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Breach of covenant by landlord: Whether a landlord breached repair covenants by replacing roof with materials which were not like-for-like (Lambeth London Borough Council v Gniewosz – 2020)

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Where a landlord replaced an original zinc roof with a glass-reinforced plastic roof, was it in breach of its lease covenants by not replacing like-for-like?

The background

In Lambeth London Borough Council v Gniewosz [2020], the tenant held a lease of a flat of which the local authority was the landlord. The landlord was required under the terms of the lease to “repair…renew…and [at its discretion] improve…the roof’, and service charge provisions enabled the landlord to recover the costs of complying with this provision from the tenant. It was mutually agreed that the roof was in need of replacement. The roof was zinc, but the landlord proposed a replacement comprised of glass-reinforced plastic.

The tenant applied to the First-tier Tribunal for determination as to reasonableness of service charges, which, amongst other items, included the replacement roof works. The tenant claimed that the replacement with glass-reinforced plastic rather than zinc would breach the landlord’s repair covenants. They also challenged the reasonableness on the basis that that the like-for-like replacement with a metal roof would deliver better value for money, the need to aggregate the work with the replacement of other roofs on the estate, the insufficiency of warranties and guarantees in the contract proposed and the likely poor workmanship, as well as potential breaches of building regulations and planning policies.

The First-tier Tribunal held that using glass-reinforced plastic would breach the landlord’s lease covenants and found in favour of the tenant without considering the other points raised and did not make findings on all of the evidence that it heard. The landlord appealed to the Upper Tribunal.

The decision

The Upper Tribunal set aside the FTT’s decision, finding in favour of the landlord, and the matter was remitted to a different constituted panel for a hearing. The landlord’s appeal stated that the FTT had not duly considered whether the works would constitute repair or renewal and had not explained why the works could not be improvement. The landlord argued that the replacement of the roof was a repair. The words ‘repair’, ‘renew’ and ‘improve’ reflected a drafting style that commonly grouped these words together under the heading ‘repair’ and none of them added to the general repairing obligation. Therefore, the landlord argued the FTT should have identified the legal basis on which it had decided that the proposed repair would be a breach of covenant. It argued that it should have used the test for whether a specific repair was a breach of covenant as set out in Proudfoot v Hart [1890], which contained the appropriate test for determining whether the repair was a breach of covenant; this test had not been applied by the FTT.

The Upper Tribunal found the FTT’s explanation insufficient. It had not stated the legal test used in assessing whether the replacement works were in breach of the landlord’s covenant. It appeared the FTT had taken the view that zinc would be a better material than the glass-reinforced plastic proposed, and that the reasonable leaseholder would be unsatisfied with the glass-reinforced plastic, making an aesthetic judgment rather than one based on sufficient evidence.

The FTT had looked at the contrast between zinc and the glass-reinforced plastic rather than the glass-reinforced plastic in itself. The FTT made no mention of locality, therefore it was clear that the FTT had not applied the test in Proudfoot v Hart.

The FTT had asked itself whether the work would be a breach of covenant by virtue of the material used, whereas it should have asked whether the proposed works would be reasonable. The question should have been answered using the test in Proudfood v Hart. This test has a relatively low threshold, and it was highly unlikely that it would be failed on the basis of the lifespan of the material or the level of aesthetic concerns expressed, again evidencing that this was not the test the FTT used.

The Upper Tribunal agreed with the landlord that the works were a ‘repair’, and held that the FTT’s decision was made as a result of incorrect reasoning.

Advice and action

The landlord’s successful appeal is a helpful indicator in setting out how the Tribunal should consider claims relating to repair works undertaken by landlords.

The FTT cannot make a judgment based purely on whether it considers works to be aesthetically pleasing or otherwise with reference as to the view of ‘reasonable leaseholders’; it must apply a legal test, specifically that determined by Proudfoot, in deciding whether a repair constitutes a breach of covenant.

The Upper Tribunal set aside the FTT’s decision, finding in favour of the landlord. The FTT’s explanation had been insufficient, failing to state the legal test used in assessing whether the landlord had breached its repair covenant.

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