Emma Humphreys writes for RICS Built Environment Journal on section 18 provisions (Peachside Limited v Lee & Keung)
A recent judgment about a tenant's breach of repairing covenant on vacating a restaurant premises depended on whether phased works by the landlord constituted repairs or betterment.
The case of Peachside Limited v Lee & Keung [2024] EWHC 921 (TCC) provides a rare example of both provisions of section 18(1) of the Landlord and Tenant Act 1927 coming under judicial examination, with the key question being whether the redevelopment of a property was inevitable.
The former tenants had operated a restaurant in the Chinatown area of Manchester. The lower floors of the property were occupied by bookmaker Betfred. The 14-year lease had fairly standard repair and redecoration covenants. However, as returned to the landlord after the tenants vacated, the premises were described in evidence for the landlord as a 'warzone with grease'.
The landlord stated that it initially tried to re-let the premises in their existing condition but soon decided on advice that substantial repair works were needed to enable reuse as a restaurant.
Emma Humphreys, Partner in our Real Estate Disputes team, unpicks the judgment in an article for RICS Built Environment Journal. In the article, Emma explores the tenants' argument that the landlord was merely seeking to extract as much as possible from them through the dilapidations claim and did not intend to re-let their former premises.
She explores how the judge arrived at their decision - disagreeing with most of the tenants' defence and accepting the conclusion from the landlord's surveyor that the premises in repair would command a reasonable rental for office accommodation, albeit with a discount for limited access.
While the judge did agree with a few points, the total damages awarded against the former tenants amounted to £542,671 including agreed surveyors' fees. Interest and costs were dealt with after judgment was handed down.
Read the full article in RICS Built Environment Journal here.
