Commercial Property Law

Commercial Property Law – Landlord – Liability for Tenant’s Works – Building Contractors

The Court of Appeal upheld a decision relating to liability for tenant’s works. The decision in question was made in the case of London & Regional (St George's Court) Limited v Ministry of Defence and Secretary of State for Defence [2008]. The case involved a claim under an agreement for a lease.

Under the agreement for the lease, the landlord in this case had agreed to procure certain works for the tenant in question (“the Tenant's Variations”). The Tenant’s Variations were to be paid for by the tenant.

However, a dispute arose relating to the amount that was due to be paid for the Tenant's Variations. As a result of proceedings being brought, the Court of Appeal had to reach a determination on the following:

§   Whether the landlord in question had lost its right to bring a claim under the agreement for the lease due to the fact that it had settled its underlying dispute with the building contractor who had physically carried out the Tenant's Variations; and

§   Whether the landlord would only be able to claim sums that were certified under the building contract between the landlord and the building contractor.

The Court of Appeal eventually held that the landlord's settlement agreement with the building contractor did not prevent the landlord from claiming against the tenant in question. The Court of Appeal was of the opinion that the landlord's right of payment was not restricted to sums which were certified under the building contract between the landlord and the building contractor.

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© RT COOPERS, 2009. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.