Gavin v Community Housing Association Limited

 

The Message

Courts are reluctant to imply a repair obligation on a landlord of commercial premises.

The Case

Gavin v Community Housing Association Limited [24 May 2013] concerns tenants’ fight to stay in their premises based on a landlord’s alleged breach of obligation.

Ms Gavin and another were tenants of commercial premises comprising ground floor and basement and the upper floors were let to third parties as flats. The landlord was Community Housing Association Limited.

While the tenants were obliged to repair their premises, there was no express obligation on the landlord to repair those parts of the building which it retained. Its only lease obligations were that the tenants should quietly enjoy their premises and to insure the building and reinstate if the premises were destroyed.

The tenants fitted out the premises for use as gallery space. On a number of occasions in 2004 and 2005 the interior of their premises was damaged by the entry of water and sewage. One water leak from the flat above inundated the premises shortly before an exhibition was due to take place, which required the ceiling to be replaced. In all the cases, the landlord repaired the causes of the leaks and an insurance payment was made to the tenants.

All the leaks emanated from the landlord’s retained premises. The landlord argued, however, that since there was no express repair obligation in respect of its retained premises, the landlord’s only obligation was to lay out payments received from the insurer in repairing damage to the premises, which it had done.

The tenants continued to pay the rent under the lease until June 2008, but the following two quarters’ rent were not paid and the landlord served notice of its intention to forfeit the lease. The tenants responded that they had no liability for rent for those quarters, because they had continued to pay rent in 2005 when the premises had been wholly unfit for occupation and the rent should have been suspended under the lease terms. They argued that they should be able to set off the rent paid in error against that due in 2008.

The landlord re-entered the premises and changed the locks, but an injunction was granted allowing the tenants back in pending the trial. The tenants claimed damages for financial loss consequent on the disrepair to the premises caused by the leaks. To succeed, the tenants had to establish that the landlord had breached an implied obligation to keep in repair the retained parts.

The country court decided that the landlord was entitled to forfeit the lease and the Court of Appeal approved that decision.

The court has to consider whether the express scheme of repair or insurance in the lease excludes any other liability which the law may otherwise impose. The tenants’ case depended not only on establishing that a repair liability should be implied over and above the express lease terms, but also that the landlord became liable for the consequences of disrepair as soon as it occurred, regardless of whether it had notice.

However, there was authority that any liability derived from the landlord’s position as an adjoining occupier was based on negligence and notice. The landlord here was not negligent. Any implied obligation to repair regardless of notice has to be contractual and based on some other factors beyond the landlord’s control of the retained premises.

Although there was no express repair obligation imposed on the landlord, the repair of the building’s structure was catered for through the landlord’s insurance and reinstatement obligations. In the face of those provisions, there was no reason based on necessity or business efficacy to alter the balance of the lease scheme by imposing an implied repair obligation. To do so would be to improve the contract from the tenants’ point of view rather than to give it the meaning which all parties must have intended.

The tenants’ argument based on rent suspension was rejected as the premises were never wholly unfit for occupation. The landlord was not liable for any damages, its re-entry was lawful and the tenants have to go.