Legal Update: Stonecrest Marble Ltd v Shepherds Bush Housing Association Ltd  EWHC 2621 (Ch)
26 October 2021 by Emily Wickington
On 23rd September 2021, the High Court (presided over by HHJ Richard Williams) found in favour of the Landlord on preliminary issues relating to their repair and insuring obligations under a lease of part, where water ingress (emanating from the Landlord’s retained premises) caused damage rendering the Tenant’s demised property unusable. It was held that the Landlord incurred no liability to the Tenant under either the terms of the lease or in tort, for the damage caused.
Stonecrest Marble Ltd are the Tenant and Claimant, whilst Shepherds Bush Housing Association Limited are the Landlord and Defendant.
The preliminary issues
- Whether the terms of the Lease exclude any liability of the Landlord towards the Tenant to inspect, cleanse and/or maintain the gutter at the building of which the Property forms part
- Whether the Landlord is legally obligated to take steps to inspect and clear the guttering at the building of which the Property forms part (upon notification by the Tenant as to the condition of the guttering or otherwise) so as to prevent the occurrence or continuance of any nuisance to those premises; and
- Whether, for the purposes of the rent suspension provisions in the Lease, strictly on the assumption that the Property was damaged by water ingress, this is a risk against which the Landlord was obliged to insure under the Lease.
Facts of the case:
- The cause of the water ingress was the blockage by the gradual accumulation of debris in a downpipe in the Landlord’s retained premises, causing water to overflow from the gutter.
- The Tenant reported the water ingress to the Landlord in 2017 for the first time, further water ingress occurred between 2017 and 2019, and in 2019 following a surveyor’s report the downpipe was fully unblocked.
- The water ingress was such that it had rendered the Tenant’s premises materially inaccessible or unusable by the Tenant for the intended and permitted use.
Relevant elements of the lease:
- The Landlord covenanted to allow the Tenant quiet enjoyment of the property
- The Tenant covenanted to keep the property in good repair and condition
- The Landlord was required to clean, maintain and repair the common parts
- The Landlord was required to insure against the “insured risks” which included “flood… and overflowing of water… apparatus” but the Landlord had no obligation to repair where the Landlord had no obligation to insure
- Rent was suspended if the property was damaged or destroyed by an insured risk so as to be unfit for occupation and use; however, the Landlord’s insurance policy expressly excluded indemnification for damage caused by gradual deterioration or wear and tear under its insurance exclusions.
As mentioned above, it was held that there was no basis for imposing liability on the Landlord under the express quiet enjoyment covenant contained within the lease, therefore preliminary issue 1 was answered positively, yes, the terms of the Lease excluded any liability of the Landlord in this situation.
With regards to preliminary issue 2, HHJ Williams applied previous case law from 2013, to conclude that the parties intended that the lease provide a comprehensive scheme for the repair and insurance of the demised and retained premises which was sufficient to exclude the Landlord’s liability in tort. The answer to the issue was no, it is not for the court to determine the practical effectiveness of the scheme, nor to import common law liability to plug any gaps which resulted from it. It is simply the courts function to give the lease the meaning and effect that was intended by the parties.
The Tenant conceded that the ingress was not an “insured risk” due to it being the accumulation of debris, it fell within the insurance exclusions as damage caused by gradual deterioration. As a result, preliminary issue 3 was answered in the negative. For the purposes of the rent suspension provision, the Landlord was not obliged to insure against the risk of damage by water ingress, and rent should not be suspended as a result.
If you are a commercial tenant or landlord looking to enter into a new lease and wish to get advice regarding the repairing and insuring obligations included within it, please do get in touch with our commercial property team on 01206 835316 or email [email protected]
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