Specific performance for breach of repairing covenant at Beetham Tower

If a landlord has breached its repairing obligation, the landlord will need to carry out the repairs in accordance with the terms of the lease.

Background

If a landlord has breached its repairing obligation, a tenant may apply for an order for specific performance, requiring the landlord to carry out the repairs in accordance with the terms of the lease.

Facts

The construction of Beetham Tower, Manchester’s iconic skyscraper, was completed over a decade ago by Carillion. The tower consists of 47 floors, the initial 23 of which form the Hilton Hotel and the remainder containing residential flats. The Hotel was let to Blue Manchester Limited (“the tenant”) on a 999 year lease. North West Ground Rents Limited (“the landlord”), own the freehold reversion.

The tower has a slim rectangular shape with fully glazed external elevations, the façade a mixture of double glazed units and single-glazed shadow box units (“SBUs”) which are attached to the frame by sealant.

Approximately 5 years ago, in 2014, a defect was identified where it appeared that the sealant attaching the SBUs to the frame was failing. Emergency works were carried out to screw stitching pressure plates to the panels to help hold them in place. The emergency works were, originally, intended to be a temporary measure pending a permanent fix being identified.

Despite the intention for the works to be a temporary fix, no substantive plan for a permanent fix had been identified by 2018, when Carillion went into liquidation. 

Circumstances

The lease placed an obligation on the landlord to keep in “good and substantial repair and when necessary as part of repair to reinstate replace and renew” the Common Parts of the Property which included the external façade, the frame and the SBUs.

The tenant brought a claim against the landlord to compel them, amongst other things, to undertake works to provide a permanent resolution to the faulty SBUs.

The landlord argued that whilst the solution implemented in 2014 was intended to be temporary, it was a sufficient solution which could remain whilst they pursued Carillion’s insurers and the contractors.

Decision

The court, in reaching its conclusion, assessed the five-part analysis of liability for disrepair, and then asked the key questions:

  1. Whether the existing position was such as to place the landlord in breach of its repairing covenant?
  2. Whether the tenant was entitled to an order for specific performance and, if so, on what terms?

A statistically significant number of SBUs presented with evidence of failure, or of starting to fail, and no evidence have been provided to explain why certain SBUs would be affected and others would not, meant repairs would be required to them all.

The court found the existing SBUs, with the screw stitched pressure plates, were not in good and substantial repair as they were only intended to be a temporary fix, for no more than 3 years. As a result, the court found that the landlord was in breach of the lease terms and was required to replace the SBUs.

The court ordered specific performance, deciding that damages would not be an adequate remedy as the tenant would either be accepting damages in lieu of acceptable repairs or carrying out the works themselves and seeking to recover from the landlord under the terms of the lease. There was sufficient certainty over the works that were required (which are estimated to cost around £4M excluding VAT), with a clearly specified result to be achieved, albeit the landlord may apply to carry out a different scheme of works if the works are identified during investigations by a qualified consultant to not be practicable other than at a disproportionate cost.

Comment

The case highlights the circumstances in which the court will make an order for specific performance, a draconian measure, against a landlord to enforce compliance with a repairing covenant.

For further information about Weightmans or to discuss any of the issues in this update, please contact; Peter Hall, Associate on 0161 214 0659, peter.hall@weightmans.com

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