When a valuable picture was painted without permission on the outside of a building, the court decided that the landlord's claim to own it was stronger than the tenant's.
Dreamland Leisure was the tenant of a building in Folkestone, which was used as an amusement arcade. When graffiti appeared on the outside of the building, Dreamland's first thought was not to paint over it, but to remove the outside surface of the wall and ship it to a gallery in New York, hoping to find a buyer for it. For this was no ordinary graffiti, but a mural by the renowned artist Banksy, said to be worth hundreds of thousands of pounds.
The landlord objected, and claimed to be the owner of the mural on the basis that it had been painted on the outside of its building. It was left to the court to decide who owned the mural, in the case of The Creative Foundation v Dreamland Leisure Ltd.
The tenant argued first that it was entitled to remove the wall on which the mural had been painted in order to comply with the repairing covenant in the lease, and secondly that once the wall had been removed, it no longer belonged to the landlord but now belonged to the tenant - who was therefore entitled to sell it, complete with mural.
On the first point, the judge sided with the landlord. Removing the entire wall was not an appropriate means of complying with the repairing covenant in the lease. Painting over the mural would have been a much simpler and cheaper method.
It was therefore strictly not necessary for the judge to consider the second point, but he did so anyway, on the assumption that the tenant had been entitled to remove the mural. The question boils down to who owns a part of a building that the tenant has removed in compliance with its repairing covenant. Once no longer part of the building, such items become chattels (as distinct from part of the building). It seems that this was the first time that the courts have needed to consider this issue.
There is nothing in a conventional lease that provides an answer to that question, so the court had to imply a term into the lease as to who becomes the owner of such chattels. It held that they belong to the landlord. Since the entire building belongs to the landlord, it has the better claim when any parts are severed from the building and become chattels. Furthermore, as between the landlord and the tenant, it was fairer that the landlord, rather than the tenant, benefited from what the judge described as "the spontaneous actions" of a third party, Banksy in this case.
The judge's decision on ownership of the mural instinctively feels right: the mural was painted on the landlord's building, and therefore belongs to the landlord. The case is more complex than this, however, since some items removed from a property are valuable (as in this case) while others are not. The court emphasised in this case that its decision was limited to a case in which the removed item was valuable.
So how would a court deal with a landlord's claim to own, for example, a piece of redundant air conditioning kit that the tenant's contractor had removed and disposed of while maintaining the air conditioning system? In normal circumstances, a landlord is unlikely to take the point, but it might be different if the parties are already in dispute about other matters. The court deliberately left that decision for another day.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.