Home Information Cases BHP Petroleum Great Britain Ltd v Chesterfield Properties Ltd (2001)

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BHP Petroleum Great Britain Ltd v Chesterfield Properties Ltd (2001)

Summary

Covenants by a landlord that were expressed to be "personal" to that landlord were not "landlord covenants" and could not, therefore, be released by notice served under s.8 Landlord and Tenant (Covenants) Act 1995. * Leave to appeal to the House of Lords refused.

Facts

Appeal by the first defendant ('Chesterfield') and cross-appeal by the claimant ('BHP') from the decision of Lightman J which held that: (i) covenants by Chesterfield that were expressed to be "personal" to it were not "landlord covenants" and so could not be released by notice served under s.8 Landlord and Tenant (Covenants) Act 1995; but (ii) no liability on the part of Chesterfield had at that point arisen under the terms of a works defects clause ('the defects clause'). By an agreement for lease between Chesterfield and BHP, Chesterfield agreed to carry out certain refurbishment works to premises that it would then let to BHP for a term of 20 years. The defects clause in the agreement provided that Chesterfield would remedy any building works defects occurring within the period prescribed by the agreement, such as "any physical damage to the demised premises manifesting itself during the defects period, or any defect that would result in physical damage to the demised premises manifesting itself during the defects period". Furthermore, it was provided that all obligations in the agreement on the part of Chesterfield were personal to it. The works were completed and the lease was duly executed. Chesterfield then transferred the reversion to an associated company and served the s.8 notice. BHP served no counternotice. In due course three of the toughened glass units cladding the outside of the premises fractured. BHP contended that the use of such units was a defect in the premises that Chesterfield was liable to make good under the defects clause by replacing all of the units, not merely those that had fractured. Chesterfield contended that: (a) it had been released from any liability under the defects clause by the s.8 notice; and (b) the use of the units was neither "physical damage" nor a "defect which will result in physical damage" in respect of the demised premises within the meaning of that clause.

Held

Personal covenants are not within the Landlord & Tenant (Covenants) Act 1995.The court also ruled on questions of construction of the lease and agreement for lease concerning the extent to which provision had been made for the original landlord to bear some liability in respect of defects in the property.

(1) The answer to (i) supra lay in the definition of a landlord covenant in s.28 of the Act. The words "for the time being" indicated that for a covenant to be a landlord covenant it had to be one that fell to be complied with by the person who might from time to time be entitled to the reversion. By definition, a personal covenant could not qualify. It followed that the judge had correctly decided this issue in favour of BHP. (2) In the second limb of the defects clause the words "manifesting itself during the defects period" applied not to the "physical damage" but to the "defect". This being the case, the defects clause imposed liability on Chesterfield to replace all the glass units. (3) There was nothing in the Act to fetter the freedom of contracting parties to place a contractual limit on the transmissibility of the benefit or burden of obligations under a tenancy.

Appeal dismissed. Cross-appeal allowed.

* The House of Lords refused an application by Chesterfield Properties Ltd for leave to appeal in this case on 22 April 2002.

Court of Appeal
Judge & Jonathan Parker LJJ; Bodey J
Judgment date
30 November 2001
References

LTL 30/11/2001 : [2002] Ch 194 : [2002] 2 WLR 672 : [2002] 1 All ER 821 : [2002] 2 P & CR 9 : [2002] L & TR 18 : [2002] 2 EGLR 121 : [2001] 50 EG 88 (CS) : (2002) 99(5) LSG 29 : (2002) 146 SJLB 5 : [2001] NPC 174 : [2002] 1 P & CR DG17 : Times, February 21, 2002 : Independent, December 6, 2001

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