Ruling repairs landlord's rights

Roger Pearson looks at a decision which could have serious consequences for tenants who do not comply with repair covenants. A recent ruling in the Chancery Division of the High Court is seen as adding a further weapon to the increasing armoury of landlords seeking to force tenants to honour the terms of repair covenants.

Until relatively recently, covenants purporting to impose repair and maintenance obligations on tenants were viewed by landlords and property lawyers as more or less unenforceable and not worth the paper they were written on.

Then, in 1995, came the Court of Appeal case of Jervis v Harris, which armed landlords with what has since been viewed as a potent remedy. It was held that, if tenants refused to meet their obligations, landlords were entitled to enter the property in question, carry out the work and claim the cost back from the tenant.

In the latest case, Rainbow Estates v Tokenhold, another bullet has been put in the breech of the legal gun that landlords can use against tenants who do not comply with repair covenants.

The case involved a freehold mansion and grounds in Epping. The landlord, Rainbow Estates, launched summary proceedings against the lessee, Tokenhold, for rent arrears and for the specific performance of the repair covenants which it claimed had been breached.

Previous interpretation of the provisions of the Leasehold Property (Repairs) Act 1938 has been regarded as a block on such actions, even though it did not apply to actions for specific performance.

One of the aims of the Act was to deter those such as speculators or unscrupulous landlords who might buy the reversion of leases, which in themselves had little value, and then harass tenants with schedules of dilapidations. The purpose of such moves would not be to ensure that the property was kept in proper repair for the protection of the reversion but to put pressure on the tenant.

In Rainbow Estates, Deputy judge Lawrence Collins QC said he bore these principles in mind and stressed that it was necessary for courts to be astute to ensure that landlords did not seek specific performance of such covenants simply to harass tenants.

There was, he said, a real need for great caution in granting such a remedy against a tenant.

Nevertheless, he held that such an order was applicable in this case because the leases in question lacked a forfeiture clause and the usual provisions enabling a landlord to enter premises and carry out the repairs himself. Coupled with the serious state of disrepair the premises had been allowed to fall into, this entitled Rainbow Estates to the order.

Steven Philippsohn, the litigation partner at Philippsohn Crawfords Berwald who acted for Rainbow Estates, says: "It is a decision which could provide landlords with considerable assistance in their attempts to compel defaulting tenants to comply with their obligations.

"While the facts of the case were unusual, tenants in similar circumstances will now no longer be able to avoid having to do what they agreed to do when they acquired their interest."