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Good "repair and condition” where there is asbestos present

23rd November 2020

Good "repair and condition” where there is asbestos present

Nyree Applegarth, Partner in the Higgs & Sons Dispute Resolution team, looks at a recent case where a tenant was ruled not to have delivered up a site in good condition due to the presence of asbestos.

It is vital that tenants undertake environmental due diligence before entering into a lease as there could be hazardous substances present.

This was highlighted once again in the recent case of Pullman Food Ltd v The Welsh Ministers and another [2020] EWHC 2521 (TCC) where the judge had to consider whether the existence of asbestos containing materials which had been left buried across a site meant the tenant was in breach of its yielding up obligations in its lease.

The tenant had appointed consultants to remove buildings from a site in accordance with the terms of its lease.

However, during the course of the works, asbestos-containing materials had been disturbed and then distributed across the site.

The High Court held that the yield up covenant required the tenant to deliver up the site “in good and substantial repair and condition to the satisfaction of the [lessor]”.  Referring to case law, the court made the following points:

  1. The word “condition” shows that the obligation could be extended to doing works that went beyond strict repair.
  2. The lessor did not have unlimited discretion as to the appropriate standard of “good condition”.  The tenant could, however, form its own judgment as to what was required to satisfy the appropriate standard, as long as its judgment was reasonable.
  3. The site was already damaged given the presence of asbestos and was not in good condition or in proper repair.

Whether or not the asbestos containing materials were in the site before the lease was granted was irrelevant, the judge ruled. Even if asbestos was present before the grant of the lease, removal of the asbestos was required for compliance with the covenant.  The court held that the tenant was in breach and therefore liable for damages.

Environmental due diligence prior to a lease being agreed means appropriate exclusions from liability can be dealt with.

The case also highlighted that a site can still be returned in good condition, even if it is not capable of being in disrepair as all buildings have been removed.

For more information and expert advice, contact me on 01384 327151 or nyree.applegarth@higgsandsons.co.uk

 

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