Examining the breach of the implied covenant

20 Jul 2016 | 6 min read

8702268 - key lying on a lease document

What is the extent of a landlord’s statutorily implied repairing covenants where the landlord is a leaseholder who has sublet a flat in a block owned by the freeholder? Philip Rainey QC, of Tanfield Chambers, explains the Supreme Court’s position in Kumarasamy v Edwards.

The Supreme Court, allowing the appeal of a long leaseholder of a flat in a block of flats, held that an injury which the respondent subtenant of the flat had incurred on a paved area outside the block had not been caused by the appellant’s failure to keep that area in repair, in breach of covenants implied into the subtenancy by sections 11(1)(a) and 11(1A)(a) of the Landlord and Tenant Act 1985 (LTA 1985).

What was the background to the case?

The case concerned an assured shorthold tenant of a flat, the respondent, who tripped over a raised edge of a paving slab when taking his rubbish to the bin. He suffered some personal injury. He sued his landlord, the appellant, for breach of the implied covenant to repair under LTA 1985, ss 11 and 11(1A). But the appellant was a buy-to-let investor. He only had a long lease of the flat itself, together with rights of access. He did not own the block and did not have a lease of the area where the respondent fell. Nor had he had notice of the disrepair to the paving. Therefore, he defended the claim. A deputy district judge allowed the claim and awarded the respondent damages, but a circuit judge overturned that decision. The Court of Appeal then reversed the circuit judge’s decision and restored the original order. The Supreme Court overturned the Court of Appeal and dismissed the claim.

What issues arose for the Supreme Court’s consideration?

As usual, the issues for decision became refined as the case rose through the appellate process, until there were three issues for the Supreme Court to decide:

  • whether the paved area was, within the meaning of LTA 1985, s 11(1)(a), the ‘exterior’ of the front hall of the block of flats
  • whether the appellant had an ‘estate or interest’, within the meaning of LTA 1985, s 11(1A)(a), in the communal hallway of the block of the flats
  • whether any obligation for the appellant to repair the area where the respondent fell would itself be subject to an implied requirement that the appellant had notice of the disrepair

What did the court decide on those issues, and why?

The court decided the first issue in the appellant’s favour—it held that it simply was not possible, as a matter of ordinary language, to treat a path leading from a car park and bin store to the front door of the block as part of the exterior of the front hall. No unnaturally wide meaning of ‘exterior’ was appropriate. An earlier Court of Appeal decision, Brown v Liverpool Corporation [1969] 3 All ER 1345, which was inconsistent with this interpretation, was held to be wrongly decided. That was enough to dispose of the appeal in the appellant’s favour.

On the second issue, the court found against the appellant. He had a leasehold easement over the front hall. An easement is an interest in land, as defined in section 1 of the Law of Property Act 1925. Thus, again on the ordinary meaning of the words of the statute, the appellant had an interest in the front hall of the building. For this purpose it did not matter that, having sub-let with exclusive possession to the respondent, the appellant could derive no practical benefit from his easement for the time being.

The court’s treatment of the third issue is very interesting. It first rejected an argument based on O’Brien v Robinson [1973] 1 All ER 583 and Dowding and Reynolds’ textbook Dilapidations: The Modern Law and Practice that notice of disrepair is always required in respect of the implied covenants under LTA 1985, s 11. The court pointed out that it was well settled that notice of disrepair was required to be given by a tenant to a landlord where the disrepair arose within the demised premises, and that notice was not required where it arose in areas retained by the landlord (British Telecom plc v Sun Life Assurance Society plc [1994] 2 EGLR 66). However, it observed that no case had directly considered what the position was where the landlord did not own an area over which he had repairing obligations.

The court considered the position where a landlord, such as a freeholder, did have a legal estate in retained parts and could be said to have possession except for the fact that the landlord had demised those parts by another lease—for example, where the common parts of a block of flats were demised to a management company under a management lease. The court held that, generally speaking, notice of disrepair would not be required to be given to the freeholder in that situation, despite the common parts lease. But in a case like this (which is very common, given the growth in buy-to-let) where neither the landlord nor the tenant have possession of the common parts of a block, and the landlord has effectively sub-let his limited rights over the common parts, the court held there was an implied term that the landlord had to have had notice of the disrepair before he could be liable for breach of a repairing covenant over those parts.

The reasons for importing a notice requirement were:

  • the appellant had effectively disposed of all his rights over the common parts for the duration of the sub-tenancy
  • it was the respondent who used and occupied the common parts and had the best means of knowing of any want of repair
  • dovetailed with the statutory defence under LTA 1985, s 11(3A) which was available to landlords who had no rights to carry out repairs, and
  • contrary to what the Court of Appeal had decided, in circumstances where there was a head-landlord who had covenanted to repair common parts, it followed that a flat lessee’s implied right to use the common parts of a block of flats did not carry with it an implied right to carry out repairs

Is the judgment helpful in clarifying the law in this area?

The judgment is helpful in clarifying the extent of implied repairing covenants in short leases where the landlord is himself only a tenant of a flat. It is also of great assistance in explaining when notice of disrepair is and is not required. The court pointed out that where the demise is internal and non-structural, the application of the rule means that the tenant will not have to have given notice where disrepair arises in structural parts of the flat that are not demised.

Philip Rainey QC appeared for the appellant in this case.

Interviewed by Robert Matthews. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

 

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