Tenants of commercial premises are often subject to rigorous repair obligations and are required to hand them back at the end of their leases in a similar condition to that in which they found them. In one High Court case, a hotel operator who failed to match up to those obligations was landed with a heavy dilapidations bill.
The operator took a 20-year lease of a listed, 36-bedroom hotel, parts of which dated back to the 15th century and which was in a historically important riverside location. After the lease was terminated on less than amicable terms, the property’s then freeholder submitted a very extensive schedule of dilapidations. The amounts claimed were disputed in detail and proceedings ensued.
Ruling on the matter, the Court noted that various covenants in the lease required the operator to keep the premises in good and substantial repair and condition and to deliver them up at the end of the term in a clean and decorated state so as to be fit for future occupation. The freeholder’s fixtures and fittings were, wherever necessary, required to be replaced.
It was agreed that the standard of repair imposed on the operator was, having regard to the age, character and location of the premises, to maintain them in a state of repair that rendered them reasonably fit for occupation by a reasonably minded tenant of the class who would be likely to take them.
The hotel had been comprehensively refurbished and reconfigured shortly before the operator took up occupation. On that basis, the operator was required to hand back the premises in a condition fit to serve as a high-class hotel, restaurant and public house in a prestigious location.
The Court found on the evidence that the covenants had in several respects been breached. Amongst other things, boilers and a large part of the hotel’s heating and hot water system needed to be replaced. Window repairs, substantial external redecoration and deep cleaning measures were also required.
The Court noted that, as a general rule, the measure of damages payable for breach of a repair covenant is the reasonable cost of the works required to put the premises in the condition they ought to have been in when delivered up. The operator was ordered to pay dilapidation costs totalling £597,117.