Key dilapidations issues

Terms concerning the condition of a building may also be implied into a tenancy. This may happen where there is a gap between the landlord and tenant’s repairing obligations; if this is the case, the court, if asked and if appropriate, may ‘plug’ this by implying the necessary provision. Terms may also be implied by statute, but this tends to apply to residential property only.

The approach that the court will adopt when considering whether to imply a term into a contract (including a lease) was set out in BP Refinery (Westernport) Ltd v Shire of Hastings [1978] 52 ALJR 20.

Effectively, there are five strands to the test:

• the term must be reasonable and equitable;
• the term must be necessary to give business efficacy to the lease;
• the term must be an obvious one to imply into the lease;
• the term must be capable of being clearly expressed; and
• the term must not contradict any express term of the lease. The more comprehensive the scheme for repairs expressly provided for in the lease, the less likely it is that a term will be implied.

Applying these tests in a situation where, for example, a lease provides for internal repairs but no more, might result in the implication of a covenant on the landlord to repair the structure and exterior of the building.

An example of a complex case where the terms of the tenancy (including implied terms) had to be construed by the court was Holding & Barnes plc v Hill House Hammond Ltd (No. 1) [2001] EWCA Civ 1334. However, the court will not always seek to ‘plug a gap’ in the repairing obligations in a lease (see Jacey Property Co. Ltd v Miguel De Sousa and Another [2003] EWCA Civ 510) and Gavin and anor v One Housing Group Ltd [2013] EWCA Civ 580 ).

Terms may also be implied by statute. This is particularly the case with residential property. Of particular note are the provisions of the Landlord and Tenant Act 1985 and the Defective Premises Act 1972.