Summary

A recent case, Blue Manchester Limited v North West Ground Rents Limited [2019] EWHC 142 (TCC), shows that landlords must consider aesthetics when assessing repairs, as they could be ordered to reinstate original design features.

Background

The Beetham Tower is an iconic feature of the Manchester skyline, and the tallest tower outside London in the UK.

 The High Court judge (rather poetically) noted that the external facades form a “sleek interrupted wall of glass, reflecting the sunlight in which Manchester is - despite common belief outside Manchester to the contrary- frequently bathed”.

This striking design feature was made possible by strips of structural sealant which fix the glass panels to the building.

The sealant started failing in around 2014; clearly a serious problem.

A short-term solution was implemented (screw stitching pressure plates to the frame profiles) and safety hoardings at ground level.

Was this ‘uglier’ temporary solution sufficient to satisfy the landlord’s repairing obligations?

The High Court thought not, and that aesthetics was a relevant factor. The tenant won its claim for specific performance to compel the landlord to undertake permanent repairs, as well as damages.

The claim 

The first 23 floors of the tower form the Hilton Hotel, which includes Cloud 23 bar (on the 23rd floor, with spectacular views over the Manchester skyline). The upper floors contain residential flats.

The hotel wanted permanent repairs to the facade. It argued the landlord was in breach of its repairing covenants, and objected to the temporary repairs for 3 reasons:

  • Safety concerns;
  • The detriment to the building’s appearance impacted the hotel’s ability to market itself as a “destination” venue including the Cloud 23 bar; and
  • The ground level safety barriers and hoardings, negatively impacted guests’ “arrival experience”, impeded the valet parking service, and obstructed light and views from the foyer.

The hotel wanted an injunction requiring the landlord to carry out permanent repairs to reinstate the glass facade. It also claimed damages for breach of the repairing covenant (and in relation to safety hoardings and water supply issues).

The landlord argued the temporary repairs were sufficient to satisfy its repairing obligations. It was pursuing claims against the insurers for Carillion, the main contractor that built the tower (now in liquidation), and a sub-contractor, which it hoped would fund a permanent solution.

The disrepair issue

This court concluded that, from design/constructional/functional and aesthetic perspectives, the landlord must restore the facade to its original condition.

The fact that the landlord had only paid around £400,000 for the freehold reversion (compared to the £45million paid by the hotel for the 999 year lease) was irrelevant. The landlord had covenanted to keep the property in good and substantial repair during the lease term.

After weighing the expert evidence, the judge considered that the temporary ‘ugly’ stitch plates, which made the panels look like they had been ‘stitched together by some giant hand’, was not good and substantial repair.

The court assessed whether there was disrepair based on the current condition (with the temporary repairs) but, when considering the repairs required it took into account all relevant circumstances, including the facade’s original design. The stitch plates were intended as a temporary fix, lasting no more than 3 years, and were inadequate 4 years later.

Whether the cost of repairs could be recovered through the service charge (which excluded inherent/design/construction defects), or from the contractor or subcontractor, was a separate issue.

Specific performance

The judge thought the works obligations could be defined with sufficient certainty, and damages were not an appropriate remedy, so ordered specific performance.

The court allowed the landlord a generous 18 month works timetable.

The hoardings issue

The landlord was liable for damages in relation to safety hoardings outside the front of the hotel, which had been in place for longer than was necessary/reasonable.

The landlord’s ‘snail like progress’ in working up a permanent solution was criticised. This should have been undertaken at the same time as the temporary works.

Where a landlord has a right/duty to carry out repair works, which would otherwise breach the quiet enjoyment covenant/obligation not to derogate from grant, the landlord is entitled to do the work, provided that the landlord has taken all reasonable steps to disturb the tenant as little as possible. 

Takeaways

  • Landlords must take into account aesthetic considerations when deciding what repairs are appropriate.
  • Temporary repairs will not always satisfy a landlord’s repairing covenant; permanent repair solutions should be progressed at the same time.
  • The landlord’s repairing obligations/rights must be balanced against other covenants. Repair works which adversely impact the tenant should not go on for longer than is reasonably necessary.
  • Landlords purchasing freehold reversions for relatively small ground rents, should be mindful of the risk they could be ordered to carry out repairs under the lease, the costs of which might not necessarily be recoverable via the service charge or from an insolvent contractor.
  • Where contractors are responsible for design/construction defects, claims should be pursued swiftly to avoid insolvency-related issues.
  • Specific performance claims are only appropriate for works obligations where the works can be clearly defined. This may be easier for a specific result (such as reinstatement works) rather than works to build something new.
  • The court will allow a generous timetable for specific performance orders to carry out works, so that such claims may be of little use as a litigation tactic to speed works along.

 Perhaps The Beetham Tower inspired Liam Gallagher’s recent single, “Wall of Glass”, perhaps not. Either way, the landlord has got to put the wall of glass back (in anger, probably).