There haven’t been many dilapidations cases to reach the Court of Appeal in recent years, but South Essex Partnership University NHS Foundation Trust V Laindon Holdings Ltd has broken that trend.
Laindon was the landlord of purpose-built offices in Basildon, which the Trust had occupied until January 2011. In late 2014, the landlord won damages in the High Court of just over £130,000 for breach of the tenant’s repairing covenants in the lease. The tenant appealed on two points:
The Court of Appeal found that the carpet tiles, which were fitted before the lease started, formed part of the premises rather than being landlord’s fixtures and fittings which the tenant was obliged to repair or replace on a like-for-like basis. As the lease entitled the tenant to make non-structural alterations to the premises without the landlord’s consent, they did not commit a breach when they replaced the carpet tiles with broadloom carpet.
Loss of rent
Interestingly, the High Court assessed the costs of the repair works at the date of trial, rather than the termination of the lease, as the judge accepted the landlord’s evidence that it was reasonable to delay those works for commercial reasons until a new tenant was secured. Accordingly, the judge awarded loss of rent to the landlord for the void period it would have to endure to carry out the remedial works.
In the Court of Appeal, the tenant did not challenge the landlord’s decision to delay the works or the assessment by the High Court of the losses as at the trial date. Instead, the tenant argued that the landlord could not claim loss of rent whilst the landlord continued to wait, after the judgment of the High Court and once it had been put in funds by the tenant, to find a new tenant before carrying out the works. The Court of Appeal agreed. The loss incurred by the landlord, as a result of a continued delay after the payment of damages by the tenant, was not recoverable.
Overall, the damages were reduced by over £61,000. Sadly, the Court of Appeal was not invited to consider the High Court’s finding that the cost of the works should be assessed at the date of the trial in 2014, rather than on lease expiry. This could have a substantial impact on an amount awarded, since contractor’s fees were significantly cheaper in the depths of the recession. It might not be long before this point comes up for consideration in another case.
Case: South Essex Partnership University NHS Foundation Trust V Laindon Holdings Ltd