15 October 2013 #Dispute Resolution
In the recent case of Twinmar Holdings Limited –v- Klarius UK Limited the High Court gave helpful guidance to Tenants on their responsibilities for repairing/replacing glass fibre reinforced polyester roof lights. Roof lights of this type regularly cause difficulties in dilapidations claims and the Twinmar case has already had some publicity as a result of this.
The case also provides helpful clarification both to Landlords and Tenants on the nature and scope of the full repairing obligations generally found in leases of commercial premises. In addition it gives specific guidance on common items of disrepair which will be of great assistance to anyone involved in or facing a dilapidations claim.
Twinmar gives guidance on exactly how far a Tenant is required to go to put premises back into repair at the end of a full repairing lease. In this case the tenant, Klarius, had a 15 year lease of a warehouse (with ancillary offices) of about 50,000 square feet. Importantly the warehouse had been new at the start of the lease.
When the lease came to an end there were all the usual sorts of disrepair you would expect to find: impact damage to the doors and external cladding; signs of wear to the concrete floor; dirty walls and ceiling and of course discoloured/degraded roof lights. All these were in “as new” condition at the start of the lease.
The Court emphasised that where a lease contains a standard full repairing covenant the starting point is that the tenant is required to put the premises into a condition reasonably fit for occupation by the class of tenant likely to take the premises. However the crucial detail in this is that the class of hypothetical tenant is the tenant at the start of the lease, not after 15 years’ use.
This obviously creates a more significant obligation on the part of the Tenant under such circumstances and is likely to come as a shock to many tenants whose lease is coming to an end. Many of the common items of disrepair highlighted above may not be of much importance to an incoming tenant taking a warehouse that is 15 years old, but that does not, in itself, relieve the Tenant from having to carry out the works.
In the Twinmar case the Court did not consider the statutory cap on liability behind which a Tenant might try to shelter in these circumstances, but those arguments are never straightforward.
The Judge in Twinmar also helpfully went on to consider some of the common items of disrepair.
Damaged exterior panels
A number of the exterior cladding panels were damaged, mostly by impact. They were not structural and some were described as “relatively minor”, but the landlord was still entitled to claim for their repair.
Loading bay doors
Once again the loading bay doors showed the usual signs of impact damage. Other than a “minor aesthetic blemish” the tenant was found to be liable for repairs.
Cleaning the warehouse ceiling
The warehouse ceiling was dirty and the Court found that this was not in compliance with the relevant covenant. The Landlord tried to clean it but found it to be impossible, and gave up on the basis that cleaning would be disproportionate. Notwithstanding this the landlord was entitled to recover the costs of the abortive cleaning attempt.
Cleaning warehouse elevation
The tenant had pressure cleaned one of the external elevations. The landlord then came back and did it again. The Court held that the initial cleaning was acceptable and satisfied the standard repairing covenant, even though the additional clean by the landlord made it look even better.
The tenant had not cleaned the other elevation at all, and the landlord was entitled to recover the costs of cleaning that elevation.
The warehouse floor showed areas of wear to the concrete where the aggregate had been exposed. The Court found that if the aggregate was exposed then the floor was not in good condition and again the landlord was entitled to recover for its repair.
The roof lights were the main cost claimed for by The Landlord. The Court said that the roof lights must be capable of letting in about the same amount of light as at the start of the lease and that they must be structurally sound and weather-proof. It was found that there had been a visible and “significant” reduction in the translucence of the roof lights and that once this happened the roof lights could no longer be described as being in “good condition”. The Judge described “significant” as a reduction in translucence such that the light coming through the roof lights has to be augmented by artificial lighting in weather conditions that would not have required additional lighting when the roof lights were new.
While this case gives both general and some specific guidance on the extent of a tenant’s repairing liability, much will depend on the specific wording of the covenants in each case. But it does make it clear that a tenant’s repairing liability can be significant, especially where the tenant has occupied the premises from new, and that liability can extend even to items which most people might consider to be cosmetic. This underlines the standard advice to a tenant approaching the end of the lease term: review the state and condition of the premises and take advice early on both the extent of your legal obligations and tactics for dealing with repairs.