Splitting responsibility for repair between landlord and tenant, so that the tenant is liable for the interior and the landlord for the exterior and structure, can give rise to problems in practice. A recent example is the case of Janet Reger International Ltd v Tiree Ltd [2006].

DAMP IN THE BASEMENT

Janet Reger had been in occupation of ground floor and basement premises for over thirty years. After a major reconstruction finishing in 2000, they took on a new lease of the property. There was then a change of landlord. By July 2003, signs of damp had begun to appear in the basement, and a year later the problem had become sufficiently serious for them to move out of it.

CAUSE AND REMEDY

It was agreed that the cause was defective damp-proofing work carried out as part of the reconstruction project.

The appropriate remedial measures were also agreed: preparation of the floor and walls to a height of 1 metre above ground floor level to receive a linked damp-proof floor coating and three-coat wall render.

One of the expert witnesses likened the works to the insertion of an inverted swimming pool into the basement.

WHOSE RESPONSIBILITY?

The tenant’s repairing obligation extended to the whole of the demised premises; the landlord’s to the structure. It was common ground that the defective damp-proof course formed part of the structure.

On the face of it that looked hopeful for Janet Reger. However, while the damp-proof course was defective, it had been installed like that, and had not deteriorated. The damp might in due course affect the fabric of the building, but there was no evidence that it had yet done so.

It is an established principle, expressed in cases such as Post Office v Aquarius Properties Ltd [1987], that for a repair covenant to bite, there must first be some physical deterioration.

All items which were in disrepair in this sense (plasterwork, floor finishes and so forth) fell within the tenant’s obligations; it was therefore Janet Reger which was liable.

HOW TO PREVENT THIS OUTCOME?

From the tenant’s viewpoint, the outcome appears harsh, though of course the problem is that the party actually responsible, namely the contractor which carried out the defective work, was not in court.

It could equally be seen as harsh to fix the new landlord with liability, effectively requiring them to improve the property.

It is hard to know what Janet Reger might have done differently to avoid the problem.

Having occupied the building for thirty years, and immediately after a major reconstruction, they would not have done a full survey before signing the new lease, and in any event there were no signs of dampness at that stage.

The only solution would have been to try to negotiate the benefit of warranties from the contractors.

What the case does underline is that there must be a dividing line where only part of a building is let. Before getting into litigation such as this, it is necessary to be very clear-headed about what element of the property is in disrepair, what work needs to be done, and on which side of the dividing line it falls.