[2024] UKUT 356 (LC)

There was some initial uncertainty whether the material day for the purpose of the proposal to alter the list was 27 March 2020, the date on which the Property was vacated or 8 September 2020, the date on which Mr Wimbourne submitted his proposal. Nothing now turns on that debate as Mr Donmall informed us at the start of the hearing that the valuation officer concedes that the Property had been incapable of beneficial occupation on each of those dates.

The Property was vacant between 27 March 2020 at the latest and a date in April 2021 at the earliest. Structurally its condition remained more or less constant until the commencement of remedial works towards the end of that period, but the evidence suggests that the environment within the building fluctuated. The water which lay on the basement concrete floor in February 2020 had gone when Mr Read visited in November. We do not know whether between those dates the ingress of water ebbed and flowed repeatedly or whether a one-off incursion necessitating the evacuation of the Property then subsided or was pumped away.

The other unknown concerns the efficacy of the remedial work carried out after the appellant had signed its lease. It is possible that this was the incomplete work which Pringeur James saw when they inspected in May 2020, or it may be that the injection holes they observed were evidence of an earlier effort at waterproofing the joint. Mr Sugrue was unable to assist on that point. We are therefore left uncertain whether the water which entered the basement at the end of 2017 did so because previous remedial works had failed. Nor can we be sure whether the snagging works which were then carried out by the developer before fitting out began were initially successful, but then deteriorated and eventually failed, or whether they were ineffectual from the outset with their inadequacy only becoming apparent at the beginning of 2020. The route by which water entered the basement was certainly through the joint between floor and wall and the mechanism seems likely to have been an overflow of perched water which had built up in or around the space from which the sheet piling ought to have been removed, but we cannot say whether these incursions were frequent or infrequent.

It is common ground that the Property was incapable of beneficial occupation due to the propensity for water to enter the basement between March 2020 and April 2021. The length of that period should not be allowed to create an impression that the solution to the problem was complex or required extensive works. The concrete joint was identified as the likely source of the problem by March 2020. The remedial work was relatively simple in its design, took only a few weeks to complete and is unlikely to have been particularly expensive. The evidence did not focus on the causes of the lengthy delay in carrying out the work, and we make no findings about that, but there appear to have been two likely explanations, namely, disagreement over who was responsible for carrying the works out and the impact of the pandemic.

It is also agreed that some of the defects at the Property should be disregarded. The broken pump and the poorly sealed manhole cover in the basement both contributed to the insanitary conditions, but they were unconnected to the structural issue with the concrete joint. There can be no doubt that the remedial work to return the pump to a functioning condition and to re-seal the manhole to prevent smells and flies from escaping was work of repair. It was also obviously work which no reasonable landlord would consider to be uneconomic. Whatever the material day it must therefore be assumed to have been carried out.

The only issue concerns the joint between the concrete floor and the concrete wall through which water could, and did, penetrate, and the consequences of that water penetration. Was the work to seal that joint which was carried out by Rascor in April 2021 a “repair” within the meaning of paragraph 2(1)(b) of Schedule 6, 1988 Act, or was it something other than a repair?

Once the appeal is reduced to that relatively simple question the answer is not in doubt.

For a hereditament to be assumed to be in a state of reasonable repair, as the statutory repair assumption dictates, any deterioration of the hereditament must have been arrested and corrected and it must have been restored to a former, better condition from which it had declined. Repair is the converse of disrepair, as Lewison LJ put it in Monk in the Court of Appeal, at [26]. Counter-intuitive though it may appear, although the basement in Post Office v Aquarius was functionally inadequate it was not in a state of disrepair and it did not require repair because it had not deteriorated from a previous condition; the kicker joint had always been inadequate due to poor workmanship or poor design and there was no evidence that any part of the defective building had suffered deterioration since its original construction. If the repair assumption had been applied to that structure, it would have been assessed in its actual condition, ankle deep in water, because the work to correct that condition was not repair. If the work was not repair, the repair assumption would not have required that it be assumed to have been carried out so as to leave the hereditament in a state of repair.

For the reason we have already explained at paragraph 53 above, the burden of proving that the basement was not in a state of disrepair falls on the appellant. But we do not base our decision on the burden of proof.

Nor do we base our decision on the fact that at least one previous attempt had been made to seal the joint which had been unsuccessful. Mr Donmall submitted that the remedial work carried out by the developer at the end of 2017 had succeeded, and that the waterproof grout injected into the joint had subsequently deteriorated and failed. That was said to be demonstrated by the fact that the basement had been left for six weeks to dry out after which the appellant had been satisfied that the problem had been cured and had commenced its own fitting out works. But the evidence does not show that the original remedial work succeeded; it shows only that there was no further water penetration for a period of time, possibly for more than two years, and that the problem was not observed again until early in 2020. The evidence does not show whether that was due to the temporary success of the remedial work or whether the repair was ineffectual but water accumulated in sufficient quantity to reach and then penetrate the joint only in specific conditions which occurred infrequently. If the latter explanation is correct the case would be analogous to Post Office v Aquarius, at least as far as the joint itself was concerned. If the joint had never been effectively sealed, whether initially or as a result of an ineffective attempt to remedy it, future work to seal it would not be work of repair.

The only evidence suggesting that the joint may once have been watertight but subsequently failed is contained in the brief observations of Rascor following their visit in January 2021. They diagnosed the problem as “a failed waterstop on the construction joint”, a description which might suggest the deterioration of a building component. But Rascor were not addressing the question we are currently considering and may simply have been referring to the failure of the previous resin injection to resolve the problem.

Despite the absence of detailed evidence about the joint itself, we are not in doubt that the penetration of water through it gave rise to a state of disrepair. At the very least this included damage to the internal partitions in the basement of the Property, as Mr Levy recorded and as the appellant reported to its insurers on 30 March 2020. The photographs we were provided with did not show this damage, because the partitions had been removed by the time they were taken, but it would be a natural consequence of the partitions having become wet. In his report of 27 February Mr Levy stated that “ponded water has affected the interior of meeting room 3”. He also recorded moisture seepage and mould growth in the adjoining residential basement area including a lift lobby and stairwell. He regarded the presence of mould as hazardous to health and as creating a risk of respiratory disease. It is clear that these conditions were present within the hereditament, especially in meeting room 3. They were also present within the residential area, outside the hereditament, where Mr Levy observed “water damage to the lower sections of the dry lined plasterboard walls, skirtings and … carpets are also stained”.

Damaged plasterboard can be replaced, and mould can be wiped from the surface of a wall; if the same damage recurs periodically, it can be treated in the same way again. A question therefore arises about the scope of the statutory repair assumption. Does paragraph 2(1)(b) require only that it be assumed that the damaged parts of the hereditament have been repaired by the material day, or does it also require an assumption that the leaking joint has been rectified in the manner eventually achieved in April 2021. If the joint itself was not in a state of disrepair, but was in its original condition, does the fact that damage was caused by the water to other parts of the hereditament mean that the design or workmanship issues must also be assumed to have been solved by sealing the joint?

The principles identified by Lewison LJ in Hounslow v Waaler show that repair need not simply involve returning a damaged element to its former condition. It may include eradicating an inherent defect, such as the absence of expansion joints which had caused Portland stone cladding to fall from the face of Campden Hill Towers in Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1980] QB 12. It may also include prophylactic measures to avoid the recurrence of the deterioration. Where there is a choice of methods of carrying out repair, it is for the person with the obligation to decide which method to adopt.

Relevant examples of the application of these principles can be found in other cases. In Elmcroft Developments Ltd v Tankersley-Sawyer [1984] 1 EGLR 47, a basement flat suffered from damp penetration which caused the plaster on the walls to perish. The landlord was obliged to repair but it suggested that its obligation was limited to carrying out patch repairs to the plaster as and when it became perished and did not extend to inserting a damp-proof course which would have cured the problem once and for all. The Court of Appeal disagreed, because, as Ackner LJ explained:

“The patching work would have to go on and on and on, because, as the plaster absorbed (as it would) the rising damp, it would have to be renewed, and the cost to the appellants in constantly being involved with this sort of work, one would have thought, would have outweighed easily the cost in doing the job properly. I have no hesitation in rejecting the submission that the appellants’ obligation was repetitively to carry out futile work instead of doing the job properly once and for all.”

Stent v Monmouth DC (1987) 54 P & CR 193 is to the same effect. A house on an exposed site had been built with a wooden front door. Water frequently penetrated through or under the door, causing it to rot. Over the years the landlord had carried out a variety of works to address the problem, including cutting out rotten parts of the door and replacing it entirely from time to time with a new wooden door. Eventually the landlord installed a weatherproof aluminium self-sealing door, which solved the problem. The tenant then claimed damages, saying that the landlord had breached its repairing obligation by failing to install the weatherproof door years earlier. The Court of Appeal agreed that the landlord had failed to carry out the necessary repairs and that the periodic patching and replacement with similar doors had not fulfilled its obligation. Stocker LJ said this:

“Accordingly, in my view … the obligation under the covenant in this case was one which called upon the appellants to carry out repairs which not only effected the repair of the manifestly damaged parts but also achieved the object of rendering it unnecessary in the future for the continual repair of this door.”

Paragraph 1(2)(b) requires that the hereditament be assumed to be in a “reasonable” state of repair, so it is also relevant to bear in mind the general standard of repair which the law requires. In Monk in the Court of Appeal, Lewison LJ explained, at [24]:

“Whether property is in a state of reasonable repair is traditionally described as such repair as, having regard to the age, character, and locality of the property, would make it reasonably fit for the occupation of a reasonably-minded tenant of the class who would be likely to take it.”

Having regard to those statements of principle, and the nature of these premises, we do not consider that putting the Property into a reasonable state of repair after the damage caused to it by the ingress of water in early 2020 could be achieved simply by removing and replacing the damaged partitions and cleaning off the mould. The building would have remained vulnerable to future incursions of water, which would have caused the same type of damage to the replacement partitions and the same risk to the health of the occupants. Although we cannot say how frequently those short term measures would have needed to be repeated, because the frequency of the water penetration is not established, the evidence shows that the problem had been experienced at least twice in a period of less than three years. We bear in mind also the relatively limited scale of the works required to produce a permanent solution, and we are satisfied that no competent building owner or engineer would have contemplated anything less than the comprehensive remediation which was eventually achieved.

In the rating context, the usual principle that the person who has the repairing obligation is entitled to choose between different types of work may not apply. Under paragraph 1(2)(b) the assumed repairing obligation falls on the notional tenant, but all repairs are to be assumed to have been undertaken other than those which “a reasonable landlord would consider uneconomic”. It may therefore be appropriate to assume a scheme of works such as a reasonable landlord would not consider uneconomic, even if that involved more substantial work than a reasonable tenant might choose to do at their own expense. But as this is not a borderline case, and as we are satisfied that the repeated replacement of damaged partitions would not be repair, we do not need to consider that thought further.