M's freehold interest in the premises had diminished owing to such breaches.

Held

(1) The question was what the particular words meant in the lease with which the court was concerned when construed against other obligations contained in the lease, having regard to the general nature of the premises and any other material circumstances as they existed at the time the lease was granted. (2) M sought to argue that mere preventative work, undertaken by way of anticipation to avoid the occurrence of damage from a future but reasonably anticipated repair, was properly regarded as repair and the reasonable cost of it recoverable. However, merely because a piece of equipment was old and there must have inevitably come a time when it was required to be replaced, preventative works could not be said to have been "repairs" required to have prevented the consequences of the equipment failing when in the meantime it continued to perform its function. (3) The class of reasonably-minded tenant likely at the commencement of the term of the lease to have taken the premises referred to the quality of the reasonably-minded tenant that would have done so, having regard to the then age, character and locality of the premises. Therefore, the standard of repair was what would have made the premises reasonably fit for the occupation of such a tenant. Accordingly, in the instant case the question was what, given the age and character of the premises and its locality, a reasonably-minded oil company would reasonably have required, at the time the lease was granted, to have rendered the premises reasonably fit for use as a place from which to run a petrol filling station and associated businesses. (4) Under the lease the tenant covenanted, inter alia, to keep the premises in good condition "to the satisfaction of the Lessor's surveyor". There was no reason why that phrase should not extend as much to the content of the repair work as to the manner in which it was to be performed. However, the surveyor did not have carte blanche as to what he could require. The works to be undertaken must have been to make good a want of repair or absence of good condition. In stipulating what works were to be done the surveyor had to exercise his own judgment and come to an honest view of what was required. (5) Total was in breach of the repairing covenants contained in the lease. The overall cost of the works needed to make good the breaches amounted to £120,302. However, since the diminution in value of the freehold was £73,500, it followed that M's claim for damages succeeded but was capped at that figure under s.18 Landlord and Tenant Act 1927.

Judgment accordingly.