Laindon Holdings Limited v South Essex Partnership University NHS Foundation Trust [2016]

Laindon Holdings Limited v South Essex Partnership University NHS Foundation Trust [2016]

A provision permitting internal non-structural alterations worked to the benefit of the tenant

Following the determination of a lease, Laindon Holdings Limited (the“Landlord”), brought a dilapidations claim against South Essex Partnership University NHS Trust (the “Tenant”).

The agreement for lease required the tenant to carry out fit out works which was to be done by the Landlord contractors but at the cost of the tenant. The works included replacement of the existing tiled carpeting.

Towards the end of the lease, the Tenant informed the Landlord that it was going to replace the tiled carpeting with strips of broadloom carpet. There was no objection from the Landlord but following the lease end, the Landlord issued a terminal schedule of dilapidations which included a breach relating to the carpets.

The initial court ruling was that the Tenant should pay the Landlord damages which included an amount for the replacement carpets on the basis that they belonged to the Landlord.

The Court of Appeal stated that the ownership of the carpets was irrelevant because the tenant had a right to make internal non-structural alterations without the consent of the Landlord.

Replacement of the carpets was therefore a permitted alteration and the Tenant was not in breach of the disrepair covenant in respect of the carpets.

This decision will be unpopular with Landlords.