Twinmar Holdings Limited v Klarius UK Limited & Anor

 

The Message

The Court is now giving useful guidance to surveyors re Terminal Dilapidations Claims.

The Case

The Technology and Construction Court has now determined a further dilapidations claim arising out of expiry of a long lease (Twinmar is the owner of Unit C, Swallowdale Lane, Hemel Hempstead, Hertfordshire. The premises comprise a warehouse building and offices totalling some 50,000. ft2.

The premises were constructed in 1993 and Klarius took a lease for 25 years from 29 September 1993. However, they exercised the break clause so that the lease determined on 28 September 2008.

Twinmar’s surveyor originally estimated the cost of all the repair work at £400,000 plus fees but, following a tendering process, the cost of the works was reduced to approximately £225,000. Twinmar was anxious to carry out the works as it intended to occupy the premises but, as ever, there was substantial dispute with the tenant as to the extent of the repair works that the tenant could be held liable for.

The major issue was over the roof lights. Twinmar claimed that they were in substantial disrepair and they were entitled to recover the costs of treating the roof lights with a proprietary coating system called Delglaze. Twinmar also sought to recover the costs of scaffolding and netting and other associated safety measures involved in applying the Deglaze coating.

Klarius argued that the roof lights were not in disrepair as they were not leaking and moss and lichen had not taken hold but the Judge held that that the liability for disrepair was not to be measured on this basis as the standard of repair required has to be judged by the position at the commencement of the lease. An outgoing tenant must leave premises reasonably fit for the occupation of a tenant of a class who would have been likely to have taken them when the lease was granted.

Applying this criteria, and given that the premises were brand new when the lease started, the Judge held that the condition of the roof lights must be, insofar as possible, in the same condition in which they were in 1993. In particular, they must be capable of letting in about the same amount of light and must be structurally sound and weatherproof.

The Judge considered evidence from the expert surveyors for each party and also previous Schedules prepared and he took into account the fact that most manufacturers state that roof lights have a life expectancy of at least 20 years but that some loss of light could be expected after about 10 years. He also had regard to what was said by the manufacturers of the Delglaze coating when they inspected in 2008, although he accepted that manufacturers and suppliers often seek to paint a fairly gloomy picture in order to secure a contract for the works.

Accordingly, even though the roof lights were not leaking, the Judge held they were in disrepair as they were letting in significantly less light due to abrasion of the glass surfaces and wearing away of the original gel coating. He allowed the claim for all the costs of the remedial works and the attendant health and safety measures required.

The Judgment also dealt with a number of other issues, including whether the tenant could escape liability for damaged exterior panels on the basis that the damage was caused by the Buncefield explosion in 2005 and should have been covered by the building insurance. The Judge said that the insurers would have dealt with any damage caused by the Buncefield explosion at the time, and not left matters until 2008.

Although the Judge made some reduction to the claim overall, he did not reduce the amount of £24,200 for preliminaries as he thought this would only be appropriate if the extent of the work allowed was significantly less. He allowed professional fees at 12% and awarded loss of rent due to the delay suffered by Twimar in being able to relocate from their other premises. The Judge did, however, reduce the amount allowable for the preparation and service of the Schedule of Dilapidations given that it included a substantial amount of works that were never actually undertaken. Interest was awarded to Twinmar at 3% above base rate.