£1.2 Million dilapidations claim fails

Posted: 7th November 2012

A landlord left with a dilapidated property after its tenant went into liquidation has failed in a bid to recover more than £1.2 million after a High Court judge ruled that the alleged debt had not been calculated in accordance with section 18(1) of the Landlord and Tenant Act 1927.

<ansionThe claim had been compiled on the basis of a rent-free period that was granted to a subsequent tenant of the office property, rather than on the basis of any diminution in the value of the reversion that resulted from the tenant’s failure to comply with the repair covenant contained within the lease.

Whilst not ruling out the possibility that a provable debt may exist, the court decided that it must be subjected to the limits imposed by section 18 and its calculation will necessarily require the valuation of the reversion of the property in its actual state at the date of the surrender of the leases and its repaired state.

The landlord’s arguments that it should be compensated by the tenant’s liquidators for the cost of reinstating the property to the same plan and design that pertained at the time of the demise were also rejected by the judge on the basis that a surrender of those obligations had been negotiated and came into effect before the leases were due to expire.