Dispute Resolution

For a long time, it was considered that a tenant was only obliged to improve the condition of a property beyond its condition at the date of entry if the parties had agreed that the tenant was to put the premises into good condition and repair. An obligation to keep premises in good condition and repair did not include an obligation to put it into that condition.

Change in approach

That all changed in 2015, when the Court issued its appeal decision in @Sipp Pension Trustees v Insight Travel Services Limited.

The lease obliged the tenant to “accept the leased subjects in their present condition and at their own cost and expense to repair and keep in good and substantial repair and maintained…and to replace or renew or rebuild whenever necessary the leased subjects… in at least as good condition as they are accepted by the tenant all to the satisfaction of the landlord and that regardless of the age or state of the dilapidation of the buildings or others for the time being comprised in the leased subjects.”

There was no obligation to put the premises into good condition and the tenant accepted the premises in their present condition.

Nonetheless, the court said that the natural and ordinary meaning of the repairing obligation was that the tenant had to maintain a minimum standard of repair which was that of “good and substantial repair”. If the property did not meet that standard, the tenant was required to put it into good and substantial repair.

The factors the court looked at to reach this decision were:

  1. The tenant was obligated “to renew, replace and rebuild as necessary”, and the repairs were to be carried out “to the satisfaction of the landlord” and “regardless of the age or state of the dilapidation of the buildings.”;
  2. The dilapidations payment demand in the lease referred to “a sum equal to the amount required to put the leased subjects into good and substantial repair”. This wouldn’t make much sense if the repairing obligation was any less than requiring the tenant to put the property into good and substantial repair;
  3. No schedule of condition was created at the start of the lease.

What now?

In effect, the court changed the law so that – generally speaking – keep now means put. In doing so, it brought Scotland in line with England.

It is only when the wording of the lease suggests that the tenant is not to put the premises into a better condition than it accepted them that keep does not mean put. According to the Court, that can be the case when the obligation to “replace, renew and rebuild” (or similar such words) is missing.

Calum MacPherson

Calum MacPherson

Senior Solicitor at Brodies LLP
Calum is a Senior Solicitor in the Business Dispute and Asset Recovery Team. He provides clients with advice on a wide range of complex and contentious property related issues.
Calum MacPherson

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