May the Landlord Wants to Evict the Tenant So That He Can Bring in Volumes Limited - Assignment Example

?Issue – the landlord wants to evict the tenant so that he can bring in Volumes Limited. May he do so? The first issue that will be examined is the issue of whether the landlord may evict the tenant so that he can bring in a new tenant, Volumes Limited. At first blush, this does not seem possible, as the lease is for a fixed term of years, and the landlord may not simply evict. The tenant has rights established by various Acts, including the Landlord Tenant Act 1956 and the Landlord Tenant Act 1995. Therefore, the landlord will have to come up with a good reason to evict the tenant, and he might have one under the Landlord Tenant Act 1956. One of the interesting aspects about this problem is that the nature of obligation changed from one tenant to the next. The facts indicate that my client is the tenant of a Victorian Townhouse. The facts also indicate that my client is not the original tenant, and that the lease was assigned to my client three years ago. It may be inferred that perhaps the previous client, the one who actually made the original lease with the landlord, was a residential lessee, as the structure is a home, and the character of the lease changed when the original lessee assigned his or her lease to the current lessor, who is obviously a business lessee, as they are using the space for a bookstore. Therefore, two different parts of the Landlord Tenant Act might apply in this situation. The original lessee, if the original lessee was a residential lessee, would fall under the first part of this Act, and the current lessee, who is a business, would fall under the second part of the Act. This is because the first part of the Act is titled “Security of Tenure for Residential Tenants,” and the provisions in this part apply only to residential tenants. The second part of the Act is titled “Security of Tenure for Business, Professional and Other Tenants,” and it, of course, applies to commercial interests, such as the one in the fact pattern. Therefore, two different analysis will have to be performed – one analysis for the original tenant, and one for the current tenant, who is our client. The fact pattern indicates that, for the original lessee, the original lease was executed in 1997 and included a repair covenant, in which the original lessee was to perform the necessary repair work to keep the building in tenantable condition, and that this included decorations, wall-surfaces, window frames, glazing and casements. Moreover, in the original lease, there was provision for rent review in the 5th, 10th and 15th years of the lease and that the lease may terminate on the 16th year, by giving six months notice, provided that the lessee materially performed the duties that were required of that tenant under this lease. Therefore, the clause that the original lessee signed with the landlord will come under the Landlord Tenant Act 1954 § 8. This provision states that when a tenant and landlord agree that the tenant is to perform certain repairs on the structure, and these repairs are not made, then the landlord may charge the tenant the reasonable value of the repairs (Landlord Tenant Act 1954 § 8). This does not seem like an overly draconian solution to the problem, if it is determined that there needs to be repairs made and the tenant refuses to make the repairs - the landlord can simply make the necessary repairs himself, which in this case would include shoring up the cracks in the ceiling, and reinforcing the floor joists so that the excess load does not cause further cracks, and could then charge the lessee the necessary charges that the landlord would incur in getting this done. Yet there is a more draconian provision in the Landlord Tenant Act 1954 when it comes to lessees who refuse to perform the terms of the lease. In this case, the terms of the lease are that the lessee performs the repair work that ensures that the dwelling in tenantable, and, assuming that having cracks in the ceiling make the dwelling untenantable, then a refusal to deal with this issue might be cause for the landlord to claim that the tenant is not performing the necessary terms of the lease. In this case, the landlord might have a cause for repossession of the dwelling, according to Landlord Tenant Act 1954 § 16. This section states that a landlord may make an application for forfeiture or right of re-entry when a tenant fails to comply with any terms of the tenancy (Landlord Tenant Act 1954 § 16 (1)(a)). It goes on to state that if a tenant is covered under section 1 of the statute, in that the tenant is a low-rent tenant, then that tenant has a right of recourse if the landlord wants to kick him out. This provision, of course, does not apply here, as there is no indication that this tenant is a low-rent tenant. However, this section implies that a landlord may enforce a covenant by making an application for re-entry or forfeiture, which is a measure that the landlord may take against our client if it is determined that our client has failed to perform the terms of the lease, which is what would happen if the client fails to go ahead and make necessary repairs if these repairs are deemed necessary to make the structure tenantable. Moreover, the covenants that were in the original lease agreement definitely transfers to the current lessee, our client, in case this is an issue that is in doubt. This is established in the Landlord Tenant Act 1995, which states that, when a lease is assigned, the assignee inherits the benefit and the burden that the assignor had (Landlord Tenant Act 1995). This part of the Landlord Tenant Act 1995 establishes that assignees basically inherit the burdens that the previous lessors had. The implication is that the new lessor steps into the shoes of the previous lessor. Therefore, the argument could be made that the new lessor, even though it is a business interest, could only inherit a residential interest in the property if the previous tenant was a residential interest. Therefore, Part I of the Landlord Tenant Act 1954 is the controlling Part of this Act, and the new lessee does not have the same protection as it would have if it’s lease was purely commercial. That said, Part II of the Landlord Tenant Act 1954, which deals with business interests, which is what the current situation is, is also relevant. There are no provisions for what happens when a business tenant does not perform repair work or other aspects of a covenant to which the lessee and the lessor agree, as there is in Part I of the Act. It does state that a landlord may evict a business tenant with six to twelve month notice (Landlord Tenant Act 1954 § 25). There is also a provision for the tenant to indicate whether or not he or she is willing to give up the premises (Landlord Tenant Act 1954 § 25). At any rate, this section seems to apply to a tenancy that is not a fixed term, which this one is, as it is a 25 year lease, so the Landlord probably cannot use this portion of the statute to terminate the lease of the tenant. Indeed, part of this section indicates that “In the case of any other tenancy, a notice under this section shall not specify a date of termination earlier than the date on which apart from this Part of this Act the tenancy would have come to an end by effuxion of time” (Landlord Tenant Act 1954 § 25(4)). This would indicate that the date of termination shall be not earlier than the date that the tenancy would have come to an end by the terms of the original agreement. In conclusion, the landlord might have reason to evict the tenant if the tenant is not living up to a covenant that is inherent in the lease. Remember, the tenant is bound by this covenant, even though the covenant was extended to the original lessor, because the Landlord Tenant Act 1995 states that assignees are bound by the covenants that the assignors were bound to. Therefore, there cannot be an argument that the new lessee is not bound by this particular covenant, because he is. And the landlord may make an application for forfeiture or re-entry if the tenant does not abide by all the terms of the lease. This was established in Section 16 of the Landlord Tenant Act 1956. So, the question becomes whether or not the tenant is breaking the covenant to repair, and this is an issue for analysis in the next section. Issue – is the damage done by the heavy bookshelves damage that obligates the tenant to repair the damage by the original covenant to ensure that the dwelling remain tenantable? Our client argues that the damage that the bookshelves caused is not covered by the covenant to repair, while the landlord states that it is. The covenant to repair states that “The tenant hereby covenants that during the currency of this Lease the Tenant shall put and keep the premises in tenantable repair to include the decorations, wall-surfaces, window frames, glazing, and casements.” The tenant, our client, interprets this clause as stating that the repair work that needs to be done by the tenant is restricted to cosmetic work. Therefore, the tenant, our client, is attempting to circumvent the covenant to which he is bound by stating that the damage done by the bookshelves is not covered by the covenant to repair. However, the tenant is clearly wrong in this regard for two reasons. One, the tenant makes the argument that the covenant is only restricted to cosmetic work. In this case, the tenant would still be on the hook for the repairs, because cracks in the ceiling are cosmetic work, in that they make a dwelling look unsightly. Since cosmetic work refers to work that is an effort to beautify a dwelling, certainly cracks in the ceiling would make a dwelling look ugly, and repairing these cracks would be essentially beautifying the dwelling. Therefore, even if the covenant to repair is restricted to cosmetic work, the tenant’s argument in this regard falls flat because fixing the cracks is cosmetic work. Further, the tenant reads the covenant incorrectly. The covenant clearly states that the tenant is responsible for making any and all repair work that makes the dwelling tenantable. The covenant goes on to include such items as decorations, window frames and the like, but the wording of the covenant does not say that this is exhaustive. It simply says that it “includes” these items. Most likely, the landlord felt compelled to include these items that are cosmetic because, perhaps, an interpretation of the clause without including these items would necessarily exclude them, as they are not necessarily vital to making a dwelling tenantable. Nevertheless, the term “tenantable” means that the dwelling is kept in a state that is habitable for a new tenant, and having cracks in the ceiling would certainly mean that the dwelling is not tenantable, simply because a new tenant would not want to live in a dwelling where there are large cracks in the ceiling, especially when there are heavy bookshelves above that might fall through the floor. Moreover, an engineer has recommended shoring up the joists so that they are not damaged further, and, certainly, having damaged joists will affect whether or not the dwelling is tenantable, because a new tenant will not want to live in a dwelling that has damaged joists. Yes, the joists are not permanently damaged, but they might be if the load continues, therefore it seems that the tenant should be responsible for this work. That said, the tenant does have a plan to mitigate the damage, in that he wants to diversify and put in an Internet cafe that would ostensibly reduce the damage caused by the heavy bookshelves as it will reduce the load that will be put on the joists. So, this is an argument that the tenant can make in this regard – he is not going to be damaging the joists further if he goes through with his plans for the Internet cafe. Therefore, if the client does go through with these plans and goes ahead and creates an Internet cafe, thus removing the heavy bookshelves that are causing the most damage, then he might have an argument that the joists do not need to be shored up, because the engineer indicated that reducing the load would help, and this is what the tenant plans to do. In conclusion, it seems that the tenant will definitely be liable to the landlord for the damage done by his bookshelves. This is cosmetic work, in that cracks are unsightly, and fixing the cracks will beautify the dwelling, which is the point of doing cosmetic work, and the cracks also make the dwelling untenantable, as it exposes the new tenant to the danger that the ceiling might fall in because of weak floor joists. The only thing is that, possibly, he might not have shore up the joists if he installs the Internet cafe, as it seems that the heaviness of the bookshelves is the main reason why the joists are weakening in the first place. So, he definitely needs to fix the cracks; he might have to reinforce the joists if the engineer states that the joists need to be shored up regardless of whether or not heavy bookshelves are up above. But he definitely needs to do the repair work of some sort. Issue – the landlord wants to review the rent. Is this possible? The landlord in this case wants the rent reviewed. The facts indicate that rent reviews are to come up at the end of the 5th, 10th and 15th years in the terms, at the end of these years, provided that notice is given the tenant during the course of those years. The facts also indicate that the lease was originally executed in 1997. This being the year 2011, it stands to reason that the lease is currently in its fourteenth year. So, it seems that the request is a bit premature, and the landlord will have to wait until the year 2012 for a rent review. That said, there is authority that states that the landlord might still be able ask for a review. The cases of United Scientific Holdings Ltd. v. Burnley Borough Council [1978] AC 904 indicate that time is not of the essence in a rent review clause, unless there were contraindications – such as stating that time is of the essence. If there is no such contraindication, then time is not of the essence in these clauses, which means that a rent review can still be conducted late. This was followed up by the case of Bickenhall Engineering Co. Ltd. v. Grand Met Restaurants Ltd. [1995] 1 EGLR 110. This case also established that there is a rebuttable presumption that time is not of the essence in these rent review clauses unless there is contraindication of this, such as the words “time is of the essence,” or can be inferred by surrounding circumstances or interlineation of the contract. Moreover, contraindications must be “clear and explicit” to override the presumption that time is not of the essence. Further, Lancecrest Limited v. Dr. G. Aiwaju [2005] EWCA Civ. 117 had facts similar to these facts, in the landlord was to give notice of a rent review, and did not give notice in a timely manner. The court considered this to be a “trigger notice,” which would be similar to the facts in this case, and they decided that, even though the trigger notice was served over a year late, it was still valid because nothing in the lease indicated that time was of the essence when it comes to rent reviews. In reviewing the facts of this particular case, there was no contraindication that would rebut the presumption that time is not of the essence. There were no words to this effect, and it is unclear what the surrounding circumstances were, but the facts do not indicate that these surrounding circumstances are special enough to void the presumption that time is not of the essence. Therefore, the landlord might be able to go ahead and do a rent review. That said, the landlord is four years out of time – that might be pushing it. After all, the landlord in Lancecrest was only a year late. Therefore, it might be pushing it to say that four years is an acceptable period of lateness in which to serve notice of a rent review. That said, since time is not of the essence, he still might be able to get away with it. Sources Used Landlord Tenant Act 1956 Landlord Tenant Act 1995 Engineering Co. Ltd. v. Grand Met Restaurants Ltd. [1995] 1 EGLR 110 Lancecrest Limited v. Dr. G. Aiwaju [2005] EWCA Civ. 117 United Scientific Holdings Ltd. v. Burnley Borough Council [1978] AC 904 Read More

 

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