Baillie v Savage [2018] EWHC 3035 (Ch)

Summary

The High Court determined the correct interpretation of a rent suspension clause in circumstances where a property was rendered uninhabitable by a risk of a wall collapsing in the future.

Facts

In 2008 the Appellant granted a tenancy of the property to the Respondent. The tenancy agreement provided that “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”.

Four months into the tenancy, a part of one of the garden walls collapsed, leaving the remainder of the wall and part of the car port, garage and kitchen floor bulging. The tenant’s structural engineer was of the view that the remaining wall was also at risk of collapse and that the property was therefore not safe as a habitable dwelling.

Issues

The issue therefore was whether in the above circumstances the rent suspension clause in the tenancy was triggered.

First instance

At first instance, the Judge found that the clause was triggered. There had already been damage to the wall, and the Judge was satisfied that there was a risk of further damage. It could not be said that the future damage would be controlled so as not to affect the property or its occupants and therefore the property was uninhabitable.

Decision [on appeal]

On appeal, the landlord argued that the Judge had been wrong to hold that the risk of further damage constituted damage for the purposes of the rent suspension clause.

However, this was rejected by Mr Justice Henry Carr. He held that on a proper interpretation of the tenancy, the rent suspension clause was indeed triggered. Although such clauses are generally construed strictly, the clause in this case was not limited to particular events such as storm or tempest. It applied if i) the premises or any part was destroyed or damaged by an insured risk; and ii) the nature of the damage was such as to render the premises unfit for occupation and use. The risk of further damage was capable of rendering the premises unfit for occupation: Summers v Salford Corporation [1943] AC 283. In this case, there clearly had been damage to the wall, as it had collapsed. Once such damage had been established, the risk of further damage of a similar nature (so long as there was sufficient connection between the damage and the unfitness for occupation) was enough to satisfy the requirements of the clause.

Comment

The form of rent suspension clause in this case is commonly found in tenancy agreements and accordingly the decision provides a useful guide as to how such a clause ought to be applied.