The Case: Car Giant Ltd v Hammersmith and Fulham LBC [2017] EWHC 197 (TCC).

Background

The landlords of several industrial units brought a claim in September 2016 for dilapidations against the tenant, the London Borough of Hammersmith and Fulham. The tenant had a 25 year full repairing and insuring lease from 1986 to 2011 which included a covenant to “yield up the property in good and substantial repair”.

When the lease expired, it was agreed by the parties that the repairing covenant had been breached and the parties surveyors’ valued the cost of repair works at £402,887.86.

When the claim was brought in 2016, the issue was what was the diminution in value of the property as a result of the tenant’s breach. Were the landlords able to claim the full cost of repair works from the tenant? Repair works to the value of £183,897.86 had been carried out. Repair works to the value of £218,990 remained outstanding and the property had been re-let.

Landlords Position

The landlords argued that the outstanding works had not been carried out by 2016, almost 6 years later, as they did not have the money available to do so and did not want to incur these costs whilst the tenant was refusing to pay. Further they did not want to disrupt the new tenants and a programme of repairs had been established and was ongoing.

Decision

The Court said the landlords had no evidence to support their arguments. The burden of proving the diminution in value of the property fell on the landlords.

The failure to carry out all the repair works identified by the surveyors indicated that the outstanding works were unnecessary. In particular the landlords had failed to establish:

  • Why the outstanding works had not been carried out (despite 6 years having passed);
  • The outstanding works would be carried out;
  • The outstanding works were serious or substantial (particularly given that the property had been re-let at a market rent); and
  • The value of the property had been diminished by an amount equivalent to the full cost of the repairs i.e. £402,887.86.

As a result the valuation of £402,887.86 was not considered when deciding the diminution in value of the property.

For further help or advice in relation to this article, please contact Lupton Fawcett’s property dispute Partner and specialist Hayden Glynn.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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