English High Court orders specific performance in respect of remedial works for structural defects

In the recent English High Court decision of Blue Manchester Limited v North West Ground Rents Limited [2019] EWHC 142 (TCC) (“Blue Manchester”), specific performance was ordered against the landlord of a mixed hotel-residential development to remedy structural defects in the glass façade of the building, among others.

Brief facts. This case concerns defects in the Beetham Tower, (“the Tower”), a mixed hotel-residential development in Manchester, UK. The Tower was fully clad with glass panels comprising, among others, single glazed shadow box units (“SBUs”). To avoid externally visible fittings, the glass panels were attached to the Tower with strips of structural sealant around their perimeter.

The claimant was the owner of the hotel in the Tower. The claimant leased the hotel premises from the defendant, who was the owner of the Tower. 

In June 2014, it was discovered that the bond provided by the structural sealant was failing in some cases. The main contractor for the Tower conducted an urgent investigation. A decision was made to secure the SBUs by screw stitching pressure plates to the frame profiles to hold the SBUs in place (“Stitch Plates Measure”). The works were completed in November 2014. This was intended to be a short-term solution pending a full investigation and the design and installation of a permanent remedial solution. Unfortunately, the investigatory and remedial processes were so protracted that nothing concrete was achieved by January 2018, when the main contractor went into liquidation.

As a result, the claimant sought specific performance against the defendant to compel it to undertake works under the repairing covenant in Cl 7.2 of the lease (“Repairing Covenant”) in order to provide a permanent remedial solution for the SBUs.

The defendant resisted the claimant’s application on the ground that as matters stood it had sufficiently complied with the Repairing Covenant so that it was not in breach. The defendant argued that the existing solution, while only intended to be temporary, was a sufficient remedial solution whilst the defendant pursues claims against the main contractor’s insurers and the sub-contractor responsible for designing and installing the Tower’s façade. In any event, the defendant argued, specific performance was not applicable given the lack of a clear agreed remedial specification.

The Court held in favour of the claimant and ordered specific performance against the Defendant.

Meaning of “good and substantial repair”. The Court held that the standard of “good and substantial repair” in the Repairing Covenant did not require the Tower to be in a perfect condition. However, the repairs had to be reasonably fit for the occupation of a reasonably minded tenant of the class likely to take them, “having regard to the age, character and locality of the premises”.

In light of this, the Court added that it was unnecessary for the disrepair to be so serious as to make the property non-functional for the Repairing Covenant to be breached. To illustrate, the Court cited Gibson Investments Ltd v Chesterton Plc [2002] 2 P&CR 494 which stated that “the building must be [more than] capable of occupation... the building must be in a state of repair which is appropriate for a high class office building in a prime office location”.

Standard of repair taking into account design life. The Court stressed that it was insufficient for the defendant to assert that the SBUs were not in disrepair simply because they were currently being secured with stitch plates and would remain secure with regular inspection and re-tightening. The main concern was whether the SBUs would remain structurally safe “for the foreseeable future”.

In this case, the glass plates had a design life of 50 years. However, based on the facade consultancy’s assessment, the Stitch Plates Measure would only ensure structural safety for 3 years from installation (ie, until end 2017). The expert evidence at the time of the trial in January 2019 was that the SBUs with the existing stitch plates were secure, but would not remain secure indefinitely.

The Court found that no follow-up study had been done by the defendant to indicate the longevity of the Stitch Plates Measure, and no plan was commissioned to give reasonable confidence as to the structural stability of the current arrangement for some specified period. The defendant’s suit against the main contractor’s insurers and specialist sub-contractor for a more permanent solution was, at the time, stayed until April 2019. Further, the expert witnesses agreed that the Stitch Plates Measure posed long-term safety risks and fixed the SBUs in a manner contrary to their design intent.

In the circumstances, the defendant had not satisfactorily complied with the Repairing Covenant.

In any event, the Court noted that the proposed regular maintenance of the stitch plates may be unacceptable to the claimant as a hotel owner. For one, it would be difficult for the hotel to manage its occupancy so as to ensure that rooms affected by maintenance operations were not booked in circumstances where unpredictable weather conditions meant the possibility of maintenance schedules being disrupted.

Relevance of aesthetics. According to the Court, aesthetic considerations were relevant in this case, the hotel being a luxury development.

An important design feature of the Tower was the unitised appearance of the glass façade, which depended on there being no obvious externally visible fixings between the glass panels. The stitch plates, which were externally visible, had a “significant adverse impact” on the appearance of the building. As a result, “there would have to be some compelling reason why a tenant such as the claimant should have to accept this as a repair for a building”.

Specific performance in landlord-tenant cases. Given the draconian nature of a specific performance remedy, it is typically ordered only when it is “just and equitable” to do so. The test is typically whether damages are an adequate remedy.

However, the Court also noted that it is well established that specific performance is available in appropriate circumstances in the case of a claim by a tenant against a landlord. In Jeune v Queen’s Cross Properties Ltd [1974] Ch 97, it was held that “a mandatory order upon the [landlord] to reinstate the balcony is a much more convenient order than an award of damages leaving it to the individual [tenants] to do the work. There is nothing burdensome or unfair in the order sought”.

In the present case, the defendant did not raise the issue of damages being an adequate remedy. In any event, the Court observed that there was some concern about the defendant’s ability to meet the costs of any repairs undertaken by the claimant under the lease. Where the defendant might be unable to meet (or might have made itself unable to meet) such costs, damages would not be an adequate remedy, and specific performance would be appropriate. In this regard, no submission was made to the Court that the defendant did not have the financial ability to comply with an order of specific performance.  

Degree of particularity for specific performance order. The Court ordered the defendant to remove the stitch plates and re-secure the SBUs in a way which provided substantially the same external appearance prior to June 2014. The Court also allowed the defendant to undertake a different remedial scheme if the remedial works were certified to be not reasonably practicable by a suitably qualified consultant.

Citing Co-operative Insurance Society v Argyll Stores [1998] AC 1, the Court noted that orders to achieve a result were more readily enforceable by specific performance as opposed to orders to carry on an activity.

Rejecting the defendant’s objection that the specific performance order lacked particularity, the Court held that it was “not necessary for a detailed schedule of works to be drawn up” so long as a clearly specified result was ordered and the defendant can be protected against the risk of unforeseen events making it impossible or impracticable to comply.

Implications. Blue Manchester reflects the commercially-minded approach courts will take with regard to construing the repair obligations in a lease. Where temporary measures are employed to remedy structural defects, they should also be supplemented with information about their longevity or plans to ensure long-term structural safety, bearing in mind the original design life of the equipment. The Court’s willingness to grant the remedy of specific performance in a landlord-tenant situation, with the draconian consequences of contempt of court proceedings for non-compliance, will aid tenants in similar situations in the future. This case also provides welcome clarity for parties seeking specific performance with its focus on specific results to be achieved and measures to protect defendants against unforeseen events.

This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.

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