Don Peel

Partner

Commercial Dispute Resolution


Dilapidations claims update

Don Peel

The topic of supersession in dilapidation claims has been in the spotlight again in several cases in the High Court. These were PGF v Royal Sun Alliance and Sunlife v Tiger.  Martin Hutchings QC acted for Tiger in the Sunlife case, which followed on from a successful case in November in the Technology and Construction Court when he was instructed by Don Peel of Fraser Brown, which involved similar issues of supersession.

Supersession is the term used by building surveyors when works of repair carried out by a landlord following the end of a lease go beyond the standard of repair required by the lease. An example would be where a landlord knocks down an existing wall that is in disrepair and builds new offices in its place or extends the building. Another example would be where a landlord replaces an outdated roof with a new modern and much improved roof.

The outcome of these cases showed there is general confusion about the effect of supersession on a landlords claim. These decisions suggest that there is no common law principal of supersession in dilapidations claims.  When a landlord does works that improve or change the property after a lease has ended, such as installing a new toilet, upgrading air conditioning or knocking down a wall and replacing it with something else, this does not affect the landlord’s  dilapidations claim aginst the former tenant.  The exception is under section 18 of the Landlord and Tenant Act 1927 and this exception is statutory. Section 18 only applies to a landlord’s intentions for the property at the date the lease terminates but not subsequent decisions.

A landlord’s intention should not be judged by what happens after the end of the lease, but on what the landlord intended on the day the lease ended. In all other circumstances the landlord is entitled to recover the cost of the repairs from the former tenant as provided by the lease , even if the landlord does not do the repairs.  This is because the law is not concerned with what the landlord does with the damages that he is entitled to because of the tenant’s breach. Therefore, this means that supersession only ever exists under statute i.e. pursuant to section 18 Landlord and Tenant Act 1927, which must be assessed on the day the lease ends.

For most commercial landlords, the most important thing coming out of these cases is that it is advisable to stick with the dilapidations claim set out in the terminal schedule of dilapidations prepared at the end of the lease and to resist claims of supersession by the former tenant even if you make plans to change or improve the property after the lease has ended. 

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