Whilst no one knows the real identity of the artist known as Banksy, his artwork has recently been the subject of a High Court case which has provided some useful guidance relating to the interplay between repairing covenants and chattels of substantial value.
Banksy's mural appeared on an external wall of a building in Folkestone in September 2014. The building was occupied by Dreamland Leisure Limited as a tenant under a 20 year lease which demised the structure and exterior of the building to it.
As is the case with most murals, Banksy's artwork appeared on the building without the prior knowledge or consent of either the landlord or the tenant.
The tenant (Dreamland) subsequently arranged for the mural and the section of the wall it was on, to be removed.
Covenant to 'keep' in repair
The landlord alleged that the tenant had breached its lease by removing the mural and asked the Court to order the return of the mural to it pursuant to section 2 of the Torts Interference with Goods Act 1977.
In its defence, the tenant argued that it was obliged, or alternatively entitled, to remove the mural from the building in order to comply with the tenant covenants contained in clauses 2(b) and 2(d) in its lease which required it to:
"Keep the whole of the demised premises including all glass of the windows locks latches and fasteners all boundary fences (if any) and all fixtures and additions thereto in good and substantial repair and condition" and "In every fourth and in the last year of the Term howsoever determined to paint all the outside wood iron and other work now or usually painted with two coats of good quality paint and in a proper and workmanlike manner. And with every outside painting to restore and make good all external rendering wherever necessary".
The tenant also argued that once the mural had been removed from the building, it became the tenant's property as a result of an implied term in the Lease.
The Court reiterated that an obligation to 'keep' in repair is only engaged if the particular part of the building is out of repair and accordingly, before it could consider whether the tenant had complied with its obligation to carry out the necessary work to 'keep' the building in repair, the Court was required to consider whether or not the presence of the mural caused the building to be out of repair. The tenant argued that the presence of the mural on the existing paintwork caused the building to be out of repair although it admitted that no damage had been caused to the structure of the wall. The Court was 'narrowly' persuaded by the tenant's arguments and therefore the Court then turned to consider the question of what work was required to be carried out by the tenant in order to comply with its obligation to keep the building in repair.
The landlord and the tenant both agreed that there were less invasive ways of the dealing with the damage caused to the building by the mural which included painting over it and removing it by chemical or abrasive cleaning. The Court reiterated the established point that the tenant was only required to undertake such remedial work as a sensible person would adopt and concluded that the tenant was not entitled to or obliged to repair the wall by removing part of it.
Ownership of the mural
Having decided against the tenant on the first issue, the Court went on to decide who the mural belonged to.
The Court decided that the mural belonged to the landlord for the following reasons:
- The default position is that each part of the building belongs to the landlord and therefore it is up to the tenant to establish that a term ought to be implied into the lease which changes this.
- Chattels do not become the property of the tenant simply because the tenant has discharged its repairing obligation.
- Even if a term could be implied in respect of the ownership of waste or chattels which have only scrap or salvage value it does not mean that a similar term can be implied in relation to a chattel of substantial value.
- It makes no difference that the value of the chattel is attributable to the spontaneous actions of a third party.
Points to take away
As noted by the Judge, the facts in this particular case were 'exceptional' and although a case with similar facts is unlikely to present itself on a regular basis, it does provide a warning to tenants that they cannot use extreme methods to comply with their repairing covenant in order to receive a 'windfall'.
If you are a landlord letting a property with a valuable chattel attached to the land you should consider what rights you want to retain in respect of that item and whether you want to retain ownership of it in the event it is removed from the building. Although this case was decided in the landlord's favour, it would be prudent to require an express clause in the lease dealing with rights, obligations and also the ownership of any high value chattels.