Off the wall

Dilapidation claims remain fertile ground for disputes in both commercial and residential landlord and tenant matters. The advent of the adjudication procedure for residential properties under the Housing Act 2004 has reduced the number of matters that find their way to the small claims court but this has not removed their importance in more serious cases where many thousands of pounds might be at stake.

A frequent point of contention is the issue of what constitutes the actual 'structure' of a building for the purposes of section 11 of the Landlord and Tenant Act 1985, which governs a landlord's repairing obligations. This legislation is clearly part of a long line of statutory intervention that has sought, in a piecemeal fashion, to redress somewhat the historical bias in favour of the landlord as well as seeking to improve the overall residential letting stock.

The answer to what at first might appear to be a simple question has not until now been completely settled, yet it is clearly one that is crucial in determining liability in the case of residential property occupied under a short lease.

Under section 11 of the Act, the landlord of a residential property held on a lease with an original term of seven years or fewer has a number of repairing obligations (see box below). It is not possible to contract out of this liability by use of a covenant in the lease unless both parties agree and seek a court order to that effect (section 12). Such actions are extremely rare.

The recent case of Grand v Gill [2011]EWCA Civ 554 has now however provided a clear answer. The main question before the Court of Appeal was as to the correct level of compensation payable by the landlord to the tenant for breach of a repairing covenant. Central to the court's decision was whether or not the plaster to the internal walls of the demise formed part of the structure as intended by section 11(1)(a).

In November 2004, the appellant Ms Grand entered into an assured shorthold tenancy of a flat owned by the respondent, Mr Gill. There was a problem with water ingress due to a damaged roof and poor guttering and this was exacerbated by condensation caused by an inefficient boiler that regularly broke down and inadequate ventilation. A combination of these factors led to dampness and mould growth on the walls to the extent that the plaster had to be removed back to bare brick and the walls completely re-plastered.

The problem was further complicated by the fact that Mr Gill only had a long lease of the flat which he let to Ms Grand and therefore the guttering and roof did not form part of his demise.

Ms Grand sued for damages for the disrepair caused by the damp and for breach of the covenant to give quiet enjoyment. At first instance the trial judge awarded damages for the disrepair in the sum of £5,250 based on the condensation brought on by the defective boiler and inadequate ventilation with a further £350 damages for breach of quiet enjoyment. Ms Grand appealed arguing that the award for the disrepair caused by the damp failed to take account of the fact that Mr Gill had not repaired the damaged plaster. The question in essence was simple; did the plaster formed part of the structure of the demised property? If it did, Mr Gill was indeed liable under section 11 of the Landlord and Tenant Act 1985. If it was not part of the structure then he would not be liable.

The answer, however, was not as simple. The issue of whether or not plaster forms part of the 'structure' of a demise had been the subject of much debate in the higher courts for some time without a clear answer.

The Court of Appeal in this case, after careful consideration of the relevant authority on the subject, decided that plaster is, in the final analysis, an essential part of the ceilings and walls which give a dwelling house its appearance and shape.

It was not merely decorative as had been suggested and therefore formed part of the actual structure of the building for the purposes of section 11(1)(a). Mr Gill was therefore in breach of covenant for failing to replace the damaged plaster.

In reaching the leading judgement Rimer J said: 'In the days when lath and plaster ceiling and internal partition walls were more common than now, the plaster was, I should have thought, an essential part of the creation and shaping of the ceiling or partition wall, which serve to give a dwelling house its essential appearance and shape. I would also regard plasterwork generally, including that applied to external walls, as being ordinarily in the nature of a smooth constructional finish to walls and ceilings, to which the decoration can then be applied, rather than a decorative finish in itself. I would therefore hold that it is part of the 'structure'.'

This is the first case where the issue seems to be have been finally an unambiguously clarified and it appears that landlords are now held to be accountable for damaged plaster.

In addition, this case might well provide ammunition for solicitors representing commercial tenants in multi-occupied buildings on an internal repairing and insuring basis even though the Landlord and Tenant Act 1985 itself does not apply.

Any ambiguity in the original schedule or, indeed, if a schedule were not prepared at all, might be grasped upon to argue that the plaster, or other internal wall or ceiling lining might be deemed structural rather than decorative.

Further, during negotiations it can be more forcefully argued that plaster should fall outside the scope of a tenant's responsibility. In residential matters adjudicators acting under the Housing Act 2004 routinely find tenants liable for damage to the internal fabric of the property, most usually through failing to adequately ventilate the property and allowing the build-up of condensation, unless there is clear evidence that the damage is caused by a structural matter such as rising damp.

This judgment is unlikely to affect that approach where pragmatic considerations of tenant use and lifestyle will continue to predominate in all but the most severe cases.