In the recent case of Blue Manchester Ltd v North West Ground Rents Ltd  EWHC 142 (TCC), the High Court upheld a tenant's claim for specific performance against its landlord, requiring the landlord to repair the external glass facade of the property.
The property this claim relates to is The Beetham Tower in Manchester. The first 23 floors form a Hilton Hotel, which is let to the tenant Blue Manchester Ltd on a 999-year lease. The lease was granted for a premium of £60 million and an annual rent of £20,000. The floors above the hotel contain residential flats.
The landlord, North West Ground Rents Ltd, acquired the freehold from the original developer in 2010 for £400,000.
The tower has a fully glazed external facade. The glazed panels were attached to a frame by structural sealant around their perimeter.
In 2014 it was discovered that the sealant was defective, and it began to fail. The main contractor, Carillion, applied screw-stitched pressure plates to the frame panels. The works were completed by the end of November 2014. It was intended to be a temporary measure to allow a full investigation and the design and installation of a permanent solution.
It wasn’t until April 2017 that Carillion suggested two proposals for a permanent solution. Carillion then went into liquidation in January 2018.
The tenant complained that the temporary fix had an adverse effect on the building’s appearance and that the safety barriers and hoardings at ground level, which were installed for safety, impeded vehicular access and obstructed light into the building.
Under the lease, the landlord covenanted to keep the common parts "in good and substantial repair and when necessary as part of repair to reinstate replace and renew where appropriate…" The landlord accepted responsibility for the facade but argued that it had complied with its obligations by applying the temporary fix whilst it pursued claims against Carillon’s insurers and a subcontractor, which it hoped would fund a permanent solution.
The tenant brought a claim against the landlord for breach of its repairing covenant, seeking to compel the landlord to undertake works to provide a permanent solution.
The tenant also claimed an injunction and/or damages in relation to the continued presence of hoardings at ground level.
The High Court held that:
- The tenant succeeded on the disrepair issue and was entitled to specific performance to compel the landlord to undertake a permanent remedial scheme within 18 months, plus damages.
- The tenant also succeeded, and was entitled to damages, on the hoardings issue and an issue regarding interference with the water supply.
The judge considered that the temporary fix, if adequate may have been sufficient but on the facts, the solution used was not a structurally safe one for an unspecified period going forwards. The stitch plates were contrary to the original design intent and could potentially cause breakage of the glass, performance issues with the aluminium frame and damage to the primary weather-seal. They would also need on-going regular inspection and maintenance, which would likely cause disruption to the hotel, its clientele and the occupiers of the residential flats. The judge also accepted that the stitch plates had a significant adverse impact on the unitised appearance of the glass facades.
In summary, the tower's existing condition did not amount to good or substantial repair and it was necessary to reinstate the original fixing or to replace the original panels.
This case is a useful example of a tenant successfully claiming specific performance against a landlord.
It is also interesting to note that when the landlord had acquired the freehold reversion as a ground rent investment vehicle, it had taken on the risk of liability for repairing inherent defects, or design and construction related risks.
Landlords should be aware that temporary repairs may not always be sufficient to satisfy their repairing obligations. If a permanent solution is required, and this may be simply for aesthetic reasons, they should be sought at the same time as the temporary repairs.
For more information get in touch with the Property Litigation team on 029 2267 5560.