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Implied Repairing Covenants in Commercial Leases

Recent decision by the court of appeal on implied repairing covenants in a commercial shop lease

In a recent decision by the Court of Appeal (J N Hipwell & Son v Szurek 2018 ) Mrs Szurek, who was the tenant of a café, experienced problems caused by unsafe wiring, causing her to close her business. She sought to recover her consequential losses (£22,750). Mrs Szurek claimed there had been a breach by her landlord of an implied obligation in the lease to keep the electrical installation in the premises safe. In its defence, the landlord sought to rely on the ‘entire agreement’ clause in the lease.

At county court level, the judge had held that a term should be implied in the lease to make the landlord responsible for the electrical installations in the premises, based on the presumed intentions of the parties.

He appealed. The court found that the lease imposed more obligations on the tenant compared to the landlord but the lease made little reference to the responsibilities for the repair of exterior of the premises, or to the plumbing or electrical installations, although a right of access was reserved to the landlord for the purposes of repairing any service media.

Notwithstanding the entire agreement clause, there was an obvious gap in the terms of the lease and the Court of Appeal applied the rule on implied terms as summarised in Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] to provide ‘business efficacy’ to the contract. The court took into account the remaining terms of the lease and the fact that H had ultimately accepted responsibility for these items, and that it was necessary to imply a covenant on the part of the landlord to keep the electrical installation serving the property safe.

The landlord’s appeal was therefore dismissed.

Point to note : This case is a useful reminder of the fact that an ‘entire agreement’ clause will not necessary relieve either party from responsibility for any omitted terms from a lease, where a term is necessary to give the contract business efficacy. Heads of terms arising out of negotiations should therefore be clear as to the allocation of repairing responsibilities for different parts of premises and for services.

This summary is based on an article originally published by Practical Law Company. It is summarised for information only and does not constitute specific legal advice. For more information or for specific advice please contact commprop@prettys.co.uk

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