Opinion

Case highlights tenant's rights to claim

13th March 2019

Case highlights tenant's rights to claim

A recent High Court case was a useful reminder of a tenant’s rights to claim against a landlord in breach of its repairing obligations, says Commercial Property Associate Jen Hicks-Jones.

The case related to Beetham Tower, an iconic 47-storey skyscraper in the centre of Manchester comprising a hotel on the first 23 floors, and residential flats above. 

Blue Manchester Ltd v North West Ground Rents Ltd [2019] EWHC 142 (TCC), granted the tenant an order for specific performance against its landlord for breach of its repairing obligations under its lease.

Beetham Tower is the tallest building in the UK outside London and was built by Carillion Construction in 2006. Tenant Blue Manchester Ltd operated the hotel as a Hilton Hotel, and a lease was granted for a premium of £60 million and an annual rent of £20,000.

The Landlord was North West Ground Rents Limited, who purchased the freehold in 2010 for £400,000. Under the Lease, the Landlord was responsible for keeping the common parts, including the external façade, in ‘good and substantial’ repair. The cost of repairing inherent effects could not be recharged to the Tenant via the service charge.

Carillion discovered in 2014 that the sealant bond in the external glazing of some of the units was failing.  As a temporary measure, Carillion fitted stitch plates to 1,350 units, which considerably affected the aesthetics of the building.

By the time Carillion went into liquidation in 2018, no permanent fix had been implemented, and the Tenant took the Landlord to Court for breach of its repairing covenants.

The High Court held that the temporary stitch plates were not sufficient to constitute repair, and that the Landlord was in breach of its repairing obligations.  The Court ordered the Landlord to replace the original external glazing units with similar units, unless to do so would not be reasonably practicable “other than at disproportionate cost”.

The Tenant was awarded damages for the delay in disrepair, and the disruption it had suffered.

Jen said: “This case strengthens the rights of tenants to claim against a landlord they believe is in breach of their obligations to carry out timely and adequate repairs.”

Jen offers support to businesses, lenders and individuals, helping them to get the most out of commercial property. With a broad expertise across the commercial property spectrum, her experience includes: acquisitions and disposals, investment and development finance, commercial and residential development, acting for landlords and tenants, advising on property aspects of corporate transactions, and general estate management.

 

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