A court has enforced the landlord’s repairing obligation relating to Beetham Tower, requiring it to find a permanent solution to failing glass panels.
At 47 storeys high, Beetham Tower dominates the Mancheser skyline. Twenty three of its floors are occupied by the Hilton Hotel and the remainder by residential apartment owners. The external façade of the tower comprises panels forming a ‘sleek uninterrupted wall of glass’. And these have been the subject of recent litigation in Blue Manchester Ltd v North West Ground Rents Ltd.
The landlord, North West Ground Rents, was freehold owner of the tower. The tenant, Blue Manchester, is the owner of the Hilton Hotel. The hotel lease was granted for a term of 999 years for which the tenant had paid a £60m premium. Under the terms of the lease the landlord was obliged "at all times to keep in good and substantial repair and when necessary as part of repair to reinstate replace and renew where appropriate the ... Common Parts". The common parts included the external façade.
The glass panels were attached to the structural frame by strips of sealant which prevented them from loosening under wind pressure. They were a mixture of double glazed units and single glazed shadow box units (SBUs). In 2014 the sealant attaching the SBUs was found to be failing. As a temporary fix and to ensure the building’s safety, pressure plates were screw-stitched to the frames to keep the glass panels in position. It was intended that this fix should last no more than three years pending a full investigation and installation of a permanent solution. However nothing substantial was achieved and the main contractor, Carillion, went into liquidation in 2018.
The tenant issued court proceedings seeking an order for specific performance compelling the landlord to undertake works under its repairing covenant to provide a permanent solution to the problem. The proposed solution was the installation of an alternative glazed facing representing a like-for-like replacement of the existing SBUs. The tenant also claimed the stitched panels had a negative impact on the building’s appearance, and that the hoarding and safety barriers erected at ground level in 2014 were obstructing light and access to the hotel.
The landlord accepted that the façade was its responsibility but argued that the steps it had already taken constituted sufficient compliance with its repairing obligations.
The question the court had to consider was whether the façade, with its temporary stitch plates in position, was in disrepair. In other words, was the temporary solution structurally safe and would it remain so for the foreseeable future? The answer was no.
The court held that of itself, the fact that the stitch plates were only designed to last three years meant that the SBUs were not in good or substantial repair and this put the landlord in breach of its repairing covenant.
A more permanent solution was also warranted by other reasons: the stitch plates were not in accordance with the original design and this ‘inevitably’ increased the stress in the facade components. The fix could result in damage to the primary weather seal and it required ongoing regular inspection and maintenance which disrupted the tenant’s business.
There are no reported cases as to whether solely aesthetic considerations could be relevant to the court’s decision, but the court held that they could be relevant. Without the stitch plates, the facade had a clean, modern and unitised appearance. This was significantly and adversely affected by the stitch plates and the court held that there would have to be some compelling reason why the tenant should have to accept this as a permanent solution.
Having found the landlord to be in breach of its repairing obligation to keep the façade in good or substantial repair, the court ordered it to remove the stitch plates and to reinstate or replace the SBUs and their frames, as appropriate, to ensure that they are securely affixed in such a way that the building has substantially the same external appearance as it had when the lease was granted.
The landlord was given permission to apply to undertake a different remedial scheme if the works were revealed not to be reasonably practicable other than at disproportionate cost. Eighteen months was deemed to be a reasonable time for the design and implementation of the works.
The court also ruled that the tenant was entitled to damages due to the barriers and hoardings having been in place for so long.
This case is important because orders for specific performance compelling compliance with repairing covenants are relatively rare.
Interestingly, the court had no sympathy that the landlord had only paid £400,000 for the freehold reversion, received modest ground rents in return and yet was facing an expensive liability. In the lease, the responsibility for repairing inherent, or design and construction defects, lay with the landlord and so this inequality of commercial benefit was not relevant.
Blue Manchester Ltd v North West Ground Rents Ltd (2018) 2019] EWHC 142 (TCC)