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How Janet Reger caught a cold because of the damp.

BEWARE of repair. The case of Janet Reger International Limited against Tiree Limited provides a useful reminder of case law on repair in commercial leases.

When landlords and tenants enter into a "full repairing and insuring" commercial lease, the obligation to repair is a key clause to consider ensuring that your position is protected. If the wording is not precise enough then litigation can be the highly costly result.

A Janet Reger shop had traded at 2 Beauchamp Place in Knightsbridge, London for 30 years. In 1997, the freeholders wished to carry out redevelopment and Janet Reger temporarily moved out.

In June 2000, the business moved back into the basement and ground floor and was granted a new lease.

In the new lease the landlord covenanted to "use reasonable endeavours to maintain, repair and renew the structure of the property".

Over time the basement became increasingly damp. The Amtico floor was lifting sufficiently to trip up customers, the air was damp, there was fungal growth on the wall and the smell had begun to permeate into the shop.

Due to the condition of the basement, retail stock could not be stored there and the situation became so bad that it was unreasonable to expect the staff to work there.

Janet Reger was obliged to move out of the shop. After lengthy investigation it transpired that the damp was caused by defective works of alteration carried out by the previous owners and the absence of a damp-proof course. For two years the landlord acknowledged the damp problem and whilst it did not refuse to carry out remedial work, neither did it do anything about it.

The repair covenant in the lease stated that the landlord should "use reasonable endeavours to repair, renew and maintain the structure".

As the damp proof membrane was in the floor, and this was deemed part of the structure, Janet Reger believed that the landlord should carry out the remedial works. The retailer began proceedings against the landlord with its main challenge to convince the judge that the damp proof course had deteriorated.

The judge, however, found in favour of the landlord; holding that the damp proof course had not actually deteriorated but had been defectively installed.

The judge held that the claim failed as there was no disrepair to the structure (despite the mould on the interior walls) and that the landlord was not obliged to carry out the works.

The judge held that merely because there was a loss of amenity due to a design fault, this did not lead to a conclusion that there was disrepair.

Janet Reger not only lost the case but also had to repair the effects of the defective damp proof course because under the lease it was required to ''put and keep the premises in good repair and condition''. The company also had to continue to pay rent for the basement even though it could not use it.

This case reinforces the need for a tenant to obtain appropriate surveys before letting a property and, where possible, warranties. Where the landlord retains a liability to repair the structure of a property or areas outside of it, the tenant should require an express obligation to keep it in good condition.

Richard Freeman-Wallace is head of property at Watson Burton LLP
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Oct 3, 2007
Words:550
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