UK: Supreme Court Limits Landlords Liability For Disrepair

Last Updated: 5 September 2016
Article by Charlie Gothold, Emma Broad and Thomas Nolan

The recent Supreme Court decision in Edwards v. Kumarasamy [2016] UKSC 40 will come as a relief to buy-to-let landlords concerned about their liability for disrepairs in common parts. The Supreme Court, in the context of section 11 of the Landlord and Tenant Act 1985 (Section 11), reviewed and extended the application of an implied term that a landlord will only be liable for breach of its repairing covenant where it has had prior notice of the disrepair.

Background

Mr Kumarasamy (K) was the long leaseholder of a second floor flat. The demise included a rights of access over the entrance halls, staircases and landings of the building in which the flat was situated (the Building) and also across an external paved walkway (the Path) leading to communal bins.

In 2009 K sublet the flat to Mr Edwards (E) by way of an assured shorthold tenancy. In July 2010 E was taking rubbish out to the communal bins when he tripped on an uneven slab forming part of the Path thereby injuring himself. E sought compensation from K based upon Section 11:

s.11(1) "...[T]here is implied [into a lease of a dwelling-house ... for a term of less than seven years] a covenant by the lessor –

  1. to keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes)"

On appeal there were three issues before the Supreme Court.

1. Was the Path part of the "exterior of the dwelling-house" for the purposes of s.11(1) of the 1985 Act?

The Supreme Court concluded the Path did not form part of the exterior of the dwelling-house of the Building for the purposes of Section 11:

  • in the words of Lord Neuberger, "it is hard to see how a feature which is not in any normal sense part of a building and lies wholly outside that building, and in particular outside the floors, ceilings, walls and doors which encase the front hall of the building, can be fairly described as part of the exterior of that front hall";
  • this view was supported by the fact that the legislators had felt the need to include the words "including drains, gutters and external pipes" at the end of Section 11; and
  • Section 11 should not be widely construed given that its effect is to place one contracting party under a burden that it had not expressly agreed with the other contracting party.

The decision on this point alone would have been sufficient to defeat E's claim however, as the other points had been fully argued the Supreme Court went on to consider the same.

2. Did K have an "estate or interest" in the front hall as required by s.11(1A)(a)?

It was accepted that the right of way over the entrance hall, staircases and landings amounted to an easement and therefore an interest in land. K however argued that since he had sublet the flat to E, including the right of way, K had effectively been deprived of any practical benefit from the easement and therefore no longer had any interest in the land. The Supreme Court dismissed this argument. K still retained an interest in the front hall by virtue of the easement.

3. Was notice of disrepair required?

Lord Neuberger outlined the following principles derived from previous case law:

  • where a party covenants to keep premises in repair, that amounts to a warranty. Consequently as soon as those premises fall into disrepair the covenantor becomes liable to the covenantee for breach of covenant (the General Principle);
  • the General Principle may be expressly qualified by the parties; and
  • in some cases the General Principle may be qualified by an implied obligation on the tenant to give notice of the disrepair before any liability for breach arises under the landlord's repairing covenant (the Rule).

The rationale for the Rule is that where a landlord has let premises, it is the tenant who is best placed to determine what state and condition they are in; a landlord may have no means of knowing what state and condition they are in unless put on notice by the tenant.

Considering how the Rule would apply to the letting of flats, such as this, there were two preliminary questions:

  • where the landlord of a flat agrees to repair the structure and exterior, does the applicability of the Rule to the repair of the structure and exterior depend in some cases on whether or not the demise is an internal demise only? Yes. In the words of Lord Neuberger, "the rule would apply but only to the extent that the structure is included in the demise". He acknowledged however that this "may seem a rather technical, or in some cases an almost capricious distinction"; and 
  • can the Rule apply to property that has not been demised to the tenant? Lord Neuberger concluded "the rule does not normally apply to premises which are not in the possession of the tenant".

With the exception of Lord Carnwath who expressed reservations about laying down general rules for the applicability of the Rule, the other Judges agreed with Lord Neuberger.

This case differed from previous ones insofar as the area that had fallen into disrepair was not in the possession of the landlord or the tenant. Neither the front hall nor the Path had been demised – K and E only had rights over the same by virtue of the headlease and the assured shorthold tenancy respectively. The Supreme Court nevertheless held that the Rule applied. In the words of Lord Neuberger, "[i]n so far as [K] had any right over the hall and paved area, he has effectively disposed of that right to [E] for the term of the Subtenancy just as much as he has disposed of his right to use and occupy the Flat to [E] for the term of the Subtenancy. During the Subtenancy it is the tenant who uses the common parts, not the landlord, just as it is the tenant who occupies the flat, not the landlord".

Where does this leave us?

If the previous decision of the Court of Appeal in this case had stood, it would have meant that a landlord's liability on its repairing covenant could only be qualified by an implied covenant for the tenant to give notice where the disrepair related to the premises actually let. Instead, while the Supreme Court decision acknowledges that an implied covenant to give notice will generally not arise where the disrepair is of premises outside the tenant's actual demise, it found that this was not an absolute rule and there may be exceptional circumstances where this is not the case.

Here, the fact that the landlord had effectively disposed all right to use the common parts to the tenant justified an implied obligation on the tenant to give notice to the landlord of the disrepair within the common parts prior to any liability arising under the landlord's repair covenant. This, together with Lord Neuberger's restrictive interpretation of what is meant by "exterior" for the purposes of Section 11, will come as a welcome relief to buy-to-let owners.

However, the case does leave some uncertainty as to where the line will be drawn in respect of disrepairs in areas not let to the tenant concerned. Lord Neuberger reflected that previous case law suggests that "it is not normally open to a landlord who has agreed to repair the structure, to invoke the rule [i.e. the implied covenant to give notice of disrepair] against a tenant of a flat in relation to disrepair of part of the structure which the landlord has let to another tenant...". Further, in an aside, Lord Neuberger commented that where a landlord owns the whole of the building in which a flat is let (as opposed to merely a headlease of the flat itself), its Section 11 liability to repair the common parts is unlikely to be qualified by an obligation on the tenant to give notice of disrepair.

While we are left wanting clarity as to when an obligation to give notice will be implied where there is disrepair to premises other that those which have been demised, landlords and tenants alike should approach each case with caution and always consider whether they would be better served by including an express obligation to give notice of disrepair.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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