In The Creative Foundation v Dreamland Leisure Ltd & others  EWHC 2556 (Ch), a tenant removed a Banksy mural from the wall of a building in Folkestone and the landlord, a charity promoting the arts, wanted it back. The Foundation claimed for delivery up of the mural and applied for summary judgment in which the main question to be decided by the High Court was, if part of a building is removed by a tenant, who does it belong to; the landlord or the tenant?
Dreamland Leisure Ltd is the tenant of the building onto which the mural was painted and The Creative Foundation is the freeholder and Dreamland’s landlord. Dreamland’s demise includes the structure and exterior of the building and its lease contains tenant’s covenants to keep in good and substantial repair, to paint in every fourth year, and to yield up ‘together with all buildings and erections now or hereafter to be built upon’. It also prohibits Dreamland from maiming, cutting or injuring any of the walls without landlord’s consent.
The mural, entitled “Art Buff”, was spray-painted onto the external flank wall of the building in September 2014 and was attributed to Banksy. The mural was well known in the local community and was even covered in perspex by the Council in order to preserve it.
Shortly after the mural was painted, Dreamland removed a portion of the external wall containing the mural and sent it to the USA for its eventual sale. Apparently it had been valued at somewhere around £470,000, so Dreamland would have been in for somewhat of a windfall! Dreamland made good that part of the wall it had removed.
The Foundation claimed for delivery up of the mural. It argued that when the section of the wall was removed by Dreamland it became a chattel which belonged to The Foundation along with any proceeds of sale, if it were sold. It also claimed that Dreamland was in breach of its covenant not to cut, maim, or injure the wall by removing part of it.
On the contrary, Dreamland said the mural was removed in pursuance of its repairing covenant and that once removed, the mural belonged to Dreamland, as did any proceeds of sale.
In reaching its decision, the High Court restated the well-known principle that the obligation to repair pursuant to a repairing covenant only arises if that part of the building is actually out of repair or condition. Dreamland contended that as a result of the graffiti, the wall was indeed out of repair. It also argued that the presence of the mural was likely to attract further graffiti. The Court was narrowly persuaded by this argument.
The Court went on to say that where the repairing covenant applies, as it did here, the next step is to consider what method of repair is reasonable. This must be assessed objectively. In some instances it might be reasonable to use an invasive method such as removal of the wall in order to comply with a repairing covenant and this would be particularly true if the chosen method provided a longer term solution than a less invasive one. However, in this case the Court agreed with The Foundation’s argument that Dreamland could have used alternative solutions to remove the mural, such as painting over it or by chemical cleaning. Therefore the removal of the section of the wall containing the mural was not a reasonable method of complying with its repairing covenant.
The High Court went on to deal with the main question before it, which was what happens to parts of a building that are removed by a tenant in compliance with its repairing obligation. It was common ground that those parts revert to the status of chattels. However, it was necessary to imply a term into the lease as to the ownership of those chattels. The Court held that, even if a term could be implied which said that parts having no scrap or salvage value became the property of the tenant, where the part removed was of substantial value it belonged to the landlord.
This is a useful case which raises some important points and will assist landlords and tenants to clarify their rights in respect of repairing covenants and the removal of parts of the property demised by the lease.