High Court – implications of lease terms when giving up a lease

Implications of lease terms when giving up a lease

In a case at the High Court on the 23rd September 2020, the High Court examined how a clause in the lease about returning the property to the landlord at the end of the lease applied where asbestos was left buried across the site at the end of a lease.

The tenant had appointed consultants to remove buildings from the site. The consultants’ works in dismantling the buildings had disturbed asbestos-containing materials and spread them across the site.

As with all such matters, the facts of the case were critical, and the terms of the lease examined for meaning and implication on the tenant and the landlord. The lease set out that the tenant must return the property to the landlord “in good and substantial repair and condition to the satisfaction of the Landlord”.

The court made the following key points:

  • Use of the word “condition” shows that the obligation was capable of extending to doing works that went beyond strict repair.
  • The Landlord did not have unlimited discretion in deciding on what was the standard of “good condition”. However, the Landlord could form its own judgment as to what was required provided the landlord was acting reasonably to what is good condition.
  • The presence of the asbestos meant that the site was in a damaged or worse condition and was not in a good condition or in proper repair.

As such the removal of asbestos was thought to be a reasonable requirement to be able to meet the obligations set out in the lease. This was true even if the asbestos had been present before the lease started!

The court held that the tenant was liable for damages for breach of the lease term. This only goes to highlight the level of examination and searches that should be taken when entering into a lease. To conduct a full survey of the condition of the property and or land is not to be ignored. There are costs involved in such an examination, but these can be used as negotiation points.

Bowling & Co can guide you on such matters.

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This is not legal advice; it is intended to provide information of general interest about current legal issues.

 

Case: Pullman Foods Ltd v The Welsh Ministers and another [2020] EWHC 2521 (TCC) (23 September 2020) (HHJ Keyser QC).

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