Baillie v Savage (2018) EWHC 3035

Or, the significance of tenancy agreement clauses.

A tenant had signed a two year tenancy on a house. There was no break clause. £34,000 in rent – for the full term – was paid in advance. After moving in, the tenant contacted the landlord’s agent to say that a front garden wall at the property was bulging. Nothing was done and subsequently, the front part of that garden wall collapsed, blocking a side passage and causing damage to a heating pipe.

The tenant’s account was that soil thereafter continued to fall from the wall, the remaining part of which was bulging, there were cracks inside the house, and the kitchen floor bulged. The tenant complained to the agent that the property was not suited for living in (the relevance of this will become clear). The tenant obtained a structural engineer’s report, which concluded there was a serious problem and the back part of the retaining wall could fall. That was very close to the builing. The risk of damage was very high, due to a sloping embankment and the risk of landslip. As a result, the property was not safe to live in.

Now, as we sadly know, ‘not safe to live in’ is not normally an actionable state. Obviously there was significant disrepair here, which would have been actionable under section 11 Landlord and Tenant Act 1985, but ‘not safe to live in’ is not, yet at least, a basis for a claim.

However, this tenancy agreement contained a clause with the heading ‘premises uninhabitable’, which stated,

“The rent or a fair proportion of the rent shall be suspended if the Premises or any part thereof shall, at any time during the tenancy, be destroyed or damaged by any risk insured by the landlord so as to be unfit for occupation and use…

The suspension of the rent or a fair proportion of the rent, according to the nature and extent of the damage sustained, shall remain until the Premises shall again be rendered fit for habitation and use.”

The tenant brought a claim under this clause.

At first instance, the District Judge rejected the landlord’s argument that the tenant ‘had an alternative motive, to terminate the tenancy’, and criticised the partisan nature of the landlord’s expert’s evidence. A link between the damage and the property being unfit for occupation was necessary for the clause to operate, but the tenant’s expert’s evidence on the risk of landslips. it was not clear where debris would next fall and there was a risk the entire wall would collapse. The clause was activated. The landlord was ordered to repay £18,059 in rent and interest, release the £2000 deposit and pay costs.

The landlord appealed. The landlord argued that the DJ had erred in finding that the front part of the wall collapsing might cause the whole wall to collapse, so triggering the clause. A photo showed the bulging was there at the start of the tenancy. As the wall had been built in two sections, the collapse of one part didn’t mean it was likely that the rest would collapse.

The High Court held:

Two factual questions arose on the appeal

Had a part of the premises been damaged during the lease? Yes it had, so the first part of the clause was satisfied.

Did the nature of the damage render the property unfit to occupy?

The DJ had found that was the case. There had to be a connection between the damage and the unfitness to occupy, but the tenant’s engineer’s evidence showed that. The landlord had not cross examined the engineer and put any break in the causation to him. The present court was not going to make findings of fact based on a photo not raised in cross examination at first instance trial.

Moreover, the DJ had taken a commonsense perspective. Half the wall had collapsed. The DJ was entitled to conclude from this that continued occupation was dangerous. Once damage had occurred the real risk of further damage of a similar nature engaged the tenancy clause, especially where the situation was potentially dangerous.

The landlord’s argument was effectively that the tenant should continue to occupy (and pay rent) when there was a risk of further collapse and damage. This was not reasonable. Summers v Salford Corp (1943) A.C. 283 at 289 cited

“I will only cite one passage from my own judgment in Morgan’s case, because I know no better way of expressing my present opinion after a lapse of fifteen years. ‘If the state of repair of a house is such that by the ordinary user damage may naturally be caused to the occupier, either in respect of personal injury to life or limb or injury to health, then the house is not in all respects reasonably fit for human habitation’. In the present case the breaking of one sash-cord necessarily involved the strong probability that its fellow cord, especially with the extra strain imposed on it, would also break, with the further certainty of danger to anyone handling the window at the time of the break (which) would prevent that room from being reasonably fit for occupation.”

Appeal dismissed.

Comment

The landlord was represented on appeal, and one does have a certain sympathy for his counsel. Trying to argue that the property was fit to occupy until there as another collapse and further damage to the property was never going to be an attractive line of argument.

Fingers crossed, reliance on this sort of tenancy clause should not be needed in the future, at least for new tenancies, assuming that the Homes (Fitness for Human Habitation) Bill goes through (next step is second reading in the House of Lords on 23 November). An approach to ‘fitness’ that incorporates risks to health and well being, not just post facto harm should hopefully avoid such ‘but the building hasn’t fallen on you yet’ arguments. Summers v Salford should continue to be of use.