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Office Depot International (UK) Limited v UBS Asset Management (UK) Limited [2018] EWHC 1494 (TCC)

In Office Depot International (UK) Limited v UBS Asset Management (UK) Limited [2018] EWHC 1494 (TCC), the tenant of a large warehouse in Manchester brought a claim against its landlord for a declaration as to whether any works were required to put the roof into repair and if so, what those works were.

The warehouse was constructed pursuant to a design and build contract between the freehold owner and Amec Developments Limited. Following practical completion of the warehouse, a lease was granted to the claimant in 2005 for a term of 20 years. From the outset, the roof leaked and it continued to do so notwithstanding patch repairs. In 2010, the landlord made a claim against Amec alleging defects in the design and construction of the warehouse and that claim was settled by payment of a sum of money to the landlord.

Although the tenant was subject to a full repairing covenant in respect of the roof, the landlord did not seek to enforce that covenant against the tenant. Were it to do so, the tenant would seek to pass on the claim under the collateral warranties given to it by Amec when the lease was granted and Amec would then seek an indemnity from the landlord under the terms of the settlement agreement in respect of the landlord’s claim against Amec. The tenant wished to claim on its collateral warranties in any event and wanted to know what it was obliged to do to put the roof into repair under the lease whilst the warranties were still enforceable (before the expiry of the relevant limitation periods). Accordingly, the tenant issued this claim seeking a declaration which would bind the landlord and the contractors, as to whether it was obliged to put the roof of the warehouse into repair and if so, by what means. The tenant also claimed damages against the contractors in respect of the cost of such works as the court found were required.

The landlord applied to strike out the claim against it on the ground that it is not open to a tenant to adopt a position of neutrality where the landlord is not seeking to enforce the repairing covenant, and to leave it to the court to decide whether there is a breach and if so what is required to remedy it. Moreover, the tenant’s claim for a declaration, in advance of works being carried out, that a particular scheme of works would satisfy its obligations under the lease with regard to the defects to the roof was misconceived because in covenanting to keep the roof in repair, the tenant takes the risk of a particular scheme of work not being satisfactory once carried out and the relief sought by the tenant would shift that risk to the landlord. O’Farrell J. accepted these arguments and concluded that the tenant’s claim did not raise any dispute as to the remedial works required to be carried out because the tenant did not advance a positive case. It would be inappropriate for the court to conduct an inquisitorial inquiry as to the most appropriate scheme of works rather than deciding between the competing positions adopted by the parties. O’Farrell J. rejected the argument that the relief sought by the tenant was akin to a declaration sought by trustees in respect of the administration of a trust (where the court, in effect, accepts responsibility for the administration of the trust).

Stephen Jourdan QC and Adam Rosenthal acted for the landlord.

A copy of the judgment can be found here here

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